Monthly Archives

March 2016

Real Estate,

What is the perfect ratio cash/mortgage funded properties?

A lot of people ask this question in forums for real estate investing. Usually, they already have one cash funded property and they’re thinking about going and get credit for the following properties, but are afraid the strategy fails. Sometimes, they already have credit funded properties and wonder if their credit is too large. However, what is not trivial to see is that all these investors suffer from the same problem: fear. In theory, we only buy rental properties where the demand for them is high. So if we do believe we’ll have tenants, what would on earth stop us from buying all credit, other than not qualifying for more?

Long story short, all cash funded properties are incredible tools, and so, it does make sense to buy some properties all cash. Why? Two main reasons: first you increase your income, which enables you to qualify for more credit in the long run. Second, you can borrow against these properties.

I tried to solve the question of the post, and here’s what I came up with:

Real Estate,

Finding and maintaining properties

I was asked the other day what methods I use to find properties, and why it takes so long. “If your plan is to have 12 properties, why does it take you so much to find new ones?”

Well, I live in Germany and my RE is to be bought in Portugal. This limits my opportunities to actively look for new properties, but this is not what consumes the most time. It is actually the rules that I use to buy new properties. Remember, saving 20% now on a 40K property (8K) will have a tremendous impact in even 5 years from now. I am not just trying to get rich by doing smart financial decisions, I am on a hurry to retire! This means that I need to be extremely savvy and get the best of the best deals! I am also a goal setter, so I have a lot of goals to meet. Let us discuss what I do to buy new properties.

Studying the market is not an overnight job, but this is done and I know exactly what I am looking for. If you’re considering going into real estate, study and re-study your market (I will post something about this in the near future – stay tuned there is a lot to come up in March). So if I know my market, what else do I need? Here is what you need:

  • Consider start time and establishing a long term relationship with one or two contractors. They will be crucial for you to have substantial gains now but mostly in the future. This is especially true if you decide to buy undervalue, distressed properties. This is also done in my case.
P2P lending, a new P2P lending platform

Based in Latvia, Twino is a recent P2P lending platform that seems to be a great alternative to popular P2P platforms that are only available to US citizens. Twino is, to the best of my knowledge, open to everyone. Twino is particularly interesting to me because, according to them, they will buy out loans from investors (principal amount and interest for the investment period) if they become 30 or more days overdue: see here (“All about investments” -> “Does TWINO guarantee the repayment of investment?”). To the best of my knowledge there are not many P2P lending platforms doing this.

Real Estate,

Real Estate: my philosophy

I have noted that my philosophy about real estate is very peculiar. While I am eager to invest more and more, I only take a step ahead when I see that the deal complies with all my rules. Here are they:

  • I only buy undervalue, and in particular 20%+ undervalue. The funny thing is that money is there to be made even on fair deals. Well, tomorrow may be a different day. If you buy undervalue, you’re protecting your butt. If the market comes down by a 20% factor, you are still fine. OK, this sounds trivial so far, so let us analyze the complicated questions: if the only great deals I find are in less prosperous areas, do I still buy? Depends on what is less prosperous, but yes, I am willing to take up way more risk. The only thing I really care about is having tenants I can serve (see point 2). Rule #1: I know my market inside out.  

How to make money with your blog

There are gazillions of posts on the internet about this. This has indeed became a problem: you cannot filter out what is relevant for you and your blog. Moreover (and more problematically, to me), is that usually you cannot see how much money the authors of such articles make with their own blogs. I am writing this post to describe my strategy to make money with my blog, and I will keep you posted on how much money I make with it. You can actually check it out here. Therefore, you can see the correlation between the tools I use and the money I make, thereby deciding if this is the right strategy to you.

Real Estate,

7 Reasons why real estate is a good investment

After 2 years studying Real Estate (RE), I came up with 7 reasons that make it a great investment. It is not that I think that RE is the best investment ever, but RE has certainly advantages over other types of investment. Let me break point out 7 great advantages of RE and break them down for you guys:

Daily life,

Why most people in the world rich never get rich?


This is a question that I’ve repeatedly seen in forums of investment and personal finances. Maybe you’ve seen it with a different format such as in “What does the average Joe lack that prevents him from getting rich?” or “Why is it that many people with high incomes never get rich, while others with small incomes make their way to the millionaire club?”. I think that at this point I understand money very well, so I will answer it.

