All Forum Posts by: Luca Gewehr

Hi Kevin, thanks for your input. I agree that good deals only start at 70% ARV-repairs and under, as a rule of thumb, and this is what we should be aiming for. My market value example was merely to illustrate what the market is like in general, seeing as rental incomes at 0.5% of ARV-repairs imply that even if you get a fantastic deal at 50% of ARV-repairs, the rental income would still only be 1% of ARV. Given these numbers for the Belgian market, it doesn't seem like the ideal location for investing in residential real estate for its rental income. There might just be other alternatives, though.

To give you an example of a fantastic residential real estate deal at 50% of ARV minus repairs in Brussels:

- ARV: €300,000

- Purchase price: €120,000

- Repairs: €30,000

- Total cost: €120,000 + €30,000 = €150,000

- Registration fees + closing costs (out of pocket): 12.5% * €150,000 = €18,750
(12.5% is the rate in Brussels)

- Conventional loan (100%): €150,000

- Monthly loan payoff (mortgage + interest): €150,000 * 0.5% = €750 / month
(you might get a slightly better or a slightly worse deal depending on your situation and depending on what loan you can find)

- Yearly loan payoff (mortgage + interest): €750 * 12 = €9,000 / year
(you might get a slightly better or a slightly worse deal depending on your situation and depending on what loan you can find)

- Monthly rental income = €300000 * 0.5% = €1500 / month

- Yearly rental income = €1500 * 12 = €18000 / year

- Expenses (quick and dirty 50%-rule, not including the mortgage): €18000 / 2 = €9000 / year

We've bought and slightly repaired a house at 50%(!) of the after-repair-value, and we are breaking even on cash flow. Of course, we've made an immediate profit in terms of equity, although this is thanks to the job-part of the business (finding and making deals; fixing) and not the investment-part. Analyzing the deal, we've gained €131,250 in equity (€300,000 market value - €150,000 debt - €18,750 cash out of pocket) from making the deal, which is 7 times our out of pocket investment of €18,750. Holding this property and breaking even on the cash flow year after year, we'd gain €9,000 in equity every year through the loan payoff. For year 1, our €9000 gain in equity equals a ROI of 5.3% (€131,250 equity / €9000 debt payoff), which is decent but certainly not spectacular, given that we could simply sell the house, pay off the debt and invest the gained equity elsewhere. From year 2 onward, the ROI further decreases, seeing as the yearly nominal gain is still €9000, whereas the net equity increases.

I apologize if this was a bit extensive, I was partly writing this to recap some thoughts for myself :) If anyone has come across similar markets and/or knows of ways to handle this, any input is highly appreciated!

Hi Stephane, I was on holiday so I apologize for the late reply! To be fair, I've met just a couple of investors so far and have not been overwhelmed by their results in terms of ROI. Then again, I've come to understand that the residential real estate market in Brussels doesn't seem like the easiest one in the world, given the relatively low rental prices (with rental incomes per month around 0.5% of market value). Given my desire to house hack my first property, I'm not giving up the search just yet, although in the near future I will probably look for alternatives such as out of country investing, commercial real estate and notes.

Hi Hans, nice to hear from a fellow Belgian investor. Welcome to the forum!

Researching the Belgian market (more specifically Brussels) for residential rental properties, I've come to similar conclusions. A studio/flat/apartment/house with a market value of around €100k will rent for around €500/month; one with a market value of around 200k will rent for around €1k/month; one with a market value of around 300k will rent for around €1.5k/month; etc.

Besides, even if you obtain a loan for 100% of the purchase price, you usually have to pay 12.5% out of pocket (in Brussels): registration fees and closing costs. This further hampers your ROI percentage.

As such, if you buy at market value or make a decent deal (85%-95% of market value), your projected rental income barely even covers your monthly mortgage payment, let alone projected/unexpected costs (taxes, vacancy, maintenance, repairs, CAPEX, property management, etc.).

Above, you've already mentioned valid reasons for the disparity between the US and the Belgian residential rental property market. In my view, these relatively low rental prices compared to the market values are just as much a result of the high importance (both social and psychological) that most Belgians place on owning (a) house(s) as opposed to renting.

