The Norwegian Investor - Turning a failing plan into a success

Unless you are a badass at planning, things will go wrong. Sometimes you make mistakes and you really should have known better, other times things might happen that are simply out of your control. I believe that to be successful at anything you need to have a combination of two things. The ability to plan and the flexibility to fix the problems as they arise or successfully change the plan to make it successful. I for one would say my strength is in the planning bit, but this spring I got blindsided by something I didn't expect, and my fledgeling career in investing nearly got of to a bad start. 

I have a friend, David, who's quite successful with short term rentals and he was kind enough to show me how to run a smooth operation in a profitable and not so time consuming way. Of course I was impressed with what he was showing me, and when he offered to mentor me through the process I leaped at the opportunity. There was one issue however. David lives in USA, and I live in Norway, so I had to figure out how to set up shop in Norway instead.

Now I don't live in a city that have all year tourism, so I had to look outside my home turf. And Norway is a very expensive country to buy real estate in, so I started to look outside of Norway. First to Sweden where housing costs can be as low as 10% of what they cost in Norway, but after looking at the Swedish political system I quickly threw away that idea, and went to look in all the other big cities of Europe. Budapest became the city of choice, and a HELOC was set up with our bank. 

But as we were browsing the properties on the (really bad) Hungarian websites, the Oil prices around the world were starting to crash, and with it, the Norwegian Kroner currency. Within a very short time period, our spending power outside of Norway was severely restricted, and taking money outside of Norway suddenly didn't seem like such a smart idea. I must admit I was completely blindsided by this decline, and even until this day I am unsure what to learn from the event, other than when you decide to move, move quickly, and when things look bad, don't do them. Obvious I know, but I was frustrated for weeks as this happened, as I was almost feeling like the universe was conspiring against me. I am certain that if I had started the process of acquiring real estate in Hungary one month earlier, I would have a very different Real Estate career in front of me today.

Anyways, I decided that even though Budapest is likely a big winner when it comes to real estate investing in the next 5 years, it's still not better than just finding property in Norway instead. At least until the NOK currency strengthens again. 

I knew we had to adapt strategy if we wanted to have a successful first investment. And by faith perhaps, I had just started watching a show called Income Property, a TV show where home owners renovate, and often even change floor plans of units to increase both value and income of the property. It was a light bulb moment for me, and when I went online to look for apartments that could help us achieve this, I found a flat that literally was 4 houses down from from where I live! It was a one bedroom 50sqm (450sqf), with a good layout for adding a second bedroom. It was priced low for the area as it required some renovation.

Being priced at only 1.600.000kr (approx 200.000 USD), this looked like a screaming deal to me, and I looked to see when the public viewing of the flat was. But to my despair it had been earlier that Sunday, and in my city these days EVERY flat is being sold the day after the public viewing after having a bidding war with multiple buyers and they always go above asking price. Some other things about Norway, is that you are expected to have the financing in order when you place your bid, as your bid is legally binding, unlike in the states where one has the due diligence period to pull out... and you do the due diligence during your viewing of the property... something I wouldn't be able to do as the viewing was over, and the bidding would start at noon the following morning. So I went to bed that night, thinking that the deal would pass me by... another failure where I didn't move fast enough...

The following day I went to work, but thought about the deal throughout the day. As noon came, I got an SMS from the agent in charge of the bidding. 1.550.000kr... 50K under asking... What a waste of time I thought to myself... And why would he put 4 long hours as deadline for the owner to consider other offers?? In my last bidding round, people were using 1 hour as standard... I went back to work.

At 14.45 I had received no more updates, and I called the agent to ask if the highest bid really was under asking price. She confirmed that it was, and my blood started to boil. I didn't have financing in order, and I hadn't seen the place. Would I dare to place a bid, blind, on a property only one person had bid on in 3 hours? No, I had to be financially responsible so I had to go for the second best option. I had to convince the agent that I needed a private viewing of the flat, right away! So I told her I was prepared to bid 1.6 mill, if I could see the place first. Thankfully she said yes, and that she could meet me 15 minutes later...

Two problems.... I had to work until 15.00, and my work is a 30 minute drive away. So in case my boss ever reads this... yes, my kid was sick, the house was on fire and the dog ate my homework! I had to leave 15 minutes before! 

And if the police ever read this, yes I did drive at the speed limit. Somehow the roads must just have been much faster that day.

I got to the property, and did my inspection. My wife met me there as well and we both agreed that it needed some work but that it had great potential. We both agreed that we had to take a stab at it, as it seemed perfect, and that we would be able to sort out the financing one way or another. Another important note is that during our viewing, the agent revealed to us that the other bidder had revealed his maximum bid would be 1.590.000, so that further strengthened my belief that the asking price of 1.6 million kroner was the right bid for us. We handed in the bid, and held our breath for the 45 minutes of deadline we gave the owner. We fully expected another offer of course, but had hopes that the other bidder would not have time to outbid us. No roller-coaster in the world can give the thrill I felt during the wait for the agent to get back to us! And eventually we got the call and the congratulations!

In the end, we ended up getting a 1.2 mill mortgage and financed the remaining 25%+ transfer costs with the HELOC. So I can say that my very first deal ended up being a nothing down deal!

Special thanks to my wife, for being a fantastic business partner and a great enabler of things. You are a rock star! I am also very grateful to our banker Mette, who helped us get the best possible financing. Thanks to her, we didn't have to go to other means. Big thanks to the agent as well, for being able to show us the flat at very last minute!

My wife firmly believes that if things are meant to be, they will be easy. And in many ways this deal, certainly did feel easy, in the sense where all the pieces of the puzzle fell into place when they were supposed to. Perhaps shes on to something... I don't know. I for one choose to think that I create my own opportunities and luck. We worked smart and hard to get this deal, and we got good help from the right people. 

PS. We took over the flat 3 weeks later, on the 27th of July. Then we renovated for 1 week, and had it rented out on the 3rd of August, where we got the asking rate of 10.000kr pr month.