These are exactly those good points. I’m speaking broadly, and perhaps I’ve already spoken too much for today, so I won’t go into provocation.
So, I don’t have experience with investment apartments, so I’m making broad generalizations that might very well be off the mark. I just quickly looked at the pictures of the apartment and threw out “a couple of grand for a surface renovation,” but as you said, it might not be needed at all. The bathroom and kitchen there seemed to be in good condition, and for a 500-euro apartment, the floor and walls are probably in good enough condition too.
Considering the 1st floor bad was the same thing; I just remember the general rule that the first floor is less valued than other floors in a building with an elevator.
This is true on a general level, of course, but when talking about a small studio apartment with low rent, I don’t believe the weight of the matter is significant. More essential for the apartment buyer is that there isn’t an elevator renovation coming in the near future, because that is an unnecessary expense as a 1st-floor shareholder.
Heh. I didn’t look that closely myself either. In that case, the elevator doesn’t burden the maintenance fee, and there’s no risk of surprise costs regarding it
Oh, that’s right, there was no elevator after all. So this property is even better in that respect, with the apartment being on the first floor, and there’s no need to pay for an elevator renovation.
Well, there is a difference. If I think about my own terraced house, a few people walk past the front yard windows every day, and there is still a front yard with bushes between the small path and the window. The backyard, on the other hand, provides quite a long distance to the windows on that side, and the backyard is followed by a row of trees.
In such a small apartment building, dozens of people pass by one’s own window very closely every day. In addition, in an old building without an elevator, the sounds of movement in the hallway are most annoying to the resident of the lowest floor.
I once bought an apartment in a new development, the balcony of which is at ground level. The decisive factor in the purchase decision was that the hallway entrance is half a floor lower, from which people also use the elevator (of course, one can take the elevator half a floor down to this lowest residential floor, so accessibility is also realized) and the glazed balcony is located in the inner courtyard, where there is also a shrub-bordered seating area further away from the balcony. But the fact is that many people avoid ground-floor apartments. Of course, some rare people even absolutely want their apartment on the lowest floor.
I personally have three apartments on the lowest floor, at ground level. The purchase price was low, and then the rent can also be set a few tens below the other apartments in the building. Additionally, there’s no elevator maintenance fee. In the 500 price range, there is currently a lot of demand.
Not a single vacant month has occurred for these either. But it is true that in a building with an elevator, the best floors are the lowest floor in a building where the lowest floor is not at ground level but above storage units, and then the very top floors.
Edit: experience regarding that rent level only from Kuopio and Jyväskylä
From there, you can also find a small apartment already rented from Naapurikodit, quite close to the university of applied sciences and vocational school. Less than 10 minutes by bike.
Pipes renovated 20 years ago, so it will probably be another 30 years before the next one.
The rent level in Kuopio, 545, is slightly better than in Jyväskylä.
Loan 25 years, 35,000e. Roughly with current interest rates: 80 euros principal payment, 80 euros interest. Maintenance fee 84 euros, capitalized principal payment 150 euros.
Rental income 545-80-84-150=231 euros
After taxes, 160 remains. And after paying the principal, 80 euros remains.
I don’t know the property, but it doesn’t look bad and you could probably negotiate the price.
Sounds like a pretty strong hunch colored by personal preferences. It depends entirely on the microlocation for both terraced houses and apartment buildings, as I mentioned in my message.
As for terraced houses, it’s good to remember that the majority of them are very modest dwellings for the lower middle class and low-income earners, and by no means alternatives to detached houses built in the 2000s for the middle class in areas with expensive plots.
In real estate investing, there seems to be a very strong “analysis paralysis”.
I know many “Etuovi real estate investors” who have been searching for years for the right property. An acquaintance, if I recall correctly, was looking for a property for the first time already in 2012, but still hasn’t acquired one; now his latest idea is to buy that apartment when his own house is paid off. Of course, prices in university cities have slightly decreased from their peaks in recent years, but if one had already been paying down a loan for 13 years, some capital would already be in the portfolio.
In my opinion, it’s better to buy the first and second property and learn a bit from them than to endlessly weigh risks and numbers. Of course, one must still be able to avoid falling into the “value trap” by acquiring an apartment from at least a reasonable area.
In this case, I looked at the house via Google Maps. Of course, I can’t say with full certainty whether the window was on the side of the house where all residents pass by, or on the side where the parking lots are located.
But even if we don’t go to Google Maps, it’s quite clear that living at ground level is, on average, quite different in different housing types.
