Posts and pages about my Real Estate.
As I promised before, this blog will talk more about Real Estate investing than any other type of investment. You may recall I want to make 20k from rental income in 2017, and 100k+ in 4-6 years from now. My plan is to generate enough passive rental income to retire, although I’ll invest in various things.
I am often asked what are the best Real Estate investments in Portugal (and my markets in particular), and how exactly I can reach almost 20% net ROI. This post will give you a good idea of what I do.
The most important question, for me, is buying multi unit properties. In Portugal, there are plenty of them. Let me show you an example:
(retrieved from Google Maps)
Having invested heavily into Real Estate in the past 2 years, I have learned a few lessons which I would like to share with you. Of course that in this article, I will be talking primarily about real estate in Portugal. Note that the lessons I will be sharing apply to the the Portuguese market only. You may think “Algarve Portugal real estate”, because that is very sexy and trendy, but I will actually be talking about real estate in Portugal as a whole. Note that the markets in Algarve and Lisbon are especially regulated, given that the majority of the leases are short-term leases.
My dear dudes,
If you subscribed to this blog, you have received awesome photos of the renovation of RP#3. Today, I want to expand more on the topic of real estate. Many of you ask me how can I buy Real Estate so cheap and yet have high appraisals.
The concept of leveraging is very well known among investors; We prefer to use Other People’s Money (OPM) rather than our own money. The idea is simple: we can use our money to make more money and we use OPM to make more money too; the gains on our own money must be higher than the interest we pay on OPM.
Holding a PhD on Applied Mathematics, being type A personality and a little OCD, I typically estimate things very accurately and thoroughly (sometimes too much!). Turns out that I messed up big this time.
I am very proud of RP#3 – it will generate a 50% Cash on Cash return and I will add 6 units to my portfolio. This would not be very surprising if we weren’t talking about a <50k property…
When I bought it, I knew right away that I would have to spend serious dollars towards renovating it. However, I did underestimate what I was going to spend…
I am sorry this heads up took a while more… I’ve been busy… if you follow my blog you’re aware that I bought rental property 3 (RP#3) and I was waiting for the official purchase to be confirmed, as the process when back and forth a few times. Well, I finally transferred it into my name. 🙂 This is sort of a game changer, so I need to explain this deal in detail.
This is a 6-unit rental property (yes I more than doubled my unit count)! Although extremely cheap, I will have to throw a LOT of dollars into it. I payed about €33k for it and I will have to throw another about $15k so it is ready to rent out. Total, I expect to invest about €48k in the purchase, renovation and furniture.
My contractor hasn’t picked up a hammer yet, and I’ve already thrown over €5k into it, distributed among requests to federal and local taxes and bank fees. 🙁
Either way, I added another 6 units to my portfolio and I am finally at 10 units! Shit, the dream is happening… with this rental property, I now have 10 units! I will probably be the landlord of about 25 people, assuming an average of 2,5 people per unit. And you know what? I like this game so much I just submitted another offer (more to come later on…).
Even though my buddy investors mock me with the fact that I bought my RP#1 all cash, I still believe that it was a great decision. First, it is a cash-cow which I don’t have to concern much with (it will still cash-flow). Second, it was such a great tool when I came to the bank asking for money. “Look fellas, I’ve got myself this nice property in cash. It nets me about €2400 a year. Don’t you think that I am creditworthy? Oh, and BTW, I am debt free.”
You should look at the bankers face when they saw this 27 years old who bought an apartment all cash, when they have been paying theirs for 20 years and ain’t done yet. Maybe I sound like a privileged prick right now, but that is not my intention. I am simply happy with the fact that this helps me negotiating with the bank (remember, Portuguese banks are very peculiar when it comes to lending money…).