How to Create a Multi-Million Real Estate Investment Portfolio From 0, Chat With David Schreyer

Yasi: Today I have real estate investor, David Schreyer with me. and he has more than eight years experience with real estate investment in Switzerland. He started almost from scratch, but nowadays he had made it to multi-millions in real estate investment. We have a lot to learn from him in today’s session.

And in the past, he used to work in the financing sector, dealing with asset evaluators, bankers, and investors collecting all the knowledge he had from his professional experiences and his personal interest in real estate. 

He made to where he is today. And I’m so glad to have him on this show. And he’s going to share with us what makes a good real estate investments, how to calculate the ROI, what are the mistakes you should avoid and what are the best practices?

So welcome to fast-track podcast, David.

This is a podcast session that is long overdue, but I’m so glad to have you here on Sunday morning recording the session with me. I’m sure you’re very busy, but I feel very grateful. In the past you worked in the financing sector. I want to dig a little bit more into that. How was that experience helped you in your real estate investment? 

David Schreyer: I think the interesting thing is first you see many objects, you see the customer’s issues what they’re facing also, I think Costumers it’s used on one side and also you see the different banks, you see their quotas and also the interest they charge, how you can negotiate with them.

And this is really helpful later on. Of course they will not tell you everything you need because they come up with their own numbers. But if you are awake person and you really interested in what you do as a job, I think you learn from that and then you can apply it in your life.

You can, you basically learn to for the bank, how to formulate things. What is important for the bank side, like for the financing side and you can connect basically both pieces. And I think that’s very crucial. So this helped to just help as you go. 

Yasi: Both sides who lends out the money and then the side who needs to borrow money and then, you know how they do the calculation.

And basically you can tweak your personal situation to get what you want in the best scenario. 

David Schreyer: Yeah, exactly. Yes. The financing part and the buying part. So you can basically then learn a lot for yourself as well. So that was very crucial information and I think very important. 

Yasi: And tell us a little bit more about your personal story.

How did you get into real estate investment? Why it is so interesting for you? How did you get started at that time? Eight years ago? 

David Schreyer: As financial advice, I see many customers portfolios. So I start making my own mind what would I invest in? And real estate was one of them like also use to invest in ETFs very early on. Like right now, ETFs is a very common thing, exchange traded funds.

And but back in zero eight, I think it was not so famous yet, but that early on invested in ETFs as well. So I’m pretty open to all kinds of investments. I think they all have the reason to be here and I think they’re all interesting in their own way. For me, I just decided that real estate is surely a viable candidate.

I also thought, they can be pretty profitable as a leverage point of view because I thought in 2008, it is good to buy and you would have a good leverage on that, because to be, to make it very practical for normal people and normal person, the average person can not go eight and but they’re only start actually investing in 2014, roughly. Is that both the first five units for me in 2014, until there was a mainly invested in stocks. 

Yasi: And it’s the reason why wait six years 

David Schreyer: to the bank.

Say, I would like to have a 60, 70% loan or my own capital to get stock, right? The bank will say, ah, this is way too risky. I will not lend you this. But if you say, I will let, I will buy real estate, they will. So it gives you already as an average earner of much higher leverage. So this is a very crucial thing to leverage the position and basically hit the ball for your weight.

Yasi: you’re a very young man at that time. So you realize the interesting part about real estate because of the leverage.

And how did you decide to, take the plunge in 

David Schreyer: Yeah, because of course I have to build up the capital first, like Switzerland is famously a very expensive real estate market. It’s I think it’s one of the most expensive only internationally. I still think it’s good market overall.

I think there is a market per se is good. I think it’s a bit expensive now, but the market is good. Meaning that I think the ownership rights here are very good. Swiss has good ownership rights for Swiss citizens. And if you can buy. If you can actually buy the ownership rights are very good. Some country having issues of their ownership rights. For me, that’s big. No-go, like many Asian countries, for example, I’ve only limited ownership rights. That’s a little bit challenging, let’s say. So I think that’s interesting. As soon as the ownership rights are very protected here, and I think similar to America, it’s also very strong, but at first had to build up the capital.

So I first invested in ETF and stocks and more liquid assets. So it took me till 2014 to accumulate simply to capital for that. 

Yasi: in 2014, how did you choose your first investment property? What is the process? What’s your thought process? What’s the actual process.

David Schreyer: The first property, for sure to important was that the profit is, has to be right. The location. The first one was a challenging one because it’s also privately as being a thing because I have three kids by now I’m married and I have three kids. I knew that I was wanting to live in there.

