Some folks seems to be quite good at handling money and investments from an early age, like my friend ‘The Danish Dividend Investor’. Others, like myself, has to go through a lot of mistakes before we finally start to realize the importance of saving and investing in order to have more freedom in our lives. Sadly, some people never get it. But the good news is: it’s never too late to turn things around!
Today we’re going to hear from Casper, a Danish guy who’s been through some ups and downs financial wise. I really think there’s a lot to be learnt from his experience. You can read much more about him on his blog Bluelobster.
The WWE: Hi Casper. Thank you for taking the time to do this interview. Can you tell us a bit about yourself and how you make a living?
I was born and raised on the small island Falster (part of Denmark). At the age of 17, I moved to Hørsholm (north of Copenhagen) because I got a position as entry level data technician. After around 6 months I got a promotion to a position as a full-time IT Consultant. This was around 2006 right before the latest financial crisis hit the global economy. At that time the housing market was going nuts, and I wanted to join the ride.
I looked towards the swedish market where the COL was a bit lower and houses more affordable. I bought my first small 1 bedroom appartement about 5 kilometers (3 miles) outside the swedish city Helsingborg. After quitting my job one year later, I sold the apartment with a profit of 100.000 SEK after a year, I bought a motorcycle and invested the rest in danish football clubs. I ended up loosing all most all the money I’d put into the clubs.
I wanted to try something different, and I got to serve at the Royal Danish Guards. It was a super nice place to be, and a great place to be a soldier. After doing my time in the army, I wanted to open a computer store in a small town of arround 2000 inhabitants on the island Falster. After 8 months I had gone into way too much debt and had to close the shop with a loss on the wrong side of half a million Danish kroners (>81,000 $).
The experience gave me a fantastic inside into how it is to live a life without money. I had to show up in the enforcement court, had lots of creditors and rude debt collectors from the Danish Tax Authorities. I hit rock bottom when I had to beg for 10 dollars at a gas station in order to fill my tank to get home. All my credit cards, gas cars etc. had been closed because by the bank.
The great thing about hitting the bottom is that from there you can only look upwards and onwards. I had to find a new way to make money. Fortunately, I had good papers from my time in the military, so I got back in as a Private. It was a huge benefit to me, in a situation with financial problems, to be able to live in the military barracks. The military paid me around 18.500 (around 2,900 $) Danish Kroner a month before taxes. I also had the opportunity to do a lot of overtime, field exercises and so on, which all helped me to earn more. Further, I started delivering pizzas in the weekends to increase my income even more.
All this meant that I had quite few expenses and a relatively high income. I started to pay back all my minor creditors and made payment agreements with major creditors. After I finished my military training I was sent to Afghanistan for 6 months. During my time abroad, the army paid for all expenses and I got around 25.000 DKK (4,000 $) every month after taxes. I continued to pay off debt aggressively, and when I came back home my debt was down to around 100.000 DKK (16,000 $).
After my time in Afghanistan, I had a few months of vacation. I decided to spend the time off learning about affiliate marketing and SEO. Since elementary school, I’d been programming in PHP, CSS and HTML, so I had a pretty good foundation for developing my ability to make money online.
I created a few websites and services and started to make an increasing profit shortly after. I found myself in a completely new situation in terms of personal finance: income from my job in the army, very low expenses and a big side-income from my affiliate websites. After a while, I quit the army and started to work full-time with the websites. I also started a few other small e-commerce businesses. However, after a couple of years, I started to get bored, so I started taking lessons in order to achieve the equivalent of a high school diploma in order to get into law school or study medicine.
I got into law school, but I quickly realized it wasn’t the right thing for me. I really was not motivated for the affiliate business anymore – so I sold all my websites. At that time the prices on real estate property had dropped significantly in Denmark. I took advantage of the lower prices and bought a condo in my small hometown. Shortly after, I met my girlfriend and we decided that I should move in with her in her apartment. That gave me the opportunity to become a landlord as I kept the condo I’d bought.
I started out using Airbnb. At one point, a foreign couple wanted to rent the condo for three months as they were trying to find a permanent place to live in Denmark. After three months, they still hadn’t found a place to live. After talking to the couple, I bought a new property and rented it to them on a contract. I also rented the old condo out on a more permanent basis. Suddenly, I found myself having two rental properties.