First, note one interesting fact. Most of the people who become rich, stay rich. Plus, most rich people do not actually appear to be rich (read the book “The millionaire next door” and you’ll understand why).

Now, there are exceptions to this rule. People who got rich due to millionaire contracts (such as sport starts), often end up poor or even filing bankruptcy.


February 2016 (€77891.44)

February 2016 (€77891.44)

I am currently worth €77891.44 (this is 11.63% of my first goal of €670K).


This is the first report of my monthly balance, so exceptionally I won’t be comparing with the previous month. There is one thing to keep in mind: I impose myself a very frugal lifestyle. I am making about €2600 net a month, and I try to live off €800-€1K every month. Here is how my assets looked like at the end of February:


Checking accounts – Cash in 2 accounts (daily expenses account and investment account)
Interest accounts – Interest bearing accounts
Emergency fund – Money I have in a very liquid form
Stock account – online
Bonds – Debt of European countries
P2P Loan account – online
Credit – Money my employer owes me and deposit for my rented apartment
Toxic credit – Credit I have from a company that filed bankruptcy (assets will be sold and profits distributed among creditors)
Rental property #1 – In Portugal, currently rented out
Rental property #2 – Planned to buy till summer
Car and home assets – To be sold in 2016

So this means that I have about €6K on my checking accounts (I have two accounts, one for daily expenses, another one for investments). Interest accounts are accounts where I have money which is paying me interest. Right now, interest rates are very low and I am getting less than 1%, but the bank pays me monthly (I am getting €6.5 a month for the €18K I have). The great thing about these accounts is that they are really liquid – I can take the cash without penalties, whenever I want to.

I also keep an emergency fund, which I typically feed with €250 a month. Once I have €6K there, I will stop feeding the fund and start investing the €250. I currently have no stocks or bonds. I will buy €750 worth of stock this month, so we’ll see some activity there, for March. I have €2800 in credit (mostly in the form of rental deposits or money I have to put upfront for business trips – which my employer reimburses me typically 6 weeks after the trip is over).

Toxic credit is what I call a financial application that I had at a corporation which filed for bankruptcy. There will be a liquidation of the company’s assets (promised for more than 2 years now) and they will then distribute the profits among the creditors. I don’t know if I will ever see any of that money, though. My rental property is worth €40K and it is my biggest asset. It is currently rented out for €275, but as I have to pay a property manager at the moment, and pay taxes on that, I end with with €160 of net cash flow (a month) from that.

The only reason I am considering my car and some “home assets” in the assets category is because I plan to sell them in the next 6 months, as I will be living Germany. I expect to make about €4K from that. I have also put a “Rental property #2”, as I am thinking about acquiring another rental property after July. I currently have no debt. 🙂

I will update this section every month (most likely in the last day of the month).

Real Estate,

New tenants for Rental Property #1 and RP#2 in the works

My property manager just gave a call to inform me that he found new tenants for my rental property #1, which is great news! The condo was leased out to the tenants on a one year for €275 a month (I will sign the contract next week). From that, I have to pay the condominium fee, property and renting taxes, and management fee, so this will be about €170/month cash flow positive. Since I have renovated the place recently, I will have some tax advantages in 2016, so I expect the net cash flow to be about €200/month.

Two weeks ago, I also started to look for a second property, which I expect to buy until August. I will most likely buy this property in a different city (but also in Portugal). I expect to spend up to €40K, using leverage, and rent it out for €350 (about €3000 net per year). As I said in other posts, I stick to one rule when it comes to the math of a RP: every condo I buy should generate cash flow to be paid in 15 years if no mortgage is used (these figures exclude fixing costs but account for taxes and property management fees).

In August, I will assess the performance of RP#1, and the performance of my property manager, as I have to decide if I want to extend the contact I have with him. Up until now, I think his fee is totally worth it.


March 2016 – new blog!

Hi guys,

Because I had my blog hosted on wordpress itself, I could not make a whole lot of things, and many of my viewers asked me to move it to a decent platform. Well, here it is and I hope you guys get a kick out of it!

During this transition I removed a lot of things and I kinda started the blog from the beginning, in terms of contents. I feel that this should be a new, enhanced platform for my viewers.

Let us work together on our earlier retirement! Stay tuned – I will be updating the blog at least 2 times a month!