So I had really had to cover many things. I want to live in there. Then they have to be profitable. I have to think it’s also attractive to live there. And also I have to like it and they have to fit the family. So sometime profitable object and the family object is not exactly the same, they can be different from each other.

On the other side, I would also clearly say, if you would live in there yourself, if you’re family, then maybe it’s still not a bad object because obviously if you think it’s good that other people might also think it’s good So I think I needed somewhat central, position. I knew that I will not be able to afford to have something in the middle of a big city.

First of all, I think the market was already done in 2014, very expensive. I wish to buy in zero eight, but it was simply not possible in 2014 and I thought it is already pretty expensive. So a city was difficult to have it. And also personally speaking for the family, I would like to have something to be outside.

I needed something a little outside and also with enough profit and how much profit need to do with depends very strongly, right where the exact position is. And the age of the building, I would say like outside of the main cities, I personally would think it’s good. If it makes five to 7%, five to 7% animal. If it makes more, would be great. will be difficult to find. And I did actually find something in this area. So this is pretty important. And the older, the building is, of course the profit has to be higher. This is it also to consider is of course special factors, can you invent, for example is the rent below market price or above market price or at the market price?

Is there renovation you need to immediately do? Can you, after renovation raise the price? I actually did find my first object and I still love it now. I still have it, like actually I have all my objects, they’re holding all of them and had a super good experience with it. I still like it. I go there from time to time.

I did many renovations. Yeah. And yeah, that used to live there as well. So it’s really, it’s a great object. 

Yasi: Yeah. Interesting because when you talk about outside of main city, five to 7% is good because south our audience, my coming from other countries, especially Asian market, it was a little bit crazy out there.

So let’s just say here is in Switzerland, the market is a little more stable. I think that’s a good point because five to 7% in Switzerland if you get it from the return from the real estate, but on the other hand, the bank interest rate is zero or even negative. You have more cash.

You, you see it’s a really profitable investment.

David Schreyer: Yeah. Yeah. I didn’t stand important here is to say as well that I’m just talking like the cash profit. I like from the cash. Not talking any kind of increase in value, because I think in many Asian countries, actually, the cashflow profit is actually not super big.

Like the rent is not even that high. Sometimes the mortgage can be also quite expensive and higher interest. So the cashflow is not so extremely positive in some Asian countries about the the increase in value is big. Yes. Not always, but it depends. It’s tricky, but we’re five to seven.

I really mean the pure cash profit. Like nothing about value. Like I assume the value of it stays the same forever. 

Yasi: this is a good point for real estate investors. Should they look at asset appreciation to think about if it’s a good investment or they should focus more on the cashflow?

Cashflow ROI?

David Schreyer: Yeah, that’s a good question. I think both are important. There is for sure a strategy to go on both. Okay. Like some of them, they go for increase in value. Some of them pure cashflow the best would be to have both of them, right? You have increase in value and cashflow, even better would be you have cashflow value, then you have increase in value and you have a cashflow which goes higher.

Like you, for example, doubled the cashflow of the real estate. If you doubled the cashflow, you have then double the cash and double the valuation, not even considering the increase in value, 

Yasi: What do you mean by double the cashflow of the real estate? 

David Schreyer: Let’s say you have a real estate. It’s a good location.

It’s just in the look after real estate, like it’s not a, it’s a great building, but they don’t care it. They don’t give the love. No, you can feel that maybe it has a. 10 appreciate the building. Like it, maybe it’s a fantastic building. You love it. But the people living, they don’t love it. I see this many times I personally like very old buildings.

I like any old buildings. I really like it. And for me, it’s also personally, I really just appreciate it very much and they carried very good. Sometimes they are pretty cheap to rent. Not always, but sometimes you have people in there that just don’t appreciate. They just think it’s cheap, but actually it’s great.

It’s nice. And so you have to bring out the character of this building and then you have to make a nice building all of this, and then you will have people really love it. for example, Victorian style, old building. I totally love it. I think it’s a dream. I really be like with a fish tail floor.

I would love that so much. I know people, they love that too. They think that’s awesome. They will pay a lot, to be in a Victorian style fish, tail, ground building with nice floor and all those details. But if they’re not really maintained, they can even be, sometimes they are pretty cheap.

And but there are people in there. They are there because it’s cheap. They don’t like Victorian buildings, so they don’t pay for that. They just pay the cheap price. And then I think sometimes the good thing to do is to renovate this, make it nice. It’s good for the building. It’s also good for the city, because in the end you have better tenants.

You can raise the rent, and and you have people really appreciate it. Like they really love it. And people, they really like where they stay. They will look to the place much better. So in this situation, what you will have is you will have a cashflow, which is much higher than before. The valuation already went up because the cashflow is higher, and you also have, then the inflation increase through inflation or other factors like it’s close to the city or the city grown. So then you have three or four factors altogether. 

