All Forum Posts by: Angelo Van

I double checked the property tax it is indeed that low (depends on the municipality). I was surprised since usually the USA is way lower on taxes than the Netherlands. Though im pretty sure our income tax is much heavier, rates go up to 52% and you don't have to work thát hard to get a part of your income taxed on a rate of 52%. Either way property tax seems low and since I have the feeling (might explain the lower 1% rule outcome too) that the exact same property would cost here more than in the USA. So since it's a percentage we might pay a similar "absolute" value. And the 1.9% mortgage rate i explained above :). But a big big thank you for linking me to this file. I've made similar ones for school projects but they were not that sophisticated on input, though they were discounted. Either way massive thank you i'll use it.

BTW sorry for asking in this topic (I used some numbers from Brandon's books) but is there a topic out there, or a list with thumb rules for % maintenance, utilities and insurance. I guess i can figure out some of these numbers by informing at companies but it be cool to have some general number to compare them to.

That is indeed true. And I'm very aware of the positive correlation between yield and risk, though there is also something as just bad deals where either rent or price is not conform market. I guess this is also a significant part of the low value.

Though I agree neither is good or bad.  But naturally i'm risk averse. Maybe I get attracted to those less risky properties and thus automatically end up with lower percentages. Since I have no experience yet and just looking around I'm not looking for a high risk property. This actually might also explain the lower value i get. Risk. Good one. Didn't think of that yet while I should have.

@NancyP39 30 years with 1,9% interest (If I would live in it). I took this rate because it was most accessible (not so realistic i know)  Besides if it would take a more realistic rate (couldn't find one so quickly) the 0.5% would only be lower so this is even best case scenario on the mortgage and it's still no 1% or near it.
Property tax is 0,0838% of the marketprice here.

@BjornA yeah you might be right. I guess if they were super good properties the brokers bought it themselves or shared them in their network. Though the average MLS listing was 41 days last year.


But from reading the replies it might be a combination of method and market/supply issues. For example Nancy showed some assumptions regarding the 1% rule that indeed might apply in a different way for my location such as taxes and 30 year mortgage. On the other hand it could also be as Bjorn says because I only looked on the MLS so far in combination with the fact that many are overpriced. In addition my rent levels are pretty conservative. I saw some brokers online (not the mls) were offering 1,5x the rent I used in my calculation.Though I'd think that was madness (it was approaching 1% then). Brokers from the big city investing in my little town. Ain't nobody can afford that but whatever. Whether I'm low or they too high, it could be another factor. Everything together might explain a great deal of variance already.

Thanks for the help so far. Additions are still welcome :)

Maybe not thát good, but it might be around break even. So yeah i think 1% is too high for my market? Could that make sense? yet 0,5% still seems a bit low though. I calculated with 25% cash.  But maybe 0.7% or 0.8% is more realistic. I guess there are no rules for this. But i just wanted to get some feedback on whether my statement makes sense or not.

Exactly. However 260k properties (in my situation) tend to go for €1100 euros here, let's say $1250. And yeah maybe I can still make that work but my point is, I feel the 1% is either not representative here (meaning you won't find any deal that fits the 1% because the threshold is not accurate) OR, the market is priced very different here which means finding deals at the moment is very hard. Which could make sense since money is cheap? The two are not positively correlated.

p.s. sorry for the double post had some troubles merging 2 quotes in one message.

That is indeed a good way to create your own personal rule of thumb. However I was just wondering why this 1% definitely does not seem to work for my market while it's not per se a bad deal. (ran some numbers). Not anything special but shouldn't be as bad as this rule of thumb indicates either.

So i've heard many people talk about the 1% rule. The rule states that the monthly rent should be around 1% of the purchase price.  Now I want to say I do understand this is a rule of thumb and I do understand it's not the way to success but merely an indication or a way to filter options. I also understand that this number might vary from market to market. And I also heard things are overpriced at the moment....

However, I thought let me try to apply that in a real life situation. The number seems high to me. I've noticed when I was reading BP's books that the prices in USA seem fairly low (at least to me) yet it yields nice rents. So I thought let's do it on my Dutch market.

Example; https://www.funda.nl/koop/breda/huis-40055057-wilr...

Single family dwelling; 125m2, upper 60's, 5 bedrooms, 200k (euro).

I looked up similar houses meaning; (same age, rooms, +/- 10m2 more or less, similar location)

Rents varried from 890-1045. And average at 973. 

973/200k = 0,49%. 

This is twice as low as the 1% rule suggests. Is this because of my  market or is this really a bad deal? 

Is this 1% USA specific? If the number would be a little off I'd just tell myself that might be because of a completely different market or over priced properties. But this factor 2 just seems too large to me. Any thoughts about this 1% rule? 

@Costin I.

Thank you so much for the directions! I will totally check them out asap.

I really like the reply of Filipe about the positive correlation but It has one flaw. You can't do that until you have invested in real estate, am I right? Or maybe I missed you had already. For now I assumed it's family owned RE. Either way she told you that you got fired before. I'm not sure if you have a new job at the moment. But apparently you two survived financially when you got fired. Why don't you find a new job and make some sort of arrangement with her to keep 70% to yourself. It would be "additional" money to your current situation. Of course I assume here your wife can carry the current load, is okay with that and that you don't have a job at the moment. If that is your situation maybe this could work. She might not see it as a loss if it goes bad since you store it away somewhere safe and the money never sees the light of day. Plus it's from your "extra" job. Not sure I'm making sense but I hope it's helpful to you.

I'm new too and I'm very interested in hearing the answer to the question as well. I guess you can download market reports in your area which are often available for free. There are several indiciators to look for, employment, income, prime yields, some ratio's, vacancy, etc. There must be a heck of a lot more and better determinants. For example for FINLAND (i had an exchange period there I study real estate) we used the KTI a lot during our projects. They offer benchmarks, research and analysis services. There must be something similar for your region. Of course it can be helpful to go to your national statistics agency they often offer interactive maps with demographics as well as income levels and crime statistics.