Financial and reservation
Your starting point is to hire a good financial advisor. For example, we work a lot with Poundwise ourselves. (Very good club with several disciplines in house that are relevant for you as a real estate investor). However, there are tons of financial advisers. If necessary, start a conversation with 2 advisors and see who you have the most confidence that they are the best for you from a business point of view. My experience: cheap = expensive. Go for a party that is GOOD and not one that is cheap. And what is good? Do they have a choice menu? Then they lose. Do you not have a mobile phone number for your mortgage adviser? Then they lose. Did they fail to meet their appointment to call you back the first time? Then they lose!
Furthermore: look at your current resources and equity and include this in your mortgage discussion. Get good advice on how strong your financial position is and if your position is very good, then bid without reservation or with a limited financial reservation. This significantly increases your chances.
Did you already missed out several times with your bid or aren’t you allowed to come and view it at all? Then hire a purchase realtor. You just come for regions such as Haarlem and Amsterdam no in between without a purchase realtor.
My preference is to invest in apartments with a somewhat larger and also a healthy VvE (association of home owners). The reason is that you then have to worry less about joint maintenance.
Do you have multiple buildings and are you taking more time into them? Then hand over the management. If your activities are seen by the tax authorities as something that ‘goes beyond normal active asset management’, you run the risk that your income will be taxed in BOX I.
My advice is to rent out homes with rents up to a maximum of € 1400 per month. The more expensive segment is harder to rent out and is more sensitive to economic blows. My preference is often for expats and working young couples. You know from this that they will leave again and not stay in the house for life. This gives you a better position to continue to adapt the rent to the market or, for example, to upgrade the home to a more luxurious rental segment. They are also usually neat target groups.
Preferably in the bigger cities or where there is sufficient economic activity. I stay away from remote places / villages or places where not much is happening economically. If the efficiency is no longer interesting somewhere, look for surrounding neighborhoods or places that are still emerging or have the potential to do so.
Stay away from busy roads or where there is constant noise pollution, air traffic, smells and unsafety. Or in neighborhoods that simply rationalized will never get better than the disappointment it is today. Look for places where there are plenty of shops, schools, green areas, sports facilities in the area and close enough to arterial roads and public transport facilities.
Stay away from homes with poor foundations. If a house is directly (without concrete erector) founded on wooden posts, do not go for it. For all other types of foundations: get well informed.
Stay away from leasehold. Unless a direct perpetual redemption of the ground rent is possible.
I am extra critical of post-war construction. Especially the period of the 1960s and 1970s. This, for example, due to problems with concrete rot, asbestos, old stoneware (sewer) pipes, lead pipes and the often relatively higher maintenance costs. Because of the build quality and character I like to look at pre-war construction (1890 – 1940). Because wood and wooden floors are often used here, it is also relatively easy to renovate. Young construction (
If you are a small real estate investor, I would not easily risk very radical renovations. Professional investors can often renovate much faster and cheaper. Small investors can go wrong on:
-Finding a good, reliable and available contractor
-Monitoring / adjusting the renovation if the house is not close to your own home
-Too high costs at the bottom of the line, which turned out to be more profitable to have bought something that was simply more “finished”.
My preference is for apartments where value can be added with “quick wins”. Think of architecturally good homes where you can achieve cosmetic benefits in particular:
-Other fronts and / or kitchen counter top
– Give new or different function to spaces where nothing is happening now (a storage room for example)
Buy investment objects that are or can be obtained in the free sector. How do you know whether a home is available in the free sector? You can have a quick scan done by the company for this PBOV. Costs approx. €65,-. Really read our blog about rental points with the most important advice on rental points and the energy label.
Permission VvE (Association of Home Owners)
Make sure that you know that renting out is accepted by the VvE.
There are a number of Facebook groups that I am a member of that I can recommend to boost your knowledge, to spar with other colleagues and for off market deals:
Learn from and learn with others
Take a look and listen to, for example this couple who simply talks very soberly about how they moved to 20 buildings in 4 years.
A nice, inspiring young man who has made his trade of helping to buy other investment properties is Thierry Stokkink. He has an Online Platform where you can become a member (approx. € 40 per month) and where you have all the relevant information you need as a real estate investor in one place. Think of realtors, appraisers, property managers, example documents / flyers, calculation tools, etc. etc.
And no, I don’t have any shares or interest in that platform;)
10 golden purchase tips
Read this blog with the 10 golden purchase tips.
Do not stare too much at the efficiency (the ‘BAR’). A BAR does not say everything. Rather a lower efficiency at a location that is still emerging or has a very stable value than a high efficiency at a place where you run risk. Is there too far from an economic heart, will the neighborhood never become something there, is it a holiday park or does it click too good to be true? Then quickly get out of there.
Till so far…
I wish a lot of success!