That’s a very good example. So coming back to the cashflow thing, when you calculate the investment return, just give us a very basic education for some who have not started with investment in real estate yet.

Yasi: How to calculate the return and how to actually use your own money more effectively. 

Sure. I think important is that you make your own calculations, like I see many I see many documents, I get from basically pictures from sellers. I think it’s far to run your own name numbers and to know your numbers.

And also you really have your idea. What should we be? For me, the sale price. It’s just what you like to have, it’s his numbers. I just, usually what I do is I check how much it’s the net inflows, like without eating costs, just pure net inflows. And then I calculate them through the percentage.

I want to half multiply hundred, but then you have to buying price, so let’s say it’s a hundred thousand, right? The net inflows a year, a hundred thousand Swiss francs. It’s like roughly a hundred thousand dollars through 6%, multiple hundred through six, multiple hundred 10. That’s the price. And from this, you deduct all the renovation necessary.

David Schreyer: So if, for example you land at certain number right then at the end, but you have to remake the heating or the roof and it cost a hundred thousand. Then you have to deduct this from the price it’s important. You know that this is what you should pay.

Yasi: is leverage included or not? 

So does it mean that we, when we see a potential real estate property, we see how much rent we can get from it per year. And then we divided by the desired ROI and then time 100, then we that’s the price.

But in this case we did not count the leverage factor, right? 

David Schreyer: Yes. This is basically, yeah, this is without leverage. This is just a, the profit before leverage of course. If then you would have let’s say you bring 25% on capital. You have this, of course multiple for, because you leveraged by four by the factor of four.

So of course the own capital profit can be very big. This is exactly the point. 

Yasi: Let’s say in the situation in Switzerland a lot of people, they need to prepare, a lot of cash in order to invest because here the price, absolute price is quite high. Like half a million to several million.

How can average investors, if they prepare the cash to best leverage on the mortgage and how can they best negotiate with the bank? Get a good rate or even qualified to get a mortgage? 

David Schreyer: Sure. Let me split it up in certain points. Let’s first maybe start with let’s start with how to get to go to mortgage, right?

That’s a good point. If you want to get the good mortgage, you have to run your numbers as well. So I, for example, I have a documents which shows pretty much how the bank calculates this estate. I have documents at home and the excel’s prepared, so I pretty much can assess pretty accurately what the bank will have as a value.

So I know exactly if I change this on the state, then the value for the bank will be this. So I see always the value between what the bank will say the value is, and what’s the, what I paid for it. And if I see, for example, the value is much higher than what I paid for it. Then this gives me a very strong negotiating point that the bank feel stable, see the same thing.

And then obviously for them, the risk is very small until you can get a good rate because then they see, all right, this is actually, this house has many reserves. So you get the good rate. So important. Important is that you have. You have to really check the financial data very carefully and all to have that in mind with anything you invest or any renovation as well, what’s what you get and what you invest.

And you have to be really honest with yourself. And sometimes also honest with the tenants. I’m pretty honest. I’m pretty transparent with those things. And if you find this sweet spot there, then you get automatically very good rent, very good rate. And also you have to understand a little bit, which bank likes, which object different banks have different preferences.

I guess this is also in other countries, the case in Switzerland to some banks like Citi, more, some banks are okay with not cities. And I have both AF some flat, some houses in the middle of cities. Some of them live a bit outside. You have to find the right object. Some banks are pretty good with businesses in the buildings.

Some actually not. So you have to find out the preference and here two person who doesn’t know which one is which one I think you just have to try, you have to have your numbers and then approach them and then see, you will see different results from different banks. Because especially in the business area, like multiple flat houses with businesses, the difference can be big.

And also old buildings, some banks like old buildings, some often they don’t. So it’s pretty specific. 

Yasi: That’s a very great insider tips. How can cat average? You must’ve, that like different banks have different preferences, real estate or interesting point. Do you have anything to share with us is okay.

Like which bank is preferred? What Switzerland, 

David Schreyer: you mean also this is a subject to change. No, it’s it’s also, it’s not always constant, you have to find out little bit, sometimes you feel a bank want to go out of a sector. Like also like my main profession also was accountant and I’m still working as an accountant too.

So I’m actually, I’m working really a lot to be honest. So I’m already from accounting and from interacting with banks as an accountant. I also feel that I, you can tell if a bank, when they leave for sector, if they want to increase their share in the real estate market or not same, like with company financing, if they want to increase or not.

