Second part relating to the figures of my first rental investment. The previous article focused on the context and the risk limitation actions implemented for this first rental investment. Now let’s get to the actual numbers . Let’s go!
Before going into the purely financial figures, let’s start by presenting the property, an apartment building . Some interesting features:
Let’s continue with the loan contracted with our bank:
Let’s now move on to the rents to be collected, assuming those paid by the tenants in place. Note that these are currently bare rentals :
Now let’s talk profitability. All inclusive, the cost of acquisition is €150,000. The sum of the rents excluding charges is €1,156, which gives us a maximum annual rent of €13,872.
The gross return is therefore:
Being 100% owner of the building (finally the bank at first… 🙁), no co-ownership charge exists. It remains to be paid per year:
The gross profitability taking into account the charges is then:
This profitability net of expense is the net profitability before tax.
We talked about profitability, now let’s move on to monthly cash flow. As a reminder, cash flow is the difference between your cash inflows and cash outflows . If the cash flow is positive or zero, this means that the property can be self-financing. This is the objective that Madame and I had in mind for our first rental investment.
We will receive, excluding rental vacancy, €1,156 for rent. In total, we will pay €849 per month for this loan, corresponding to €836 of credit plus €13 of insurance. Consequently, the gross cash flow will be:
Of course, the charges must be included in the calculation to make the figure more realistic. As indicated above, we have 1,712€ of property tax and 280€ of PNO insurance, i.e. 1,992€ of charge per year. By smoothing this sum over 12 months, we obtain €166 in monthly charges. The monthly cash flow net of charges will then be:
As with profitability in the previous paragraph, it is important to note that this monthly cash flow is the pre-tax cash flow . So understand that it is not €141 that will land in our pocket every month. We will still have to remove our property taxes.
What do you think of the figures for this first rental investment? Would you have tried a first adventure with such figures? Do not hesitate to go through the comments for your remarks!