The Real Estate Report – March 2018 edition is a lot better then the Saving Rate report for March, which we posted earlier this week. Where we personally had a bit of a “rough” month financially (everything is relative!), the real estate investments happily continued along.

Real Estate Report – March 2018

Rental Income

Our rental income for March 2018 was the again the same as for January and February (love this boring stuff!), which means we received about €3.640 in real estate related income.

The monthly income distribution is provided below:

Real Estate Report - March 2018 Income

Real Estate Report – March 2018 Income

Rental Expenses

The expenses for March 2018 were low and consisted of the following:

  • Mortgage and loan payments; and,
  • Management fees.

Insurance payments are due again in April, no maintenance required this month either. Property taxes are coming in May. So not a whole lot of money disappeared  from the bank account in March.

We did get a bit of 2017 property tax back! We had gotten a wrong assessment and complained about it (about 12 months ago already). “They” thought we were right and gave some money back. Always nice and better late then never! Another positive note, the tax assessment for 2018 seemed right.

The expenses for the month are as follows:

Real Estate Report - February 2018 Expenses

Real Estate Report – February 2018 Expenses

Real Estate Report – Overview

The net rental and loan income for March was €3.082. The net cash-flow was a bit lower at €2.028. 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 income once the loan matures in late 2020.

Total net YTD income is €8.030, net cash-flow is €4.873. Keep in mind that we will spend about €10.000 this summer on renovations, so this year will not be very lucrative investment wise! That being said, this should be the last large expense for the next decade or so. There will be small stuff, but no major work like this.

Real Estate Report - March 2018 Overview

Real Estate Report – March 2018 Overview

Real Estate Report – Forecast

Considering we are going on a long road trip later this month, we are no longer looking at new properties or other investments/renovation works. Everything that we needed to do is done, so we can go on holiday with a peaceful mind. We just need to hope that nothing strange happens, and if it does, it will be taken care of by the property manager.


How did you do in March?

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The last week has been a bit real estate themed. We first looked at our (and others) housing history, next we explored living on a boat. To continue this trend, here is the Real Estate Report – February 2018 edition.

Real Estate Report – February 2018

Rental Income

Our rental income for February 2018 was the same as for January, which means we are well over €3.600 in real estate related income.

The monthly income distribution is provided below:

Real Estate Report - February 2018 Income

Real Estate Report – February 2018 Income

Rental Expenses

The expense for February 2018 were quit high due to a one-off expense item. The expenses consisted of the following:

  • Mortgage and loan payments; and,
  • Management fees.

There were no insurance fees this month, no maintenance either (yay) and the taxes are not due until April. The major expenses were the property management fees due to a new tenant moving in in early February. The screening and contracting fees are expensive at one month rent + value added tax. We then also hope our new tenant sticks around for a while! The one upside, no vacancy between tenants and thus no additional expense here either.

The expenses for the month are as follows:

Real Estate Report - February 2018 Expenses

Real Estate Report – February 2018 Expenses

Real Estate Report – Overview

The net rental and loan income for February was €2.210. The net cash-flow was a bit lower at €1.157. The explanation lies in the fact that we provided a private real estate investment loan that does not pay out the monthly interest. We will get this once the loan matures in late 2020.

Real Estate Report - February 2018 Overview

Real Estate Report – February 2018 Overview

Real Estate Report – Forecast

Lots is going on the real estate front. We have been trying to get various quotations in for the paint removal and subsequent placement of stucco on two investment properties. It turned out that adding about 6 cm of insulation saved the costs for old paint removal and made installation of stucco easier. It was therefore only marginally more expensive, so we decided to go for this route.

There are a few benefits too, the insulation lowers the heating bill and also would allow higher rental rates to be charged. Because the Dutch government also plans to go without heating gas as of 2050, we will be making the first step to making these properties future proof too. It all seems a logical decision to us 🙂 We also already got the municipal approval to preform the works, which we are planning for  during the summer.

After some negotiations we selected a reputable company which will charge us €12.000 for the works. Because we will sell one of the properties to family (sale is now also delayed to this summer), we won’t pay for the full amount. The plan is to also replace two windows and paint the remaining window sills, so the property is in perfect condition. Remember that we will move into this property ourselves in the future, so it makes sense to invest some extra money into this property!

New Property?

We have also been looking at a new property last Friday. It’s a double unit that has been on the market for a while, but they just dropped the price (again). It’s promising, but we are awaiting a few clarifications on various questions that arose during the viewing. If we can come to an agreement (and no other party snatches it from under our noses), the sale is likely in Q3 of 2018. Bit excited about this opportunity to be honest!

I wrote this post already on Tuesday, had a call with the real estate agent Wednesday afternoon. He came with bad news as the property is as good as sold, it also had a few issues that we were afraid off. It would have made the conversion more expensive and we therefore could not compete with the other offer. Darn….


How did you do in February?

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Guess there is a new trend in blogger land (well, at least in the Netherlands). Several of our blogging colleagues have been reviewing their housing history. In short, they told us how they lived in their lives, from the moment they were out of school/University. Including some explanation on why they did what they did, costs, prices and more. They sometimes also noted what their plans are for the future. Guess it’s our turn next 🙂

Housing History

To put it mildly, we did not sit still for very long (or we are getting old, you pick). Over the last 12-13 years we have lived in many different type of properties in two different countries. We owned and we rented, in both countries. The latter was usually the best option if didn’t know how things were going to develop in our careers/lives. It’s also the “mandatory” place to start when you have no money 😉

Housing History - Think big! Well maybe....not.

Housing History – Think big! Well maybe….not.

The Start

Our living journey overlaps a bit with our student days. As Mrs. CF was still living in her 20m2 (215sft) student condo during the first 3 years after she graduated. She had a shared kitchen and bathroom and paid about €270-300 per month for the place I believe (including utilities).

At the same time I was living in a 35m2 (377sft) social housing condo. I was fortunate enough to have my own kitchen and bathroom. For this unit I paid about €350 per month, utilities/taxes came separate. We were living about 40km from each other during these days. Because of where we were working at that time we often used each others condo’s to live in, saved a lot of commuting time!

Housing History - Small Condo

Housing History – Small Condo

Fun fact, this first “grown up” condo for Mr. CF was actually huge compared to the previous student room(s) rented prior. That was a mere 11m2 (118sft) divided over two rooms on either end of a hallway (with shared bathroom in between), but it had it’s own “kitchen”! Needless to say that was rather small but with fun house mates.

Moving Up

After we decided that we really liked each other, we moved in together. We found a nice condo that we could rent for about €650 per month and was “huge” compared to what we had been living in prior. The condo had 4 rooms as was 70m2 large (753sft). So we had more space, spend more time together, and we were still paying about the same!

Before we moved into this condo Mrs. CF did look at buying a place of her own, but could never find something affordable at that time on her income. This was also when we discovered we really like house hunting!

