Real Estate secrets

Real Estate secrets

By coincidence, I discovered that real estate investing can be very interesting and accessible, even for location independent people. If you have a starting capital (or means to get a mortgage for your first apartment) it is a great way to create a passive income; a big step on your way to financial freedom.

Right now I own four small apartments in Amsterdam (30m2 each) which I rent out long term to expats. This provides me with a ‘passive’ income and a ‘pension’. If anything ever happens to me, I could always live in one of the apartments and have the income I make from the other three ones. It was never my intention to get into real estate, I just found that it is fairly easy and provides a very good investment.

In this blog I share my personal real estate journey, my best tips, some discussions and finally my top team! Hope this helps you decide if/how real estate can  help you to achieve more (financial) freedom.

Real Estate secrets
Real Estate secrets

My real estate discovery journey

In 1996 my dad gifted me the downpayment, for a house in Amstelveen, NL. When -15 years later- I got ‘fired’ from The Netherlands for traveling too much, I wasn’t allowed to register in my own house anymore. I could live there, but without official registration I lost all my rights. So I decided to travel the world and rent out my house. For the first time, I realized that owning a house does not only have to be a financial burden (you have to work to pay the expenses): it can also provide income and thus more freedom.

When I got sick I needed a place to recover. Since my own house was occupied, I borrowed some money from friends and bought a small 30m2 apartment in Amsterdam. This proved a great investment: real estate was getting more expensive, so people were moving into smaller spaces. Mine was recently renovated and very luxurious. As soon as I moved in I felt better and was ready to travel again. So I rented out the small apartment, now having two rental incomes. I stayed with friends, in Airbnb’s etc: all my travel was covered by the rental incomes!

Then I realized that the 200m2 house I owned in Amstelveen, provided much less rental income compared to its value, than the small apartment in Amsterdam. Via Whatsapp – from Thailand – (“would you be interested in buying the house instead of renting it?”) I sold the house to its renters. Both they and I were happy with the deal. With the proceeds, I paid off the mortgage on the house (knowing I would never get another mortgage, being both an entrepreneur AND not registered), paid off the debts to my friends and then I had just enough money left to buy another small apartment in Amsterdam.

Because I did not need financing (in Dutch “geen financierings voorbehoud”) and was prepared to take over the apartment immediately, I could offer slightly less than other buyers (there were many!) and could still get the deal closed (sellers like certainty). Now I owned two small apartments, which I had decorated by a designer. With those great pictures and smart, small spaces in good locations, it was easy to find expat renters who would pay top rentals. I had no debts, real estate going up in value at a crazy rate and a nice monthly income. For me, this was as far as I would go.

But then a friend triggered me: you could leverage the value of your apartments, get a mortgage and buy one or two more! It took a while to get over my initial hesitation and ‘no mortgage’ principle.  I made a calculation and found that the rental income would not only cover the interest but would also provide me with some extra income. And on top, I would benefit from an increase in value of the apartments; getting a mortgage was indeed a good idea!

Even though I was convinced this was a good ‘business case’, all the banks and mortgage advisors I spoke to turned me down because I was not registered in The Netherlands. So BUYING real estate is no problem if you are not a resident, getting it FINANCED is. It took me more than 6 months to find a way to get a mortgage as an investor, not requiring to be registered (more about that later). Even with the higher real estate prices, even at a higher (investor) interest rate (I pay 3,5% instead of 1,8% for locals), it was still worth it.

So last week  – even before the confirmation that I could get the mortgage was final – I bought apartment number three. My designer had already received the details of the space and had made a plan, so I could order furniture online. I had the apartment painted the day after the signing, received all the furniture on day 2, assembled and decorated it on day 3. During the painting, the real estate agent passed by with a potential renter. She saw the empty apartment and the drawings of the designer and decided she would rent it. She moved in on day 4…

Then my real estate agent alerted me that he had an apartment for sale in my building, which was not on the market yet. I know the area and the building are great, and I should easily be able to rent it out, so I said yes. Now I am in the process of getting a mortgage on apt 3 and 4 in order to be able to buy apt 4… 🙂

This is as far as I can go, there is no more ‘leverage’ left in my apartments. I am happy with my portfolio and would like to share my lessons learned with you.

Real Estate secrets
Real Estate secrets

My top 9 real estate tips

1) Choose a city and area you know

Everybody knows succes stories. I was triggered many times by friends saying they made great deals in Buenos Aires, there are lots of opportunities in Athens etc. Unfortunately there are also a lot of failures we don’t hear about. Don’t trust a random third party, like a ‘some’ real estate agent in a foreign country, when you want to seriously invest in real estate. I found it works best to invest in a city, or even a specific area within that city, that you know best. This prevents you from buying in a ‘promising area’ but on ‘the wrong side of the railroad tracks’. Every insider knows things that outsiders just don’t see until it’s too late. Trust your own gut, ask your friends, check out the real estate websites in the areas you already know well.

