Hello my dear readers and fellow investors.
I just wanted to give you a quick update on the property I’m in the process of buying. This morning I had a meeting with a bank and the financing finally seems to be settled. I’m allowed to take over the existing mortgage! YAY!
Here is a quick financial overview of the property:
Original property sales price: 154.500€
My offered (and accepted) price: 141.100€
Down payment: 13.400€
Mortgage size: 115.500€ (81,85%)
Mortgage interest rate: ~1% + fees (approximately 1.5%)
Yearly mortgage expenses: 1.732€
According to Danish law only 80% mortgage is allowed, but since it was so close to 80% it was accepted!
Line of credit from the bank: 20.000€ at a 5.25% interest rate.
I will only use 12.200€ + expenses for lawyer etc. now, but it’s good to have a little extra.
Yearly estimated property expenses: 3.500€
(This covers maintenance, administration, insurance, caretaker, environmental taxes etc.)
Yearly income from tenants: 17.245€
Expenses: 5.932€ (3.500€ property expenses + 1.732€ mortgage + ~700€ line of credit usage)
Net profit: 11.313€
The expense for taking over the mortgage was 670€, but this is a one-time fee.
I think this is an incredible investment! For a down payment of 13.400€ that is equivalent to a 84,4% return on investment?? Of course, the interest rate is variable and could rise over the years. And at least some kind of vacancy (lack of tenants for a short period of time) must be expected. But still, it seems almost too good to be true.
Am I missing something here??? Please share your thoughts below!