Housing History - Bigger Condo

Housing History – Bigger Condo

Moving Abroad

The next step in our adventure was to dump all our stuff into a sea container and fly to Canada. We were lucky enough to have a fully paid for furnished condo to our disposal when we arrived. This gave us the ability to look around for a rental place so we would be covered for the first year. Obviously we didn’t have the ability to purchase a property yet, nor did we want to. When arriving in a new country you want to be flexible to be able to adapt to your new life.

The place we found was a 130m2 (1400sft) detached house with attached double garage! Coming from the Netherlands, we were so not used to this amount of space. We loved it! And started to fill the garage with one nice car, a motorcycle, bicycles and a BBQ….(oops). We paid about €950 ($1.500) per month for it (based on todays exchange rate).

Housing History - Canadian Style

Housing History – Canadian Style

After about a year we decied that Canada was a very nice place to live and wanted to stay there longer. But renting was out of the options, as it was considered “too expensive”. This was before we realized the amounts for maintenance costs an property taxes! As the house prices had just stabilized from the crisis years, and the interest rates were pretty low already, we made the plunge into home ownership.

The first house we bought was 205m2 (2.200sft) without the basement developed. We did that a couple years later and added another 75m2 (800sft) in living space to it. Getting to a total (and very ridiculous) 280m2 (+3.000sft). The house cost us (including fees, garden and basement development) a total of €315.000 ($500.000). Yes, we used to own a half million dollar house! My fault, lesson learned and won’t do that again, unless it’s a rental property 😉

Moving Back

After Miss CF was born we decided to change our housing history once more and move back to the Netherlands. Because we had no jobs we decided to rent a house once again. We found a deal via Mrs CF’s father and landed our butts in an old farm house. As we were ready to downsize, we would have taken anything, but still ended up with whopping 220m2 (2370sft).

Housing History - Farm House

Housing History – Farm House

We only paid about €800 per month for this place (it’s condition matched the price, in case you were wondering). However, we also had a huge heating bill! The place had virtually no insulation (and mold in the basement). It still was a pretty cool place to live for a while and we enjoyed the place quite a bit. The house had “character”, shall we say.

Second Home Purchase

After we had settled and found jobs again, it was time to buy another property. One that we could potentially modify and rent out in the longer term. We were definitely not looking for a “forever home” this time around. The last time we did it got us 280m2 to clean, heat and maintain! We’ve (more specifically me) learned that “more space” does not equal more happiness.

It took us a few months of browsing, and a couple “near miss” purchases, before we got our hands on our current house. We now own a 125m2 (1345sft) house consisting of two floors. The price for this house was (including fees) €200.000. Our current mortgage payment for this place (interest and principle payments) is about €626 (excluding any tax returns on the interest). It’s still owned for 86% by the bank 🙂

The Future

The next step is to move again! We will split our house into two rental units and move out ourselves. The current plan is to move into one of our current rentals. This unit is “only” 77m2 (828sft) and has no more mortgage associated with it.

We will however take mortgage on the property to have more money to reinvest into other assets. As it’s a nice place and situated in a good area, we probably could get a €150.000 low interest mortgage on it. That gives us a lot to work with!

Housing History - Tiny House

Housing History – Tiny House

Anyhow, it’s a nice little semi-detached house and situated near some green spaces and water bodies. It’s a good place to live and it much closer to family. The latter will make Mrs. CF a happy woman, and a happy wife is a happy life, so onwards we go.

Other Bloggers

Fellow bloggers that posted about their housing history:


How about you? Where did you live and how has your housing history developed over the years?

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After all the fluffy posts about becoming HOT-er and something with a letter, it is time to talk cold hard cash! It’s time for the Real Estate Report – January 2018 edition.

Real Estate Report – January 2018

Rental Income

Our rental income for January 2018 is the highest it’s ever been at well over €3600. Primarily thanks to the first full month of interest on the  private Real Estate investment loan.

The monthly income distribution is provided below:

Real Estate Report - January 2018 Income

Real Estate Report – January 2018 Income

Rental Expenses

The expense for January were relatively low again. The expenses consisted of the following:

  • Mortgage and loan payments,
  • Management fees;
  • Insurance payments, and,
  • Property maintenance.

The maintenance on the heating systems of two units was done in late December, but the bills came in January. No other maintenance costs were incurred this month. We did notice a slight hike in the insurance fees, which is rather unfortunate but not unexpected with the storm damage in the Netherlands over the last few years.

The expenses for the month are as follows:

Real Estate Report - January 2018 Expenses

Real Estate Report – January 2018 Expenses

Real Estate Report – Overview

We started off the year very well with a net rental and loan income of €2.740. I added a new bar on the overview graph below with the net cash-flow income. In short, this is the money that hits our bank account and we are able to reinvest.

In January this net cash-flow was a solid €1.689. If this seems low, it is because the interest on the private investment loan is not paid out. This interest compounds and will be paid out once the contract term ends in December 2020.

Real Estate Report - January 2018 Overview

Real Estate Report – January 2018 Overview

Real Estate Report – Forecast


We received unfortunate news that one of our favorite tenants was leaving. She got to do an internship for her studies that paid really badly and she could no longer afford the rent. She ended up moving in with her boyfriend. We made a deal with here that if we could find a new tenant by February 1, she was free to move out early.

Fortunately for her, It took less then a week to find a new tenant and we had the transfer completed yesterday. The downside is the cost for getting a new tenant, since we use a property management firm (for tax reasons) these are considerable. The (cash-flow) income for February will not be very pretty.

The sale of one unit to family is ongoing and we are making progress. We are still evaluating mortgage options, after which the property will be assessed. Next we will do up our own contract and go to a notary public to get the ownership transfers sorted. Timing is a bit unclear, but might still happen before we go on our road trip in April. If not, we will compete it after we return. We are not really in a rush as the market is hot and new investments are hard to find. Still considering going for a private real estate loan.


How did you do in your first month of 2018?

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It is time for the last post of the year! There is a little bit of time left to discuss Real Estate and some of our plans for 2018. Time for the Real Estate Report – December 2017 edition.

Real Estate Report – December 2017

Rental Income

Our rental income for December, in combination with a new private Real Estate investment loan, has rocketed our income to almost €3.400. During December we rolled two separate private real estate loans into one. Because the second loan only commenced halfway the month, the interest only reflects a portion of the total forward monthly income. The loan has already been used to purchase new real estate. Exciting times for all parties involved.

The monthly income overview is provided below:

Real Estate Update - December 2017 Income

Real Estate Update – December 2017 Income

Rental Expenses

The expense for December were very low again. The expenses consisted of the usual:

  • Mortgage and loan payments,
  • Management fees; and,
  • We got some money back due to a corrected tax assessment! Always good news.

Maintenance on the heating systems of two units was done in late December, but the bills will come in January. Due to a lack of any other works, we have no maintenance expense this month.

The expenses for the month are as follows:

Real Estate Update - December 2017 Expenses

Real Estate Update – December 2017 Expenses

Real Estate Report – Overview

What better than to close the year with a big bang?! We made a total of almost €2.871 in net rental and loan income for the month of December (before taxes). The net cash-flow will come in at around €2.200 for this month.

