All Forum Posts by: Thierry Van Roy

So this 'apartment building' in my market has been for sale for about 6 months now and it's very peculiar. Quick roundup, get ready for this:

1. 18 units (going from studios to huge luxury lofts) spread over the upper floors of 3 retail stores (big franchises) in the main shopping street (one entrance, 3 addresses, if you follow).
2. 95% of the construction done... And then they quit (seriously, what?). So two units are missing the façade (boarded up at the moment) but only need like 10,000 EUR each. All units are vacant. Kitchens and baths are there, though some still need to have the exhaust installed).
3. The owner, after interrogating the broker, turns out to be a 45 million EUR foreign investment fund from my other market (I invest in Liège and Maastricht, the fund is Dutch, the building is in French-speaking Belgium). Still waiting for my application at the planning bureau to find out which one.

It's as if they just suddenly lost interest or got spooked (ghosts?) and left.

They're of course trying to sell at market price: 1.5 million EUR. Their pro-forma estimates 120,000 EUR in GPR, which is wishful thinking in my opinion. They turned down two previous offers and one is pending.

So two questions:

1. What's going on here? Why would a big investment fund stop just before the finish line?

2. Any tips on negotiating with these kinds of institutions? I speak their mother tongue, but I don't know if I'll be speaking their language.

Will be doing an inspection this Friday, I have a strategy for the property but the thing is showing more red flags than a North-Korean military parade.

The Millionaire RE Investor is still evergreen, even with the title (and the first half of fluff). But I do agree: 2004 is old if no updates have been published. There are lots of great books on the subject from the past three years, focus on that.

Check out Valuehound, they're kind of the biggerpockets of syndication in terms of resources.

A bit late for me to pitch in, but the only way to do this (don't forget you may have to flush here and there) in cold weather is by wrapping the house and using heaters within the wrapping. As far as I know, at least, that's the only way.

I wish there were more from The Netherlands actually, we're 3 people at best, though thanks for taking us as an example ;-)

Though we pretty much cover the globe, some here are internationally specialized.

Legal term would be "opinion", by the way, advice makes you liable.

Welcome, Anila!

I had the sale thing reading it... Upto the second part. Once he starts uttering the word "franchise" is when the book really takes off. Same thing with RE Millionnaire, the first half was the Why, but the second part - the How - is golden.

Let us know if you need a deal analyzed or whatever. :-)

Seloger is best, PaP might also work (what the Americans call FSBO-deals). Oh, and then there's the Notariat to keep your eye on.

Though you might want to seek out the local broker who specializes in investment properties. Try to contact him, tell him what you're looking for and hope he's a nice guy (you'd be surprised...)

I look at website listings daily, only 5% is worth examining closer... and that's if I'm lucky. France has a lot of vacant property by the way, though that requires a lot of effort to weed through.

And Germany was a great investment 5 years ago. It's past its growth peak now, flooded with investors. Investing there is still high quality because the sector is very professional (especially through participation funds), but it's just not the same as self-managing in your back yard.

When your local market is in an impossible market cycle, hence the amount of French, Canadians and others going to Florida. The developers and whatnot there have been pushing their market internationally at that.

Also, international markets can offer much greater appreciation when you look at the world from a bird's eye. When Vietnam is appreciating 20% per year and your little corner of the earth only knows single digits, well... (caveat: gotta marry a Vietnamese in order to buy property there).

Cash flow investors are less interested in international markets, especially if they're hands on. You would really have to be at a point at which you're looking for market diversification. Other than that, you're essentially speculating.

Take the 6000 EUR per annum. Now let's see...

1 month vacancy = 500 EUR (if you're lucky)

Provisions for tenant change = 400 EUR

Repairs = 500 EUR

Insurance = 110 EUR (Really? Is that all?)

Taxe foncière = 700 EUR (don't really know for France, don't forget local taxes)

Prélèvements sociaux = 775 EUR (after taxe foncière, 15,5%)

And then there's still the income tax in which you rise in your tranche. I'm already at around 3.000 EUR. You can get it down to about 1.000-1.500 EUR if there's no tenant change and whatnot, but then I can only wish you good luck, literally.

Just saying...

But in any case, you are right to say it would be better to put it in real estate than in the bank. If you're happy with this revenue, then I would at least recommend you to look for a multiplex (3-7 units) if at all possible. The 300.000 EUR would allow you to get one in a certain price range for which there is a lot less competition (in The Netherlands and Liège, between 400.000 EUR and 1.000.000 EUR). Sellers are getting desperate there. A bank will give you a mortgage for an income property like that, they'll only look at the numbers and what you propose to do with it.

I don't like sharing buildings with other investors/owners, the multiplex offers benefits of scale, the mortgage gets paid off at a historically good rate and that will get you some tax benefits as well.

Prices were already too high in 2008. Because of the crisis, people started pumping their money into stone, so that kept the inflated prices stable. But this can't keep going on.

12*500 = 6000 EUR - If you can keep your annual costs lower than 1000 EUR, then fine, you're making about 4,16% and there seems some room for capital appreciation. But I haven't had anything with only 0.84% in operating costs.

To compare: In the "hypercentre" of Liège I could get 23.000 EUR a year out of a four-plex at 260.000 EUR. Repairs of 40.000 EUR. Annual costs estimated at 8.000 EUR. I passed on that deal, even with those figures.

If you're not in a rush, there are a lot more 'viager' deals on the market in France these days. Like an apartment on the 6th floor in Paris, 40m², 1000 EUR a month, 100.000 EUR down, the lady is 71 and there aren't any elevators. Those have peaked my interest of late and they essentially allow you to avoid an investment mortgage.

What you're essentially doing is buying "at market price", but these forums are about people trying to find deals. Some here refuse anything below 8% net operating income, and they consider half their gross operating income to be operating costs.

There's nothing wrong with buying at market price, it just isn't what the sophisticated investor is interested in. Olivier Seban also warns for these mediocre 'deals', even though I'm still not sure whether he's the best reference (a lot of his success depended on appreciation).