EDM Advisors GmbH -

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For Investors

OUR OFFER

Professional Investors receive prequalified project proposals in accordance with their investment criteria.

We offer private and semi-professional investors with minimum subscription amounts of € 250,000 or more the opportunity to participate in solid, interest-bearing private loan facilities through exclusive private placements. Alternative financings between € 250,000 and € 2,000,000 do not represent a core business for banks and are too small for professional investors, making this sub-market interesting for private and semi-professional investors.

Specifically, we offer private and semi-professional investors the opportunity to participate in subordinated property financing. The investor grants a loan to a property owner and in return receives a secondary land charge on an existing property as well as an attractive interest rate of between 4% and 10%.

How can we support you? Give us a call

+49 (0)30 208 48 63 00

Subordinated property financing is suitable for investors who

  • have an investment horizon of between one and five years
  • want to attain moderate interest rates between 4% and 10%
  • want to invest their money without additional costs
  • expect a positive return even in stagnating or slightly falling markets
  • want to save the time and effort regarding administration and tax associated with direct real estate investments
  • expect preferential terms compared to retail investors
  • expect more security than a direct acquisition of a property can offer
  • have the theoretical ability to cope with a worst case scenario of a total loss.

Use case

  • A project developer owns a rented apartment building worth €1,000,000. The property is encumbered with a land charge of € 500,000 from the financing bank
  • The project developer needs money for a new project. He receives a loan of € 400,000 from a private investor. As security, the lender receives a second mortgage on the existing property as well as half-yearly interest payments. The existing property is now 90% mortgaged (50% bank + 40% private investor).
  • After two years, the project developer's project is completed. From the proceeds of the sale he repays the loan of the private investor.

The granting of subordinated property financing offers clear advantages and disadvantages. Under identical conditions, it is less risky than the direct purchase of a property.

Advantages and disadvantages of subordinated property financing

Strength Weaknesses
  • Attractive interest rates of 4 – 10%
  • Short durations possible
  • Unlike the purchase of real estate, no transaction costs are incurred by the investor.
  • Due to the borrower’s equity share and possible guarantees, the risk tends to be lower than when buying one’s own property.
  • Investment income subject to preferential tax treatment (Abgeltungssteuer)
  • No administrative expenses
  • No say in property management
  • No participation in capital appreciation
  • No tax depreciation possible
Opportunitiey Risks
  •  positive Returns can be generated even in stagnating or slightly falling markets
  • the security of the investment increases in rising markets
  • as with the purchase of property, a total loss is possible in the worst case
  • Liquidity risk – if required, it is very difficult to liquidate a personal loan before its due date.

Advantages and disadvantages of subordinated property financing

Strength
  • Attractive interest rates of 4 – 10%
  • Short durations possible
  • Unlike the purchase of real estate, no transaction costs are incurred by the investor.
  • Due to the borrower’s equity share and possible guarantees, the risk tends to be lower than when buying one’s own property.
  • Investment income subject to preferential tax treatment (Abgeltungssteuer)
  • No administrative expenses
Weaknesses
  • No say in property management
  • No participation in capital appreciation
  • No tax depreciation possible
Opportunities
  •  positive Returns can be generated even in stagnating or slightly falling markets
  • the security of the investment increases in rising markets
Risks
  • as with the purchase of property, a total loss is possible in the worst case
  • Liquidity risk – if required, it is very difficult to liquidate a personal loan before its due date.
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