Our total net rental income for 2017 came in at almost €23.617 (before taxes), the associated net cashflow is around €18.600. This is all much more than we expected last year when we made the forecast. This is all due to the delay in maintenance works for the exterior of two units, which is currently estimated at €6.500 (have the quote already). We were too late with getting stuff sorted and now have to wait for the next warm season.

Real Estate Update - December 2017 Overview

Real Estate Update – December 2017 Overview

Real Estate Report – Forecast

Ok, so the sale of one unit has started and is expected to close in March/April. Why that late? Because some of the parties will be abroad. Perhaps we can speed things up, but we have not looked into this at the moment. We also still need to complete assessments of the property to determine the final sales price and arrange a mortgage with our relative, who will be buying the property. Lots of fun stuff

Based on the existing situation, anticipated new tenants, the planned sale and the scheduled maintenance work. Here is a quick overview of the numbers for 2018.

  • €38.500 rental and loan income (excluding any new investments)
  • €20.000 expenses (includes €6.500 for large scale external maintenance for two units scheduled in April 2018)
  • €18.500 net income (cash flow is considerably lower as the loan payments are not paid out but compound)

In short, we expect higher operating costs next year and therefore a slightly lower net income in 2018 than in 2017. Note that we don’t know how, or in what, we will invest the proceeds of the unit sale. Perhaps we will do another real estate loan, or we might purchase one of two units. Will keep you posted as always!


Best wishes for you and your family and all the best in Real Estate investing in 2018!

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As mentioned in a previous Real Estate Report, we have been looking into real estate loans. We have even already had a meeting with a real estate loan platform, and have been “approved” to become dedicated investors. Let’s have a look at said platform and associated pros and cons.

Disclaimer: we have no interests in nor do we get any compensation for writing this post!

Real Estate Loans via

A reader from our blog (which we also met in person during on of the meetups) gave us a hint a while back. She had been in contact with the people from and believed it could be interesting for us. And right she was! We dropped them a message and got talking about the services they provide and the opportunities they have.

Real Estate Loans -

Real Estate Loans –

The Setup

The platform works sort of as a crowdfunding platform, but with one main difference. Instead of having many different investors, there will only be one. Yes, one investor per project. The reason is simple, the investor will get the first lien right (hypotheekrecht or “mortgage right”) on the property. With crowdfunding this is not the case, the property is however used as collateral for the crowdfunding loan.

How does it work? it’s rather simple actually. You first have an initial meeting with the people behind It’s their policy to screen all potential investors to see if they are a good fit. We had a very good, about 2.5 hour long, conversation about them and us. We reviewed options, discussed risks, opportunities and limitations.

Next, they grant you access to the platform and place you on the distribution list for new prospects (posted every Tuesday). Once you have found one that your like, you take an option on that project. The short version of what happens next: you, the person requesting the loan and someone from the platform visit the notary public. Here the money is transferred, mortgage documents are prepared and signed and you are on your way.

When the contract is signed and the money is transferred, the monthly repayments commence. Similar to a mortgage (and most crowdfunding loans), you now receive interest and repayment of principle. Depending on the conditions of the loan, the principle could be paid back completely, or partially over a 20 year amortization period.

The Pros

What are the neat perks for this type of investment loan? The following come to mind:

  • Good yield considering the risk profile (most are around 5-6% per annum after fees);
  • Choices between residential and commercial real estate;
  • provides all administration, collection and distribution of funds (and legal advice/support), so you don’t have to worry about any of this;
  • You invest in real estate without any of the associated hassles!;
  • It is possible to transfer the mortgage right to another investor (various fees apply), so you can get your money out of the investment if required;
  • You have first mortgage right (and generally low loan-to-value ratios), so even if the project runs into default and needs to be liquidated, the changes of losing your principle are (very?) small;
  • If the project runs into default, you have the chance to purchase the property yourself during auction and add it to your portfolio; and,
  • Long term contracts (normally a 20 year amortization period and 5 year fixed interest rates).
Real Estate Loans - Possible Investments

Real Estate Loans – Possible Investments

The Cons (and fees)

Not everything is perfect obviously. There are some downsides and costs to consider:

  • As with most investments via financial platforms there are costs associated with participation. As an investor you pay a 2% commission at the start of the loan agreement;
  • You also pay 0.5% fees over the monthly interest portion of the repayment for administrative works performed by;
  • There is a risk that the loan is repaid in full before the end of the loan agreement (and you need to start looking for a new project or other investment), hence the higher interest rate;
  • If we are in a (housing) crisis, the project runs into default and needs to be liquidated at an action, there is a change you get less principle back then you put in. If you don’t have the means to buy the property yourself at that time, you will lose money;
  • The interest is fixed for 5 years, but you don’t know what interests will do afterwards;
  • No possible real estate taxation benefits in Box 3 (you have to include the entire loan value for your tax assessment); and,
  • You need a lot of money to start with! The minimum amount to invest is €100.000 (max. loans are €500.000).

Other considerations

In summary, you get a pretty decent return on investment with these loans for pretty much no work required. That’s very appealing! Especially to us lazy investors. There are some inherent risks to this investment, of which early repayment is our largest concern. Due to the low loan-to-value ratio and the ability to buy the property at auction, we consider the risks associated with defaults limited.

Another thing you need to consider is that you will not benefit from any value increase of the property (it does work in your favor in the sense that it further reduces the loan-to-value ratio over time).

I hear you think, why not buy a property yourself if you have that much money? We have, very actively, be looking to see if you could find one, but none that we found even came close to this net return on investment (even after taxes!). Considering the effort and risks that go into having a property yourself, you really want the return to match. With the current high valuations, the limitation that we want to property managed (for tax and risk reasons), it’s hard to find a good deal. So if you cannot find one, what do you do?

Real Estate Loans - Deal

Real Estate Loans – Deal

What’s next?

We actually just made a private loan deal with other real estate investors last week for a total value of €125.000. So we are out of money for the next little while, that is until we sell one of our rental units early next year to family. With the proceeds of that sale we are seriously considering picking up one of these loans.

We doubt that we will see a major housing market correction any time soon that will make local real estate appealing again. We are also not really looking to take on a lot of leverage in the near future either. Loans such as these therefore become quite an appealing investment (unless we see a major stock market correction in the mean time).


What do you think? Have any of you ever done any of these type of real estate loans before?

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After figuring out that the journey to FIRE is horrible and all the talk about FIRE and ethics, its time to look at the cold hard cash we received. It’s time to take a look at the Real Estate Report – November 2017 edition.

Real Estate Report – November 2017

Rental Income

Our rental income for November remains well above the €3.000 mark. There are (unfortunately) no new developments to report. Still looking at ways to expand our portfolio, one way or the other (yes, we are picky, so it takes time). If you want an example of how this works, this comes to mind:

The monthly income overview is provided below:

Real Estate Update - November 2017 Income

Real Estate Update – November 2017 Income

Rental Expenses

The expense for November were quite low again. The expenses consisted of the usual:

  • Mortgage and loan payments,
  • Management fees; and,
  • Maintenance on the heating systems of two units (the other 3 are done in December).