The best for us is really just approach them, approach them and see which rate they offer. This is the simplest way to tell it actually. Because even though it’s good for giving information out here I don’t even know if it’s still valid in two years because it really depends also it depends which city, so I’ll just have to try it out, basically.

Yasi: Exactly what you talk about is really, you see things from multiple different angles, right? Like you, you will see from banks balance sheet angle that if the bank wants to increase their real estate holdings or reduce it, that’s so insightful because now as a individual investor, I think on behalf of the audience we need to think about, what does it mean to the bank?

What does it mean to the sellers? Not just, what does it mean to you yourself? You have to use the information to your best advantage when it comes to negotiation. So my next question would be. Negotiation. So what would that usually the advice you would give it to people in order to get best deal out of it?

David Schreyer: You mean if the rate the, with the price, if the price of the property order or the rate of the bank 

Yasi: price was the seller, and sometimes you have this, a housing agent in the middle, so it’s a little bit tricky. So how would you approach that? And the second question is the rate with the bank, the interest rate.

David Schreyer: So that’s at the interest rate that would just go for unit two numbers. If you have good numbers, then it’s fine. Also here, we really have differentiate for them in Switzerland, the property for own use that’s property for investing, it’s really different. There is no compare. Like the change in calculation occurs.

Usually with three units, one or two unit is called private. It’s basically goes on your private liability. Like how much money do you make as income? How much risk you can take? And after three it’s more on the building. So the building numbers, how much it makes is much more important.

 It’s all you have to, we have to know what you talk about. And yeah, so this won’t mattered in that the percentage, this is important. If you have a one or two units, because in your personal liability, it’s just important how much money you make, the more money you make the lowest rate.

And also if the building is undervalued, the bank will see it. And now if you get a Zurich flat for, I don’t know, four and a half room for maybe 600,000, the bank will see it and they will think, okay, that’s fine. And also if you make a half million income or a hundred thousand 80, of course depends on the rate, but the multiple flat house, it’s much more like how much money actually this house makes compared to how much it costs.

So the more money he makes to compare with the lower costs, the better it is basically 

Yasi: Let’s say if the multi units house and one investors buy it and then the ROI it’s good. And the investment is good. So the bank, what evaluate the cashflow ROI from the building itself rather than how much money as an income this investor makes because in Switzerland, so for the audience information in Switzerland, I think it’s the same in your country, that when you buy a real estate property, the bank evaluates if you can afford to pay based on your salary, but in this case, if you buy multiunit house, the banks evaluate based on the income from the house, rather than from your personal salary.

David Schreyer: And probably the correct. It’s like buying a business, basically. It will be similar to that, just with housing in this case. So this is this this was to answer the question, right? What was the question again? Help me out. 

Yasi: So this question is you give us the answer is go with the lowest rate.

But I have a full up question is doesn’t matter with which bank or because when you have a banking relationship with a banker would it help you or you really think it doesn’t matter? Just go with the lowest rate,

David Schreyer: difficult question. I think personal sympathy is important at all. Also depends of course, entirely which country are, I know that it’s some country it’s really matters. At some countries it’s really important. I really accept that personally. I always think numbers is the most important thing.

If you have good numbers, you always find good deals. If you have bad numbers, you really need, then you might need to relation better is to just have a good house with good numbers, healthy numbers. And then you’re really fine. You can go with everybody, everything, and that’s the, you should always focus on this.

Like I always think important is you have a good house. You may maintain it. You have good tenants, which appreciate it. You will have good numbers and then you were fine. Then you will always find a good bank. This, you don’t need to worry. And how about negotiating?

And you want, the other question was negotiating the price, the buying price, right? It’s challenging. Okay. I want to really say we have inflation in the asset prices. It’s not easy, and you of course have to understand where you can negotiate. My approach to this. And I would actually suggest that to anybody in north Chester, real estate in everywhere, and as I say, my portfolio is multi-million spy now.

And it was, it went pretty quick, to those multimillion numbers. And it took like from 2014 until maybe 2019, to go like into the multi-millions. So I think important is to really run your numbers, not other people’s numbers, not the sellers numbers is yours numbers as you really.

And I’m pretty strict. If I think this house has this value, I will exactly pay that much. I have, maybe I negotiate a little bit up maybe a little bit, but if it goes after this level, which I have in mind, then I will am out. I will not do it. I think then for me, that’s not my thing. Then I will not do it.

And I think you really have to discipline you shouldn’t be emotional. Like I calculate how much I want from this building. How much is it worth based on this profit at walked enter innovations, really have to calculate that. Of course I will have a second calculation thinking also the potential of this estate, but then I will come up with a number which matches the price right now.

