Hello from Tallinn, Estonia

[Silver A.]

Hey,

I've been reading biggerpockets.com for ages now, some good stuff here. And now I've finally signed up to participate on the forum.

( Wait... Estonia? Yes, a tiny country in Europe, just south of Finland and we have 10 inches of snow here as I type this. No, we don't have polar bears.) ;)

I turned 24 last week and have been in real estate for 4 years now. I was a real estate agent for 2 years, and started investing myself after having read "Rich Dad, Poor Dad". I was hooked.

The first deal, and the only buy and hold deal was a garage in a bad part of town than netted me 17% ROI and a whopping 30€ per month. :)

Right now I'm looking for the next apartment to flip and enjoying a bit too much spare time until I find it.

I hope I can contribute something to this community.

Regards
S

[Silver A.]

Thank you all for warm welcomes, feels like home. :)

I'll just share some more interesting things about REI in Estonia for now.

Estonia in 2011:

- population: ~1,2 million. Languages: Estonian and Russian. Almost all people under 30 can also (somewhat) speak English so doing business is not a problem.

- unemployment is around 15% (over 20% in rural areas), many people are leaving the small country towns for Tallinn or are moving to Scandinavia to find a job there.
Small flips can still be done in rural area towns, as approx 500 Sq Ft apartments can be had for 1000€ and sold for 3000€. Rentals are best to be avoided unless one wants to support unemployed people living there.

- good around-the-year rental investment options are pretty much limited to the two largest towns: Tallinn (the capital, population 400 000) and the university town Tartu in the south (100 000).

- Renting is seen as something very temporary and not as "one's own, doesn't feel like home as the landlord can knock at any time."

- Evicting problem tenants is not easy. The landlord can only appeal to court when the renters owe 3 months rent, and the eviction order takes at least 6 months to get from court.

- There has been increasing demand for rentals as since 2007 many people can't save enough money for the down payment to purchase an apartment. And a bit ironically, home loan payments are usually about half of the rent. So renting means a person is not able to save money for the down payment.

- 80% of local families over here own real estate, a house or a flat where they live in. The highest % in Europe. (That is why flipping makes sense over here.)

- € is the new currency since 2011. So far joining the € zone has not had an impact on RE prices.

- There is no corporate income tax in Estonia. (And founding an LLC can be done online in 20 minutes, if you have an Estonian ID card and an Estonian bank account.)
Also, there is no real estate licence system so everybody can start as a RE agent if they want.

- Local RE market is still recovering from RE bubble in 2005 - 2007. The RE prices fell over 2 times in 2008-2009 and many families owe to the bank twice or more what the place is currently worth. But the property prices have stabilized and 10% growth in RE value is predicted for this year and the next few years.

- small, 1-3 bedroom 1 bathroom apartments in Tallinn are the most sought after, both as a home and as an investment (flipping/rental).
These can be purchased for 800€ per m2 (10 Sq Ft) and will provide 3-5% ROI as a rental, purchased with conventional lending (most typical - home loan for 30 years, 30% down, 4% interest, based on euribor).

I personally do not know any Estonians who have purchased RE in the US. I know a few people have been looking into it and then have decided that staying closer to home makes managing investments easier .

Phew, need a break now after all these facts! :) If you have more questions, I'll be more than happy to try to answer them.

S.