The expenses for the month are as follows:

Real Estate Update - November 2017 Expenses

Real Estate Update – November 2017 Expenses

Real Estate Report – Overview

We made a total of almost €2.281 in net rental income for the month of November (before taxes).  The net cash-flow will come in at around €1.800 for this month.

Our total YTD net rental income for 2017 is now about €21.129 (before taxes), the associated net cashflow is around €17.000.

Real Estate Update - November 2017 Overview

Real Estate Update – November 2017 Overview

Real Estate Report – Forecast

One of our relatives who is renting one of our units has decided to buy the place. This is good news for us as it give us the opportunity to cash in on some of the capital gains made. This also gives us the ability to invest into higher yielding RE investments. It is one of our first investment properties, albeit not a bad investment, there are better options out there (even now).

We now need to start the process of mortgage assessments, pricing, any land registry items and some outstanding maintenance works. Don’t believe there will be any issues as we made clear deals with our family member how to proceed. Not sure how long this is all going to take, but we should have quite a bit of money next year to play with. Perhaps the investment loan as noted in last month’s real estate report will be a good option. Still to write a post about it, perhaps I can find some time in December.


What’s up with you? Any cool stuff to share?

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It is again time for the Real Estate Report – October 2017 edition. Still keeping the posts sort to limit the impact on my arm, but it is going rather well at the moment.

Real Estate Report – October 2017

Rental Income

Our rental income for October now well above the €3.000 mark due to some new developments. We have given out a €15.000 loan to another couple of Real Estate investors. They have used this loan to purchase more property. We get 6% interest on this investment loan, which is paid monthly. In return for this high interest rate the lenders have gotten a flexible repayment plan. Both parties are happy with the end result!

We also did have one unit rented for 1,5 days less due to the now tenant moving. Never knew the property manager could bill the new tenant for half a day! But hey, it works for us (half a day more than expected).

The monthly income overview is provided below:

Real Estate Update - October 2017 Income

Real Estate Update – October 2017 Income

Rental Expenses

The expense for October were high, mainly due to the massive property management costs. These are caused by the new tenant moving in. Expenses are one month rent + 21% sales tax. That hurts, but it’s still worth it for us as we did not have to lift a finger and we get a more favourable tax regiment.

Other costs are the usual mortgage, loan and insurance premiums. No maintenance required this month.

The expenses for the month are as follows:

Real Estate Update - October 2017 Expenses

Real Estate Update – October 2017 Expenses

Real Estate Report – Overview

We made a total of almost €1.425 in net rental income for the month of October (before taxes).  The net cash-flow will come in at around €1.000. Our total YTD net rental income for 2017 is now about €19.043 (before taxes), the associated net cashflow is around €15.000.

Real Estate Update - October 2017 Overview

Real Estate Update – October 2017 Overview

Real Estate Report – Forecast

We have just decided last night to not go for the 4-plex. Too many risks with the exit strategy and financing. Also still no confirmation on the renovations quote either (contractors are super busy right now, really annoying). We still might low-ball with an offer on the property, just to see what happens. Not expecting much.

On the other hand, we have been approved to become private money lenders via a real estate loan platform. The idea is that one party provides a loan to another party to finance (or re-finance) Real Estate. In return you get the first lien right (eerste hypotheek recht), all arranged via a notary public, and one heck of a interest rate (5.5-6.0% net per annum). These investment are for commercial use or to rent out as an investment property only. Personal use of the property is not permitted. 

What is the catch? The lender is allowed to repay as much as he/she likes at any time. In the worst case you get you money back within a year or two. This does not seem to happen in most cases, but it still happens. Minimum investments are €100.000 and a maximum of €500.000. I’ll write a more detailed post about this in the future. However, instead of buying overprices property right now, we are seriously considering expanding to this super passive RE investment opportunity. It almost even beats out the final overall net return on investment (after taxes) for the 4-plex! But with virtually no risks or efforts, very appealing.  


How is are you doing with your real estate ideas and leads?

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Still taking it easy on the blogging, the RSI is not gone but has reduced a bit. To slowly start I’m going to catch up on September with the a short post: Real Estate Report – September 2017.

Real Estate Report – September 2017

Rental Income

Our rental income for September is again above the €3.000 mark. Nothing special to report here.

The monthly income overview is provided below:

Real Estate Update - September 2017 Income

Real Estate Update – September 2017 Income

Rental Expenses

The costs for the month of september where the mortgage, personal loan and property management fees. However, we also paid to have the outside wall of one unit treated for a moisture issue (moisture was creeping up within the wall from the foundation). Only paint work remaining now on the inside, which will be one in December when the wall has dried out.

The expenses for the month are as follows:

Real Estate Update - September 2017 Expenses

Real Estate Update – September 2017 Expenses

Real Estate Report – Overview

We made a total of almost €1.945 in net rental income for the month of September (before taxes).  The net cash-flow will come in at around €1.550. Our total YTD net rental income for 2017 is now about €17.689 (before taxes), the associated net cashflow is around €14.000. The would cover about 75% of our core expenses during our FI. Not bad, but taxes will drop this percentage a bit.

Real Estate Update - September 2017 Overview

Real Estate Update – September 2017 Overview

Real Estate Report – Forecast

We have made an appointment for April 2018 to have the outside fixed up for two units. Price will be €5.000 for the stucco and €500 for the preparation works, followed by an certain amount of cost for paint work. In short, we will be about €6.000-6.500 out of pocket next year for this project. After which those units should need very little going forward as they are completely renovated at that point (inside and out).

Still looking around to find new investments. We are awaiting a quote for renovation works for a potential future four-plex. If that is reasonable, we might put in an offer on the property. Alternatively, we might give out a investment loan to another RE investor to purchase a property. For this investment loan we have an appointement later this week.

How is your real estate adventure going?

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Travel - Culture

There is a lot happening in our Real Estate world, primarily good things fortunately. We are (very actively) looking at properties and found a couple that are interesting. Let’s therefore have a look at the Real Estate Report – August 2017.

Real Estate Report – August 2017

Rental Income

Our rental income for August is (again) above the €3.000 mark. There is one unit (Unit 1) that is also due for another (small) rental price update. We have let this one slip by accident and need to chase this one up shortly. We are also working hard to beef this monthly sum up to about double what it currently is, but more on this later.

The monthly income overview is provided below:

Real Estate Update - August 2017 Income

Real Estate Update – August 2017 Income

Rental Expenses

The costs for the month where the mortgage, personal loan and property management fees. That was it! “Cheapest” month on record. No insurance payments or property taxes were due this month. What a difference that makes. We also had not work done on the properties, so no maintenance costs either. I would like many more of these months 🙂

The expenses for the month are as follows:

Real Estate Update - August 2017 Expenses

Real Estate Update – August 2017 Expenses

Real Estate Report – Overview

We made a total of almost €2.444 in net rental income for the month of August (before taxes), a new record this year! The net cash-flow will come in at around €2.000. Our total YTD net rental income for 2017 is now about €15.743 (before taxes). We are now just about €500 shy of our target income for the year. But please remember that we are still anticipating a big bill in the coming months to pay for the outside restauration of two properties. This is assuming we get our act together and sort out quotes…..

