My brother and I have now completed the purchase of our 3rd apartment.
I will in this blog post go through the numbers.
Purchase price: EUR 126.846
Initial puchase costs
Title fees: EUR 1.109
Lawyers fees: EUR 461
Estimated rehab costs (worst case): EUR 6.200
Private loan for the full amount EUR 127.517 (4,75% in interests rate)
Expected rent: EUR 872
Interests (first year) per month: EUR 505
Taxes: EUR 19
Estimated common costs: EUR 156. This includes savings for future repairs, insurance, and some utility.
Budgeted profit before taxes:
Cash flow pr. month: EUR 177
Return on investment (financed): 27,33%
Return on investment if cash financed: 6,42%. This equals a cash flow of EUR 679 per month.
All a decent return for an apartment in a central location in a larger town in Denmark. The apartment also has some appreciation potential , something that is not budgeted for. The seller purchased the apartment at the top of the marked back in 2008 for EUR 172.483. So 36% higher than our price. The marked has recovered in the two largest cities in Denmark, but there will still go some time before we are at the same prices in other cities. I recon at least 5 years or more, but as mentioned we a buying for cash flow so we are not budgetting with any appreciation.