That’s important for the buying price right now, because the bank will only look at this or mainly at this. And as a second, I also think what I could make out of this house, that’s less important for the buying price, but more important for me, like for a long-term view, but then they will give a number and go with this and the best to negotiate this, the price personally I made, sometimes I make my calculations.

I even show them to the seller. Like I literally even go to the broker and say, look, this is my calculation. This is the value of this house. It’s not more, it’s not less, it’s exactly this value at sometime. This is below what they want to sell for, sometimes also with the broker or even with the board, I tell this and really the exact number it’s not unusual that they just say, all right, this is, I see, this is obviously very justified.

I can sell it for this value. Yeah, so it’s not unusual. Surely you have to make sure that you can actually do it. There’s very hot market. They are a little bit overheated. Zurich city would be one of them. You probably not easily can do that because they will simply say, I don’t care.

Somebody will. Which is probably true because there’s some people in this market that don’t want to make money to just want to park the money for later. So it’s, they don’t, they have a different, you don’t need to compete with those people because they don’t want to have investment. They just want to park money and you don’t want that.

Then you shouldn’t do it. You need to have a proper profit, which should also cover the long-term costs of this estate and have give it flexibility for other things. But you can show those numbers especially apart from the main centers on even sometime in city centers. I actually did this many times In two, two occasions we’re talking 10 units there in Swiss is pretty expensive though. They just agree with my numbers. That’s just say, okay. Like they don’t like it sometimes because they think it’s much lower than what they want. But that just say, look, this is the price. And sometimes those houses that were in the market already for more than two years, and nobody bought because they fought, I cannot sell from my price.

They think they look at their house, they don’t even know themselves so good. They think why nobody buys and the reason is it doesn’t finance. Good. Okay. It’s not, financeable easy. It’s difficult to finance. And I think the same financial solution, how to finance this building. And then that will show them exactly the solution.

And when they see it, sometime they realize, oh, okay, this is really the reason. Like it looks, like it looks much more than it actually is. And then sometimes they have to swallow this pill and go, okay, then this is the price and the, sell it for this price. And then.

Yasi: have you already experienced that the price that you offered is like so much lower than the price they asked for say 20% lower or even more, does it happen? Did it happen in the past? 

David Schreyer: Yes, totally. Absolutely. also we have to say I personally go also for sometimes will be complicated buildings.

I have buildings in city centers and some outside. So sometimes I have buildings and city centers. They are more than a hundred years old, they’re a hundred years old. They may be, have restaurant or be not a little bit funny structure. And also the tenant mix is sometimes like I’m challenging, and yeah. Then you really have to find a bank once. And really you have to find a bank actually finance this it’s not even easy. You have to show them something works. also you have one challenge. The next thing you have to convince is the broker and convince the seller. And I’m pretty transparent that really gave out my numbers.

If they see it, yeah. They just say, okay then I have to agree. Some of them also don’t agree. I said, look, don’t problem. You can come again and talk to me in six months or any time. No problem. And it’s actually, sometimes they come six months later and say, you look it’s probably true, 

Yasi: oh, I love that. You just leave your offer on the table. They can take it later on. If they decide to work, 

David Schreyer: They can take it any time. It’s no problem. They can call. I pick up, No, no offense. No. And also if the deal doesn’t come, it’s no, no bad feelings. It’s fine. You know what?

I think everybody should find the seller, which they suit. Also, I think important is to find out what the seller worlds, and I think you’d really respect his wish , it’s also a point actually, you shouldn’t underestimate, like what does this person wants? Some people that just want money that’s okay.

Then you give them the money. You think it’s right for this property. If it matched their vision, some people also think I want the tenants to stay. Like I liked those tenants. I have a personal relationship. You just have to guarantee me that they stay at check. Then honestly, if I can justify that, if I think the number justified that, then I will say, okay, then I buy it as it is.

And that will not change nothing. It’s gentleman’s word. And I will not do. And altars also want what did sympathy, right? So I’m like, they just, they think they have enough money sometimes, or sometimes even not. But I think I just want somebody is friendly and alike and I really respect that. I think that’s totally fine, yeah. Maybe you should give it to somebody who you think is a friendly person and that you actually care about. And yeah, and I think this is also important. Like you’re a friendly person, I think this is important. And then also point there is the speed is very important. If you have your numbers and I can really see a document, I think it goes fast.

Like I can make on my mind four minutes and I read it four minutes, then I can almost already tell the number. And it’s almost. Confirmed like that. It’s pretty sure like that. And and have everything ready. I have the cash ready. I prepared everything. So I can, sometimes I could buy within that one hour, for example, once there was a five units in the city center , old building, a little bit challenging, to be honest. And I know that other people, they don’t know the markets, they don’t know the numbers so good. They don’t have the bank relations ready. It will take weeks. And they’re very emotional and they want to talk about their feelings.

