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GlobalWealth

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Just made offer on a deal today. Will follow up tomorrow with numbers if anyone is interested.
Ok, here's the deal.

66m2 (710ft2) 1br/1ba apartment in center city (european city). Purchase price of eur97,000 ($107,000). I will spend around eur3000 ($3300) to renovate.

Based on comparables (and my experience) in the area, I can rent for 15-18 nights per month year round. Average rent will be eur70/night ($77).

Based on 15 n/m, that is eur70 X 15 nights X 12 months = eur12,600 ($13,900) in gross cap rate.

My pm fee is 25% and bills, prop insurance, prop tax, and maintenance is another 15%.

eur12,600 - 40% = eur7,560 ($8,300).

Based on the purchase price plus renovations my net cash yield is eur7,560 ($8300) / eur100,000 ($110,000) = 7.5%

Keep in mind that is using a low estimate on my rented nights per month and a low nightly rental. I used eur70/n as the base, but we charge more during holidays and events (eur100-120/n) on these properties and I frequently get more than 15 n/m.

Also keep in mind that this allows me to stay in my own property several days per month and still get a 7.5% net cash yield.

Basically I am able to earn a great passive cash yield AND have a free place to live.

Hope that helps.
 

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I measure caprate here using; NOI (net operating income / total cost

I measure ROI (return on investment); NI (net income) / invested capital

I measure FCF/NI (free cash flow / net income); well....fcf / ni
 
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And the DCF valuation is not a great measurement, but just a baseline for me to compare, but I use;

Net operating income / ( 8% - 2% )

8% represents a good rate of return on this type of investment

2% represents a risk free return like you may get on a 10 year US treasury bond
 

Jamesdoesmith

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I spoke to a man who's wife is a real estate agent and he is a home inspector. It is how they met lol perfect. anyway. They had a house and an upscale type ranch condo thingy they were renting out as a venue. Well they downsized. Put BOTH on air Bandb and the house that was at the time being rented in a standard rent/lease thing was making him about 1k a month in profit. It now makes him 10K IN PROFIT! a MONTH. and the ranch thing with land a horses RENTS FOR THE NIGHT IN THE thousands! he says he won't rent it unless it meets x night requirements and y occupant requirements. He says he has it set up so that it is cleaned easily and the doors are all automated no key to key swap, Just a code to get in and bam it is yours. He says they all have to put up a solid security deposit so there goes really all the land lord burden that comes with your average tenants. He says its about 95% passive income. THE only real gripe is he pays a hotel tax. but still. nice clean income, less land lord burden, and its grosses 150K to 200k in PROFIT a YEAR from TWO locations.

https://www.thefastlaneforum.com/community/threads/golden-nuggets-tips-processes-how-tos.35110/page-8#post-433458

from the golden nuggets thread around January
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2 things

A) you do not need to do this in foreign or crazy locations. Many people have been doing it apparently in the US of A. Dallas is a great hub cause of all the business

B) This does not seem to be that new.

Cash is king
 
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Hi @Jamesdoesmith

Agreed you can do it anywhere. The point of the thread was for those interested in a different lifestyle living in multiple countries and earning money while living rent free.

I like the keyless entry. I have one with the same thing. No key exchange and no need to meet guests. You can even see when people enter and exit using an app on your phone. If you are not local then you only need a good cleaning person who is reliable and will show up when guests leave.

I definitely have a minimum number of nights and also take a reasonable deposit. But that takes some balance. While it seems like it would be easier to have a 14 night minimum, you will lose a lot of potential renters. I typically have a 3 night minimum. I also charge a cleaning fee in addition to the rental rate.
 
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Nice spreadsheet @GlobalWealth
How did you determined the 30% equity since it's a new purshase ? ( was it underpriced ?)
Just asking so i can learn to make better spreadsheets :)
The 30% was down payment

I can run it many ways

But you won't likely find a non resident mortgage with less than 30% down
 

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Page 2 of the spreadsheet has an amortization schedule that it pulls the mortgage data from. I do run the spreadsheet on every deal before making any offer.

