Do you need help buying or selling a house in the Netherlands? Don't hesitate to contact Mie-Lan Kok Estate Agency. They would love to help you further. If you have equity and you want to make it work for you, there are several options. You can put your money in a savings account, you can invest it in the stock market, or you can invest it in real estate. Your best option depends on the risk you are willing to take.
Putting your money into a savings account
One of your options is to put money in your savings account. Some people will say that with the current low-interest rates, it makes little sense. On the other hand, saving might be a way to build up a small reserve with little risk. As of 1 July 2021, ING and de Volksbank (including ASN Bank and SNS) will charge negative interest for any credit balance above €100,000. At ABN Amro, the limit is now at €150,000. Rabobank has already announced that it cannot provide guarantees for customers with a balance of up to €100,000. The interest rate can also fall below 0% for this group. And then there are taxes; you have to pay wealth tax.
Putting your money into a savings account is a relatively safe option, but don’t see yourself sipping a Pina Colada on a sunny beach from your profit.
The advantages of investing in real estate in the Netherlands
If you dream of being financially independent, investing in real estate is a good option. By investing in real estate, you have the opportunity to quickly provide for your daily necessities and fixed costs with a few investment properties. One major advantage of investing in real estate is that it is less sensitive to inflation. In general, rental income provides more financial security than income from shares. Furthermore, here in the Netherlands, rental income is not taxed!
Another advantage is that in addition to rental income, you also create a possible increase in your property’s value. This increase in value provides a return for the long term. A special benefit in the Netherlands is that you do not have to pay tax on this profit.
Be aware, however, that if you return to your country of origin, it is possible that this country will levy tax on the profit you have made on this property. This applies to, among others, Great Britain, Australia, Italy, Canada and the United States. Timing to move is crucial here, if you would like to prevent to get taxed.
There is more though. When it comes to the stock exchange, shares can collapse during a crisis and lose their value. An advantage of investing in real estate is that during such a crisis, a certain value will always remain.
The risks of investing in real estate in the Netherlands
Of course, there are risks as well. For example, there may be a crisis and the value of the investment may drop. Of course, if you do not have to sell, it is not a big problem, you simply wait until the value rises again before selling it. But there are more risks. For instance, what do you do in case of vacancy, if tenants do not pay the rent or if they have converted your charming apartment into a cannabis plantation?
In order to protect yourself as much as possible, it is advisable that you hire a professional to rent out your property. This professional has the means to do a background check on a potential tenant, whereby the potential tenant is also checked financially.
In addition, an official rental contract will be drawn up, whereby the landlord is always protected against adverse consequences. The rental agent will inform you of all the necessary information and in good time whether or not to extend the rental agreement. This way you have the least risk. In addition, this professional can also advise you what kind of lease contract is best for you, so that you have the most flexibility and you are well protected.
For investing in real estate, it is possible to get an investment mortgage. This means that you have to put in about 30 percent of your own funds. With a regular home mortgage, you're not allowed to rent out the property without the bank's permission. So, make sure you get the right mortgage. It will be a bit more expensive, but at least you can rent out your house without any problems. For more information about this matter, you can contact a bank or mortgage broker.
When you buy an investment without a mortgage, you could include the rental income and the equity of this property for the financing (and purchase) of a second investment property, which you can also rent out.
In addition, the rental income offers the opportunity to borrow more from the bank for your own home, which is used as your main residence. The rental income received is partly included in the mortgage calculation for the purchase of an owner-occupied home (main residence).
What you need to consider when investing in real estate
There are a number of things you need to think about if you want to invest in real estate. To get a good return on the property, it is wise to ensure that the property is in the free sector. Social rental property is subject to fixed rents. Rent is determined based on a point system. Properties with 142 or more points are in the free sector, which means you are not bound by fixed rents. For an optimal return, an investor will therefore want to purchase a home in the free sector.
One of the important parameters of this point system is the property value of the municipally (WOZ) of the house and the energy label. This label has a significant influence on the number of points. This means that a house with label A, for example, has a greater chance of being in the free sector than the same one with label F. In order to achieve a good return, it is important to properly investigate whether a particular property will provide this.
Of course, the location of the property is also key. You can imagine that a property in a remote village will yield fewer returns than a property in the Randstad area.
If you decide to invest in real estate, we are ready to guide you. We ensure that the relevant rental agent rents will rent out your property. As soon as you intend to sell your investment, we would love to help you further. You have come to the right place with us.