All Forum Posts by: Thierry Van Roy

Siim, could you give some info on the fiscal and LLC policies in the Baltics? Do they differ a lot between the three? There's a lot of fiscal competition growing within the EU (like Bulgaria's triple 10% tax structure), it really peaked my interest.

There's a difference between not being able to sell individually and house prices tanking, of course. Statistics show the French market only making a slight dip in 2009, which they recovered from the very next year. Going up ever since because of more people moving into real estate instead of other assets as a consequence of the crisis.

But the rent hasn't increased proportionally, while taxes have. Hollande of course won't stay on forever, being even less popular than if Bush and Obama had a baby at their respective lows.

As for Panorama, I know it can be very opinionated. Appearantly, I've been rather fooled by the other side, after reading the latest edition of Property Magic, I was under the impression the statistics showed a general boom there as well. But they've been kind of dabbling since 2010 now that I look at the charts? Hah.

As for Spain, the boom was simply too crazy, I doubt it will "all recover". What to do with the ghost towns? Anyone want to buy the abandoned airport "Madrid-South", just 200 km from Madrid! At 100 million, it's a steal! (I kid.)

There might be a recovery in Catalonia and the coastal towns soon because of this foreign capital, but that won't trinkle down to the entire Spanish market. The party places (Ibiza, Canarian Islands) are still having prices go down as well, it'll take some time before this market rebounds. Maybe as the baby boomers retire? A lot of Belgians are there buying second homes right now (a bit like the English before).

Oops, this post is getting TLDR. It's a pity there aren't more Europeans here, so we could have our own forum section.

@Ann_Raymond:

• UK prices are through the roof, there was even a Panorama documentary on how this is getting out of control. Where do you get the idea prices are only now rising?
• France has not crashed at all since 2008, quite the opposite.
• Spain has crashed, but I wouldn't invest there. The desirable locations aren't that reduced (the coastal lines, Catalonia).

Yeah, about that. European real estate investors often joke about the kinds of shacks you can get in the US at 40,000 USD. Those things would never get built here, EU countries have very high standards.

I understand these are awesome for flippers and wholesalers, but how long do they last really? These don't last 30 years in a buy-and-hold scenario, but they do in Europe. That's why you don't really have any flippers or wholesalers in Europe, or at least it's a very small and highly professional niche (they get their deals at auctions, and even then it's close).

(Well, you can get them at very low prices in the middle of nowhere in Eastern Europe, Germany or Spain, but who would want that?)

And Paris is a big exception. So big even, France doesn't include Île de France (extended Paris) in their statistics because it would skew the numbers. They have a whole different department responsible, even.

In Paris, appreciation plays a major role. There is some room for growth because people are increasingly expecting a London-scenario there. Just imagine China would start to allow foreign ownership of real estate to its citizens. Paris property prices would go through the roof, as has happened in London with the haute finance and the Arabs for the past twenty years.

Yield-wise, there are enough opportunities. It's the cost in absolute numbers that makes it so that you can't do Europe if you have no money or credit.

As I invest in Europe (Belgium and the Netherlands), feel free to ask away. I have gotten a basic grip on most markets. They vary immensely though, so watch out.

Germany for example is still booming, although the biggest growth has already happened. A known trap in Germany is that nothing is certain until the final agreement at the notary's office. So no option, lease or whatever is binding until the final signature is officalized. Also, pretty high taxes for investors in my opinion. That drove me away after checking out the Berlin market.

Stay away from France, though. Just read "Immobiliez-Vous" if you want an investor's nightmare scenario. I'm still looking into Paris for my sister (who lives there), but something is "gonna have to give" sooner or later, it's just impossible right now.

If I remember the Münich Real Expo report correctly, the most attractive markets for investors right now are Germany, Denmark and the Netherlands (in that order).

(Sidenote: Erik, I keep bumping in to you here, we must have the same keywords set up ;-) )

Those undistributed expenses... Is it just me or do they seem rather conservative? (Marketing at 4% including sales? Or is that in the hands of the franchisor?)

I would try a scenario analysis to see where you're at in the worst case. But even then the deal looks pretty good in the discounted cash flow analysis (calculated a few years off the top of my head, but still).

Based on DCF and net profit allocation (risk management reserves? When and how to allocate the closed down facilities?), it will cash flow a lot more if you give it a few years.

It might be nice to get a complete 10y-forecast ready and see how the numbers change as the debt service decreases.

Keep us posted!

I have experienced people in Maastricht, but I recently fell in love with Liège, which gives me the added handicap of the French language (Dutch/Flemish is my mother tongue) and no 'power team' yet. But it's soooo under the radar above a certain price point, I can't pass on the opportunity.

I didn't think of seeking out local experts on the matter, though. Or a historical society, if there is such a thing here. I guess I'll have to drop by the city council. Thanks for the advice, much appreciated!

Other takers?

So I'll probably get some links to older threads, but I can't seem to find them myself for some reason.

After doing a lot of research and looking at hundreds of buildings, I seem to keep coming up with awesome deals of +1 million USD in urban centers. The financing isn't the problem and the numbers look great. Because they are capital intensive, I seem able to outmarket the competition. But here's the problem: they all concern historical buildings (I invest in Europe, ancient cities like Maastricht and Liège).

These will require a lot of renovations to get them up to speed with the new EU energy-efficient requirements and such. Paint job, roofing, isolation, windows etc. I get, but with these old buildings I fear I keep missing stuff. They are in a league of their own, one less ventured.

To give an idea of what I mean: http://i43.tinypic.com/2vdi2rm.jpg

(Yes, the entire thing.)

The payback on these costs increases exponentially when I skew the numbers ever so slightly. This has me worried. Just imagine the floors are on a wooden basis and they would all have to be reconstructed. Foundations having to be redone.

Is there anyone who has experience with old buildings of this caliber? I can start asking a million questions here, but I'm probably not even scratching the surface of my potential headache. I'm grateful for everyone's input.

As @Roy_N above says. In the US I guess this is an issue people consider, but try any metropolitan area in Europe. In the Netherlands, where I invest, I have come across perfectly fine houses from the 16th century even. The front is protected as monumental property, but that's just the façade. The problem is if the house hasn't had any work in the past 30 years, like no electrical ground and lead piping.

I'm still eyeing this one beautiful five story mansion in central Maastricht, but it'll be at least 200.000 EUR rehab in electricity, plumbing, roofing and isolation.

Rubbish fundamentals on awesome fundamentals. That's what you get for not doing anything in just 30 years, no matter whether it's 30 or 300 years old.

Thanks for your input!

I am of course working under one of these successful people. But there are language barriers, copywriting, business expertise etc. to be bridged, so that's where I come into the picture.

The guy I'm working for is a walking powerhouse in luxury marketing, who can seamlessly organize launch parties with big names. But his work is through vision, promotion and networking; he outsources the rest. I need to translate that clutter and mold it into business proposals. Will probably get a lot of things cleared up on my business trip, but I know I'll still have to reach for my Philip Kotler library myself.

In any case, thanks again! If you have some resources you tend to use, I'd love to know. And I'll see if they're still looking to involve investors, should you be interested ;-)