Real Estate Update - August 2017 Overview

Real Estate Update – August 2017 Overview

Real Estate Report – Forecast

We finally got confirmation that our two tenants are leaving us. They have successfully bought their own place. The unit was put on the market the same day. A week later we had 7(!) viewings and yesterday morning agreed on a new tenant to move in. So no vacancy! Nice. However, this does mean new fees for the tenant selection….

For those of you that remembered our interest in German Real Estate investments (see here), we checked the tax implications and they are not favorable. We would be required to pay income tax, which boils down to 20-25% of the net profits. That’s a lot!

On the searching front, the property we looked at with 12 units has too much risk associated with it. We could get the numbers to work (was relatively good actually), but we could not get the exit strategy to match. There were also some permit concerns that were vital for this one to work. In short, we thanked the broker for the time and efforts and we moved on to the next……3 options.


Option 1: simple 70m2 condo. Reasonably priced, so we thought, but after the viewing earlier this week decided against it. Too much work to be done, lots of cracks in the walls. Partial bathroom remodel required. Kitchen needed professional cleaning (grease everywhere) and tile replacement. No time for this right now, getting a contractor would be too expensive and will impact return on investment. We walked away. Was potentially a 850 per month unit.

Option 2: Triplex with 3 very large units (+100m2 each). Have a scheduled visit tomorrow. Promising on paper, nice photos, good neighborhood but not the best rental market (i.e. not a large city with ditto companies). However, we are very interested to see where this is going. Current estimate is about 3.000 month in rental income if successful. Would also be cash-flow positive from day one. Friday update: what a disappointment…… make a detailed calculation to figure out the renovation costs to get it into rentable state…..€100k. That either means a lot lower purchase price (doubt that) or we need to walk away. Afraid it will be the latter. Bummer!

Option 3: House along a dyke (already looked at it last weekend). Currently 3 units with option to make it into 4. Large yard with two storage sheds (with potential to convert one into another unit). Requires extensive work, need to build two bathrooms and one kitchen. It also has a dated interior, which would require some upgrading. Potential rental income is also about 3.000 per month (for 4 units). Big upside: its cheaper than option 2, even with expected renovations (including safety margin). But the big downside is the amount of work. Time to book a viewing!

We are having so much fun! 🙂


How about you, any interesting news to share? Any recent purchases or issues? Let us know

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Wait, don’t run away screaming because the posts title states “Taxation”. This one is interesting (for the Dutch at least)! As you might be aware, we currently have all our Real Estate being taxed in Box 3, to benefit from the most favorable taxation option. However, if you would to purely FIRE on Real Estate in the Netherlands,  which taxation options is best? Our post today will try to shed some light on this. We present to you Dutch Real Estate: Taxation Options.

Disclaimer: we are not tax professionals and this is only our interpretation of the tax code. Consult a specialist if you want to make sure the tax approach is best your situation!

Dutch Real Estate: Taxation Options Introduction

As noted before, the Dutch tax system is quite complicated, but also gives you various options to manage the taxation of your Real Estate. It all depends on what you want to achieve and how actively you want to participate in your Real Estate. For today we will look at 3 taxation options:

  • Taxation of Real Estate income in Box 1:
  • Taxation on Real Estate when incorporated, with Box 2; and,
  • Taxation of your wealth in Real Estate in Box 3.

Let’s have a more detailed look at that the different options would entail. Note that the general deduction (Algemene heffingskortingen) should be the same for Box 2 and 3 options. It is subject to your income for Box 1 and therefore varies.

Real Estate with a pool

Real Estate with a pool

Box 1 Real Estate Income Option

First off, in principle the government almost always sees your Real Estate as wealth under Box 3. However, and this is where the tax law gets a bit fuzzy, when your Real Estate ventures (buying, sell, renting out) start to resemble “an active business”, the income is taxed as if you “work”. In this case your Real Estate income would be considered under Box 1. For the Dutch among you, this is a good post with some clarifications.

However, for this assessment we assume you actively manage your properties (assumed as long-term rentals) and that taxation is similar to the short-term rentals (think a B&B, AirB&B and similar situations). The taxation in this case is based on the net income you make from the property. You will have to report 70% of this net income, over which you will pay income taxes and social insurance premiums.

2018-08-18 Update: for actively managed (including AirBnB/etc.) rentals of an investment property, you might actually be required to add the total net income to your Box 1 taxes (not just 70% calculated as in this example, which applies to short term rentals of you own home only!).

Box 2 Real Estate Dividend Option

Another option to deal with your Real Estate is to incorporate into a business. In this case you can manage the properties anyway you please. You can also use the depreciation of the buildings and pretty much all other costs to limit your profit (and thus taxes). On this profit you will have to pay 20% tax (flat rate). Whatever is left, you can pay to yourself as dividend, which is taxed at another 25% (flat rate). In short, your net profits are effectively taxed with 40%.

We have actually incorporated before when we were still living abroad, because at that time it was an interesting option to limit our overall tax burden. However, you have to be very careful with this option. Here is why. There is a “ter beschikking stellen” clause in the dutch tax code. This means that if you loan money to your own business, you have to report income on this loan under income taxes (Box 1). If you already have paid employment, this taxation could be as high as 52%!

The interest rate your company pays on your loan also has to be conforming to market rates. You are not permitted to charge excessively high interest rates or no interest at all. In the later case the tax man will assume an interest rate for you and will tax you on it… be warned. Considering market conforming rates are currently in the order of 3-6% (-isch), you would only net 1.5-3% on this loaned money after taxes. Not very appealing!

Box 3 Real Estate Wealth Option

As noted in the introduction, and as also explained here and here, Box 3 taxation is based on your wealth. For Real Estate purposes this wealth is calculated as the government assess property value (WOZ) times a factor that is based on the rental income. If you have a profitable property, this percentage is usually 85%. Next, you deduct all your mortgagee and loans, which leaves you with your net “wealth” for tax purposes.

Depending on your wealth, various taxation percentages apply. Note that, in order to be qualified for Box 3 taxation, you will need a property manager that takes care of the rental property for you, as this investment has to be “passive” (read: no “work” required).

Real Estate

Real Estate at Sea

Assessment Assumptions

Now, let’s compare the 3 taxation options to see which one is best to FIRE purely on Real Estate in the Netherlands.

We have assumed the following for a single person:

  • Property market value (4 units) €500.000
  • Properties WOZ value (4 units) €450.000
  • Yearly rental income (gross) €50.000
  • Insurances: €1.500
  • Maintenance (3% market value): €15.000 (assumed primarily done by external parties; equal amount spend each year)
  • Property Taxes, sewage, garbage, etc.: €2.500
  • Property Management (tenant selection): €1.600
  • Property Management (monthly fees): €3.000
  • Marketing Costs (€50/month): €600
  • Yearly business expenses (year end statement, accountant, etc.) €1.000
  • Building Depreciation (2% per year, building value €300.000): €6.000

For this example no mortgages are taken into consideration. If you want to see how this work for you, include the interest as an expense for the Box 1 and Box 2 options. For Box 3, correct for the mortgage value. Simple as that.

