I am close to being able to buy a small house in a EU country, which would be my first real estate investment and a possible place to live in if/when we FIRE.
I ran the numbers and the ROI looks good to me but I wonder if anyone here would like to have a look at them and perhaps comment.
Here I assume to get a mortgage for 80% of the selling price (not the renovations) at 2% (need still to talk to banks, 2% is therefore a guess, but it should not be far from reality, going variable should actually be more 1 to 1.5%)
Price: 60K EUR
Renovation costs: 20K EUR (adding one bedroom and one bathroom)
Total one time costs (notary fee/taxes) are about 1K EUR
Yearly recurring costs (taxes on rent, mortgage interests, 1% maintenance costs, insurance, communal taxes) amount to around 2.6K EUR
Given that the house was now rented out for 450 EUR/month, I am calculating to get 550 EUR/month after renovations and assuming the house to be occupied 10 out of 12 months on average.
This all adds up to:
Downpayment+renovations+one time costs = ~33K EUR
Yearly revenue = ~2.9K EUR (5.5K EUR income - 2.6K yearly costs)
ROI = ~8.8%
The variables which I am mostly unsure about are the renovations costs (I spoke to a local carpenter though) and the actual rent I would be able to charge (and I guess you won’t be able to comment on those), but I wonder if the rest of my calculations look sound to you?