Real estate investing

Real estate investing
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3278

Let’s update the situation.

So, bought at the peak, and eventually, partly due to the positive credit register, a “must sell” situation arose – although interest rates were also high, I paid without complaint even during the highest times. I could have sold other things, but I considered my other possessions more valuable than the apartments acquired for income generation.

I believe I sold apartment A at a loss of about 13,900 euros. I sold apartment B at a loss of about 11,000 euros, although this is strongly mitigated by a rental relationship of about 4 years and only 0.5 months of vacancy during that time. I sold apartment C at a loss of about 2,500 euros, although it also had a 2-year rental relationship behind it, mitigating the loss. One apartment still remains, which would be unprofitable to sell, but it can stay because it is not collateral for any loan.

Roughly 27,400 euros in sales losses from the apartments, and of course, that one remaining would incur at least 10-15k in losses, but it will stay for now – I need to pay it down a bit. Of course, there were also rental incomes, at least for apartments B and C, X euros – I haven’t calculated exactly how much, but probably around 16,000-19,000 euros for apartment B and some 4,000-6,000 euros for apartment C. So, was the loss big? Not necessarily in the end – but certainly with opportunity cost, yes.

So, everything was essentially bought for holding, but for me, the positive credit register caused significant disadvantages for normal life, and I was no longer able to get a loan, or rather, a loan with good terms, so I ended up having to sell and release money from there. And indeed, money was released from there, even though I sold at a loss. If the positive credit register hadn’t been a hindrance, I would have been content with selling a maximum of 2 apartments.

Now I just have to seriously ponder where on earth I can get so much capital income that I can utilize those “massive” losses within 5 years :D. 1.5 investment apartments still remain in this portfolio. I’m not buying more as such, but various loans should be renegotiated.

I took the risk myself, and let’s put it this way, in my situation, I was still able to take it without disrupting my family’s life, meaning I could absorb the losses without it showing in everyday life in any way.

Of course, it would be nice to be rich and wealthy, but that project is now taking a bit of a backseat.

But for the coming years, the goal is to “carry forward the losses” further, so that I can utilize the losses in taxation, at least partially.

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3279

It’s worth borrowing the Real Estate Agent’s Handbook from the library and reading it through. It seems to be the official textbook for a degree in that field. I’ve read it through sometime, and it serves as a better guide for home buyers and sellers than any other book.

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3280

I didn’t know there was such a deadline for this. And doesn’t the so-called deficit deduction (if there are no capital gains to deduct from) transfer to another income type, i.e., earned income? And if not, you can of course sell profitable shares and then buy them back, thus clearing your tax debts.

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3281

An interesting interview with Timo Metsola in the Kuuntelija podcast:

Discussion, for example, on the effects of changes in student housing support on the housing market.

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3282

Unfortunately, deficit relief cannot be obtained from a sales loss

3283

Problems are already starting to appear for rental apartment owners. A friend just received a notification from the district court stating that an apartment will be taken over by the housing company due to unpaid maintenance fees. The owner is Optimum Invest Oy from Kempele, and it is part of Kaski Capital.

I reassured my friend that the housing company is unlikely to terminate the lease or even raise the rent to cover the outstanding maintenance fees, because it’s even more expensive if the apartment is empty.

The property is located in Kivistö, Vantaa, a 41 m2 two-room apartment, built in 2022, and was for sale with an asking price of 183k euros until March. Not a single viewer, even though the property was indeed rented out. Of course, the rent received was less than the total of the maintenance and financing fees.

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3284

OP’s Rental Yield Fund’s independence may have been compromised - Ilta-Sanomat

“The independence of the valuation of the assets of the approximately one billion euro OP Rental Yield Fund may have been compromised. An inspection carried out by the Financial Supervisory Authority (Fiva) revealed that an OP analyst working in portfolio management had a significant role in the reviews of the fund’s asset valuations, even though the valuation must be independent of portfolio management.”

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3285

My friend made some strategic moves. They terminated their lease agreement and are moving elsewhere.

It’s hard to find a real winner from this equation, especially from a real estate investment perspective. My friend is the biggest winner. They get a bigger and more desirable apartment in a better area for cheaper. And of course, the owner of that apartment gets a tenant for the empty property.

The losers are at least the shareholders of the company he’s leaving, who will have to start looking for a new tenant for the apartment. On Vuokraovi.com, there appear to be 273 studio or one-bedroom apartments for rent in the Kivistö area, of which 156 are immediately available. A tenant might not be found very easily either.

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3286

Kivistö has indeed become a real graveyard for real estate investors. On Etuovi, there are 132 studios and one-bedroom apartments for sale, including even new developments. I bet it will take ten years before supply and demand balance out – both for property sales and rental agreements.

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3287

I don’t know Vantaa, but isn’t Kivistö’s population still growing at a pretty good pace: Väestön määrä ja kehitys | Vantaa

The qualitative difference in supply is certainly quite narrow, considering the construction time of the housing stock and the similarity of the apartments. But then you have to stand out with the price, and then the apartment will be rented out even among hundreds of applicants.

I would be more concerned about those residential areas where the differentiation between the existing housing stock and housing demand is inevitably moving in the wrong direction in terms of rentability.

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3288

Mere population growth is not enough to increase housing demand if family reunification migration is behind it.

