Owning a Studio

With the help of our parents, we managed to buy a studio, in a decent residential zone, that has good access to commercial and office zones. The money used to pay the apartment, cash down,  came from a long time investment in another property, in the countryside, that became too hard to administrate. 

It was a mutual decision to sell the house and buy this studio (and set aside the difference). The studio was in a decent state but we wanted to freshen it up, changed the flooring, changed part of the furniture, and bought a new TV.

As it is in a good zone it was extremely easy to rent, as it stayed on the “market” close to 3 hours.

The exchange was realized in 2016, so we are renting it for almost 4 years and I decided to administrate it in the last 2 years. It is still in the possession of my parents and that’s the reason I will never include it in my portfolio.

After the purchase was made and the studio was renovated, we finished paying all the acquisition taxes, we calculated the rent to match a 5%ROI (return of investment) per year. It is a bit under the market price but we are very lucky with the current tenants which are top-notch persons and we really enjoy our collaboration.

We didn’t think about selling it until now and we won’t until the current tenants move out (and this coming from their side).

I don’t exactly understand the phenomenon, but in the eastern part of Europe, everyone is decided to be an owner and not a tenant. I even came across the situation where someone bought an apartment in the native city, moved with the job in another, bought there a new apartment, and rented the old one. And what can I say about us, as we have a rented apartment and paying the mortgage for our own apartment? Maybe it has to do with the Maslow pyramid of needs, the feel of security or shelter, but everyone wants to own his place and even the banks and the government encourage you with attractive credits. Sincerely when I think about paying the mortgage for 30 years, that is a big NO from my side, so I stroke the deal for 20 and decided to pay it in 13 (from which 3 are already passed – and if my blog will get more followers I can shave 2 more…haha).

Is it worth it?

When calculating the rate we went by implementing a formula. The steps are the ones that follow but I have to thank a financial community here in Romania for providing it (“Stiinta Banilor – Valentin Nedelcu“).

First, we get the total cost, and in this case, it includes the acquisition cost + legal documents and notarial costs + renovation costs.

The second step is to approximate a rent on the following data: Your desired rent times 11 months (as we considered from the start a buffer month for different problems that can appear: things get broken, the tenant leaves and we can’t find another, etc.) minus the 6% times 11 months (where 6 % is the tax we pay for gains coming from renting a property, under a certain sum) minus a sum for different expenses (if the buffer month is not enough).

To sum it up, the number is : Rent*11 – 6%Rent *11 – breakout amount.

The last step is to subtract from the annual gains the annual expenses and in this case, we have the insurance and the tax for owning an apartment.

Profit = (Rent*11 – 6%Rent *11 – breakout amount) – insurance – taxes.

Now to calculate the return of the interest you just divide the cost from step one to the profit and see in how many years your investment will be paid off. And we got 5% for 20 years. Of course, with time there is also the inflation that will help and we will increase the rent if the zone develops more (for the next tenant) and we will obtain a bigger ROI.

As mentioned before, I don’t include this property in my portfolio so I won’t give the exact gains we get, but I will quantify everything in percentage with the data from the last two years to see if we respected our initial calculation.

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Months January-December 2018 – Total return of 108%
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Months January-December 2019 – Total return of 108%

From both graphics we respected the contributions and even get income for all 12 months. We had some small expenses but they were well covered so the total return was almost 5,5% ROI instead the expected 5%.


In my opinion, renting an apartment can be a very good way to boost your incomes but there are can also be a lot of trouble. We were lucky and until now nothing broke and it is in good shape and we have wonderful tenants.

There are multiple opinions on the internet from positive to negative about doing this kind of investment. A YouTuber I follow and love hearing him talk about managing properties is Graham (of course he is talking about another market – the USA).

I will continue post here about managing this property or what troubles will appear and all the decisions concerning this topic. My next step in “real estate” will be to follow a course of investing in this area.

So if you are interested in reading about it, don’t forget to subscribe!

Disclaimer: I am not a financial consultant! All the information you find here are my decision, I have taken at that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money and you can have losses.

P.S. The header image is from Pixaby

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