After a couple weeks of absence, I’ve finally something big to announce. Get your seatbelt on.
Since 2 years I have been following the real estate market to get to know the price setting and market conditions. I did this in order to find a decent, payable property to live in when I graduate. As soon as I graduate, I will probably work at the military airport in Brussels and because commute is not possible (very time/money consuming), I wanted to buy my own place to stay.
So, after starting the final year at the academy, I accelerated the pace. At first I found an apartment near Brussels at a reasonable price with a commercial ground floor to rent out. There were 2 major problems: the commercial space needed BIG renovations and because of a new shopping center, people were abandoning the commercial places in the neighbourhood and there were at least 15! places for rent. No opportunity lost here.
On the other hand, I had been keeping an eye on some kind of social project but there were only a couple of selling days. Here comes the interesting part. It concerns a new apartment block which should be finished by summer 2019. The apartments are located at Laken (Brussels) and are 3 kilometers away from the Atomium and The Great Market/Commercial City Centre. No complaints about location.
It receives major subsidies from the government and enjoys a beneficial rate of 6% VAT instead of 21% VAT which makes quite a difference. The only negative point: I have to put this apartment as my place of residence for 20 years. There were some other regulations like an income limit at the time of buying, first property, blablabla… but I fulfilled the entree preconditions. After 20 years, there are no more regulations and I’m free to sell the place and pocket the subsidies. I expect the housing prices to raise over a period of 20 years so the worth of the subsidies will raise as well.
After some further research, I decided that the pro’s outweighed the contra’s so I signed my contract to buy the place! It’s a very spacious 2-bedroom apartment with 115 square meters of living space (1,250 square feet) and a 10 square meters terrace (110sqfeet). It’s visible on the image.
Let’s talk numbers. All numbers are a pretty correct estimation, it might vary a couple of hundred euros due to costs hard to estimate.
I’m only paying around €204,500 for my apartment and parking spot. (This is almost peanuts).
My subsidies and low-level VAT come in for around €108,000. This is already deducted from my buying price. It’s crazy how cheap I got this place considering it’s completely new. Thanks to the subsidies! There will come in some costs like solicitor and loan costs so this will reduce my net worth a little bit. I might do some small adaptations to the standard settings of the apartment like changing the floor or sanitary so I expect the costs to go up. However, these will also add value to the apartment so it’s not money down the drain.
I expect the apartment to be worth between €315,000-€325,000 when it’s finished. I’ll have to buy some furniture too off course. I plan to install a bar into my living room because let’s face it, it’s awesome.
Some other great news: my parents are giving me a gift of €75,000 to help me fund the place. This might be a matter of moral trouble to some people, but I look at this rationally. Being the only child, inheritance taxes are gonna be a living hell. This means it’s better to already pass something to lower the taxable amount. If you have to choose between yourself and the government, it’s pretty easy ain’t it?
Another great thing: my aunt (no kids, no husband) decided to give me €10,000 once the place is built so I can buy my furniture. Thank you auntie! Same explanation as above.
I went to the bank to ask for a loan and got a pretty decent deal. I’m getting €160,000 on a 20-year timeframe at a fixed intrest rate of 1,89%. This implies a monthly payment of +-€800.
This means I’ll easily be able to keep my money invested in stocks, yay! This was a conditione sine qua non. I was ready to transfer a little amount but because my intrest rate is so damn low, I’ll just keep killing it buying stocks. As long as my stock returns are higher than my intrest payments, there’s no fucking problem. Thanks for the cheap money!
Getting a loan way bigger than necessary means I’ll have plenty of cash available. I will put this in another future post.
The subsidies (€108,000) and the family gifts (€85,000) will skyrocket my net worth way over €300K.