“Family reunification was the largest basis for the first residence permit application in 2024.”

Increases the demand for larger apartments and decreases the demand for smaller apartments.

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3289

How does that now relate to the demand prospects for smaller apartments in Kivistö?

“In the major districts of Tikkurila and Kivistö, there were the most one-person households (48–49%), while the fewest single residents were in Aviapolis and Korso (37–38%).”

“There were big differences in the proportions of foreign-language babies between major districts in 2023. Of the babies born in the Hakunila and Koivukylä areas, over 40 percent were foreign-language speakers, while in Kivistö and Aviapolis the proportion was under 20 percent.”

(Source: Vantaa’s Population 2023/2024, Publisher: City of Vantaa, Strategy and Research)

Despite family reunifications and other similar matters, the trend in growing cities is the shrinking size of households. The reasons for this, in turn, include the growth in the number of single-person households, the decrease in family sizes, the increase in the number of senior citizens, and earlier moving out of the childhood home.

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3290

This simplistic analysis doesn’t hold true anymore either. You can find a link to Statistics Finland’s table there: Helsingin seudun asuntokuntien keskikoko - Tietoaineisto avoindata.fi
In the Helsinki metropolitan area, the average household size has remained at 1.94 since 2021. Excluding students from the general housing allowance increases shared living and will likely turn the household size onto a growth path.

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3291

Kivistö’s problem is that it is a dormitory suburb a bit too far from everything. The area is, however, outside Ring Road III, i.e., outside Helsinki’s outer wolf border. One can, of course, conveniently travel by the Ring Rail Line train, but the journey to Helsinki Central Railway Station takes 27 minutes and to Tikkurila 17 minutes. By car, one can, of course, conveniently reach Ring Road III and Hämeenlinna Highway, but there is, of course, a shortage of parking spaces.

Younger city singles are unlikely to want to be so far removed from everything, even if it saves a bit on rental costs. On the other hand, older single residents are also unlikely to deliberately seek out such a new district where there isn’t really anything. And one cannot walk to the adjacent district because Kivistö is clearly separate from the “old” urban structure.

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3292

Here are the figures for Vantaa. The number of people living alone in the city is at a record high, and this is a trend in other growing cities as well:

https://www.vantaa.fi/fi/kaupunki-ja-paatoksenteko/tietoa-vantaasta/tilastot-ja-tutkimukset/vantaan-vaesto/vantaan-vaesto-20232024/perheet-ja-asuntokunnat-2023

And here is the population forecast:

https://www.vantaa.fi/fi/kaupunki-ja-paatoksenteko/tietoa-vantaasta/tilastot-ja-tutkimukset/vantaan-vaestoennusteet/osa-alueiden-vaestoennuste

In the Kivistö major district, where the population increase is specifically concentrated in Kivistö: “At the end of 2023, approximately 18,400 residents lived in the Kivistö major district. However, the population is predicted to grow significantly during the next ten-year period, and by the end of 2033, the Kivistö major district is estimated to have already approximately 26,700 residents (…) According to the forecast, the age groups of 30–64-year-olds will grow the most in the major district, with their population estimated to increase by a total of almost 6,000 people by the end of 2033. During the same period, the number of pre-school-aged children is estimated to grow by approximately 800 children and primary school-aged children by approximately 400 children. Growth is also anticipated in the 16–29-year-old (+900 people) and 65-year-old and over (+1,100 people) age groups.”

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3293

“The proportion of people living alone has continued to grow up to the present day, and in the latter half of the 2010s, the growth rate even accelerated. In 2022–2023, growth has been slow, and the proportion of people living alone has increased by only 0.7 percentage points in the last two years.”

A direct quote from your link.

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3294

Well, people have moved there anyway, based on recent population development. A bit like Vuores, located about 10 km from the center of Tampere, has attracted residents, and people even seek to live there, not just end up there.

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3295

So, the number of people living alone is growing. Both quantitatively and relatively. It is not decreasing, as you claimed earlier, referring to family reunifications. And Vantaa’s population itself grew by about 4000 residents last year.

Kivistö’s abundant housing supply, in my opinion, strongly points to cyclical challenges rather than structural problems. By structural problems, I mean, for example, that housing would have been built either in the wrong place or in the wrong size, considering the residents.

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3296

Less than new studio apartments are being built. The huge number of vacant studio apartments already tells this.

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3297

Nonsense. The amount of construction has also drastically decreased in Vantaa:

https://www.vantaa.fi/fi/ajankohtaista/uutinen/tilinpaatos-2024-vantaan-vakaa-kasvu-jatkuu-taloustilanteesta-huolimatta-tasapainoilua-ja-harkittuja-investointeja

“Housing construction has fallen to a historically low level in Vantaa. Last year, about 1000 new homes were completed, which is less than a third of the level of previous years. The number of housing starts remained at rock bottom, at only 400. This means that the volume of housing production in Vantaa will not significantly increase in the next couple of years.”

In addition, since the beginning of 2024, the city has regulated the construction of apartments smaller than 35 m2.

The oversupply created by the overheated markets of past years, as well as the existing and future amount of construction, must be distinguished from each other when assessing the future of the housing market.

It would be nice if, since you want to argue so fiercely about housing investment without your own experience on the subject, you would base your statistical claims on facts and not assumptions.

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