First and foremost, as I ALWAYS mention, I am NO EXPERT on this.
However, if I may say so myself, I consider I have done pretty well with my hard earned yachting money over the years.
So I thought sharing my experience might help someone out there.
Please bear in mind that I started working on yachts LITERALLY the day after I finished my masters at University.
I have never had a “normal job” (aside my hostessting and waitressing jobs, prior to yachting).
My “property investing” journey began because i had absolutely no clue about what to do with the money I had earned after a few months working on my first yacht.
The bank was charging me a pretty high commission for PLAYING WITH MY MONEY.
I remember thinking:
WHAT THE…?! I am putting all of this money on this bank account every month and I still have to pay them for it!
So that’s how I started thinking about buying my first property.
Because property seemed like the safest place where to put my money…
Especially because I had litearally no idea of what I was doing.
So, just like that, I decided to purchase my first appartment.
I wanted to have an appartment of my own for when I was on holiday, so I didn’t have to go back to my family’s.
It also seemed a good idea to me as I know my town (obviously), so I knew “the basics” for my first purchase.
I bought my first property in 2013.
Why did it take me three whole years to buy it? (I started yachting in 2010)
Because (SILLY ME!) I wanted to pay it upfront.
I did not even want to hear about asking for a mortgage.
I know this will sound absolutely silly (and ignorant) to all those finance experts out there, but I have this thing in my head about (or against…) banks…
I really do not like to owe them money.
First chance they have, they will get everything from you, and leave you on the streets.
At least, that’s what happens in my mind! haha
So I was saving my money for almost three years to be able to purchase the apartment I wanted mortgage free.
MISTAKE NÚMERO UNO:
As long as you find a good mortgage broker, that gets you a good deal, paying for your property through a mortgage is actually a “better” way of investing your money, than paying it upfront.
You will be able to play with your money on other areas, instead of having to save for like forever, and have your account back at 0 euros as soon as you buy your property.
It is aswell a great way of building up a credit history, which will benefit you (as long as you pay, obviously) for future investments.
Nowadays, I own three properties:
- An appartment in my home town (100% my own)
- An appartment in Madrid (50% with my husband)
- A house in my home town (50% with my husband)
And my husband owns a house in Manchester (100% his own).
Both of us together own four properties in total, so we kind of have an slight idea of what has worked for us.
WAIT FOR THE RIGHT MOMENT:
No brainer, really.
You don’t need to be a financial expert to know that what you need to do is buying cheap, to sell expensive.
However, I have so many friends that have payed extorsionate amounts of money for properties that is quite obvious that are not worth even half of what they payed for them, that I guess this is not that obvious for some people…
- Save your money
- Have it available, and ready
- And when the market is down, make your move!
Test the waters with several state agents from the area where you want to buy.
Inform them that you have some money available and would like to be informed about any good opportunities they may arise in the near future.
Tell them you are in no rush.
I found this to be super helpful for us to find good investments.
KNOW THE AREA:
I personally do not like high-risk investments.
Right? Wrong? I don’t know.
I know that the highest the risk, the more money it can potentially make you.
Buying a property on a brand new development in Thailand, when you have not even been to Thailand, is awesome.
Well done you.
But I am not that kind…
I like to know the areas where I am buying a property.
The second property I purchased I did it with my husband, in Madrid.
As a capital city, Madrid is a pretty expensive place, property wise.
Buying a property in the wrong area of the city might become the most expensive mistake you have ever made in your whole entire life.
I lived in Madrid during my University years, therefore, I knew exactly the most profitable areas where to invest.
I do not think I will ever invest in an area I do not know like the palm of my hand, to be completely honest with you…
BUYING TO RENT OR TO LIVE?
To me, this is the second most important factor to consider when buying a property.
- Are you buying it to rent it out?
- Or to live in it?
Depending on this, the factors you need to take into consideration change completely.
If you are buying to rent it out, I would advise you to focus on these two things:
- The type of tenant you aim to rent your property to
The access to public transport near the property usually is an important thing to consider.
Obviously, I guess you will aim to rent your property to a person/family that is finantially stable, so they can face the monthly payments no problem.
Therefore, as cheap as a property may be, and as beautiful as it may look, if it is in an area where low income tenants with precarious jobs tend to live, buying that property may not be the best idea.
WHAT NOT TO WORRY ABOUT TOO MUCH IF YOU ARE BUYING TO RENT:
- The looks:
As long as the propery seems new ish, fresh and clean, you are all good.
No need for expensive furniture and last generation technologies.
MISTAKE NÚMERO DOS I MADE WITH MY FIRST PROPERTY:
Being my first property, I wanted it to be the most beautiful appartment ever.
- I bought expensive custom made furniture
- Wallpapered some walls with rather expensive wallpaper
- Bought expensive kitchen appliances
And so on…
However, whenever I was not on holiday (meaning, 90% of the year) I rented it out.
It used to break my heart to arrive to it a few months later and see stains on the couch, marks on the walls…
So, never again!
I said to myself.
RENOVATION PROJECT OR A NEW BUILD?
In my experience, new builds usually end up being more expensive than renovation projects.
Of course, you need to have the time, and correct people, to do your renovations.
Managing a renovation project from thousand of km’s away, it’s a nightmare, believe me!
Our appartment in Madrid was a renovation project when we bought it.
It took me (I say me, as the hubbie was completely out of the game somewhere in the Indian Ocean during those months…) eight months to renovate it.
- We changed the kitchen to another location
- Built one more bedroom
- Built one more bathroom
- Changed floors, windows, etc etc
Full renovation, from top to bottom.
I was incredible fortunate to find an amazing builder.
In total, we spent around 30.000 euros.
However, I reckon that the price of our appartment increased at, at least, 30% after the changes we made to it.
So, if you have the time, the will, and know the correct people for the job, I would advise you to look at renovations projects, instead of new builds.
DO NOT RELY ON TENANTS TO PAY YOUR MORTGAGES:
Even if you have great tenants, that have never missed a payment before, please always remember to have some money aside for your mortgages “just in case”.
Who knew that Coronavirus was going to happen?
All of a sudden, your tenants might lose their jobs due to unpredictable circumstances like this.
The general tendency of most governments during this pandemic has been protecting the tenants.
It might not be as easy as terminanting your tenant’s contract, and find another one.
You may have to face a few payments yourself during that period.
If you are renting your property as a holiday place, throught Airbnb, for example, your property may have 0 guests for the foreseable, like it’s happened to us.
Always make sure you can face those mortgage payments, even if you are not receiving any money from tenants, or guests.
LET GO AT THE RIGHT MOMENT:
I do not know about you, but I get pretty attached to my properties!
MISTAKE NÚMERO TRES:
I adore my first appartment so much I don’t think I will ever be able to part with it 🙁
I just think it’s a beautiful appartment, plus it brings me all these adorable memories of when I was saving my money to purchase it, at the beginning of my yachting career.
Because I bought it a the perfect moment, right when the Spanish crisis was at its pick in 2013, I don’t think I will ever “lose” money if I decided to sell it.
Before the damn coronavirus crisis, I know I would have been able to sell it at a pretty amazing profit.
But, right now, I don’t think I’d make much more money than I payed from it.
So, yeah…If I had been able to part with it when I had the opportunity, I would have made quite a bit amount of money.
Instead, I’ll have to wait for the market to recover again, and see if I manage to let it go… 🙁
Have you enjoyed this post!
Are you thinking about investing your money in property?
Let me know in the comments section or in my Instagram account!
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Please feel free to let me know any topics you would like me to post about, I will be more than happy to!
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