In his book “The One-Room Millionaire” recommends Gerald Hörhan People who want to get richto buy as many one-room apartments, “little holes” as he calls them, and then rent them out. The time is perfect to become a millionaire, he tells ntv.de. Hörhan is on studied at the US elite Harvard University, worked at large investment banks in New York, is now in his late 40s and describes himself as an “investment punk”. He is skeptical about trends. Also DFrom his point of view, the increasing refusal to work is repugnant to him. “We have to get back on track,” he says in an interview with ntv.de. Especially in view of the multiple crises in our time, it is important to have security and freedom in the form of money.
ntv.de: You describe yourself as an investment punk. What is so “punk” about you or what you do?
In times of multiple crises, financial freedom is no longer an option, but an indispensable prerequisite for a fulfilling life, says investment punk Gerald Hörhan. He is convinced that anyone can do it.
(Photo: Philipp Lipiarski)
Gerald Hörhan: I was always rebellious and never let other people tell me anything. I always wanted to do financial business differently than most people. That also meant swimming against the current. When everyone shouted: Real estate, “Help, the apocalypse is impending!”, I bought houses. When everyone thought cryptos were dead, I bought. The strategy has proven to be very successful.
Are you sometimes prone to rowdy behavior and move – let me say – in legal gray areas?
Everything I do is legal. Breaking the law wouldn’t work in the long run. Sooner or later you’ll get into trouble. The trick is: you just have to learn to understand the laws. Know how to benefit from them. Then all you have to do is pick up the money from the street. Breaking the law is anarchy. And that is completely unnecessary.
They say times are good for real estate purchases. You can see it differently. Real estate has tended to become cheaper, but not by that much. At the same time, bank loans have become more expensive due to interest rates. Even for high earners, financing is no longer so easy to manage.
They are doing a much better business today than they were two years ago. Even prices in good locations have fallen by around 25 to 30 percent. And long-term interest rates have been falling again for a month. Financing with a fixed interest rate for ten years now costs you significantly less than four percent, compared to 4.5 percent a month ago. The 10-year swap rate fell from 3.6 percent to 2.6 percent. New construction is practically dead, many property developers are in difficulties or insolvent. We have a housing shortage, plus immigration. All of this will lead to rising rents. If I have several apartments and collect several rents, that is a very good financial situation for me. You only have a situation like this every ten years. In my opinion it won’t stay that way for long.
It’s still not a walk. In your example calculations you are assuming high financing amounts. However, banks only finance a maximum of 80 percent.
What banks no longer do is provide 100 or 110 percent financing. That’s right. What financial institutions want is security and seriousness. Equity is important and you must not buy at an overpriced price! Then the banks are still willing to finance.
Let’s stick with your examples: You expect to spend 100,000 euros to buy a one-room apartment. If you browse through Berlin’s offerings on real estate portals, you’ll find almost nothing, even for 150,000 euros. How are you supposed to do that?
Berlin is an absolute special case due to the lack of living space, the extremely high rents and the crazy politics. The net rent for a one-room apartment is sometimes 800 or 1000 euros. This doesn’t exist in any other city. When rents are so high, the purchase prices are of course also higher. Things look completely different in Wiesbaden, Leipzig, Lübeck, Kiel and, in some cases, Hamburg. Likewise in Braunschweig, Göttingen, Dortmund or Bonn…
Let’s say I found and bought an apartment for 100,000 euros. What would be a reasonable rent to charge for this?
I calculate on average around 400 to 450 euros. With a purchase price of 120,000 euros with 500 to 520 euros. And for an investment of 140,000 to 150,000 euros with 600 to 650 euros. In Berlin, as I said, this sometimes goes up to 700 or 800 euros per month. This then results in a net rental yield of around five percent.
They say: You can’t become a slave to the banks. But buying a property is a financial burden that lasts for decades. Doesn’t that make you a slave to a bank?
The crucial question is: Is it a secured or unsecured loan? Do I finance a home or a leased car? The latter would be a so-called unsecured loan because there is no income to pay the loan installments. With an investor apartment, rent is paid and the loan is covered. That means: I am not a slave to the bank. I only have to pay if the tenant doesn’t pay.
