Here's my little success story from 2020/2021 that still makes me happy today :)
One evening I was scrolling through EBay classifieds again, the TV was on and I was bored.
Then I came across an apartment for sale advertised by a real estate agent. 99,000 for a 2-room apartment in a town about 50 minutes away by car. After doing some quick research, it was clear that the apartment was too expensive compared to the prices in the area and the year of construction (1995).
My interest waned. But since my cousin lived in the town, I wrote him a quick message: "Hey, time for an after-work beer these days? And tell me, what can you realistically ask for in rent per square meter?".
At the same time, I wrote to the estate agent. He got in touch the next morning and said "Tomorrow, Wednesday, you can view the apartment at around 5 pm".
So it was clear: Wednesday after-work beer with the cousin and a quick look at the apartment beforehand. Without much hope. But I thought it was a good idea to gain experience, you always learn something.
I took advantage of the day and placed a "dummy ad" on Ebay classifieds with the key data of the apartment I knew. Calculated rent, square meters, location, etc. Three interested parties responded within four hours. It was clear that the rental could work out quickly.
On the same day, I called two banks and arranged a consultation appointment on Thursday afternoon and one on Friday morning.
Also on the same day, I had a phone call with the local job center. They sent me a list with the maximum rent prices and the maximum number of square meters per person in the Harz 4 benefit. This gave me an idea of the minimum I could get for the apartment - regardless of my asking rent.
During the viewing the following day, the following picture emerged:
- Unmotivated estate agent
- Apartment has been for sale for 9 months
- Owners do not want to deviate from the purchase price, but are also frustrated that they are not getting the apartment sold
- Apartment is (deliberately) empty because it is better to sell.
Condition of the apartment inside:
- An old dark carpet
- There were some damaged tiles (small chips) in the bathroom due to an "out-of-round washing machine".
- The lighting was dim and dull, old "oil lamps" on the ceilings.
I estimated in my head what I would have to put into the apartment to get it back to a good standard. Floor renovation around €5,000, complete bathroom renovation around €15,000, "odds and ends" and lighting around €2,000.
I presented this bill to the estate agent and said: I'll take the apartment for 78,000.
The estate agent told me that I would not be successful, that the price reduction was too high and that the owners would not agree to it.
He handed me the printed exposé of the apartment and we said goodbye.
The next day was the first viewing appointment.
Conditions: Full financing in the amount of €78,000, additional costs to be borne by the buyer, additional collateral (loan against existing apartment), interest rate 2.1% with a 10-year term.
Second bank appointment on Friday morning: full financing incl. ancillary costs (just under €88,000), no further collateral, 1.29% interest for a 10-year term. I would only have to put in €1,552 myself.
After the bank appointment, I called the estate agent. I asked him: "Tell the sellers that I have the financing confirmation and that I'm committed to my offer of €78,000 until Wednesday next week."
I tell you, I was so excited to see if this would work.
The estate agent called me on Monday afternoon. The owners had "gone soft" because they couldn't get rid of the apartment for so long and because in a few weeks (23.12.2020) a new regulation regarding brokerage fees would come into force, according to which they would have to pay half of the brokerage fees.
So I actually had their consent, at least verbally. Now I just hoped that the owners wouldn't back out.
After the owners had agreed to the deal, a notary appointment was actually arranged and the purchase contract was prepared. The date: one day before my daughter's due date.
That was a good argument for me, because: The owner and estate agent seemed happy that the sale was now close to completion. The sellers, because they were frustrated with the low price but slowly realized that they wouldn't be able to get rid of it at a high price. And the estate agent, as his clients were certainly not the easiest to deal with. I think he just wanted THE CASE off the table.
So I authorized the estate agent to handle the purchase on my behalf. My daughter was born healthy on the day of the notary appointment. I was able to be there and drove to the notary a few days later to finalize the purchase - 25 minutes including the drive and waiting time at the notary.
After the notary's purchase price due date notification, the owners had their money a day later, the handover took place and the rights (e.g. rental income) and obligations (e.g. maintenance) were transferred to me.
In the upper part of the story, I gave you my cost estimate for the renovation. It was clear to me that a few new tiles in the bathroom, replacing the shower fittings and replacing all the lights with bright, warm LEDs would be enough for now. Depending on the tenant, I thought we could talk about the carpeting...
So after ordering the materials, I set to work and spent about a day in the apartment doing all the work. Cost: one day's work and around €300 for materials.
I had already told you in the upper part that I had placed a "dummy ad" before the purchase to "get a taste" of the tenant market. At the time, I also had an automated search query running, which alerted me to potential tenants looking for an apartment.
I had already used this method to contact a young man who was urgently looking for an apartment before the notary appointment. His problem as to why he couldn't find an apartment: he was open about two things. 1. he was unemployed and had been for a relatively long time (considering his age). 2. he was mentally ill.
For landlords, these are usually two knock-out criteria.
Why? Mostly out of concern for the condition of the apartment and potential damage. And also out of concern about complaints from neighbors. To make matters worse, mentally ill people enjoy special protection against dismissal. So it's not so easy to get them out of the apartment.
For me, these were initially criteria that made me think: "let's see what kind of person this is". But I didn't want to rule out renting to him from the outset.
The viewing appointment with the potential tenant took place 30 minutes after the handover of the apartment between the old owners and myself, which I had with the owners and the estate agent that day. So I didn't have to make two trips.
The following picture emerged: an approachable, neatly dressed and well-groomed young man. Talkative but still politely distant. The details of his life story will of course remain private. But I can tell you this much: he was far from the supposed and cliché-ridden "psychologically ill Harzer" and was in good health. He received close care and support and lived in the house next door. This ensured that his parents still looked after him regularly.
He moved in 14 days later. The job center pays the rent and, ideally, everyone is happy. At least until today: "yes!"
Now a few dates...
Timeline:
26.10.: Apartment discovered
(30 min.)
27.10.: Broker contacted, dummy ad placed.
(30 min.)
28.10.: Viewed apartment
(1 hour)
29.10.: Bank appointment 1
(1 hour)
30.10.: Bank appointment 2 (1.5 hrs.) Financing confirmation, submission of purchase offer to broker/owner (5 min.)
31.10.: Everything calculated again.
(1 hour)
02.11.: Acceptance of my offer by the owners (0 min.)
10.12.: Notary appointment
(0 min.)
16.12.: Approval of the purchase contract by me
(1.5 hours incl. reading the contract)
13.01.: Handover of the apartment, viewing by potential tenants
(2 hours)
23.01.: Repairs and replacing lamps
(6 hours)
31.01.: Handover to tenant
(45 min.)
Time required therefore 15 hrs. 50 min.
Good: Honesty also includes a bit of "small stuff" such as travel times, writing the rental agreement and various emails with the tenant, bank and estate agent. But roughly speaking, it was less than 24 hours in any case.
Economic data
1,500 € equity (Corona bonus from the employer)
78,000 € purchase price
8,190 € incidental purchase costs
150 € Bank appraiser
Result:
86,138 € Credit
1,552 € Equity
plus € 150 bank appraiser, € 300 lamps and repairs, € 9.90 rental agreement template
Monthly rent:
395 € cold
38 € Non-recoverable ancillary costs
30 € Community maintenance
40 € Maintenance of separate property
92.59 € Interest costs
Remainder therefore € 194.41
Repayment: 1.8 % = € 129.20
Cash flow: € 65.21 -> sufficient to pay the tax, after depreciation and interest costs etc.
I look forward to your questions and feedback :)
