That’s it, here we are. It was a few days ago. On May 20 of this year, it had been just over a year since I had purchased a building . And what better way to mark this anniversary than to take stock of the past 365 days? What changed ? What do I regret? It’s time for the big unboxing and I want to share it with you…
In 2014, I set myself the goal of finally investing in real estate. After too long years of waiting, it was decided. For various reasons, it was written that this first rental investment would not be an apartment . Nor a house. Nor a parking lot. No, this first investment would be an entire building. Buying a building, I have delusions of grandeur! After several months of research, after a few visits, after numerous inquiries here and there and after a few bad surprises, I finally found the property I needed.
A few weeks later and after some adventures between my bank and my broker, it was during a nice month of May that my wife and I became the happy owners of our first rental property, a beautiful building made up of three apartments.
After a few endless negotiations to obtain the most advantageous loan possible, I found a nice loan and so I became a landlord. But buying a building is not easy at first. The same goes for any good. It is necessary to organize things well so as not to find lost.
The three lots making up the building were already rented at the time of purchase, so I introduced myself as the new owner, completing everything with a few requests to simplify my life. Beyond the classic requests for insurance, maintenance of boilers and others, I obviously asked to set up automatic transfers to collect the rents of my tenants without doing anything .
For me, buying a building was also synonymous with work. I had indeed also planned to (have) carry out some electrical work in the building. I had to organize the different interventions of my craftsman with the different occupants. The good news is that this work, provided for in my investment, can be fully deducted from my property income .
When I tell you it’s hard work…
My building is spread over three levels, each floor corresponding to an apartment. Ground floor and first floor tenants were quick to set up a monthly transfer each month. For the tenant of the second, it was more complicated and I invite you to read my article on the subject. Fortunately for me, the latter quickly gave his notice, thus releasing me from his presence. Once again, I’ll spare you the adventures (outgoing inventory postponed at the last minute, difficulty in recovering the rent due, etc.), but it was really what you could call a (very) bad tenant .
And again, I’m weighing my words…
Brief. The re-letting was relatively easy. Indeed, during the acquisition of the building, the real estate agency through which I went had undertaken to manage the first rental free of charge following the purchase . The apartment therefore experienced a few weeks of rental holidays. And since the end of 2014, a new tenant has been in place. It’s perfect. Since then, three rents have fallen into my bank account each month for a total amount of more than €1,100. Without that I have nothing to do. Here is a good supplement to your salary and a nice passive income.
Isn’t life beautiful? 🙂
I don’t regret having embarked on this somewhat crazy gamble more than a year ago: buying a building is a very good investment. Of course, I’m only at the beginning of the adventure . In particular, I still have 19 years of credit to repay, but I am fully confident. This first year taught me to manage some difficulties related to the world of rental and rental investment. I now feel more competent in the field and more able to deal with this type of situation.
As a reminder, I am currently paying around €850 in monthly loan payments including insurance, for around €1,150 in rent. Which gives me a monthly gross cash flow of €300, in my favor. I have since adjusted two of the rents slightly upwards, based on the IRL. My monthly situation has therefore improved by a few euros since then.
For the coming year, I intend to adjust only one of the rents, that of the ground floor. It is indeed very far from market price. For the others, I have not planned an increase, because I prefer to favor a tenant who stays a long time by paying the right price rather than a lot of tenants who come and go with a rent that keeps increasing. I even planned to send them a letter telling them that I was not passing on the legal rent increase to their rent 🙂 .
As luck would have it, I have also just completed my first tax return in recent days taking this investment into account. To declare my rents, two choices were offered to me: micro land or real . The first entitles you to a 30% reduction on the rents collected. That is to say that for €10,000 affected, you would only be taxed on €7,000. The real is aptly named and allows you to deduct from your rents all the charges associated with your investment: loan interest, property tax, work, etc. I invite you to read my article dedicated to deductible charges to get a better idea. precise about the subject.
For my part, I quite naturally opted for a declaration in reality. Between the interest on the loan and the work I mentioned above, the choice was easy. Note in passing that I undertake de facto to declare in real terms for a period of three years . The result is clear:
It is an extremely pleasant feeling!
For next year, my tax on my property income should still be very low or even zero. Who said that buying a building was paying a lot of tax?
This article ended up convincing you to buy a building, right? 🙂 In any case, it is obvious for Madame and myself that this investment will not be the last of its kind. Maybe not this year, but 2016 could be the opportunity to launch again… Last point. I mentioned some time ago all the interest of going through a broker to negotiate your mortgage. That’s what I’m (still) doing right now. My monthly loan payments should, I hope, drop by several tens of euros , while my credit was taken out barely a year ago. Enough to further improve the profitability of this investment… 😉
For you, what did your first year as a real estate investor look like? Do you want to buy a building or an apartment? Feel free to talk about it in the comments!