Just completed the real estate related finances for 2018 and made a forecast for our real estate investments in 2019. We are in a good shape and 2019 is looking to be an even better year. Here is the Real Estate Report – Overview 2018 (including forecast for 2019).
Just in case you are interested in Real Estate investing in the Netherlands, take note! There is another meetup organized on 9 March 2019. See here for more details.
Real Estate Report – Overview 2018
Real Estate Related Income
Our real estate income (rental income and interest on loans) for December 2018 was very good! We were able to close the year with an all-time high income of almost €3.874.
The monthly income distribution is provided below:
The expenses for December 2018 were higher due to the final bill of the window replacement works. We had 14 windows upgraded from single glass to HR++ (double) glass windows. Needless to say that insulation improved, noise levels dropped and less moisture issues. Happy with the result (and so are the tenants)!
The expenses consisted of the following:
- Mortgage payments;
- Maintenance costs;
- Holiday season gifts for tenants (other category), and,
- Management fees.
The expenses for the month are as follows:
Real Estate Report – Overview
The net rental and loan income for December was almost €2.612. The net cash-flow was lower at €1.555.
As noted earlier, we have a mortgage and we provided a private real estate investment loan that does not pay out the monthly interest (hence a lower net cash-flow). We will get this interest (and principle) once the loan matures in late 2020.
And a graph to visualize the net income and net cash-flow of our real estate portfolio (including real estate loans) throughout the year:
The massive drop in the middle of the year is driven by the rather large bill for renovations. Fortunately the renovations have significantly increased the value of the rental properties, but negatively affected income/cash-flow. Overall, it helped increased our wealth for the year!
The works done on the building included adding isolation on the outside of the building. If you want to know more about this, there will be another meetup on 26 January 2019 in Haarlem. We will have a speaker doing a presentation about energy efficiency for houses including the finances. Do join if you can! Fees for the day are only €15.
Real Estate Report – Recap
How did we do compared to our forecast from a year ago? Well, we significantly overshot our maintenance costs. We estimated about €9.000, but ended up paying more than €16.800 for various jobs. Mind you, we also did way more than anticipated, but in a good way. We decided to improve the insulation of the properties and make sure they are worth more. However, the units are also able to generate a higher monthly income (now and in the future) because of better energy index labels. Money well spent!
It’s no surprise that we also earned less this year than budgeted. We were aiming for about €18.500, but ended up getting about €16.800. Which is not that bad considering the extra costs for renovations. The reason for the smaller difference than the overpayment in maintenance expenses is simple. We ended up with higher rental rates and we added a real estate loan investment that increased our revenue.
That being said, we can’t really live on €16.800 in revenue. And definitely not on €4.088 in cash-flow! Not really FI on our real estate investments this year 😉 Also don’t want to have another flood in our rental’s in 2019….
Real Estate Report – Forecast 2019
What is the forecast for 2019? Drumroll please….
- Total real estate related income: €46.500 (excluding any new investments)
- Total real estate expenses: €13.100 (assuming no major unexpected issues, but including more maintenance works)
- Anticipated net income: €33.400
- Anticipated net cash-flow: €21.000
Mind you, the last two numbers do not included any wealth tax corrections!
Now, add in some juicy dividends for 2019 and we should be pretty darn close to be FI in 2019. On paper anyways, looking at taxes and cash-flow, we still have a few more years to go. Hoping for a good year 😉
Any interesting stuff to report with your real estate? Please share your experiences!