Tax rates and social insurance premiums for 2017 are used for the calculations. Utilities are assumed to be paid by the tenants. We have kept costs for insurances, property taxes and maintenance the same for all options.

Box 1 Tax Results

For this assessment we have assumed we need about €600 per year in marketing costs for the various units when they become available on the market.

Based on the assumptions above, the Net Income is about €18.937. This could be improved a bit if you do some of your own maintenance. Do realize that for every euro reduction in expenses, you only earn about €0,5 back in net income due to taxes and social insurance premiums.

Also note that if you start to earn more, the tax burden also increases as income tax is progressive (from 36.55%, all the way up to 52%).

Dutch Real Estate: Taxation Options - Box 1 Income

Dutch Real Estate: Taxation Options – Box 1 Income

Box 2 Tax Results

We have had several people question why we don’t incorporate. This is why! The net income you can withdraw from a company (in the form of dividends), after paying profit and Box 2 dividend taxes, is lower then if you manage the property yourself (at least for this scenario). The total net income comes to only €16.294. But you will have another €6.000 in the company to use for investments.

The main reason is the depreciation of the building, this money will be available within the company as cash, but cannot be withdrawn! It’s considered a reserve, not profit, so you cannot pay it to yourself as dividend. The money will be available for future investments though.

There are some other reasons to incorporate obviously, of which a big one is the ability to limit personal liability. Incorporation might still be appealing for certain people and situations, but you really need to do your homework here.

Note: you still have to perform work at the company as you actively manage the properties. If you work for the company you also need to pay yourself income (which comes in Box 1 for tax purposes). However, for simplicity reasons, this has not been taken into consideration. If you would, the profit, and thus the available dividend, becomes smaller. You would get some of this lost income back via Box 1 income. We are also assuming you don’t pay yourself the minimum Major Shareholder amount (which is €45.000 per year), obviously.

Dutch Real Estate: Taxation Options - Box 2 Income

Dutch Real Estate: Taxation Options – Box 2 Income

Box 3 Tax Results

This leads us to Box 3 Real Estate investments, which clearly is the winner with the lowest taxation and thus the highest net income at €23.178. Even with the additional costs for a property manager (in terms of both selection fees and monthly fees), you are still better of from a net income perspective. This is a double bonus, as you don’t do any of the work and still get more at the end compared to Box 1 and Box 2 investing. How good is that?

Dutch Real Estate: Taxation Options - Box 3 Income

Dutch Real Estate: Taxation Options – Box 3 Income

Discussion and Notes

We did some more calculations for higher incomes too. We made the same calculations for a €1M Real Estate portfolio for a single person. This showed exactly the same results; with Box 3 investments outperforming both Box 1 and 2 by a healthy margin. If you are a couple and you have a €1M Real Estate portfolio, you can even benefit more as you can split the income or wealth and limit your taxes that way.

Now, the above is simplified obviously, as it is rather difficult to compare the three options due to all the requirements and options/limitations. Have a look at your personal situation to find out what works best for you!


Based on the above assessments and assumptions, you are best off getting a property manager and maintain all your Real Estate investments in Box 3 for tax purposes. We are planning to do the same. Best of luck!


Does this provide new insight to you? Have I missed anything critical? Did I make an error somewhere, please do share!

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Austria - Castle

Here is the Real Estate Report – July 2017. Nothing much to report, still be slacking on the outstanding work, too busy with life and there is no urgent motivator either. Not good, but such is life. Still, a rather nice RE income this month for sure!

Rental Income

Our rental income for the month is now officially above the €3.000 barrier with the rental increase completed for one of the units. One more unit is due for a rental increase (should have been done per July 1), need to get this done ASAP. The other 3 units will remain the same for a while.

The monthly income overview is provided below:

Real Estate Update - July 2017 Income

Real Estate Update – July 2017 Income

Rental Expenses

The main costs for the month where water/sewage and garbage removal fees. Another significant expense was the quarterly payment of the various insurances. The interest expenses were the same, so were the costs for property management.

The expenses for the month are as follows:

Real Estate Update - July 2017 Expenses

Real Estate Update – July 2017 Expenses

Real Estate Report – Overview

We made a total of almost €1.896 in net rental income for the month of July (before taxes), a bit down from last month. The net cash-flow will come in at around €1.500. Our total YTD net rental income for 2017 is now about €13.298 (before taxes). That’s a lot of money!

Real Estate Update - July 2017 Overview

Real Estate Update – July 2017 Overview

Real Estate Report – Forecast

Stil no confirmation on the tenants moving out, they are awaiting their final approvals for loans/mortgages. But we still are anticipating them to move out. Too bad, nice couple and good tenants.

We had actually submitted an indicative offer on 5 rental properties, but the seller was not budging. Therefore no deal here, too much risk for the current asking price.

We have also requested more information on another property which currently has 12 units and shared kitchen/bathrooms. It appears interessting, but has (the usual) issues with permits and the potential for a large amount of outstanding maintenance. It does have the option to be upgraded to 16 units, which is good. Asking price per square meter is also reasonable. Still more work to be done here.

And, as noted here, we are also keeping an eye on potential German investments, but we have to sort our some taxes questions first.

Opportunities still exist, but it currently takes quite a bit of effort to find the one for us. Almost considering diverting the funds to other investments….


How is your RE life going? Any fun news to share?

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Investing at the neighbors - Learn German

When house prices rise so rapidly, various areas suddenly become (relatively) unattractive from an investment perspective. This also applies to our own local area and, realistically, most of the western portion of the Netherlands. Can you still invest in Real Estate, of course, but the ROI will be less favorable. What do you do? You start to look at investing at the neighbours: you start to look at Germany!

Investing at the Neighbours

We are still looking for the next Real Estate opportunity, but we noticed that we are much pickier this time around. Why? Because we want to make sure we get the best bang for our buck (well, Euro that is). This will likely be our last (big) purchase for quite some time, so we want to make it count. With the rapidly rising house prices in the Netherlands it is becoming much more difficult. There are still quite a few RE investments to be purchased, but the cap rates/ROI are “dropping like a brick”. Or we are just bad at finding the right deal, which could also be true.

Investing at the Neighbors - German Real Estate

Investing at the Neighbors – German Real Estate

A couple of weeks back we thought we have found our opportunity for 5 rental units, but this fell through on the price. We ended having a difference of €15.000 between our highest offer and the seller’s bottom price. Considering several unknown risks (condo board issues, tenant modifications to the units, backlog in maintenance, etc.) we decided to move on. We are willing to take some (calculated) risks, but this was too much.

In the following (continued) search for properties we browsed many RE investment and house sites. At some point I bumped into a section on investing in Germany. Considering we could not find anything to our liking in the Netherlands, Germany suddenly appeared interesting. You can find one of the many overviews of German properties here: (Dutch only).