It’s good. But it takes a while. And then maybe they say, no, then the seller, he wanted to hurry up. Like I had to sell it. He said he was moving to America and he had a lot of houses, I think like 10, multiple flats and houses all over the city. What’s his last. And he was actually just about to leave, like within one week, like he sold everything in Switzerland.

He really sell everything and Waco and go to America and reinvest everything in America. It’s pretty crazy. And that was his very last unit. I loved this unit as to have this this multiple flat house in city. And I think you just want to be fast. He really wants to be fast. And he had a buyer at this buyer for whatever reason jumped off and actually they didn’t chose my offer.

I was probably only second. Maybe there was a, I think this was a very good object. They had hundred people want this object, a hundred people there. I know I don’t need to negotiate. It was just good from spot was a perfect for totally fair price. A very fair price. I called them. I said, I will buy for this price.

It’s good. I will check it. I checked it. But somebody was even faster. And then I said for whatever reason, this person then jumped off. It can be anything, it can be a private reason, maybe disparate and just get a divorce and I’ll suddenly, and then they cannot handle that. So they have then it was, they called me and said, look, the person jumped off.

And if I want overtake, I said, sure, because they know I can do it very quick. And then I think within one week it’s not rice, like within two days everything was ready and that by the end of week was basically notarized. And this person was also going to America by the end of those weeks. So that was really fast.

Speed here is also important. Some people just want speed. It doesn’t even matter for them a little bit more, a little bit less than money, but they want it quick.

Yasi: There’s so much wisdom from this story you give the seller what it wants. Maybe it’s easier to negotiate the price or easier to even get the property, right? If there’s 

David Schreyer: yes. Some, some properties is about to speed.

Some properties is about friendliness, some properties, purely price. I am actually the most careful of properties that only about the price. This is tricky and I’m about price alone is not a problem. If it’s only the price, it’s still doable, but you really have to also check w who you want to compete with.

If you compete with people, they pay anything, just want to park their money. Even they make a loss. There’s some people that they make easy money, a buy something for 10 million and if they later on get 9.5, they’re fine. you can maybe not bet. I think most people, they cannot bury that. And then I would say, don’t compete with them. Then you also have to know when you should go out.

That’s why I say I really run your numbers. It’s the most crucial thing you should really become competent and read a lot about this as well. You will always find something good. Also here. I think you should really yeah, really be honest with yourself. If this, the price is too high, then I don’t do it.

I really don’t do it. I say thousand times. No, if needed, I will just check if the rate between yes and no is one, 200, then I will just check a hundred buildings. Like I will check to check more. I will not just then say, okay. I say yes, even though I don’t like it, then I would just not do it 

Yasi: on the flip side.

Would you do it? If let’s say the price is lower than what is acceptable, even though our other disadvantage comes together with this building, 

David Schreyer: if the price is lower, because of these advantages. Yeah. For sure. I will, then it matters. Can you solve those problems? I’m actually also as I said, I have many buildings there were sometimes difficult, and I’m somewhat of a problem solver.

Also here. We have to say, some people can not do that on don’t want to do it, and I see myself also that especially nowadays market, I think it’s different to just buy property just from the spot. You’re not just from the catalog. I think often they’re pretty expensive, not even decorate, but if you can solve problems.

This is really why this matters. And I’m really focused on that. Like I said speed is a problem solver. This person wanted very quick. I solve his problem and that’s good. Or sometimes it’s different. Sometimes there’s a building. They say the price that’s important, but I want to maintain, I want to keep the management of the building.

It happens then maybe you could say, yes, so this is this also one thing. Or I said, the tenant stays, this is a thing or restaurant business. It’s also tricky. Restaurant business is tricky, it can be challenging. You have to really think about it. Especially restaurant things are difficult to finance, but if you know how to finance things, it could be a thing to think of.

Yeah. Also, the question is, how good can you renovate and how good can you work? Can you assess those things? I have experience as well that I can go through building and pretty much say, okay, this flat I can renovate. And how much is it? I’m pretty realistic with prices. Like I can go in there. I know the floor is that much.

I can immediately imagine this. So while I walk through a house, I can immediately tell how much is needed to do. And if you can do it

yes. I think important is you have to evaluate like how much you need to invest and how much you need to be done. And this also needs to be negotiate.

As I said, in this complicated buildings, you need to be a problem solver. If you can say, solve their problems, you can make the deals, because this is also a sweet spot. 

