On our pursuit to achieve Financial Independence by 31.12.2024, my wife and I are working hard on

• constantly shaping our finances to steadily increase our savings rate
• which puts us in a position to invest regularily into income producing assets.

Our stock portfolio with currently over 60 dividend paying holding positions has a market value of over USD 312’000 and has the potential to generate over USD 12’000 in fresh cash in 2020 (net after taxes). And we will certainly strengthen our share portfolio further to make that Passive Income Machine churn out more and more money.

Our second Passive Income Machine – a Peer to Peer (P2P) and Crowdlending (CL) portfolio with loan investments in the amount of over USD 67’000 – currently has the potential to generate over USD 650 per month resp. USD 7’800 annually. And it will grow stronger, month by month.

Having set a passive income target of USD 20’000 by the end of 2020, my wife and I are working hard on acquiring more and more income generating assets which will sustain our cost of living in around four years. We will then finally be financially independent.

In order to diversify our investments further, my wife and I also took the decision to add a third Passive Income Machine (to our stock and P2P/CL portfolios): real estate properties which will generate rental income.

The benefits of geo arbitrage

Currently, our deposits on the bank amount to almost USD 500’000 and we plan to use a large portion of that cash pile to acquire rental properties, especially in France over the next two years.

My wife and I have our eyes on buying several small apartments (studios) in France near the Swiss border which we then want to rent out.

We have been living in Central Europe for the past years and real estate prices have litterally gone crazy here. For instance, in Switzerland, an appartment with a size of 100 m2 located in an urban area can easily cost USD 1 Mio.. In my view, in Central Europe, it quite often makes more sense financially to rent as the risk of overpaying for a residential property is high which goes hand in hand with the tendeny to get over-leveraged. Or at least there is the risk of substantially weaken one’s financial flexibility.

We also have been running the numbers (over and over again) with regard to acquiring rental properties in Central Europe, and no matter how we put it, very few objects we had an eye on showed some potential to make interesting investments. As it is always when it comes to investing, price is paramount. And we had to realize that there is almost no room to negotiate the price of the appartments or houses. The market in Central Europe is clearly overheated and so far has not given us the option to take profit of our strong financial position.

In France in contrast, there are certain regions, where home prices are in general much more reasonable, in particular as we have the benefit of our wonderful currency Swiss francs (CHF) which got stronger against most curencies in the past years, in particular towards the Euro. The real estate market in France is significantly larger and offers us much more opportunities. For instance, finding studios (around 20 m2) to buy for around EUR 20’000 is perfectly possible and there is even room for price negotiations. Such a studio can be rent out for around EUR 250 per month. Clip away one third of these revenues (taxes, charges etc.) and it will still make an interesting investment.

And here comes the best: with unit prices of around EUR 20’000 per studio, we can acquire 10, 15 or 20 of them to build a diversified rental income stream.

So, we will making use of geographic arbitrage by taking advantage of the difference in real estate prices between Switzerland and certain areas in France.

Just to be clear: jumping into real estate investing abroad is a rather complex move and we will have to take our time to set everything up properly. We will certainly not rush in, do our homework, making researches, speaking to many agencies, studying tax implications, visit a lot of apartments etc.

It will be fun, we are super excited and I’ll keep you updated in my next blogposts.

 

What about you, fellow reader? Do you own real estate properties? Do you also plan to acquire apartments or houses abroad resp. do you have already bought real estate in another country?

Thanks for sharing your experiences or plans below in the commentary section. 

 

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.