Berlin, Germany - My 1st deal - Deep dive (part 1)
Dear all,
I want to share my story as a newbie investor.
it took about 4 years to for me to get from a bad job to cashing my 1st rental check. 2015 I realised my job was not going to pan out as planned and decided to start self educating.
After a major infusion of Kiyozaki, Napoleon Hill and BP I started the least fun part of my journey: saving money when I needed it the most.
I turned it into a game which I called "how much can i save this month?". It was based on the 10% principle of Rich Dad Poor dada which I systematically tried to extend to the max.
I got my real estate license (which is super easy in Germany, literally a formality) and left my job and got one working for a real estate fund as sales.
I closed my first deal there as broker working on a tiny salary. The advantages to me were enormous
- 1. getting a paid education
- 2. being employed in Germany means you get MUCH easier access to a bank loan.
- 3. Most importantly I met David who is now my partner on this deal and an amazing mentor and friend.
I found my 1st deal as a buyer in September 2018 after having been educating and saving about 2,5 years. Here are the specifics.
Purchase price: 80.000 € (100% financing)
Size: 34 m2
Closing cost: ca. 8.000 € (self financed with a 50% partner)
Renovation: 12.000 € (self financed with a 50% partner)
Furnishing: 12.850 €
Total: 100.000 € or 112.850 € all in (w/ furniture)
ARV excluding furniture: 163.200 € or 175.000 € w/ furniture
Renting: 1075 e /month
Expenses: 357e /month loan + 216 e /month
Result:
Free cash flow: 502 € /month (1075 - (357 + 216))
Equity buildup: 62.150 € (175.000 - 112.000€)
ROE: 189 % (62.150 / 32.850)
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