Hoi hoi round 2! Today we interview B from the Netherlands. After buying his flat at age 22, he tells us how he got started with property investing, why he sometimes recommends timing the market and his refinancing strategy.

What we also talk about:

• Why and how he got started with real estate so young
• Wealth tax and some property numbers
• How and why he refinanced his apartment
• His philosophy when it comes to debt
• Not paying off his student loans 😱
• Buying his apartment at age 22

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B was able to buy his flat at age 22 in 2015. He tells us this was the perfect time to buy because properties were still affordable and thanks to his salary he was able to get a mortgage. In fact, he was able to finance 103% of the property (wow!) and only paid 2-3,000€ in closing costs. A pretty amazing deal – although Alvar notes this would not be possible for a 22 year old nowadays. 😢

To rent or to buy? And should I time the market?

A never ending debate in the personal finance world – am I better off renting or buying?

B tells us that you’re better off renting than owning a home if you live in a big city. This is because you’re more likely to move around, and it’s probably very expensive to buy. B says that if interest rates start rising again and he rents out his flat to tenants but does not manage to make a profit, he would probably sell and rent out instead. He argues that real estate bubbles can be seen quite a few months ahead and so you can time the market and sell before the market crashes.

I (Araminta) argue that it’s all about cycles, and that although the market will crash, it will also pick up again. However, B makes a good argument that if you buy at the top and never make money on your tenants, there’s not much of a point. Purchasing a property is a huge investment which could be done every few years – meaning timing the market is worth it.

Refinancing his apartment (Risqué? 🤔)

B bought his apartment for 162k€, and is now seeing his neighbours selling their apartments for an astounding 240k€! Seeing all this, he decided he didn’t want all this capital locked up in bricks, and so decided to take out a second mortgage and keep the change. This is mostly deemed risky, since as Alvar says, if the market crashes and you suddenly can’t afford the mortgage payments, you’re in pretty bad luck (see the 2008 crash 🙄).

However, B tells us that for him investing is more important than becoming debt free, and so he does not mind being in debt if he is able to invest the money.

To be or to not be debt free

B is a data driven guy, and so if the maths makes sense, he does not mind being in debt. However, there are people who are uncomfortable being in debt and who are psychologically affected by it – which is totally understandable.

We come to the conclusion that if you can’t sleep at night because of your debt, then it totally makes sense to pay it off.

B is actually the opposite of that – he hasn’t paid a single euro towards his student loan debt, for example. The government gave him a sweet 7k€ for his university which he did not need, so he invested it instead (clever!). Since the interest rate is super low, he knows he is better off not paying anything, and so is fine with that.

As we say, this is an awesome strategy and tactic if you know what you’re doing and if you’re confident you can pay back the loan easily. Not something any student could do – so be careful 😉

B’s recommendation: do the spreadsheets!

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Links

• B’s blog: FIRE the Boss
• B’s podcast:
• Financial Samurai
• Episode 19: Reaching FI and Paying Wealth Tax
• Dutch FIRE subreddit