Discover the presentation of Andrew, a new member of our community, an experienced investor in residential real estate and housing by investing in several investment properties. He explains to us why he is now turning to parking and garage real estate.
Are you part of our community of over 3,000 investors and landlords ?
Andrew, a new member of our club introduces himself
Before introducing myself, thank you to Christopher for taking the trouble to call me as a new member that I am. We can see that we are not here on a “cash machine” commercial platform (I know one on the subject of garages precisely…). But rather on a collaborative site with members and not customers to exploit.
I worked as a professional (psychologist) until mid-2016, but I also did many other things; university lecturer, beekeeper, book author, manager of a tourism residence… More than half of my working time has always been self-employed. Whether it was the pension scheme for employees or the self-employed I did not expect to be able to keep my income. And now that I’m retired… I can confirm it ! And it could be worse for those younger than me.
To compensate, the solution I had chosen some 30 years ago was to buy residential rental real estate on credit. On credit because I didn’t have the first penny (my first credits were 100% over 15 years…). And that real estate was the only field where I could build up a patrimony on credit. Try a little bit to ask for a credit to buy works of art, shares in a local SME, or gold bars to see and you’ll give me some news… So rental real estate to have a replacement income in retirement.
The calculation was simple: the rents paid part of the credit and the cost was sustainable. In fact I never bought apartments separately but houses which I converted into apartments (works financed on credit) and a small building which already contained six of them. From about the 10th year onwards, the rents revalued every year paid almost the monthly credit instalment. At the end of the 15 years, the cash flow became positive but the overall balance sheet was still in the red. It should not be forgotten that for 10 years it had been necessary to “put the rent at the end” in order to pay the monthly payments and it still took quite a few years to compensate for this and for the business to become “neutral”.
In my case, this financial break-even point was established on average 20 years after the purchase date. Earlier for the first purchases and later for the last ones due to the fact that the revaluation of rents became very low each year. Between the second quarter of 2015 and the second quarter of 2016, the rent revision index did not even move… so no revision !
I now have a dozen rental units whose theoretical income (if everything is rented …) very largely compensates (if everything is rented bis) the loss of income at retirement and yet I propose to arbitrate them against garages, car parks or warehouses.
Why do you turn to the parking lots
There are a number of reasons, and these are in bulk. For 20 years, I had no problems with my tenants and I had a fill rate of almost 100%. In the last 10 years or so the situation has deteriorated. I have had to deal with a lot of unpaid bills, I have gone to court 9 times to claim my rent (I learned to do this without a lawyer, so without any fees) and twice to ask for an eviction. Between the moment you decide to evict and the moment you get the house back, it takes 2 years…).
I had to deal with damage and significant restoration costs. The region has lost jobs, the city’s population has declined. Moreover, incomes have become precarious and I recently found myself with 6 homes empty for more than a year due to a lack of solvent files, even through agencies. And the tax authorities are now demanding a tax on unoccupied housing…
And that’s why I’m gonna change my mind. I’m already on an active search. I have an appointment next week with my banker. I’m not going to wait until I sell an apartment to replace it with garages, I’m going to do the opposite. Actually I’m looking at some garage lots, I’m projecting, I’m calculating. I’m also interested in workshops or small warehouses that could overwinter camper vans or caravans, I’m not excluding anything. I’m a camper van driver myself. What counts is to get out of the “housing” domain and its specific laws. The objective is to migrate towards contracts governed by the civil code. Hoping to have less litigation and, if there is any, fewer complications to get out of the impasse. Perhaps in a few months time I will have the opportunity to tell you about my first “garage” transaction.