All Forum Posts by: Thierry Van Roy

Hah, well... the high rent in Amsterdam is also because of the high property prices. A'dam leaves all other Dutch markets behind in this sense. If Brussels is any comparison (I invest in Belgium and The Netherlands), you should keep track of where the city is expanding to. They can't keep places like Bijlmer deteriorating indefinitely.

Be sure to read up in here. I also recommend "Onroerend Goed als Belegging" from the Amsterdam School of Real Estate (you might get it at a student's discount? Perhaps even credits for some of their classes?). If you want something with a little more fluff (you're using a lot of Kiyosaki vocabulary there ;-) ), go for The Millionaire Real Estate Investor. The second part of the book is a very nice summary of all there is to real estate investing.

One more pro-tip you won't get anywhere else:

The Dutch REI market is an Old Boys Club. Very different from Belgium, where everything goes through listing sites. I was recently asked to join the regional board of VastgoedBelang, they liked the fact I'm a youngling. Joining VastgoedBelang is the only way to network with private investors and many intend to unload some inventory during the coming years.

hallo Guus,

Feel free to contact me for any info on the Dutch market, I'm active in Maastricht and with VastgoedBelang.

Hah. I remember asking the same question. Yeah, a reverse mortgage.

I also remember getting advice from someone who tried this: "next time, I'll calculate for the person in question to turn at least 100".

I wanted to do this with a doctor who was certain she would be able to estimate someone's life expectancy (target market: Paris). We eventually left this idea, it's just too unpredictable.

You would be better off doing seller financing. With a little creativity, this will also help in dodging inheritance tax. If the numbers turn out right, you won't get a bunch of their offspring jumping you.

Anthony Chara (and others) have often said not managing your property manager is the single biggest mistake with apartment investors. The trick is to have performance reports and compare them to the pro-forma without them getting fidgety about you "telling them how to do their jobs".

I don't see how the property managers I know would cost more than an on-site handyman.

@Erik Noordam , waar zit je?

So in developing a more automated pro-forma deal analysis, I'm trying to set up standardized cost breakdowns for multifamilies. Yes, anything from fourplex to apartment and also broken down in pessimistic, neutral and optimistic scenario's.

Are there any lists out there that give a realistic estimated breakdown of costs? I want this set up so I can tweak it continuously while comparing to CAPEX and replacement.

An example would be:

monthly replacement reserves / unit = A * [.75 + .25 (#bedrooms)]

(in which A is pessimistic/neutral/optimistic 75/100/125 USD)

This is supposed to be pre-due diligence, but also so I can compare the outcome to the pro-forma. (Example: this new boiler with decalcifier lowered maintenance by 30%, increasing NOI by 2%.)

Just to be clear: I don't expect you guys to come up with the numbers yourselves. I'm assuming lists with this kind of data already exists, but I can't find any serious data anywhere.

(And no, I don't want to use the 50% rule instead.)

Welkom, Tom!

There's an international broker here who operates in both the Netherlands and the US, he'll help you out with the tax stuff.

I'm investing in Maastricht and Liège (Belgium), so if you're also into national real estate, here you go!

Going to be a contrarian here: When talking this size, I would throw the 50% "rule" out of the window. There is a thing called economies of scale, you know.

That being said, hard money at 8-12% is ridiculous. Also, what's with the 1-3y term?

I'm currently looking at 5 buildings of about 1 million USD each. Each of them gets a complete dossier of over 60 pages in order for me to secure 70%, 4-5%, 25y financing at the bank. This includes a detailed DCF of 20 years, IRR at 10, 15 and 20y resale and a three-way scenario analysis.

That's before negotiations have even started (I have looked at the units though). And even with all this, I wouldn't dare going for this big a venture.

And yes, even by my most prudent estimates, the "Rule" is no more than 40%, including a reserve buildup for some serious structural rehab and property management.

I suspect you have some serious capital for a down payment at least. In that case, try your hand at smaller deals that get bank financing. Money is more-or-less free right now, keep those hard money lenders for when deflation kills the market.

This may be a stupid question, but can't you offset property tax with your interest payments?

In Belgium, it's against the law to self-manage anything 10 units and up. And you need a lot of credentials to become an accredited property manager (3 years college or similar and 1 year internship). There's good reason for this.

Self-managing a 32-unit is basically buying yourself a job. There are a lot of examples of people trying their hand at it and coming back on the decision a year later.

How are your numbers not working out with a property manager? They're not that expensive and if your margin is this small, then property management isn't your problem.

Closing part of the value-adding chain through your own companies like Ken McElroy does is übercool, but you're first and foremost starting a business in that case. If you were to make that decision, your priority should be a business plan. Remember how he said in the podcast that he tries to automate everything in his business model?

Then again, if you would be able to start a PM business and include this complex as inventory, that would mean you're close to break even from the get go. Depreciation and other write offs would make a lot of sense as well by placing the property in an LLC and the management in a C Corp.