Even though, it’s not the first time I had to sign off on a real estate purchase, then it’s still scary enough to get started with rental real estate. However, this puts me more than half way to filling one of my goals for this year.
What did I buy?
I ended up buying a very typical starter apartment for a lot of real estate investors – a small 12 m2 apartment in a dorm style house in Põhja-Tallinn. I’ve been looking for a piece of rental real estate for quite a while now, and several that caught my eye sold very quickly, so I was unsurprised when this apartment was already booked.
However, I ended up being a part of those lucky few people who found a motivated seller – a person who had planned to start with rental real estate himself, but was moving due to switching jobs and the person who had wanted to purchase the apartment failed to pay the deposit, so the deal had failed and he was in a bit of a rush.
Why did I buy this specific apartment?
I’m going to be completely honest here, that my knowledge about real estate is not good enough to claim that my analysis was by any means perfect. The sale ended up being under market price, especially considering the state of the apartment – it had been freshly renovated. The house itself is old but ok outside, the hallways are ugly as sin though, so that can be problematic when it comes to actually renting it out. I’m taking this as a serious learning experience. The apartment itself looks like this:
How did I finance the purchase?
Essentially I didn’t get too creative with the financing. About 60% of the purchase was my own financing, the money of the company that my husband and I own. The money has been gathered through years of living below our means, and aggressively gathering money for investments. The other 40% was financed with FFF money (in this case friends, who were willing to lend out money at a low %). Currently the loans are relatively short deadlined, but I’ve tried to do my best to balance out the risks.
What are the next steps?
Well, there’s actually quite a few small things that I’ve already done. Such as finalizing everything about the sale, getting extra keys, exchanging all kinds of contact information, looking for furniture etc.
Essentially what I have to do now, is finish with getting in furniture (hopefully done next week), and then find & edit a proper rental contract & then it’s time to start looking for someone to live there!
I’m currently hovering between mad excitement and small slivers of panic, let’s see how it goes!