Austria - Castle

Last weekend we had our 3rd BENL (Belgium – Netherlands) FIRE meet-up in Utrecht and it was a blast! We had a total of 28 people show up to talk about money and freedom for the day. Many people we had never seen before, you got to love internet finance dating for strangers! We are pumped to do this again later this year and plans are already being made for that meetup. As part of the meetup I also did a short presentation: Real Estate investing – a Dutch Case study.

A slightly shorter version of this presentation is provided below. It includes some additional comments based on the feedback during the meetup. Note that this presentation is to provide some basics for property research and selection. It therefore lacks details! If you are really interested in finding the right property for you, additional detailed assessments are required. Such include risk assessments, investigation into the state of the property, taxes, a maintenance plan and more.

Property Screening

The first step into Real Estate investing is high level property screening. For this we use several sites to find properties that match our search criteria. Typical sites in the Netherlands include www.Funda.nl and www.beleggingspanden.nl. If you leave outside the Netherlands, do your search for your applicable sites, which should be easy (i.e. realtor.com, mls.ca, etc.).

Real Estate Case Study - Screening

Real Estate Case Study – Screening

Property Selection

Before you can make your property selection, you need to know what you want! Do you want commercial or residential rental unit? If residential, do you want a house, townhouse, condo or even a house boat (for Airbnb rentals).

Real Estate Case Study - Property Selection 1

Real Estate Case Study – Property Selection 1

Once you know what type of property you want, the next will be to look for one. You will have to select on price, location and the general state of the building/property. The latter is important as it affects the sales price. If you are handy and have time, a fixer-upper could be a good one. But if you are not, you should look for something that is ready to move in, but well priced.

Real Estate Case Study - Property Selection 2

Real Estate Case Study – Property Selection 2

The Condo Case Study

For this Case Study I ended up selecting a condo unit in Rotterdam, the Netherlands. This property looked appealing, some maintenance to be done in the bathroom, but generally in pretty OK shape. Price was reasonable too, but not spectacular. A perfect case study!

Real Estate Case Study - The Condo

Real Estate Case Study – The Condo

The Expenses

The first thing to look at are the expenses. We start with looking at the purchase expenses. These include costs for purchase, transfer taxes, notary and financing. Additional expenses could include urgent renovations, which are not assumed here. Please note that we assumed that there is some negotiation space for the price too (i.e. the lower purchase price)!

Real Estate Case Study - Expense Calculations 1

Real Estate Case Study – Expense Calculations 1

The next thing to look at are the monthly expenses for running the property. These include property management, insurance, maintenance, building management (i.e. condo fees), taxes and sewage fees. Because this is a condo, we only include about 1% for the maintenance reservation (otherwise it usually ranges between 2.5 and 3.5%). This allowance is to be used for kitchen and bathroom replacement, and any other things like flooring, lights, etc.

Property Management fees are included due to their tax advantages in the Netherlands (which makes this investment an Box 3 investment, rather than Box 1 income!). We also like the risk management side of things, as these guys have more screening tools than we do.

We included monthly fees and the selection fee (one month rent + VAT @ 21%). The latter is spread over 2 years (i.e. we expect new tenants every 2 years), which is slightly above average in this market segment.

Real Estate Case Study - Expense Calculations 2

Real Estate Case Study – Expense Calculations 2

Financing

We assumed we needed financing, so added an investment mortgage of €70k with an interest of 3.85% (5 year term). You might be able to get something cheaper, but will depend on your personal circumstance and other assets you may have.

We quickly calculated the total yearly mortgage costs and the cost of interest only. If you add that to the above expenses, you get the numbers at the bottom of the slide below. For cash-flow the maintenance reservation is not taken into account. As you won’t pay this every year, but likely in lumps  every couple of years. You may decide to do this differently when you are looking at a house. In which case you have yearly heating unit maintenance, for example.