Well, first we could limit terraced houses to growth centers. After that, one can then consider the absurdity of that claim, perhaps starting from how ownership and rental housing are distributed in different house types, what the average sizes of apartments are, etc.
Of course, if we look at the square meter prices of apartments, then based on that, the cream of this society seems to live in those suburbs that were filled with 20 m2 apartment boxes around the turn of the 2010s and 2020s.
And then about those large yards; that has very little to do with apartment prices and very much to do with the construction period. In the early 2000s, we still built large apartments on large plots, or on plots that bordered in a way that was sensible for one’s own living peace. After the financial crisis, we have slowly moved to this thinking of efficient square meters, which extends to both apartment sizes and plot sizes.
I have to bring up the Rintanen’s terraced house once more; it eventually went for €13,700 at auction. The outcome is excellent for the seller, and congratulations are in order. It would be interesting to know what vision the buyer has.
From the perspective of Rintanen’s himmeli, it’s a somewhat challenging equation if it was valued at €145k for the bank and now sold for €13,700. The collateral deficit would then be €145*0.7 - €13,700 = €87,800. Especially if and when similar overvaluation situations exist in other properties.
I wonder if the Rintanens themselves or any mainstream media have reported on this episode now that the final outcome is known? After the purchase, the matter was certainly trumpeted by several media outlets when the Rintanens had come up with this incredible “himmeli”. Instead of tying up collateral, the purchased properties created free collateral value, meaning in theory, replicating that equation would allow for the infinite growth of the portfolio and “wealth”. I wonder how they calculate net worth now, when the actual market value of this terraced house complex was about -90% of the estimate given by the broker? Is it still assumed that the rest of the portfolio is sound assets?
Of course, more experienced property investors understood the realities right from the start, but in my opinion, it is quite irresponsible that just a moment ago the mainstream media and social media content creators were drumming up their “gospel” without any criticism, and now there is radio silence. Of course, I don’t expect a very deep understanding of property investing from everyone, but I do think there are some quite smart people among those content creators. This couple can afford to make even large investment mistakes, but if some average Joe on a median salary has started copying this recipe, their personal finances are likely to be in a mess for decades to come and their investment enthusiasm cut short.
Normally, public criticism of private individuals’ investment blunders can be in poor taste, but in this case, we are talking about people who have sought publicity of their own accord, so criticism and skepticism are by no means unreasonable.
What good real estate investing podcasts have you listened to from the American continent? I used to listen to BiggerPockets, but it somehow became a playground for big investors.
Nowadays, I’ve mostly been listening to Dan Lane’s Rental Income podcast. It’s much more down-to-earth.
Amen. Hesari was one of the media outlets that reported extensively on the Rintanens’ housing scheme (e.g., in 2021 and 2022). Unfortunately, quite a few people may have followed the example of this house of cards they built a few years ago, so it would be responsible to report on how things stand now as well.
The leverage and current value of this terraced house already show that considerable risk and wheeling and dealing have taken place, so it would be nice to get their comments on the matter. As well as on the general situation of their real estate portfolio. @Alex_af_Heurlin1 was already pinged about this earlier, and he promised to tip off a colleague about it.
Yes, the topic is clearly difficult for everyone. I also have a fairly high threshold for publicly ranting about other private individuals’ investments, but on the other hand, staying silent is likely doing a disservice to inexperienced or overconfident investors. But that’s just the way it goes—media outlets are quick to write hype pieces on flimsy grounds, where perspectives aren’t challenged and the accuracy of the claims isn’t necessarily questioned. These rags-to-riches stories of ordinary people certainly resonate with readers, so the media has an interest in creating these stories and letting the interviewee paint with a broad brush, because big talk brings in big page views.
I thought for a long time about what to write regarding Kotimatka in this context, but I don’t think I’ll write anything. I’ll just say that they have a very confusing overall situation, from the chosen investment strategy to their values and family life. I would probably die from a stress reaction in a single day amidst all that commotion. Let’s see if we ever get an honest and analytical overview of the current state of their investments. I wouldn’t hold my breath waiting for it, as Kotimatka’s playbook seems to be based on provocative content and keeping social media discussions heated, which fits poorly with honest and thorough situation reports.
A real estate investor I respect, and the most successful one from my hometown, once stated his thesis: Real estate investing is nothing but “timing the location.”
How fortunate we are to be living through these times as real estate investors. Finland’s most liquid area in terms of volume (=location) and the best market in 35 years (=timing).
I never thought we’d return to the days when you could get a studio in Kallio for 161,000 marks (granted, with a stiff 17% interest rate).
Are we in a “once-in-a-generation” moment in Helsinki right now?