However, we had many questions, as we are unfamiliar with this RE market. Time to start looking around for some answers.

The Basics

The German property market is, to a degree, very similar to the Netherlands. Property prices are on the rise, mortgage rates are low, rents are high and tenants are well protected. Some of these items are good, some not so much. However, for the investor there are some interesting differences.

In Germany there is a so-called “kaltmiete” and “Warmmiete”. With “miete” being “rent”, you probably can figure out that “kaltmiete” is the pure (“cold”) rent of the property and “Warmemiete” includes items such as certain utilities, condo fees, building management fees, etc. Now this is also where it gets interesting, as you as the landlord can apparently include quite a few things into the “warmmiete”, such as building insurance, property taxes, waste and sewage fees, building management, cost for common areas and snow removal costs (not only for a condo, but also for a house).

This is considerably different from the Netherlands where various of these items cannot be transferred to the tenant, they are indirectly (and only partially!) included in the rent. But this also means that the expense for you a landlord are higher, which weighs on your return on investment. In short, German RE yields appears to be similar on the surface, but when diving into it, the yields are actually a bit better due to a shift in expense to the tenants.

There are however 3 things you cannot include in the “warmmiete”:

  • Property management fees;
  • Maintenance cost, and,
  • Income taxes (go figure ;-).

When managing a property from afar, you will need a property management firm obviously. Rates appear to be very similar from what we are used to back home. One item is far more expensive in Germany, which are the closing costs. Depending on where you buy in Germany, the total closing costs range between about 10-15% of the purchase price. This is primarily caused by higher land transfer taxes and costs for the realtor.

Investing at the Neighbors - German Real Estate - Castle

Investing at the Neighbors – German Real Estate – Castle


Now,  rental income from various German properties does appear to be appealing, but then taxes have not been paid yet! We don’t know much about German taxes. It was therefore time to talk to some experts, so we reached out to Mr. and Mrs. W from They lived in Germany for the longest time and currently own 6 properties that they rent out. They have relocated to Romania and are technically FI on their Real Estate investments.

We had a great call for nearly 2 hours on Friday night about German RE and FIRE in general, which was great fun indeed. We also got some interesting tips to check out. However, there is lots more to discuss and we are still to setup another chat to continue the discussions. Thanks again Mr. W for your time, much appreciated!

In the Netherland you have to pay wealth tax on your RE investments. This is a rather favorable system in the sense that you can keep your tax bill limited (you can use your debts/mortgages and the assessed value of the property in rented state to limit your wealth and therefore taxes). But when investing in Germany, it appears you will have to pay source taxes. The system in Germany is different and income from RE investments is considered under income tax, for which the tax rates are much higher (starts at around 10% and goes up to 40% in steps).

Because our primary country for tax purposes is not Germany (but the Netherlands), there is also no tax exception on the first €8.500 p.p. In short, we would start to pay taxes on every (net) euro we would earn from RE investments. There is a tax treaty between Germany and the Netherlands, so we might still be able to limit/avoid double taxation. That being said, we have lots more homework to do here.

Other Items to Consider

There is definitely some work to be done on the taxes side of things, but there are also some other things to consider (good and bad):

  • The properties are not “around the corner”, you need to manage them from afar (added risk);
  • Our German is not that great right now, so the language barrier plays a part too (added risk);
  • Finding a good property management firm that you can trust is a must (difficult);
  • Local by-laws and their implications;
  • How do the tenant protection laws work in Germany (added risk);
  • Insurances, currently we don’t know if they are similar to the Netherlands, in terms of coverage and price;
  • You might need to make the occasional trip to Germany to check out the property (yeah, holiday opportunity too!);
  • You will need to make sure contractors are not screwing you over for renovations and/or repairs (ties in with note above on management firms);
  • The property purchase costs are relatively low per square meter, however, this also means that you will have to consider a higher maintenance budget per property (i.e. a higher rate than say 2.5-3.5% of the property value). For example, you can buy a large house for €250.000-€300.000 (with 8 rental units), which is in good condition. In the Netherlands you might make a maintenance reservation of say €6.500-7.500 per year. But with a large German property with 8 kitchens, 8 bathrooms and a large exterior surface, this reservation is likely too low. Especially since labor and materials cost are about the same in Germany as in the Netherlands. Again, some homework is in order to find out what is appropriate.


How about you? Have you been triggered to consider (RE) investments beyond your borders? What do you think about our ideas? What have we missed?

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Austria - Castle

It is the end of the month again, so it is time for the Real Estate Report – June 2017. It was a rather uneventful month (yay!), but we have to start focussing (and acting) on some of the longterm maintenance items remaining for the year. Tradesman/woman are hard to find during the summer in one of the best economic years in a long time. Fall will also becoming around quicker than you think. Time to step it up and finish the required works!

Rental Income

Sorry for the boring story here, but still the same tenants, same income and all on time again. We will shake it up in July when there is one rental income increase (the €250 for Unit 3 will go to €275). This will boost our rental income to well €3.000, which just looks really cool on paper.

The usual income overview is provided below:

Real Estate Update - June 2017 Income

Real Estate Update – June 2017 Income

Rental Expenses

As already noted in the introduction, no maintenance works have been performed (or paid), so expenses are minimal this month. It’s just the usual suspects and a small amount of water management/sewage fees. 

The expenses for the month include:

  • Interest costs (mortgage and loan);
  • Property Water management/Sewage fees/Taxes; and,
  • Property management costs.
Real Estate Update - June 2017 Expenses

Real Estate Update – June 2017 Expenses

Real Estate Report – Overview

We made a total of almost €2.303 in net rental income for the month of June (before taxes), our best month to date! The net cash-flow will come in at around €1.900. Our total YTD rental income for 2017 is about €11.401 (before taxes). We just crossed the 5 digit mark in net rental income, sweet!

Interesting note, if we look at our core expenses and the average net rental income for this year so far (~€1900 – assuming no taxes), we would be technically be FI! Unfortunately, from a cash-flow perspective we are not. Nor does this average net rental income correctly reflect reality. For that we need about a 10-20 year period within which we see a correct reflection of longer term maintenance items and turnover costs/vacancy effects. The shown net rental income should in fact be reduced with a long-term maintenance allowance. In short, we still would need more properties to become FI (or somehow drastically reduce our expenses, which could be done by moving outside the Netherlands).

Real Estate Update - June 2017 Overview

Real Estate Update – June 2017 Overview

Real Estate Report – Forecast

There is also some bad news, one of our tenants have let us know they are trying to buy a house and hope to move out in October. At that point they would have been living there exactly one year and are free to move on. This is rather unfortunate as they are a very nice couple and take good care of the place. So the search for new tenants by the property manager will be happening in September most likely.

We are still actively reviewing other properties and have actually submitted an indicative offer on 5 rental properties. The submitted price is very low as there are some risks associated with the rental units, which include an administration and year end statements that are still to be approved. The inside state of the properties is moderate, so we could see replacements of kitchens and bathrooms.