Real Estate Case Study - Expense Calculations 3

Real Estate Case Study – Expense Calculations 3

The Income

Now the fun part starts, the money coming into the bank account! We normally use 3 scenarios for screeing purposes, so get some feel for the spread and associated cash-flow scenarios. These scenarios are based on 12 month occupation (best case), 11 months (base case) and 9 months (worst case). Albeit it should be noted that it could be way worse! For example if a tenant does not pay and you cannot evict due to strict tenant protection laws.

Real Estate Case Study - Income Calculations 1

Real Estate Case Study – Income Calculations 1

Now the next step is to find out net income, so after the expenses shown in the previous paragraph. When you do, this is what  you get:

Real Estate Case Study - Income Calculations 2

Real Estate Case Study – Income Calculations 2

Not bad, even in a worst case scenario you are still cash-flow positive! Well, at least you are close to breaking even, because utility costs are not included in the expenses for the 3 months you do not have a tenant. As a landlord you are responsible for these costs at about €15-30/month (subject to usage and utility rates).

Yields

So what does this all mean in terms of yield on your investment? The shown yields are not really great to be honest, especially considering the risks you take as a landlord. You kind of what to have a cash-flow yield around 8-10% in this leverage scenario. In short, you either have to get the property for less. If you cannot, you have to walk and look for something else.

Real Estate Case Study - Cash Flow Yields

Real Estate Case Study – Cash Flow Yields

In the ultimate scenario, when all the mortgage is paid off, you get the following (2017 price level: no inflation correction):

Real Estate Case Study - Ultimate Yields

Real Estate Case Study – Ultimate Yields

Not great yields, but your cashflow is likely about €4.5-5.0K average per year. With about 7 of these, and wealth taxes included, you would be FI!

Disclaimer and considerations

Some important assumptions and considerations apply to this simplified calculation, and its results:

Real Estate Case Study - Other Considerations

Real Estate Case Study – Other Considerations

If you have any questions, do leave a comment!

 

BENL FIRE Meetups - Financial Fun Since 2016

As you might have seen in earlier posts, we (Amber Tree Leaves and us) are organizing a Belgium-Netherlands (BENL) FIRE Meetup in Utrecht on Saturday June 17. We still have a few spots left, so if you want to join in, this is your last chance! Please leave us or Amber Tree Leaves a comment/drop us an email and we will get back to you.

The Tentative Program

The program is as follows:

  • 10:15-11:00 informal get-together in Utrecht, do some chatting and have a coffee or tea with a biscuit/cookie of your choice;
  • 11:00-12:00 Financial Speed Dating (one-on-one or two-on-two sessions of about 5 min each to get to know each other);
  • 12:00-14:00 Brown Bag Lunch (i.e. bring your own) and more informal chats
  • 14:00-17:00 Presentations and discussions. Topics to be presented and discussed include: alternatives ways to FIRE, part-time FIRE, FIRE in Europe and a Real Estate case study;
  • 17:00-18:00 Spare time in case we are having too much fun with the above;
  • 18:00-19:00 Do dinner together (bring your own / pot-luck, take-out or local restaurant);
  • 19:00-21:00 More chatting and some beers and close out of the evening; and,
  • 21:00-??:00 Party in Utrecht for the real Die-hards?

Other Details

Some other details that could be useful for you to know:

  • The venue in Utrecht is very close to a train station, but also has free local parking;
  • We will bring coffee, tea, soft drinks, beer and a few light snacks (but please do bring some yourself if you can);
  • You bring your own lunch/dinner. For dinner we would recommend cold dishes like salads and pasta, or things that can be prepared without a kitchen. Otherwise you can order/get some food from local venues (pizzeria/snack-bar/local super market);
  • Costs will likely range around €10-12 pp, including beverages/light snacks. But is subject to the final number of people attending (more is better here!);
  • You don’t have to be a Blogger! Partners are welcome too; and,
  • You can come and leave whenever you want.

With under one week to go, we are slated to have some serious financial fun. We hope to see you all in Utrecht!

P.s. for those that are on the email distribution and have confirmed they are attending, details will be send to you later today!