Yasi: If you can solve their problems, you can make the deals. Okay, I’m going to mark them, maybe a highlight of this interview. 

David Schreyer: You have to unite the end. You have to solve the seller’s problem and you have to solve the financial issues, like the financing issue, and you have to connect both dots together. And then you have to see if you can stand behind this deal or not. That’s exactly what I do. And the more complicated this, as I said, the more challenging it is, but this is also a good spot.

Like you say, you have to watch out who is your concurrence by who is other people? How many people? Let’s say a big fund. You invest, you’re a big fund. You have 200 million to invest. Can you actually then care? Let’s say, or even more like 800 million or 1 billion phones. Can you care a building of two millions?

No, you can’t. This is not important for you, especially all the buildings, for example, like they’re too complex. They just want this very square new bills. Like they can evaluate that because for every little thing, a big fund, then we’ll have to send the expert. It’s difficult. It’s a lot of tendencies, too much decisions, too much little things.

And they are very, the big companies are very slow. They have a big lines, like they need to 10 times ask somebody else if this is okay, you can’t do this, but if you can solve those problems, give them a reliable answer. Fast. Do you are really valuable for the seller as well. 

Yasi: And I have a one last questions related to the mistakes.

What do you think are the common mistakes people make when it comes to real estate investor? 

David Schreyer: Okay. There’s multiple Wells. Let me think first. I think that, of course the obvious one is you buy too expensive, right? We have to first differentiate as well. Is it for all news or is it for investment here?

I have to make it clear. I really only speak about investment own use properties. One unit or two are actually, I wouldn’t say to consumer good. That’s not correct, but would I really call it a cash generating asset? I don’t think so. It’s not because the value increases, but it’s difficult to get this money out to reinvest this.

So let’s say you’re 50 years in there. Congratulations. It can increase by 300,000 and now you have 300,000 by the age, 50 years later, you’re pretty old by now, so it’s not so valuable, some, are you talking about. Properties investing properties. And I think not just properties, if you buy too expensive, of course it’s not good and here should be realistic and really have your numbers and know them, not rely on other people’s numbers.

I see, by the way. So sometimes even in the sales data, they were wrong. I don’t know,by mistakes sometimes, or why I saw that many times. So don’t buy too expensive. And then second thing is, think good how much your innovations will cost. It can be quite a lot and really think about this carefully.

It’s also important to consider that too location. Of course also important where it here just have common sense. You check, you can go, how much flats are empty in this city or in this town, and then run your numbers. But the price, state renovation. That’s all important.

Yasi: So not taking into consideration of other costs that might incurred from the building after you bought it so that people has to think about. Yeah. Even I cannot, I don’t know what else, as an example, maybe heating system, it has to be replaced is too old. 

David Schreyer: Look, I can tell you some there’s roof plumbing, like water, electricity floors tenants.

I had also sometimes, some buildings had challenging tenants I bought and this will peel people off. They’re not easy. Sometimes some people that don’t appreciate where they live, this is also something like they they can be damaged, and maybe they don’t even have only insurance.

This can happen. Also, I don’t want to go to tech technical, but also you have to watch out. The bank give credit on their value. The bank has not on your value on the best is of course the bank’s value is your value, but the bank of credit on your value, not the sell price. So if the rest to the sale price, you have to cover with own capital.

So it can be that, for example, the bank value, make it easy. Example, the buildings have a sale price of 1 million, okay? The bank’s value is 900,000. So the bank will only lend you 75% or 900,000. The rest you have to cover with own capital. So which means you already have to have a, you get 75% loan on 900,000.

Plus the other a hundred thousand is pure on capital because they say the bank say, that’s over my value. You have to cover that. So it can be that actually by now you have quite a lot of own capital in this house. You think, oh, I’m pretty secure. I’ve looked for capital, but for the bank you are Maximo lend it.

You already are at the limit of their lending power, even though you give a hundred thousand extra cash. So what happens is if now the house makes less rent or the market change, they just say the interest go up. I actually don’t give this value anymore. So high. It can be that they will not extend the credit with you.

It can even be that. They basically say now this house has instead of 900,000 value for us, it’s only 700 or 800,000 value. So basically now they only lend you 75% of 800,000. So you have to have another hundred thousand cash to even be qualify. And in the heat of the market like this, I think you should be aware of such.

That’s a challenge, you can think that if you don’t know the bank numbers, you could fake that you have a lot of phone capital in the house, but it’s not your Maximo lended. You have the maximum credit for them. So if they changed the interest or if they change their evaluation, you have to cover everything.

You’ve for money. 