So far, none of the residential deals that I've analyzed make sense from a cash flow perspective, compared to the base scenario of simply renting a place for myself and investing the money in mutual funds instead of spending it on the registration fees (assuming a yearly return of 5%-7%).

Of course, the true residential deals are the ones that are harder to find and are, as such, off-market and/or require rehab. This obviously implies more diverse work, more/better networking (public and private money lenders, contractors, other investors, etc.), more/better marketing and overall a more extensive real estate business.

Given the popularity of and the associated competitiveness for rental property investing in Belgium, other types of real estate investing might just be more worthwhile investigating. Off the top of my head: wholesaling (which isn't really investing, but a job), commercial properties and out of state (country) investing.

Seeing as we are not so numerous on the forum, if any of you wants to have a chat on the matter feel free to send me a private message and/or meet for coffee sometime. Cheers!

Hey, nice to meet some fellow local (soon-to-be) investors! I work in the centre of Brussels (Kunst-Wet / Arts-Loi) during the day on weekdays, so if any of you cares to grab some coffee in Brussels around noon or in the evening feel free to send me a private message!

Thanks for the warm welcome, guys.

I've set my mind straight on a big and specific "someday goal" and have set this goal to the NOW (the method by Gary Keller's "The One Thing"). My aim is to:

- Someday: generate passive cash flow larger than 10x my comfortable living costs, namely €200.000/year (the passive cash flow).

- in 5 years (January 2022): own a self-sustaining business that possesses over €5.000.000 in equity through real estate.

- in 3 years (January 2020): develop and manage a growing real estate business that gradually employs an increasing number of people to handle increasing deal size/frequency.

- in 1 year (actually 6 months - January 2018): make my first 3 profitable real estate investment deals (either cash flow positive or after reselling).

- in 1 month (30 July 2017): learn the complete process of successful real estate deal making in Belgium (preferably Brussels) from a successful and experienced real estate investor.

- in 1 week (02 July 2017): offer free assistance to 10 successful real estate investors in Belgium.

- today (27 June 2017): find contact details of 10 successful real estate investors in Belgium.

If anyone is interested in learning about Belgian real estate and sharing thoughts on the matter, I would be more than happy to share my complete journey on the BiggerPockets forum. Is the "Investor Deal Diaries" the right forum category for such a thread?

Have a nice morning/day/evening/night wherever you are. Cheers :)

Hi there, fellow investors!

First of all I wish to thank Josh, Brandon and all those who contribute to making this platform so great. Given the research I've done so far on real estate investing and its concepts, mainly through BiggerPockets books, blogs and podcasts, I'm excited to be introducing myself to the forum and finally jump into the actual investing scene.

My background lies in finance, with a particular interest in financial markets. Having graduated last summer, these interest have so far led to a career in asset management and (private) banking. After discovering the concept of financial freedom, reading "Rich Dad, Poor Dad" (oops, cliché) and discovering BiggerPockets, I became convinced that a decent business model in real estate investing combined with great new habits and a solid execution can quickly lead to a more purposeful life and ultimately to financial freedom.

I'm currently nor living nor looking to invest in the US, which is unlike most people on here I imagine, although this surely implies that we can complement each other all the more :) More specifically and in short, I'm now living and looking to start investing in real estate in Brussels, Belgium. 

To start out, I'm looking into house hacking a 3- or 4-bedroom house or apartment in the city, live in one of the rooms myself and rent out the others, possibly to some local friends. I'm comfortable working the numbers and doing business with people, whereas administration, taxation, legal issues and home improvements are things I still need to get to grips with.

I'm thrilled to be joining this tremendous community, and hope that we can all celebrate a lot of success, joy and happiness together! If anyone were to have some tips and tricks already, that would be much appreciated. If not, that's cool as well! If anyone in Belgium is reading, I would be more than happy to get acquainted, to have a chat and to lend a hand in your business however possible.

Cheers, have a nice evening!