They also say that even waiters and taxi drivers can set aside up to 20,000 euros a year. I would say that there are a lot of people who don’t succeed. Has anyone like this ever asked you for advice?
There are multiple possibilities. On the one hand: you have to work more. Many people today have a 35-hour week, work part-time or insist on their work-life balance. If at the beginning of your career you only want to work a little, find yourself and have six weeks of vacation, it won’t work. Then you just have to stay poor, tighten your belt in winter and dress warmly because you can no longer pay for heating or food. If you work 50 to 60 hours a week, it will work out. You only have to work when others don’t want you to. Go where there is something to earn. Even where others don’t want to go. Wait a waiter. Friday or Saturday evening. There is an absolute shortage of staff in the catering industry. Alternatively, you can further your education and earn more. Unfortunately, the trend is going in the other direction.
Are you worried because people don’t want to work as much anymore?
Over the next ten years our prosperity will decline rapidly. You can already see it everywhere: restaurants are closed on Sundays. There are fewer planes at the airports and still long queues. Try to get a doctor’s appointment. Either you have to wait or you pay more. One or two tax advisors are already saying: “No, thank you, we have enough customers.” This goes on and on. There are fewer everywhere and prices are rising. That was also the case in the 70s. If you wanted to buy a Mercedes, there were waiting times of up to three years. If you wanted the car quickly, you had to pay an extra 10,000 or 20,000 marks.
You once said on ORF: Poor people are “wimps”. Do you still see it that way?
I still see it that way. There are perhaps five percent hardship cases. A single mother with four children, for example. Or if someone is seriously ill. But a 25-year-old girl who says: “I can’t work 40 hours” and that she’s too exhausted – you just have to say, that’s absolute neglect of wealth. We have to get back on track!
You now own 255 apartments and 100 parking spaces, so you have a correspondingly large passive income. One might assume that your goal is to work less. But you are obviously a workaholic.
The important thing is that I decide what I do. Yes, I have my assets. But to retire because of that? Never. Why? Because then you wither. For many people, retirement is the beginning of mental and physical decline. The direct route to the cemetery. I live for three people. I work a lot, but I also live intensively. I decide when I work and when I go on vacation. And I go on vacation a lot, travel a lot and like to party.
And when you work, how many hours do you work per week?
From the time I get up to the time I go to bed, I’m always thinking about how to grow my business. I meet clients, coach people, give lectures, invest my money and educate myself. I don’t call that work, though. I am always an entrepreneur. But I like driving a convertible, eating well, exchanging ideas, getting ideas and traveling. Have I found my fulfillment? Absolutely. Making money is my hobby – and a very profitable hobby.
Are you a one-man show or does a lifer like you have a large back office that does the work?
I only have two employees for real estate, a good local property manager and good agents. The only major expense for me is buying or selling real estate. Everything else is manageable. I estimate I invest five hours every week in my real estate business, for example when renovations or repairs are due. This is not complicated. My entire group of companies has almost 20 employees including assistants and drivers
In the subtitle of your book you advertise that your strategy cannot prevent you from becoming rich. But isn’t the reality that the rich just keep getting richer?
Yes that is correct. Hardworking people who know about taxes and are involved in real estate can become rich. But one A study by UBS recently showedthat the number of inherited large fortunes is greater than the number of fortunes that were created by oneself. So you can no longer speak of real “entrepreneurship”. So it tends to become increasingly difficult to get from the bottom to the top. It is still possible.
You say that earning money is particularly important in times of crisis. Because it gives you the security and freedom to move where the world is still in order. How long does it take until you can decide freely about this?
That depends on many criteria. How and where do you want to live? How much money do you need for this? Normally I would say you need about 25 times your living expenses. So, with a cost of living of 100,000 euros, that would be 2.5 million euros in assets. This is certainly not completely unattainable. The one-room strategy helps with this.
Diana Dittmer spoke to Gerald Hörhan