Yasi: Yeah. That’s lowers the eventually ROI, you putting your own money inside 

David Schreyer: and you’re not just the ROI, but really it can be that they will not extend the credit you have to sell. 

Yasi: No, it’s like a foreclosure or they give you a timeframe to get to, to liquidate it. 

David Schreyer: Usually I didn’t have this situation yet myself, but that just consider it, I think they will give you a time limit when you have to bring fresh. In very extreme situation, I don’t know. Maybe could they even have a clause to, to cancel the credit? I don’t know exactly, but I, it could be that latest at the extension period when the credit expires, because the Swiss, by the way is not like another country you don’t do.

Often 30 is credit. Someone’s the only two, two years or five years or 10 years. It’s not unusual here in this country. So it can be that just don’t extend. And it could be that then other banks will also not extent because the market change. So then suddenly you own, you have a, you have to, you cannot extend the credit.

So you need certainly a lot of cash or you sell off houses. And usually exactly this moment, you don’t want to sell of houses. Then you have this ripple effect going through Yext and selling the unconvenient moment. So I’m pretty conservative also with the financial managers, like I think, yeah, that’s why I said again, you should watch those things that when you buy and if you’re unsure better, say.

till you find something really suits. 

Yasi: All right. Thank you so much for all the valuable information I have. Just one last question that you were willing to show is the audience that, what is this mistake that you made in your real estate investing that you learned lesson from you want to share with the rest 

David Shreyer: Mistakes or not 

Yasi: mistakes?

David Schreyer: Yeah. It’s just thinking I actually, there was not many mistakes. I really, as I said, look, my approach is pretty conservative. So the mistake you could look the mistake. I think I didn’t have much mistake. Like I didn’t have, none of the units I had was. There was challenges. Yes. But I all priced them in.

So it’s never something happened that I say, oh my God, I would not have made it. If I knew that and never had this, I never actually, I had much more the opposite that I actually, it actually, most of the time it came exactly as I planned or much better. Like I really, I have objects. They are doubled in value, like in just a couple of years.

And that doubled the cashflow because I knew that they are great. I love them. They’re super, but people didn’t appreciate it. And now I have people, they love it too. And and they’re still, even the people that rent there still say it’s pretty cheap, actually doubled them up before maybe.

And the only thing you could criticize is that this strategy you grow less. In quantity, like you could also say you could go in more aggressively and Tesco much more aggressively. You just go more quantity. Okay. You have to also have the capital for that. But you could do that too. I could grow faster.

I guess. I deliberately don’t want to grow too fast, even though I have to say, compared with most investor, I’d probably grow super strong, like a lot, but I personally see that I could grow even stronger. This will be possible. I just don’t decide to it. I just want the sustainable growth. 

Yasi: Yeah.

So it’s not that fast, but it’s steady and it’s safe around here, but you being away within your calculated risks. 

David Schreyer: Yeah. Look, there’s, I also want to say I could also make a company and then I have many people that come to me and they say, I would like to have a company with you, could they give, cause I gave can I give you money?

Could you invest it for me? You have that a lot, actually like I have million, I could just probably have a couple of phone calls organized and some people also say I should do it, I should expand, and just do much more quantity. And I think I could do it.

also think I can evaluate this, the certificate. Like I was absolutely kids. Now I have to check that private time and everything. I could do that. So one thing if one thing probably if I’m 80 years old, if I look back at my life and I will say one thing maybe was not perfect, maybe I will say is what was not fast enough growth or not enough.

Yeah, but also I’m a family dad. That was the one that’s a little bit conservative. So the secure, 

Yasi: yeah. Understand. If the audience like they, like what you’re talking about, they want to get more information they want to learn from you or they want to invest in you in case you started a company.

How can people reach out to you? 

David Schreyer: I have a Facebook account. You can join me there for me or or ask a friend request if you like beyond this, I actually don’t have much platform yet. Maybe I will make a channel myself in the future to talk more about my experience. And I want to give more concretely instructions and I would like to follow up like really with excel or really concretely with concrete examples.

Then you can maybe reach out to me. If I decided to do it, then you can follow me if you like, and then I will share more detail information.

I also think it’s a good thing because if people make good deals, I think it’s good for everybody. I really believe that. I think people should match each other. If the bank matches with the seller matches with the. Everybody’s happy and this is the fraction is low .

It’s a win-win situation. And I think it’s a good thing for sociality. And I think it’s even a good thing for the city. A good thing for the country. I think everybody wins. 

Yasi: Then how just say if you, one day opens your YouTube channel, then let’s catch up again and then everybody can follow you. And thank you so much for being here with us david 

David Schreyer: Thank you so much.