A few weeks back I wrote this post on hitting my 100k goal. Yesterday I came across an interesting way to continue my journey, which was not planned.
25yo, no debt, no house, no car With next year promotion should be 3,5k a month saving rate. Southern europe cost of living (avg. salary 1,700€ brutto) 100k in cash and a bit in bitcoin Plan to down-pay a house and rent it + start investing in stocks/etfs
However, I foundd a potential new investment vehicle while looking for a house in my home-town (up and coming area, starting to get highly valued close to a very expensive city). Here the options (scroll to number 4, that´s the crazy one):
Option 1 – Attic in my home-town (which I like enough to eventually live myself):
Price 230k (top floor, 120m2, 3 bedrooms, renovated, great location) Rent out for 750€ a month Mortgage would be 750€ a month Realization 1: it is a hassle to find a place you would like to live and risk tenants to fuck it up. Realization 2: it won´t make me money, only lose money and/or store value.
Option 2 – 1 bedroom studio in the city:
Price 300k (1 bedroom, 60m2, renovated, hip area) Rent out for 1000€ a month Mortgage would be 1,000€ a month Realization: too much money for too little real state 40km away from where I live
Option 3 – basic appartment easy to rent in my home-town:
Price 160k (3 bedrooms, 120m2, good condition, good area) Rent out for 600€ a month Mortgage would be 350€ a month Realization: looks profitable, I would not mind living there if I ever had to.
Option 4 – buy a full building:
Price 160k (needs 150k renovation, GREAT area, unlimited possibilities) Possibility to rent out 1 large shop space, build 3 studios, 1 appartment and 1 penthouse. Mortgage would be 350€ a month up to 1000€ a month if I go all in with renovation. Realization 1: if I go all in with 300k and rent all out ROI is 8 years. Realization 2: I can renovate and rent in stages so I don´t have to go all in. I would be breaking even with the mortgage at all times. Relization 3: I could eventually start a supermarket at street floor and an english academy on the first floor and own those businesses myself Realization 4: I could build 1 extra stage on top of the building and make it deeper, adding m2. Could also be made taller. Realization 5: Needs an elevator to get to the 3rd floor, that can be built in later if left the space for it in the original plan. Realization 6: I might have understimated costs of renovation.
So my current thinking is, let´s go for option 4, it has the highest upside and moderate downside. If there´s a crises businesses still rent my floors and even if rent in the area goes down (unlikely because of GOAT location) I still break even with my mortgage. Even if I lose my job… rental would be able to keep up with my payments and fuel my low cost of living.
What bothers me is that I think there will be a lot of money going into the technical architects, city council and then taxes towards me for installing 5 new properties
Realtors, does that seem like a good move to you? I think I am young and in pretty good shape to pull this off. What would be next steps? What should I watch out for?
Thank you all!
TLDR: Buying a full building and renovating would put me off 300k, there I could build 1 large or 2 small shop floors, 3x studios, 1x appartment and 1 penthouse. I could do that all at once or step by step. If all rented at an Ok price that would put 3,000-3,500k a month in my pocket, ROI of 8 years.
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