Another risk, albeit less of an issue for the coming decade is a somewhat stagnant rental price. Why is this a smaller risk? Because the potential return on investment is so high, that we could add another property to compensate for the stagnant rental income, inflation and associated increase in expenses. It’s a calculated risk. Will see what happens!


How about you? Any RE investment plans? A good (or bad) story to tell? Let us know, we’d love to hear from you!

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Perhaps I’m wrong, but most bloggers are probably more organized than I am. I don’t hold a buffer of posts that I can use when I lack inspiration. This often leads to last minute writing (with associated typo’s and spelling errors, sorry!). So, without pre-planning this week, it will hereby turn into “Real Estate Investing Week” at Cheesy Finance. What’s up with the click-bait title, I can hear you ask? Well, it might actually become a reality in the (distant) future. How do we think we can get to €100.000 Rental Income? Let’s review!

€100.000 Rental Income - Pretty Picture

€100.000 Rental Income – Pretty Picture

Current Situation

As you might be aware, we currently have 5 rental properties and a house of our own. The market segment we prefer includes properties around the social housing norm (defined as a €710/month limit; rents below this limit are determined by a point system here in the Netherlands). The main reason is the relatively large market available, e.g. there are many people that could afford these properties. This makes it easier to rent out these properties and keep vacancy rates low. So far, this has worded out well. The downside is that the tenant turnover is a bit higher. It’s a trade-off we are willing to accept.

We also have one commercial unit, which holds a artisan workshop. This is not our preferred market, but this opportunity presented itself and we took advantage of it. In the future this unit will be rebuild into a residential unit, which will allow a higher monthly rent and a better return on investment.

The Near Future

It probably is not a surprise to you that we are actively looking to expand our Real Estate holdings. We are currently investigating financing options and properties to see if we can expand our rental income. One option we are actively reviewing is a portfolio of 5 units. The yield is pretty good, but there are some other risks associated with this opportunity. This includes limited increase/stagnant rental income and requirements for urgent maintenance/upgrades of bathrooms/kitchens. But if the purchase price is right, this might not be a major concern. Only time will tell if this will become the right investment for us.

€100.000 Rental Income – Real Estate Financing

€100.000 Rental Income

Now, how do we get from where we are now (~€36.000/year RE income) to €100.000 rental income? Well, it’s something like: “go big or go home” 😉

Firstly we have to do two things with the existing Real Estate: convert the commercial unit and split of our existing house. The idea is to upgrade the workshop to a residential unit, this will probably costs us as much as €75.000 (could be €100.000, subject to work required). We also want to split our current home into two rental units. The costs for this are estimated at €50.000 (new kitchen, heating system, bathroom and partitions + municipal fees and any required works). This would add two rental units to the portfolio and increase income for one. Not unimportantly, we also will need to move 🙂

Secondly, the purchase of the portfolio of 5 units needs to be successful. We have no guarantees at this stage but will keep you updated on developments. Depending on how things go, the direct out of pocket costs for this Real Estate portfolio are about €100.000-125.000. This would mean we have to sell our Dutch dividend shares, sell our ETF portfolio and use most of our cash reserve.

Property Value and Financing

Based on our estimate of the value of all properties combined, we would be in the 7-figure territory. That is a lot of money! See below for a summary of what we believe (and know) the properties should be worth (market value):

€100.000 Rental Income - Property Market Value

€100.000 Rental Income – Property Market Value

Looking at this, we are going to need a lot of financing! This will also cause us to be quite leveraged with this Real Estate investment. Partially this scares the crap out of me! But when looking at the numbers (positive cash flow) and our experience from the last few years, it certainly is possible. A (conservative) estimate of the total financing we need (via investment mortgages and perhaps even personal loans) is shown below:

€100.000 Rental Income - Financing per Property

€100.000 Rental Income – Financing per Property

Right now, our own investment would be about €390.500. This is assuming that everything happens “tomorrow”. This is not the case, as this will take us several years to realize. Realistically, about 4-5 years at a minimum! During that time, principle payments would have increased our “investment value” at bit.

Rental Income

Using the existing rental income, and the estimated rental income of the renovated/upgrades units, we estimate the following:

€100.000 Rental Income - Rental Income

€100.000 Rental Income – Rental Income

This should be a realistic estimate, but could vary slightly depending on market conditions. If the economy does well, this should be very much doable. If we get another crisis/recession (and we will), we might temporarily get a bit less.

Operating Expenses

As noted above, assuming all this happens “tomorrow”, the expenses would look like this (rough estimate):

€100.000 Rental Income - Rental Expenses

€100.000 Rental Income – Rental Expenses

The expenses includes interest costs, property management, building management, insurance, maintenance reservations and property taxes.

Obviously we won’t be able to make this happen “tomorrow” as we simply don’t have that much money nor the ability to get all financing at once. This is therefore a conservative approximation, as over the coming years we pay down principle and the effective interest expense will go down.

Personal Taxes

Because all these investments will be considered wealth, the investments will be taxed in “Box 3“. In this case the tax burden (assuming the investment is done “tomorrow”) will be €1.704. The calculation is as follows:

  • Total assets are €1.070.000 (estimated market value)
  • Total assets corrected for being in “rented state”: €909.500*
  • Combined debts are €679.500
  • Net Wealth for taxes: €230.000
  • First €50.000 of wealth is not taxed (for a couple like us)
  • Next €150.000 is effectively taxed at 0.86%
  • The final €30.000 is effectively taxed at 1.38%
  • Leading to a total tax burden of about €1.704
€100.000 Rental Income - Personal Taxes

€100.000 Rental Income – Personal Taxes

*: note that we currently don’t know what the property municipal assessments (WOZ) would look like for this portfolio. This assessment is critical as it determines the value you have to add for your personal taxes. In rented state you have to use between 45% and 85% of the assessed value of the property. This percentage depends on the “yearly rental income” over “WOZ value” ratio (see here, Dutch only). We assume 85% for our scenario. This translates into the fact that the “total assets in rented state” is likely an over estimate. This as we used the market value at 85% and not the WOZ value, which generally is (much) lower.

Interesting note, if all mortgages and loans are paid in full. The total tax burden on €909.500 would be €11.082 per year (for the 2017 tax year). This is an effective tax rate of 1.22%

Net Income

So what are we left with at the end of the day? Based on the above we have the following:

  • Income €100.320
  • Expenses €67.448
  • Net income before personal taxes €32.872
  • Personal taxes €1704
  • Net income after personal taxes €31.168

Now that is more then enough to become FI for us! It would even give us about €6K more in travel allowances per year, yay 🙂

Note that taxes in this case are only just 5.2% per year! This will obviously rapidly climb as the properties are being paid off and your wealth is increasing. For example, as noted above, the taxes are €11.082 if you have no mortgages/loans. In this case the expenses would drop about €17.000 (2.5% interest on €679.500). Your net income before personal taxes would increase from €32.872 to about €50.000. In this case the tax burden would become about 22%. In that case you are left with about €38.900, that is more than enough for FI in the Netherlands!


How about you, are you interested in real estate investing? What do you like about it? What are you afraid of?

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