BENL FIRE Meetups - Financial Fun Since 2016

As noted earlier by both us and Amber Tree Leaves, we have another meetup scheduled for June 17. We have a maximum of 35 spots available and we are now already at about 20+ 25 confirmed people. But we have room for more! Do you fancy a date with complete internet strangers and talk money? This is  your chance 🙂

The Tentative Program

The tentative program is as follows, but we are happy to make adjustments if you have a brilliant idea:

  • 10:00-11:00 informal get-together in Utrecht, do some chatting and have a coffee of thee with a biscuit/cookie of your choice;
  • 11:00-12:00 Financial Speed Dating (one-on-one or two-on-two sessions of about 5 min each to get to know each other)
  • 12:00-14:00 Brown Bag Lunch (i.e. bring your own) and more informal chats
  • 14:00-17:00 Have a couple of fun presentations and discussions;
  • 17:00-18:00 Spare time in case we are having too much fun with the above
  • 18:00-19:00 Do dinner together (bring your own / potluck, take-out or local restaurant)
  • 19:00-21:00 More chatting and some beers and close out of the evening.
  • 21:00-??:00 Party in Utrecht for the real die hards?l 

Discussions and Presentations

Based on the previous meeting in Antwerp and feedback from many of you, the following topics could be presented during the meetup:

  • Life in the rear view mirror (a financial life in review)
  • The mystery portfolio (submit your portfolio, with as much or as little detail as you want for an blind review by the group. To get some various views on the matter)
  • Real Estate – what to consider and a case study
  • Crowdfunding – good idea or not?
  • How to be self-sufficient
  • When do you have enough and how do you get out?
  • Etc.

Let us know what you are interested in, and we will try to make an interesting afternoon program for you! Do you want to present, please let us know too! Still need one or two people/volunteers.

Other Details

And finally some other details that could be useful for you to know:

  • The venue in Utrecht is very close to a train station, but also has free local parking!
  • We will bring coffee, tea, soft drinks, beer and a few light snacks (but please do bring some yourself if you can)
  • You bring your own lunch/dinner. For dinner we would recommend cold dishes like salads and pasta, or things that can be prepared without a kitchen. Otherwise you can order/get some food from local venues (pizzaria/snackbar/local super market).
  • Costs will likely range around €10-15 pp, including beverages/light snacks. But is subject to the final number of people attending (more is better here!)
  • We need someone who can bring a projector for the presenations (Chris, are you still on?)
  • You don’t have to be a blogger! Partners are welcome too.
  • As noted, we can have a maximum of 35 people.

With exactly one more month to go, we are slated to have some serious financial fun. We hope to see you all in Utrecht!

P.s. for those that are on the email distribution list but have not confirmed, please let me know if you want to join (and with how many).

Antwerp Meetup

Before we get into the nitty gritty of the Saving Rate for the Month of January, let’s review our Meetup on Antwerp last Saturday (February 4). We personally had a great time, we enjoyed the presentations, discussions and the great open atmosphere in the room. We had over 20 people show up for this event, some bloggers, some not, some for a second time, some new, some young, some “not so young anymore”. In short, it was a very fun very interesting day. Thank you everyone for attending and your inputs, it was awesome!

We are seriously looking forward to the next event and have a long list of ideas that we want to pass by you all for some feedback and inputs! So keep eye on your mail box (for those whom attended one of the last two events), this blog or that of  Amber Tree Leaves.

January Finances

Ok, back to the financial stuff again: The Savings Rate. January was again a “normal” month (after the really spectacular November and December months of last year) from a saving rate perspective. Let’s have a quick look at what happened:

  • Regular (so one each) incomes from Mr. and Mrs. CF where deposited in the checking account;
  • There was a surprise in crowdfunding income. One project actually went bankrupt (second issue out of 34 projects) but was bought out by another party! We suddenly got paid out the total remainig loan! Lovely, 7.5% interest on 13 months and full investment back. Bring on more of those! Total “income” (interest and principal payments) from crowdfunding was €355;
  • No surprises on the living side of things. But we did finally get the bill for the roof replacement and repair work done in 2016. This was a rather “pleasant” surprise (for as far as a bill is pleasant), as it was a couple hundred lower than we expected and came in at just over 513 (it also helped that Mr. CF assisted to contractor in his work). No complaining at all!
  • Other costs in the Living and Healthcare category included some sewage taxes (€109), quarterly water bill (€41) and insurance premiums (€182);
  • Transport costs are increasing due to using our car again to get to work (company car is gone). Total costs for the month included about €336, which is primarily fuel (€112), road tax (€179) and insurance (€25);
  • Grocery costs were lower than normal this month, as we are still partially living off the large shopping spree from last December. Total spend was about €266;
  • The kid category was pretty stable too, not much more spend than the day care fees (net fees are about €950 – looking forward to Miss CF going to school by the end of this year, should cut the costs down to about 1/3rd or less!);
  • Travel and Leisure included some activities with Miss CF (skating on a market square). We also had tons of birthdays in January, so lot’s of “free” entertainment (gifts, if any, are covered in the “other” category); and,
  • Other items included a replacement charger for the our camera battery (€23) and a transformer (58) for the PS3 we brought back from Canada.

January Savings Rate 

All the above boiled down to a savings rate of 55.8%, we are pretty happy with that, because this is about as good as it gets for us! 

If you breakdown our expenses for the month, the distribution looks like this:

How was your Savings Rate for January? Where you happy with the results, if not, why?

A Financial Party

Are you in for a bit of a “financial party” in Antwerp (Belgium) on February 4, 2017? If so, please do let us (Amber Tree Leave or Team CF) know! We have arranged a venue in Antwerp and have about 20 or so people coming, but can accommodate a few more.

The plan for the day is to gather between 11:00 and 13:00, you can bring your own lunch is you want, or get something from the local eateries.

From 13:00 we will have some informal chats and general introductions (i.e. you talk to whom you like and have a cup to tea/coffee or a Belgium beer)

At 14:00 we will start with the discussion and presentation portion of the day, this is what we have planned so far:

  • A guide to financial independence – if you really, really want it fast (By the Financial Freedom Sloth)
  • Options Trading (by Mr Amber Tree Leaves)
  • Group Discussion: Systems vs Goals
  • How to become financially independent in the Netherland and associated official retirement implications and options (By Mr FOB – site is primarily in Dutch, but has google translate option to English) 
  • If time permits, a short review of real estate investing will be done by yours truly.

Around 17:00 we will divert to the dining location

From 20:00 we can start to explore the nightlife Antwerp has to offer. Considering Belgium is the country of the world’s best beers (Ok, personal opinion but still very much true ;-), this should be lots of fun.

More Details

You will be responsible for your own costs for food and drinks. So you can make it as expensive or cheap as you like (really frugal folks will bring their own. No, this is not called “being cheap”!).

The venue is easily reachable by public transport, but you can also park your car for free along the river Scheldt and walk to downtown. Parking is available along the St.Michielskaai/Cockerillkaai/De Gerlagkaai.

We will only request a small (<€5pp) compensation for the rental of the venue and associated costs.

Interested? Drop us an email or leave a comment!

P.s. if you want to meet some of the hotshots of the FI world (such as Mr Collins and the Madfientist), you can also check out this:

http://ukchautauqua.weebly.com/

Most likely an event to remember, but does not come cheap at around €2.500-2.700pp (for 7 days, includes everything but the flight to the UK). There were still some spots left. We have considered going, but have decided against it and instead invest the money to become FI faster.

As noted by Amber Tree Leaves earlier this week, we are planning another FIRED-UP meeting in early 2017. Considering the success of the last one (see some posts/comments here, here and here), we are really looking forward to continue with these meetups (improving/expanding them as we go along).join-our-meetup

We had already send out a doodle to those people whom attended last time to gain some insights on the level of enthusiasm and propose some new ideas. It turns out that a lot of people are in for a re-run. The plan this time around, as noted by ATL earlier, is to meet up in Antwerp (Belgium). But we can now also confirm that it will be done on 4 February 2017.

