8,7% ROI - Netherlands - What do you think of this investment?

[Ozgur Gonuru]

Hi Guys,

By coincidence I bumped into this forum and decided to do a post on here.

The matter of fact is that tomorrow I will be signing my first own real estate proporty at the age of 25 in Rotterdam, The Netherlands. I bought a house for € 89.000,- and will rent it for € 795. When I remove all the costs for renting it etc it will leave me a clean €650,- on a monthly bases.

So here is the investment case:
€ 89.000,- investment in property
€ 7.800,- yearly income
8,76% ROI

This seems pretty ok, especially since I bought in a spot where the rent prices are up these times, but I got shocked. When I read some of your posts I see crazy ROI's of 20-40% on property's of 40k-60k.

My questions.
1. How is it possible some of you guys get such a high ROI? What is a minimum/average ROI for you for such an investment?
2. I read something about lending money and investing it real estate and paying the lended money back from the income. This is impossible to do for me with a yearly ROI of 8,7%, because:

100k lended
21k (example) interest fee over 5 years
121k total

7800*5= only 39k........

How is it ever possible to do investments with rented money?

I really wish to buy more property's but it will take very long before I get this amount of money again. I got lucky with some investments in stocks etc, thats how I got this kind of money on this age.

[Bas Land]

Hi, fellow Dutch member here. First of all congrats on your first deal!

When calculating the costs and thus cashflow please make sure you include every costs you can think of. At a rent of 795 I don’t believe your only costs are 145 euros per month. You also need to take into account HOA fees, property tax (OZB in Dutch), insurance, and include a reservation for maintenance.

Regarding the financing, instead of having a 100k loan you could opt for a lower one. Why do you need 100k for? Also, if you get a mortgage you would typically pay back amortised over 30 years not 5. That will significantly lower your outgoing cash.

Good luck with the investment!