I have spoken about the subject in the past on this blog. This time, I’m going to walk you through what is essential if you want to invest in and make a living from real estate.
In 20 years we will be able to retire
I already said it in another post. It is unlikely that I will retire. I love doing things and having fun. I still like the idea of being able to do it if I wanted to. For me, this topic is less about making money and more about not really depending on anyone when you get older. If all goes well in 20 years, the apartments we have will give enough to cover the expenses of a modest living.
It’s more complicated than you think
My wife and I made the first investment about 6 years ago. The first apartment purchase was a nightmare. The company that did the renovation threatened to destroy the apartment if I didn’t pay them the last 500 euros that were left pending that I wanted to pay them after making the last improvements that were pending. The second purchase went well. In this apartment last year we had the case that a student who had mental issues (which we found out later) started destroying the apartment while we were in the house. My wife and I had a bad time and even had to call the police.
How we invest in real estate
Anyone who thinks that investing in real estate will see that it is not easy and straightforward. Despite these negative experiences, we will continue to invest. Indeed, we have just started the purchase of a small fourth apartment. The situation with the banks has become more complicated so we’ll have to see how much we can finance this time around. I always try to fund as much as possible. Living outside of Spain and considering we already have three mortgages, I understand they won’t give us more than 50% anyway. I hope 70% but I doubt it. Once the purchase is made, we will rent the rooms to the students. The apartments are located in an area close to the university. Due to the proximity to the beach, there are also two apartments that we rent out to tourists in the summer.
Why real estate (in Spain)?
The reason is very simple. You can invest using the bank’s capital. In addition, properties tend to increase in value even if we are not buying and reselling them. The idea is to generate positive cash flow. At the moment we have on the three floors we already have 100% occupancy. A positive cash flow is generated month by month between what we pay off mortgages and what we get in rents. It is a fantastic system which in other countries due to the high cost of acquiring real estate (eg Germany) cannot be done in the same way.
Investing in real estate is more complicated than what is presented to you in YouTube videos, but for me it is still the best option to increase equity and generate positive cash flow. I doubt anything better will ever emerge with the same risk / reward ratio.