While the ROI is always better with mortgage properties, my priority now is more on cash flow, not leveraging up to acquire more assets.

From my experience playing around with the spreadsheet, you get your best combination of ROI and FCF/NI at around 30%.

Obviously the FCF increases as you increase your equity, as your ROI will also decline.

And obviously your FCF is maximized when you pay cash.

Considering US 10y treasuries yield under 2% and the S&P500 dividend yield is around 2%, I see no reason to keep a lot of cash parked there now as there doesn't appear to be much upside.

You could argue that the ECB is monetizing debt now and thus the Euro markets will go up (and they have), but it seems precarious to me at the moment.

To get 6-10% nearly passive yield, diversify outside of the equity markets, diversify into hard assets, diversify geographically, and diversify across currencies just makes sense.

Getting to live there rent free is just the icing.
 
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I think it's a great strategy to beat the " asset rich, cash poor" syndrome that comes with real estate investing usually as you are more cash flow positive .
Just to be clear, this is not what I would consider a fastlane plane.

It is a way to diversify your assets, earn some mostly passive income and live rent free around the world.

If anyone is interested I can post one of the income statements from a property to show actual numbers.
 

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If anyone is interested I can post one of the income statements from a property to show actual numbers.
I'm interested in everything you share. You bring great value to this forum (especially since I live in EMEA - it's nice to hear from people on this side of the "pond" also.)
 

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Very interesting read and certainly very attainable for low capital real estate investing.

I also know a couple who have a holiday home near the beach. They rent it out in the summer season and enjoy it themself in the low season or when it is not rented out. I believe they rent it out for 1% of the purchase price per week in the high season which lasts about 15 weeks.
 
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Very interesting read and certainly very attainable for low capital real estate investing.

I also know a couple who have a holiday home near the beach. They rent it out in the summer season and enjoy it themself in the low season or when it is not rented out. I believe they rent it out for 1% of the purchase price per week in the high season which lasts about 15 weeks.
@Ikke. Do they use airbnb, booking, vrbo, craigslist or what?

I'm curiousbhow they determined rental rate.

I base it off of local comparables. And only buy if you net cash yield is >6%
 

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I'm more interested in how you get a visa to even enter these places and buy property without a sponsoring company or decades of waiting in line for a resident's visa. Ever since I got back from India, I've been dying to find a way back that will allow me to start businesses there.
 
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I'm more interested in how you get a visa to even enter these places and buy property without a sponsoring company or decades of waiting in line for a resident's visa. Ever since I got back from India, I've been dying to find a way back that will allow me to start businesses there.
I don't know anything about India, so I cannot answer that.

Europe is quite easy. Most nationalities can be in Europe visa free up to 30 days in a 6 month period. And many of them will grant you a residence permit simply by buying real estate (different thresholds apply based on country).

Most of S. America is also quite easy to buy property. For my taste, I would only buy property in Colombia and possibly Uruguay and Chile. But I am certain there are plenty of other opportunities there.

Central America can get messy. You REALLY need a very good real estate professional and a lawyer on your side. There are many issues with "dirty" titles there. But again, most people can visit C. America visa free.
 

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It sucks because I know Fragomen Worldwide is the legendary-tier solution for solving this problem the other way (Asia/Europe->USA) as long as you have mad bank to blow on their retainer fees, but it really is tough to immigrate into a country with the premise of starting a company whole-cloth there rather than just hiring their people or working for one yourself. Unless you're Elon Musk or something.

I'd need to be in the country for at least 8 months continuously. I could rent or stay into hotels for that time period. I could really even do what I want to do on a tourist visa (would have to stay in hotels though, they won't let you sign rental papers with a tourism visa) as all the transacting of money would happen online and could be sourced out of the US, but I want to do everything legally and the notion of falling afoul of a 2nd-3rd world justice system scares the crap out of me.
 

