Hi, just a quick introduction of myself

I'm Matthew, born in Holland, and I've been living in the city centre of Prague (Czech Republic) since 2012 and bought my first property in 2014.

I acquired my second property this year (waaaay smaller, as the prices have shot up!) and I'm working on getting my next property/properties now. Renting out in the centre is often not profitable, but there should be enough potential to still make money (e.g.: Rent out, Buy & Hold).

The biggest question however, is how to finance it? I could wait yet another few years when my income finally increases enough to be allowed to get another mortgage... Yup, mortgage can "only" be 45% of net income here. Who knows how old I'll be by that time...

However, there should be other ways to finance another property too, I believe (e.g.: apply for mortgage as LLC)?

Hi Matthew,
the best would be LLC but in CZ they are quite conservative when it comes to newly established LLC , especially LTV - guess the best you can have is 70%.

On a different note, does it make sense to invest in Prague 1 or 2 these days? Mortgage monthly payment is higher than the rent you can get, isn't it?

Hi Dmytro, thanks for your message :-)

As for rent income: Yes and no, rent prices should (and did!) eventually catch up with mortgage payments here, even apartments in Josefov area seem to be renting out with prices quite near to it...

I can try to leverage some of my equity in this case, see if that'll help...
To be continued :-)

I'm jealous at the prospect - I love prague and my first visit I wanted to buy a place. We are coming back for our 3rd visit in June 2020. What about hard money lenders? Is that an option? Are the properties you are looking at in great condition? Do they have a value add option so you can you BRRRR them, or is that not possible in Prague? Would love to hear more.

Prices have gone up quite a bit here, that's for sure :-)

Not sure if interest rates from hard money lenders will kill me, cap rates for long term rent can be rather low over here...

As for renovation, I don't have too much experience with that yet. Apartments can only be sold un-taxed after 5 years, and as for value increase... I don't believe it'll be that much with my apartments. Better keep HODLing for some years :-)

Anyways, I believe I'll still be around by the time you'll be in Prague

Cheers,

Matthew

@Matthew Song Loong

Hello Matthew, good job on buying in 2014, the property should have increased in the value by lets say 50%, didn’t it?

My name is Robin, I am a mortgage broker specialized working with Expats and BTL mnortgages. We just had our 2nd seminar where we discussed excatly these topics.

What you say about the 45% is thru, but you should be able with some banks to use the rental or even future rental income to support the cashflow. However Prague 1 - unless you are doing AirBNB, the rentals are hardly profitable IMO.

Also the LLC loan is possible with 70% LTV (what is super interesting is the maturitay of 25 years), interest rate 3,99%, just you might run into problem that the rent should cover the mortgage + buffer, which is quite impossible in Prague 1.

Let me know if you want to know more or have a cafe,

best regards, Robin

:) If I compare purchase price with what I found online: yes, the 50% is quite accurate. I believe I could sell it for more though

I believe one of your colleagues also attended some seminar, she recently advised me about CSOB/Hypotecni banka
If you can get into other financers, we may be able to have a chat yes :-)

@Matthew Song Loong you are probably referring to the seminar we hosted? You are more than welcome to join, next one will be in January. CSOB / Hypotecni banka I was mentioning because they are the most expats friendly, for BTL I would suggest se other banks.

Also if you are not member yet check FB group Czech Expats Property owners group.

Yes, they had good conditions in my case, plus premium banking is always nice. Not necessarily the "cheapest" though, and refinancing looks a bit scary with them :-)

Anyways, I bet it doesn't hurt to have a look at the seminar next month ;-)

Cheers,

Matthew