- Paul Muller bought his first two apartments for €80,000 in 2017.
- He currently owns 70 properties with a total value of around €10.5 million.
- He told the insider how he built his portfolio and what his investment strategy is.
This is the edited, translated version article It first appeared on September 18, 2022.
32-year-old Paul Muller owns 70 properties, valued at about €10.5 million, or about $10.3 million.
His first property, two small adjoining apartments in Leipzig, eastern Germany, was purchased in 2017 for €80,000 (approximately $77,900).
Mueller added that when he started investing in real estate, he didn’t have much money, even though he made “a lot of money” working as a consultant for PwC.
Müller said he had €5,000 in savings, but added that he was able to borrow another €5,000 from a colleague.
“So I started with €10,000 capital and raised the rest through banks,” he said.
In 2019 Muller quit his job and temporarily moved to a real estate agency, but in 2020 he became a self-employed real estate investor.
“Investing in real estate personally made me feel like I already had a small business,” Muller said, adding that at first he was solely responsible for raising capital, negotiating prices and managing the property. Added.
Mueller said about half of his portfolio consists of “buy and hold” properties. These are the properties he buys and rents out to try to make a profit.
The other half of his portfolio includes ‘fix and flip’ properties. This is a strategy where he buys a property, renovates it and sells it for a higher price.
“If you want to invest in real estate alongside your work, I think it makes sense to start with a buy-and-hold strategy.
Fix and Flip requires knowing more about the market, and that work takes much longer, he said.
“But the big advantage of this strategy is that we can build up capital quickly, which we can use to buy more properties in our portfolio,” Müller said.
He also says that with Fix and Flip, “you can generate significantly higher amounts in a short amount of time.”
On the other hand, renting out real estate “could be a larger passive income in the future, or an annuity that we can draw from,” Müller said.
How to select properties
When looking for properties, buy-and-hold property investors focus primarily on yield. Yield is calculated by dividing the annual rental income by the purchase price, Mueller says.
“For a buy-and-hold, the rent has to be greater than the loan plus maintenance and maintenance,” he said.
If there is a surplus after this, the property is profitable, he continued.
He said this is similar to a fix-and-flip project.
Muller said he focused primarily on the potential gross profit that could be made through these properties. “I do rough math before I watch,” he said.
He adds the purchase price to closing, renovation, financing, and marketing costs. This total is then subtracted from the potential selling price, and the difference is your profit or loss.
“If it doesn’t hit 15% by conservative math, I wouldn’t buy it,” Muller said, adding that he’s always trying to hit 20-30%.
“I’m very rational about real estate investing,” Mueller said. “If the numbers are right, it’s a good investment.”
He said there are also ways to reduce the amount of work.
“I own two properties on short-term leases and have handed them all over to service providers. Added that they give income to pay for this service.
He said he used property managers to take on a lot of the work on the apartment block he owns.
“Usually there is a janitor on site to take care of minor maintenance issues. My job is just to make sure everything is okay,” Muller said.
Mueller said his current goal is to grow the team from five to 50 employees and expand to the United States.