13 August 2007

Why I sold my rent condo?

Living room
I will give you some numbers and tell you a story behind them.
Purchase price @ 28th of September 2004: 30677 €
Down pay 30%: 9203 €
In 2004 I had Cash Flow at this property about 72 € in a month, which makes 9,38% ROI.
In 2007 before I sold it I had Cash Flow about 114 € in a month, which makes 14,86% ROI.
Quite good? Think again... I did. What I had forgot and found out in the beginning of 2007 where the prices of that kind of a Condo, which had risen drastically over this time period here in Tallinn, Estonia.
Selling price @ 13th of July 2007: 59438 €
Some money went to the broker and I had to pay back the loan, so I was left with 36365 €.
How much could this money make for me?
@ 5% interest rate it would be about 151 € in a month. (5% is the highest interest of a one year savings account in a bank what I could get here, that's guaranteed interest)
From original investment (9203 €) it makes the ROI 19,69% (and differently from rent income it could be guaranteed and is tax free).
But in reality I have found other opportunities to lend my money to people (who I trust) and their companies with higher interest rates...