I didn’t have to the math many times in order to figure out, that it could be a really good business to be a landlord. The relationship between the purchase price and the income from rent where perfect, and it was pretty easy to find new tenants.
The biggest challenge was to get enough cash to pay the part that wasn’t covered by a mortgage. In other words, I needed more cash. I started to look for a job highlighting the knowhow and professional skills I had required through my experience with online marketing and SEO. Fortunately, my skills were highly valued by potential employers and today I’ve a job as a consultant in an IT business. Moreover, I do a lot of freelance work for different clients and I’ve used the income to buy seven apartments over the last couple of years. Thus, I now have nine rental properties overall.
The WWE: What are your general thoughts about money and ‘passive’ income in particular?
My thoughts about my long term personal finance changed around New Year 14/15, when I knew I was about to become a dad. Until that point, I had mostly just lived paycheck to paycheck without saving or investing. I’d bought a condo to live in myself, but it was never my plan to become a landlord, it just kind of happened by coincidence.
Around the time my son was born, I sat down at made some goals and ‘guidelines’ to take more control of my long term financial situation. I’ve changed them a bit since, but overall the goals are the same. All the goals should be reached when I’m turning 60:
– I’ve made a savings and investing account to my son, and I want the value to be at 400.000 DKK (65,000 $) when he’s 21. I’ve written about the strategy here https://bluelobster.dk/5.html
– My private pension (Danish alderspension) should reach 1 million DKK (162,000 $).
– My annuity pension (Danish ratepension) should be at 4 million DKK (648,000 $).
– The mortgage in my own house should be paid out completely.
– I want no other debts.
– I want at least 10 rental properties without debt.
I want to reach those goals without compromising the quality of my lifestyle. I’m not willing to sell my car in order to save more, but I will drive a small Audi A3 even though I can afford an Audi A6. I don’t want to reach my goals by hardcore savings, but I rather focus on increasing my income.
In regards to passive income, I must say that there’s nothing passive about being a landlord or make affiliate websites, it all requires hard work. I think a lot of people misunderstands that point. However, I might be able to have a 1 day workweek if I get around 25 rental properties with my current setup, and that is of course extremely motivating. It’s not something I plan to do right now, but I’d like to have the freedom to work less at some point.
The WWE: Tell us a bit more about your experience with being a Landlord.
I’ve been doing it for four years now, and I started out by doing all the classic mistakes: Bad contracts, wrong rent, etc. The laws in Denmark protect the tenants, so as a Landlord you need to make sure, that you follow all the rules. For example, I didn’t know that I couldn’t charge separate for renovation, and that it had to be included in the rent. When you’ve made the contract it’s too late to change anything.
Even with all my mistakes, I’ve never had periods without tenants, and I’ve never had losses on any tenants. I’ve made sure to have some principles I stick to. For example, I send out dunning letters if I don’t receive the payment on time. If I don’t receive the payment on time after sending out the required dunning letter, the tenant will ultimately be kicked out of the apartment. No rent – no apartment!
All the apartments I buy will be renovated after specific guidelines to make sure they’re in the best possible shape to attract tenants. All electrical installations are renewed. Old kitchen appliances are replaced by new (even though the old ones might still be working). The apartment will always be painted in light colors, and wooden floors are sanded and painted. It’s just easier to rent out a nice apartment!
As I said before, it does take some work to find new promising apartments, negotiate the price, complete the deal, plan the refurbishment, prepare marketing, show the apartment to possible tenants, make a contract and help the new tenants move in. Sometimes I might have to do extra work after a new contract is signed, if the new tenant discovers defects.
When all those things are done, the workload mostly decreases significantly. So far, I’ve only had really great, reliable tenants. Moreover, all my apartments are in bigger properties with an owners association, who takes care of insurance, basements, caretakers etc. The owners association limits my workload a lot.
The WWE: what does it mean to you to be your own boss?
I’ve a job with a high degree of freedom, and I highly appreciate that! I’ll continue to work and what I’m doing today no matter how much money I get. I do want to have the freedom to work less when I get older. I don’t want to be forced to work 40 hours every week until I’m 68. But I absolutely don’t want to retire anytime soon! Maybe in five to ten years, when my son is a bit older. Further, I take great pleasure in building something I can give to my children some day.