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It sucks because I know Fragomen Worldwide is the legendary-tier solution for solving this problem the other way (Asia/Europe->USA), but it really is tough to immigrate into a country with the premise of starting a company whole-cloth there rather than just hiring their people or working for one yourself. Unless you're Elon Musk or something.

That depends on the country. I assume you are still talking about India of which I am woefully ignorant.

But many places are extremely easy to start a company. And very advantageous as well. ie. Estonia.
 
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Here is the spreadsheet on one property I have that has a mortgage. The mortgage was 30% down, 3.6% interest.




This apartment rents an average of 17 nights per month, year round. The worst month in the past year was 12 nights, the best was 24.

What I am calling the cap rate here is really NOI (net operating income) / total cost of property. In truth, cap rate is gross income / total cost, which would be 12%. I just don't like that measurement since it only provides a benchmark, not a real number of return.

The ROI is my NOI / equity (the 30% of my initial investment). This is a more realistic measurement of return.

And the FCF (free cashflow) / NI (net investment or equity), is also a good measurement since it tells me the hard cash I can pull out of this investment.

4% is a pretty damn good FCF/NI for a leverage property. Keep in mind I am paying down the principle on the mortgage every month which is also my investment dollars.

This property is listed on booking(dot)com and airbnb, but 80%+ of reservations come from airbnb.
 

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Great stuff, Bobby! Have you looked at Croatia or Montenegro? I know you aren't much of a beach person. But they seem like a pretty good bang for your beach buck, provided that's not the only thing one seeks. (I enjoy the architecture, "cafe culture", history, etc as much as I do the beach.)
 
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Great stuff, Bobby! Have you looked at Croatia or Montenegro? I know you aren't much of a beach person. But they seem like a pretty good bang for your beach buck, provided that's not the only thing one seeks. (I enjoy the architecture, "cafe culture", history, etc as much as I do the beach.)
I have never been to Montenegro so I cannot comment too much. A friend of mine does have a house there on the coast and loves it, but I have no personal experience.

I have been to Croatia though and absolutely love it. There are some very cool beach towns along the Adriatic coast that would be awesome. I looked at some properties when there last summer and the prices were actually quite good. I think you could make something work there. You just need to realize that it will be very seasonal and unlikely to attract many visitors in off-peak. But that doesn't mean it cannot work since you can charge higher rents during season.

Croatia has some great seafood and the little fishing towns still have cool architecture and that European cafe culture. All of Croatia is basically mountains that finish at the sea. That means rocky and black sand beaches. Not the pristine white sand beaches you get from the coral islands in the Caribbean. You need some type of shoe to walk on the beach at all times. Every beach there though seems to have some little kiosk selling water shoes.

You should also consider staying near one of the main airport cities; Rijeka, Dubrovnik, or Split. You will get more tourist traffic if you are an easy drive from one of these towns. There is no decent public transport between beach towns so a rental car is a must.
 

M&A

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I have been considering real estate for a while now, do you think that using short term rentals (air bnb) is more profitable than traditional yearly leases with contracts ?

Id be more interested in buying an apartment building in a foreign country but I don't want headache of dealing with tenants, who's paying rent, maintenance. I just want to get the wire transfers :smoking:

I lived in the Czech Republic for a year and rented an apartment, turns out the guy is from Italy and owns 20 buildings with about 20 apartments each so about $300,000 a month gross. Turns out a lot of the real estate is owned by foreigners in Europe all making big bank.

Is it possible to get a loan with a bank in your own country to purchase property abroad ?
 
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I have been considering real estate for a while now, do you think that using short term rentals (air bnb) is more profitable than traditional yearly leases with contracts ?
Short term seems to have more profit, but of course more management. If you have a good manager, then it is essentially hands off for you. In my experience you get much lower yields with long term rentals and possibly have higher risk of property damage since you don't see the property very often, whereas with short term rentals you get a deposit up front and see the place every few days to assess damage and repairs. There are tradeoffs both ways.

