All Forum Posts by: Morgan Nilsen

3 months deposit was charged because here in norway it is required by the insurance company if you want landlords insurance.

As far as having a stomache for landlording, i believe I do. Placing trust in someone is not difficult for me. I was given behavior by my tenant that I consider incongruent and the potential negative outcome of the scenario here is not something i wish to face without having seen it coming. 

Im fine, i still trust the guy enough, i sleep just fine, currently there is no problem. Thank you all for your responses. I really value your input as it lets me see more perspectives

In Dubai, rent is almost always 12 months upfront. In London, my rent was weekly. In Norway its almost always monthly. I have experienced all without it being suspicious. I would rent to a person offering 12 months upfront. And I would also offer to pay it should I rent. Its really clean to just have one transaction.

 Thank you for your advice. If what hes doing is to just get the adress its not illegal at all. But its likely to give me substancial periods of vacancy and thats whats concerning me.

thanks for the feedback guys. 

Yeah i know im paranoid about this. But I am not paranoid in my everydaylife. There is just something that dont add up here.

I agree that as long as he pays rent and take care of the property its none of my business what he does with it.

But finding a new tenant in november/ december is much harder than in august when university starts and if he is screwing me over on this to just get a quick adress fix then it litteraly is my business. 

Im really feeling my lack of experience here haha. Never heard of anyone having a problem where the tenant dont move in before

I have a tenant (45 year old man with a son of 5 years old) that is making me paranoid. I cannot determine if he is lying to me regarding his personal situation or if he is a really unlucky guy.

He is a new tenant this month, and paid his first months rent on time, and he has a 3 month deposit. But everytime we schedule to meet he shows up very late.

The biggest contributor to my worry is that he stressed the fact that he needed to move in as soon as possible several times, but after I handed him the keys he was still not moving in after two weeks.

As my apartment is in a very popular school district and he has a son as stated above, I was worried that he just rented my place to get an adress that give him the rights to send the kid there. Once the kid would be accepted into school, he could move and still have the kid belong to the school.

So suspecting foul play, I started contacting other landlords in my area that had posted their flats after I signed the contract with him, asking them if they were being approached by him. The following day, they all replied that he had not done so...

On the 16th day after takeover he spent one night there and has since been away.

I will let him be for now, and try not to think about this. I will also monitor him paying rent very closely.

I am very interested in hearing suggestions from the community as to how I should handle this situation moving forward.

Perhaps you should tell us where you are looking to invest. In Dubai, you wont get far with 2-3k usd. Happy to share my view if you can present some more information to base the advice upon

Hey Seth,

I can help you a little bit regarding sweden, and or Norway, if you want me to. Sweden has a few things going for it, but as a Norwegian investor, I found that the market was not for me.

Here are some pros and cons:

+Real Estate prices are very low outside of the cities. 

+Sweden take in 100.000 new imigrants every year, and they all need housing. Because of this the house prices is going up significantly in the bigger cities.

-Because sweden is taking in so many imigrants without having the propper financial ability to do so, many economy experts predict a collapse in swedens economy.

- Swedish tenants dont have a good culture for caring about units they rent.

+ Most swedish people actually rent their housing. Aproximately 70% of the population rents.

- The swedish real estate market do NOT reward renovations, in terms of value adding, so buying something old and renovating it is a bad idea.

I chose to not invest in sweden, even tho their house prices are much lower than in Norway for the reasons above. A very unstable economy, bad tenant culture, and no ability to force higher rents or value. 

I found the property market in Norway to be more appealing, and especially now the Dollar to NOK is so strongly in favor of the Dollar. Used to be about 6kr for a dollar, but now its 8kr because of the low oilprices.

Happy to discuss the matter with you further in private. Just drop me a message if you want to talk :)

-M

Glad to help! Here are a few more tips for you.

1. The mortgage interest will not change after you pay down below 2 mill. The interest gets set when you take the loan. Every bank should have an interest spreadsheet that you can google. Here is one of the two banks I use: Sparebank1 Nøtterøy-Tønsberg

2. Its important to calculate the taxbreak you get in Norway by having a loan. This will factor in to your math by a great deal. I hope you already do this, if you dont, let me break it down for you so you know how to do it:

 a mortgage of 2 mill with 4% interest, has an annual interest cost of 80.000kr. This sum you pay down monthly to the bank. But the tax system rewards you a tax break for having a loan. which is 28% of the interest total. 28% of your 80.000kr equates to 22.400kr that you get as a tax break, which is money in your pocket when your taxes are due. This is calculated automatically by the tax office automatically btw, so you dont have to do a thing. Just know that the 22.400kr is coming your way.

3. If you dont know about negotiations this is something you MUST learn to master, and learn it now. There are many tecniques to learn and many sources to learn from. This is a book I can recommend you to start off with, but keep reading after you have read this Trump Style Negotiation

4. You say you are afraid of renovations because of the lack of knowledge and experience you currently hold. This is a strong indicator that you should learn more about it, but learn as you go. In the bigger pockets podcast, they sometimes give a fog metaphore regarding this. The road will be made visible as you move down it. In USA contractors are often horrible, but this is not the case in Norway. Most contractors are excellent here, as they have a highly specialized education, and a sallary to match. 

5. I seriously think you should move away from thinking that new house is the better option. And educate yourself on the topics you currently fear. You are paying a very high cost avoiding your fear. And if I may be so bold as to remind you that you plan on being a buy and hold investor, you will run into every possible problem down the line anyways.

6. Befrend contractors now. Build your network! You may not know anyone now, but if you let your friends know u are looking to network with carpenters, electricians and plumbers etc surely some of them will know someone for you to be put in touch with.

Hope this helps :) 

-M

There are always ways to make your numbers work abit better. As an example, I would definitly get a 30 year plan for your mortgage instead of 25. I would shop around to get the best interest rates too. Most banks in Norway that I know of give you better interest rates for mortgages over 2 million kroner, so I would try to place myself in that category if possible.

Another thing to concider is that there is a law here that let you take up to 15% of your rental income and make it tax free if you rent out your flat with furniture. Could benefit you greatly.

I personaly focus much more on the Net Operating Income rather than ROI and cash flow. Mortgage downpayment is increasing equity, and thats as good as cashflow in my mind.

-M

To me it looks like there is one key point you have forgotten. 

As said many times in Rich Dad Poor Dad: "you make your money when you buy the property". You say you want to buy a new property to avoid major renovations but this might be your mistake.

You win the cashflow game when you aquire a property cheaply and the rent is rather high in comparison. Last time I checked new properties all charge you a premium, which you do not want in the cashflow game. 

Even tho norway is a capgain marke rather than cashflow, you can still win big if you are creative. 

Perhaps it would be better for you to look for one bedroom flats that are older that you could convert into a two bedroom. this way you pay much less for a two bedroom. building a wall is not very expensive in norway.

I could be reading into this wrongly, but it sounds like you are scared of big renovations, and that you have fear that these things could break you. This fear could possibly be preventing you from making the optimal choices. You will likely buy in Tromsø, where its easy to sell. selling is a great exit strategy if a property becomes problematic. But thats only plan B or C. Banks have always been willing to give loans to fix issues. And the market in norway give you alot of repair value, so you get alot of eqiuty from your loan.

happy to discuss this further with you if you are interested :)

-M