We are in the process of arranging a small meeting room in a bar or other facility (we will be charging a minor fee for this, but should be no more than €5 pp), to have the opportunity to have speakers/do presentations. Plan is to meet around lunch hour and continue until (late) in the evening. Detailed plans will follow and will be communicated to those attending the meeting.

privacy-meetupHow about you, are you interested? Do you want to do a presentation of something you have learned, or think is important to share with like-minded folks? Do you have any other ideas for the meeting? If so, please leave us of ATL a message or comment. We are very much looking forward to you inputs!

A new month, a new Saving Rate overview! We’ve now already closed the 10th month of 2016. Time flies when your having fun! I’m actually secretly very curious how the total finances for 2016 are going to look. But let’s not get ahead of myself here.

October was another good month from a social perspective. We had a blast at the FIRED-UP meeting in Breda with fellow FIRE enthousiasts, which was awesome. Thanks again for everyone that attended, we are planning another one for January 2017, more details to follow this month (so keep an eye out for that).

As to the financial side of October, here is a quick overview:

  • Incomes from both Mr and Mrs CF were normal, and we finally got the long awaited expense claim back;
  • Income (principal and interest payments) from crowdfunding loans is now exceeding €155/month;
  • We received full income from our two new rental properties and the commercial unit, adding a very nice €1400+ to our income (if you think this is nice, wait until you see next month….. details to follow);
  • Living expenses were high this month due to the quarterly payments for insurances and some maintenance related expenses. We also had to pay sewage fees and property taxes that were incorrectly allocated during the sale of property to us (~€80);
  • Groceries & grooming a bit below average at around €338;
  • Transport costs were higher this month due to quarterly road tax (€179), fuel (€55) and insurance expenses;
  • Costs for day-care and kid related expenses where slightly higher (~€1220, including benefits) due to an outstanding day care payment and the costs of the birthday gifts for Miss CF;
  • The cost for the FIRED-UP meeting was €66 and is covered under the leisure section of the budget;
  • Gifts came in at €32 this month (all experiences, no stuff);
  • Finally, we Mr CF bought new winter cycling clothing, which came in at a whopping €205. But it is money well spend as the last two trips were very comfortable and I was not cold at all, a major win here!

The saving rate for October ended up being just below average due to various higher quarterly expenses and some expensive purchases like the cycle clothing. We ended the month with a nice savings rate of 53.1%. See below for the usual graphs. Considering the projected income and expenses, we should be albe to close out the year about 57-58%. That would be seriously nice!

201610-savings-rates

201610-expenses

How did you do this month? Any large expenses, or bonus incomes? Let us know how you did!!

 

 

As Amber Tree Leaves already pointed out here, it is great fun meeting folks that have the same or similar ideas as you do, or have the same or similar goals. That is why ATL and us are teaming up to organize the first(?) Belgian/Dutch FIRED UP meeting.Free walking

Our goals it to locally expand on the wildly successful FIWE 2016 (see here), but this does not mean that anyone outside Belgium or the Netherlands is not invited! The goal of the meeting will primarily be to have some great fun with likeminded folks, but also exchange ideas, strategies and everything else FIRE and life related.

Outdoor-Cafe-Illustration-Vector

The current plan is to meet in a city/town close to the Dutch/Belgian border on October 15, 2016 around noon-ish. The general plan is to meetup at a café, do a city tour by foot or visit a local attraction (subject to weather) after which we will have a bite at one of the local restaurants. For those who want, another round of drinks and finally depart back home or to a local accommodation (all your choice obviously). Will aim to make this fun and frugal of course 😉

As privacy is paramount for most in the financial blogging sphere, the final details will only be made available to those who want to join. Either or both ATL and us will contact you personally to get to know you and exchange meetup information.

We already have a list of a few (international) bloggers that are interested to join. How about you? Please leave a comment or shoot us an email and info @ “our blog name – one word” .nl.

Cheerio!