2) Do your research

Study the real estate websites in your area. Both the sales and rental ones. Know which (upcoming?) areas get great rental incomes while real estate prices are  still rising. Stop at real estate agent windows with ‘for sale’ and ‘for rent’ pictures, just to get an idea for areas and prices. Talk to as many people as possible, both experts (real estate agents), investors, residents and expats.

3)  Invest in the smallest possible unit

Tiny houses are trending. Minimalism is becoming the new status symbol. People don’t want and need big apartments anymore. And also bigger and more expensive units tend to stop selling when a crisis hits. The smallest possible unit (in many cities this is 30m2) is relatively expensive (often €10000 per m2) but the absolute amount of money is relatively low, so there will always be buyers. You can make more money with two apartments of 30m2 than with one apartment of 60m2.

4) Choose recently renovated apartments over doing it yourself

Unless you have construction experience, have time to spare, a trusted construction team and the resources, don’t even think about renovating. It takes time, brings a lot of insecurities and often things go wrong. I prefer to invest in recently renovated apartments. I know, they are more expensive, but I know exactly what I get and I can rent them out immediately, without any hassle. Time is money… 🙂

5) Rent only long term

Airbnb sounds nice, but rules around the world are changing and are becoming more limiting. Plus Airbnb and other short term rental is very labor intensive and the renters usually don’t take good care of your place. That’s why I prefer long term rental (1 year and up): after signing a one year contract, you usually don’t have to do much. Since the apartment is recently renovated, you don’t even need to do a lot of maintenance or management. Be aware though, that many countries have legal protection of renters. If they stay in your apartment for a certain time, they have the right to stay, and sometimes are even entitled to a lower rent.

6) Rent only to expats

I only rent out to expats because they usually intend to leave after a certain period, their company often pays for the apartment, they don’t bring a lot of stuff (or pets), they usually take good care of the place and they travel often, so they don’t use the space very heavily. Use a dedicated rental agent specialized in expats to find candidates, perform background checks and arrange all the paper work.

7) Invest in a good team

Have experts do what they are good at. Real estate agents know how to find apartments and renters. They know how to do research and have experience in the paperwork. If you decorate your apartment yourself, it will look as if you have decorated it yourself. Create the WOW effect by hiring a good designer. They can work with any budget. Have a good painter do the work instead of struggling with the paint yourself, etc. You will save time, energy and have a better result.

8) Decide fast, aim for long term

It’s a sellers market nowadays. There is just no time for long thinking, calculating, negotiating. you need to be the first to make an offer the seller cannot refuse. Even if you pay a bit too much, you’ll earn it back on the long term.

9) Dare to take risks

You’ll never have 100% security. But by buying apartments that create monthly revenue AND have a potential increase in value, you have a double ‘backup’. If anything happens to you, you can always live in it. And if anything happens in the world like a war or a crisis, ‘stones’ are always better than money in the bank. If you don’t make a choice, the choice will be made for you. If you wait any longer, the real estate prices will go up.

What if you don’t ‘exist’?

If you are a resident of a country, you have a job and/or a good credit history, it’s fairly easy to get a mortgage (In The Netherlands the current personal interest rate is only 1,8%). If you are an entrepreneur, it gets more difficult. If you are an unregistered location independent entrepreneur, it’s almost impossible. Buying real estate is no problem: financing it is. Eventually found an agency that only works with private investors (see ‘My Team’ below). They have very strict and specific requirements and a higher interest (3,5%), but they are used to working with investors. A ‘normal’ mortgage does not allow you to rent out the property, thus creating a risk. An investors mortgage requires you to rent out the property! If you cannot get financing the regular way, keep on trying, keep  on looking for another solution. Ask different banks, agencies, financial institutions, private investors, check peer to peer banking, try borrowing money from friends and family. Focus on the business case: the real estate your have as security and the monthly rental income to ensure you can pay the interest. Investors want to minimize risks, so provide all the information they ask and anything you can think of to give them that security.

The financial facts

I am very transparent about everything I do, also about finances and investing. Please don’t see this as boasting, since I share both my successes and mistakes/failures. Being extremely transparent can be risky, since governments and tax services are also watching me and may interpret my facts differently than intended. My goal is to share what I have learned, so others can benefit.

This podcast interview on ‘The 80-20 investor show’ explores my ideas about finance, mistakes I have made and my start in real estate.

