Financial and reservations
Your starting point is to engage a good financial advisor. For example, we ourselves work a lot with Poundwise. (Very good club with multiple disciplines in-house that are relevant to you as a real estate investor). However, there are a lot of financial advisors out there. If necessary, go and talk to 2 advisors and see who you feel most confident in that they are the best for you business-wise. My experience: cheap = expensive. Go for a party that is GOOD and not one that is cheap. And what is good? Do they have to choice menu? Then they drop out. Don’t have a cell phone number for your mortgage broker? Then they drop out. Did they miss their appointment to call you back the first time? Then they fall off!
Further: look at your current resources and excess value(s) and include this in your mortgage conversation. Get good advice on how strong your financial position is and if your position is very good, go out to bid later with no reservations or a limited financial reservation. This significantly increases your chances.
Real Estate Agent
Have you misjudged your bid several times now or are you not allowed to come to view at all? Then get a buying agent. For regions like Haarlem and Amsterdam, you just won’t get by without a buying agent.
Apartments
My preference is to invest in apartments with a somewhat larger and also a healthy VvE. Reason is that you then have less to worry about in terms of joint maintenance.
Property managment
Do you have multiple properties and is this taking up more and more of your time? If so, outsource the management. If your activities are seen by the tax authorities as ‘beyond normal active asset management’, you run the risk that your income will be taxed in BOX I.
Target group
My advice is to rent out properties with rents up to €1400 per month. The more expensive segment rents less well and is more susceptible to economic blows. My preference is often for expats and working young couples. Of these, you know they will leave again sometime and not stay in the home for life. This puts you in a better position to continue to adjust the rent to the market or, for example, upgrade the property to a more luxurious rental segment. Also, they tend to be neat target groups.
Location
Preferably in the Randstad or where there is sufficient economic activity. I stay away from remote places/villages or places with little economic activity. If the return is already not interesting somewhere, look for surrounding neighborhoods or places that are still emerging or have the potential to do so.
Location
Stay away from busy roads or where there is constant noise, air traffic, smells and insecurity. Or in neighborhoods that just figured with logical sense will never get better than the disappointment it is now. Look for places where there are enough stores, schools, greenery, sports facilities nearby and that are close enough to exit roads and public transport facilities.
Foundation
Stay away from homes with poor foundations. If a home is founded directly (without a concrete setter) on wooden posts, don’t start. For all other types of foundations: be well informed.
Land ownership
Stay away from ground leases. Unless a direct perpetual surrender of the canon is possible.
Construction period
I am extra critical with post-war construction. Especially period 60s and 70s. This is for example because of problems with concrete rot, asbestos, old vitrified clay (sewer) pipes, lead pipes and the often comparatively higher maintenance costs. Because of the building quality and character, I like to look at pre-war construction (1890 – 1940). Because wood and wooden floors were often used here, it is also relatively easy to remodel. Young construction (<10 years old) is also (and perhaps especially) very interesting. What is important is that the layout is already logical (location kitchen, plumbing, bathroom) and whether the house is already well prepared in terms of sustainability for the future or whether this can be achieved without significant renovation.
Renovations
If you are a small real estate investor, then I would not venture myself into very major renovations anytime soon. Often professional investors can remodel much faster and cheaper. Small investors can fall apart:
-Finding good, reliable and also available contractor
-Monitoring/adjusting the remodel if the home is not close to one’s own home
-Too high a cost at the bottom that it turned out to be more advantageous to have bought something that was just more “finished” already.
My preference is for apartments where value can be added with “quick wins. Then consider architecturally sound homes where you can make gains, particularly cosmetically:
-Other floor
-Painting
-Other fronts and/or countertop kitchen
-Dressing
-Giving a new or different function to spaces where nothing is happening now (a storage room, for example)
Rental Points
Buy investment properties that are in the free sector or can be obtained. How do you know if a property is available in the free sector? You can have a quick scan done by the company PBOV for this purpose. Cost approx. €65,-. Really read our blog on rental points with the most important advice on rental points and the energy label.
Permission of the owner
Make sure you know for sure that renting is allowed from the VvE.
Facebook groups
There are a number of Facebook groups that I am a member of that I can recommend to you to boost your knowledge, spar with other peers and for off market deals:
https://www.facebook.com/groups/vastgoed.investeerders/
https://www.facebook.com/groups/Offmarketvastgoedgevraagdenaangeboden/
https://www.facebook.com/groups/vastgoedbeleggersnederland/
https://www.facebook.com/groups/vastgoedmastermind
Learn from and learn with others
At your leisure, go see and listen to, for example, this real estate investor who just talks very matter-of-factly about how they went to 16 properties in 3 years.
A fun inspiring young man who has made his profession out of helping others buy investment properties is Thierry Stokkink. He also has an Online Platform where you can become a member (approx. €40,- p/month) and where you have all the relevant info you need as a real estate investor conveniently in 1 place. Think brokers, appraisers, property managers, sample documents/flyers, calculation tools etc. etc.
And no, I have no shares or interest in that platform;)
10 golden buying tips
Also, be sure to read this blog with the 10 golden buying tips.
Return
Don’t stare too much at the yield (the‘BAR‘). A BAR does not say everything. It’s better to have a lower return on a location that is still emerging or is very much value priced, than to have a high return on a location where you are at risk. Is there too far of an economic heart, will the neighborhood never be anything there, is it a vacation park or does it click too good to be true? Then quickly shave away from there.
So far…
Goodluck!