Id be more interested in buying an apartment building in a foreign country but I don't want headache of dealing with tenants, who's paying rent, maintenance. I just want to get the wire transfers
This is certainly doable and can be very profitable. Especially if you are willing to buy a distressed property that needs refurb. One of my Russian buddies was in town a couple of weeks ago looking at buildings. He found one that could have been bought for about eur500,000. It was almost 2000m2. It would have cost around eur2mm to renovate and take about 1.5-2 years, but in the end you would have about 40 apartments that could easily rent for eur60-80/night.

If you take eur60/n X 15n/m X 40 apartments X 12 months = eur432,000. Thats an 18% gross cap rate.

You also end up with a building in this market that would be worth about eur4mm.

He is still considering it.
 
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Jill

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I have been considering real estate for a while now, do you think that using short term rentals (air bnb) is more profitable than traditional yearly leases with contracts ?
M&A, GW is definitely the expert on this one. But in the cursory review I did this morning of the Numbeo site he references in an earlier post, I see a lot of properties that rent for an average of $2-300/month. But if you look on airBnB, similar properties rent for $50-60/nt. So in those markets, you would definitely be better off with short-term rentals. That also frees it up for your own use, should you desire that. Like anything in this arena, it will just take some due diligence to slice and dice the numbers.
 

M&A

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If you take eur60/n X 15n/m X 40 apartments X 12 months = eur432,000. Thats an 18% gross cap rate.

You also end up with a building in this market that would be worth about eur4mm.

He is still considering it.
Is 50% a realistic occupancy rate ?

I have a friend who was renting an apartment in Prague (she didn't own it in any way, just a rolling 12 month lease), over the summer when she went back home from college she did airbnb and got about $800 a week for her place to summer tourists. But she was only paying $600 a month in rent :greedy:.

Im sure this is illegal but just goes to show the profits involved in short term rentals.
 
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Is 50% a realistic occupancy rate ?
If you read my earlier posts, I am getting more than a 50% occupancy rate year round. If you read my opening post, you will see I am very thorough in selecting the location though as it makes a huge difference.

For example, in Prague. If you buy something that is within a 10m walk of those bridges where all the tourists congregate (I forgot the name), you will do exponentially better than if you are just another 20m walk away.

Tourists love being in the center and are willing to pay a premium for their short term stays.


I have a friend who was renting an apartment in Prague (she didn't own it in any way, just a rolling 12 month lease), over the summer when she went back home from college she did airbnb and got about $800 a week for her place to summer tourists. But she was only paying $600 a month in rent
I will give you an even crazier scenario. In most of your former Soviet bloc countries the type of ownership varies greatly due to the USSR occupancy and historical and complicated land records. In some cases you can own a building (or apartment in a building) but not the land underneath and have a land lease to pay annually. Conversely, you can own the land but not the building and everyone must pay you a land lease.

In some cases, people were granted 50-100 year leases by the government as compensation post Soviet Union. They don't own the apartment, but they have use, free and clear, until the lease runs out. That could mean there are another 30-80 years left on the lease.

I have seen these leases selling for less than eur10,000. Of course you don't own the property and must give it up in 30-80 years, but you can renovate and rent out for eur60-80/night. Do THAT math.

Im sure this is illegal but just goes to show the profits involved in short term rentals.
I don't know about in Czech, but here it is quite common to do a long term lease and rent short term. I have one friend here who found 20 apartments in one building owned by the bank. The bank didn't want to sell them because the market was too low and selling them would mean they had to write down asset values for their other foreclosed properties.

The bank also didn't want to be in the rental business, so my friend made a deal to rent them long term (1 year renewable leases) with no limitations on what he does with them. He did some cosmetic repairs and rents them out for around eur30-40/night. He basically runs it like a small hotel.
 

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