All Forum Posts by: 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!

I started looking at rental deals in Dec 2016. Back then we where aiming for 14x rent multipliers (i.e. a 140k property had to bring in 10k in gross rent a year). That makes us cashflow a couple percent, usually in the range of 2-4% cash on cash and 8-10% total return (including equity build up). Now that property prices are rising, you're more looking at 15-16 sometimes 17x multipliers. That means cash flow doesn't exist anymore on these properties, the mortgage payment simply becomes too high. 

The first deal we looked at was a studio apartment advertised for 130k, that we could remodel to a one bedroom apartment for about 10k, for a rent of 850 a month. That would actually be an OK deal, but the property was sold in a couple days before we could even offer on it. Then we looked at a series of comparable deals, all to be out-bid by other buyers. 

The best deal we looked at was a small duplex apartment (house with two apartment units in it). It was sold with both units rented out. I believe asking was 185k and total rent with current tenants was about 1300 per month, which worked out to about 12x multiplier. Cash flow was good, total return outstanding. Also we thought with the property being rented we wouldn't have to compete against first time home buyers etc. Didn't matter, there were 20 viewers the first day, myself included. They did a closed bidding, we put in 195k as our offer and it sold for over 210k. After that we decided we are not actively looking for a rental anymore at this moment. If a deal comes along we take it, but actively scouting Funda (Dutch MLS) is not worth it. Paying retail is too much. Also, I'm not too involved in real estate networks to have access to good off market deals. Will look into that the coming months, but my guess is it's better now to acquire a lot of cash and grab ub a handful of deals during the next recession.

Do you have any ideas for getting better deals in a hot market?

Thanks, good luck to you too! Although I'm afraid my first rental will need to wait, prices are getting ridiculous here in Utrecht and surrounding areas and although rents are rising, property prices are rising faster due to rent control (puntensysteem).

Hi Erwin, good question. I'm from The Netherlands as well. Full disclaimer: I don't own any investment real estate. I do own my primary property and I'm looking to invest, but obviously take my advice with a grain of salt as more experienced people might be better able to help you out. Apart from the obvious financing with a bank mortgage or private money (onderhandse lening) I can think of two ways to finance property: crowdfunding and getting a personal loan. Crowdfunding is growing and more platforms are getting in the real estate space. The personal loan can get as high as 75k I believe, depending on income and other debt services. The interest rates are pretty good at 4.2%. Regarding the flipping without owning I've not heard of that before. Also with our laws I can't see how that work. Probably the tax authority will see you as the investor/entrepreneur anyway you structure it, and tax you accordingly. But then again, I'm pretty inexperienced and trying to learn as well. Good luck!

Incredible man! Really inspiring!

Thanks for the explanation. Indeed we are in a pretty crazy market right now. Can't find any reasonable deals.

Hi Saskia, cool idea of yours! Love the creativity. Do you think a structure like this one would work in The Netherlands as well?

Excuse me, in point 2 above the total equity will be 70% of course, the down payment will be 30%. Need to stop doing three things at once... 

I'm by no means an expert, so I can't give you solid advice on this, but I will be interested in how your deal goes through in the near future! Please keep us updated!

Good luck man!

Hi Sam,

Thanks for your reply. I was reading it, re-read my original post and thought yep this guys is right. I did mess up my numbers. They should be as follows:

1. We divide the ownership 1/3 for me and 2/3 for him (both value, appreciation, cash flow, mortgage etc)
2. He will put a down payment of 40% on his 2/3rd of the mortgage, thereby allowing me to put down only 10% on my 1/3rd. Therefore the total down payment will be 70% (trust me the math here works).

This means I will be more leveraged, and he will be "carrying" me for part of the down payment for a few years. The calculation is not by any means harder or easier when going 50/50 or 33/67 I guess. I'm pretty good with Excel (data professional) so the math does work.

Your recommendation on getting everything in writing is a very good one, thanks! Do you advice to just sign a document between the two of us, or get it legalised through a notary? It may cost us a couple hundred euros but I will be fine paying that if it gives more protections and clarity, and I'm not sure it does. 

Thanks for the advice anyways! I really appreciate it when more experienced people look after the new ones!