I already owned two apartments with a joint value of about of €550K. I mortgaged those for €300K to buy a third apartment of €300K. At an interest rate of 3,5%, that means I have to pay €875 per month in interest. If you borrow under 60% of the value of an apartment, you don’t have to pay annuity, so it’s just the interest (I like to keep my monthly payments as low as possible, others like the idea of lowering their debt by paying monthly annuities). After decorating the apartment, I can rent it out for €1500-1600. Of course there are some other expenses next to the €875 in interest (rental agent, service fees, taxes etc), but it is still a very interesting deal. You do the math… 🙂

Then I mortgaged the recently acquired third apartment, and number four, which I was in the process of buying, to finance number four. same amounts, same interest rate, same rental. So now I have four apartments with a total value of about €1.1M with €600K mortgage. If I really  wanted, I could refinance everything, go up to 70 or even 75% of the total value and maybe get to borrow enough money to buy a fifth apartment, but right now that is not interesting for me. I would have to pay valuation costs, advice costs and refinancing fines to set it up. Then I would have to pay monthly annuities because the value of the debt is more than 60% of the total value, increasing my monthly expenses. What would you do? Go for a fifth one?

What about the ethical issues, the city deteriorating?

There is a lot of resistance to investors buying apartments in cities like Amsterdam to rent out the  apartments to tourists and expats. I completely agree with the airbnb destination: it makes a city less ‘livable’ because  of all the short stay tourists with different needs than residents. Entire areas in the center of Amsterdam are turning into tourist streets, with coffee shops and souvenir shops. Not good! Expats, however, really come to live in a city for  a few years. They take part in the local economy: they buy or lease a bike, go grocery shopping, eat in local restaurants etc. They take care of the neighborhood, because they live there. They are not so disruptive.

“But because of investors like you, local people can’t live in Amsterdam anymore” is a criticism I often hear. It is very hard for ‘starters’ to find an apartment to rent or buy. It is true that real estate prices in Amsterdam are rising at an alarming rate. So are prices in other capitals around the world. There is more demand than availability. Wealthy Chinese and Russians are buying apartment in bulk,  often  leaving them empty, purely as an investment.

This problem cannot be solved by capping prices, or limiting the number of apartments somebody is allowed to own, as some people suggest. In amsterdam the problem is that a certain percentage of the city is dedicated to social housing. Many decades ago, nobody wanted to live in the city center and social housing at ridiculously low rates was used to ‘lure’ people into the center. These people still live there, at such low rates that they will never leave. It is just not realistic that in the popular city center somebody in social housing will pay €300 per month while exactly the same apartments in the ‘liberal market’ in that same area go for €1500.  It is great that we offer social housing at low rates to people who need it: but does that have to be in the city center?

In short: it  is not my ‘fault’ that your cousin cannot find an affordable apartment in Amsterdam. It is both an economic problem (demand versus availability) and a government problem (do we really need that much social housing in the city center?). If I would not have bought  this apartment, a rich Chinese or Russian may  have bought it: somebody with no heart for the city or country. Wouldn’t you rather have me own it? And share my real estate secrets so maybe, one day, your cousin can buy their own apartment? Maybe you want to buy it for them and rent it out to them at an affordable rate?

My team

I can only do what I am doing because of these great  people, who have been patient with me, who share with me what they know and who are not afraid to go off the beaten path.

Real estate agent. It is advisable to hire a local real estate agent when buying real estate. In Amsterdam, I work with Michael Wielinga. What I like best is his responsiveness and creativity. Fast and clear communication via Whatsapp, even during evenings and weekends. Creative and flexible solutions for unusual situations. Michael knows the Amsterdam market well (both purchase and rental) and has a great network. I like Michael’s directness, his energy and  easy going personality.

Rental agent. When selecting an apartment to buy, make sure to get the advise of a real estate agent who rents out real estate to expats. Expats are a great target group, because they are good renters, often their company pays and they won’t try to stay in your apartment after their term is up. A real estate agent specialized in (expat) rentals can advise you about local rules, the possible rental price and can help you secure a renter. Michael Wielinga offers renting in Amsterdam. Ever since my first rental in Amstelveen I have been working with Michel Rootring from EHR (Executive Home Rentals); they have offices all over The Netherlands, so offer national coverage.

Financing. The ‘wizards’ of ‘Beleggingspanden financiering’ specialize in financing investment real estate deals. Bram de Jong ( helped me to get a mortgage, based on the real estate I already owned. No Dutch registration is necessary. A Dutch passport, however, is a requirement. They are also very creative and resourceful in other unconventional situations.

Designer. You will get a top rental price if your apartment looks really good and if you have good pictures to present it. In Amsterdam, I always work with Anja van Druyten. She is incredibly creative and finds practical solutions for apartments of all sizes. She can work with any budget; her help varying from ‘turn key’ (she does literally everything) or a design and shopping list, so you can do the actual decoration work yourself. Throughout this blog post you see some examples of the apartments she designed for me:

Real Estate secrets
Real Estate secrets
Real Estate secrets

Hope this blog gave you some inspiration and tips to decide if real estate investing may be interesting for you, too.

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