A successful investment on the property market

My girlfriend and I bought an apartment with the goal of making money out of it after some minor renovations to make it even more attractive.

 

We were unfortunate to buy the apartment when the economy and property prices were on top 2007. Luckily we had decided before buying the apartment that we would stay here for a while in case the property market would go down and until the market would recover.

 

I still remember how angry I was when we bought the apartment. We had in my opinion paid far too much for the apartment. The apartment was sold for about 20% more than our original budget! I called my girlfriend and complained about the high price, reminding her that my sister had bought her apartment a lot cheaper in a much more desirable location (even though it was a few years ago). And if this wasn’t enough - a few months after we had purchased the apartment the house prices started to fall. Imagine our frustration for the bad timing…

 

 

 

 

 

 

 

 

 

 

 

During the period we lived in the apartment we only made some smaller adjustments since the apartment was basically fully renovated when we bought it. We installed wardrobes with more space and made the kitchen more convenient by installing some more cupboards and a built-in microwave. It was quite nice not to have to do too much work the first time we bought an apartment for renovation purposes J .

 

2010 property prices were back to the levels of 2007 we decided it was time to move to another apartment and invited a few brokers to come and evaluate the apartment. The price evaluation varied from less than we had bought the apartment for, to a profit of +20%. That’s a huge price range, considering brokers claim themselves to be “apartment sales specialists”! We had one of the leading brokers in the area over (an acquaintance of my sister) and she actually gave us the lowest price estimate of all brokers! I remember she said “10 years ago it was impossible to sell in this area and it is still difficult”, hinting that it was going to be really difficult to sell our apartment. And she also mentioned that the open floor plan style we had was out of fashion – no one wants it nowadays. I wonder if this was her strategy, to talk down the apartment before selling it and then “surprise” us with a good selling price… However, we didn’t choose the “top broker” and ended up having an extremely good sales price, +33% compared to our purchase price! Not bad considering that the market prices basically were back to the same levels as when we bought the apartment.

 

Since the loan conditions were very good at the time we bought the apartment we only had a down payment of about 2% of the apartment price (sounds crazy, considering it is currently about a minimum of 15% down payment!). This gave us a fantastic leverage on invested capital!

 

In my next posting I will tell you about my top tips how we made this property investment so successful, so stay tuned and subscribe to my blog, don’t miss out these interesting stories!