Create a 5th bedroom or stay with 4?

Question

Hello Bigger Pockets community,

This is my very first post on the platform. I'm active in the Amsterdam market, Netherlands. After binge-listening for a couple of months to BP, I've decided to go for massive action and purchase my first investment property. 2 weeks ago an offer a house was accepted, which made me of course ecstatic!

About the house: Located in Amsterdam, 4-bedroom house, 1,5 bath, 100m2 (1100 sq feet), good condition and minor renovating (own-funds available). Purchase price 255.000 EUR. During the pre-deal analysis, I found that it should be possible to rent out each bedroom for an average of 500 EURO. Kitchen, living, and bathroom are shared. The mortgage on the house is 1000 EUR/month.

Initially, my idea was to split up the living area and create an additional bedroom (5th). This would mean an additional 500 EUR/m income potential from the additional tenant. For renting, foreign students, the targeted tenants, care more about the bedroom size and less about common areas of the house. Note: by splitting up the living are the property would have a relatively small kitchen and living area (yet I believe to be able to still get tenants). Demand for renting in Amsterdam is sky-high.

Yet, after talking to a family member this weekend to share my new purchase, I got some doubts. I was reminded that splitting up a living area like this would mean fewer future buyers of the house. 5 bedrooms and 2 baths (I'd would create an additional one bath compared to current status) combined with a very small kitchen and living area. This unusual set-up is, of course, less attractive for a family/future buyers.

Now, I get second doubts if should create that 5th bedroom to maximize renting income (2500 EUR/m). The property would already by cash flow positive with just 4 bedrooms (2000 EUR/m). As mentioned earlier mortgage would be 1000 EUR/m. Although I'm active in a different market than the US, I'd really appreciate any advice. I'm young and very eager to learn from your feedback.

Thank you for help BP-community!

Jos Van der Sluijs · Answer

Hello Thomas,

Congratulations on your first purchase. I’m an agent in Amsterdam specialized in investments. You might know this already but there are some strict local rules about renting out rooms. If there are more than 2 people living in a place there are different rules (family’s count as two people).

I’ve add the links to the city’s website below (It’s in Dutch) and I’ll try to explain.

Basically if you would like to make it 3 or 4 people/rooms you need a common area of at least 11 m2 (118 square feet) and it must be at least 3 meters (10 feet) wide. Next you need to have the contact and airborne sound insulation at least 47 dB.

If you would like to make it a 5 or more people/rooms there are even more rules.
You need to register it at the Chamber of Commerce, It’s only possible if there are less than 25% of others doing it in the same flat/building and it’s only possible if the part of the city the apartment is in hasn’t reached its’s maximum.

Most investors stop renting it out like this and only rent to couples, family’s or 2 people (friends).

https://www.amsterdam.nl/wonen-leefomgeving/wonen/bijzondere-situaties/woningdelen/

https://www.amsterdam.nl/veelgevraagd/?productid={B25BA8DF-4C52-42F7-A634-4B4F39309718}#case_%7BFDE94C47-65FE-4357-A22E-11F0C8F4B5D4%7D

Account Closed · Answer

@Thomas Van Holder Congratulations. My experience is that 5 Bedrooms is harder to sell. Plus, the rooms are going to be tiny. An 1100 sq ft in most towns in the States would be 3 Bedrooms. I know Europe operates on smaller spaces but if you are near a University, simply want to cash flow the property, you could get away with 5 bedrooms with University students.

David Sweeney · Answer

I don't know about Amsterdam, but here in the States, I see examples of people who try and rent out the maximum number of rooms in a house, thereby maximizing their rental income. Then they try to sell the house as, say a triplex, but perhaps it is only zoned as a duplex by the county assessor. If you can legally make a 5th bedroom, and you still leave enough living space, it might work for you, so I'm glad someone sent you some guidelines. I recommend following them.

Thomas Van Holder · Answer

@Alfred Edmonds agree. For 5 people 2 bathrooms are the bare minimum. Until now, the flat has 1 bathroom (incl. toilet) and 1 separate toilet. My idea was to extend that separate toilet and add a 2nd shower.

Thomas Van Holder · Answer

@Jos Van der Sluijs thanks for the local advice on regulations. It is very useful info!

Create a 5th bedroom or stay with 4?

Create a 5th bedroom or stay with 4?

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