Elfi in the Telegraaf: "Cheap housing, it's possible!"

Source: Telegraaf, September 2, 2021

Tech millionaires see potential in low to middle-income rental homes
Simple house building By PIETER VAN ERVEN DORENS AMSTERDAM

Entrepreneur Jasper de Rooij made his fortune with the cheap telecom provider Simpel. Now, with colleague tech mogul Rudolf Booker, he wants to shake up the real estate world by building where the greatest need is: rental homes in the low to middle income segment of €800 to €1200.

Under the brand name Elfi, almost five hundred rental homes are already in the works, and at least the same number should be added every year. They are built according to a strict concept: "Everywhere the same floor, same kitchen, same spotlights," De Rooij explains in his Amsterdam office that resembles a trendy lounge restaurant.

In his office hangs the suit in which Louis van Gaal made his famous karate kick during the winning Champions League final Ajax-AC Milan. "I received it as a gift from Parcom," says De Rooij. This investment company had a large stake in Simpel, which was acquired by T-Mobile last year for an unknown amount. According to business magazine Quote, De Rooij (52) is worth about €200 million, and his business partner Booker (46) is worth twice that, thanks to fintech Payvision. ING acquired that company in 2018.

Return on investment
The two tech entrepreneurs believe they have found a gap in the market for cheap middle-income housing, although most real estate investors are no longer interested in it because of the limited return on investment and the heavy demands that many municipalities place on such projects. They prefer to build homes for sale, expensive rentals, or student housing.

De Rooij believes in cheap middle-income rentals, partly because of his experience as a thorn in the side of the big telecom companies. "When I started Simpel, I thought the big players were cheating a bit. Almost everyone was being ripped off. That was the gap in the market. I always put the customer first," says the entrepreneur. "In real estate, too, many things can be done differently. That's why half of the employees at Elfi don't have a background in real estate. If you have too many people from real estate, they'll start telling me why something can't be done."

Relationship
The entrepreneur mentions the relationship between landlord and tenant as an improvement point. "Usually, they only have contact when something is broken or unpaid, so when there's something unpleasant. But if you put the customer first, you can also provide other services, such as furniture, mobility, audio, and video."

Elfi focuses on the lower mid-market segment in the free sector. "The concept is beautiful homes from 55 to 75 square meters, basically with two bedrooms. I want homes where as a starter, you can invite your parents and get a compliment from them." In the Amsterdam office, he has built a model home, complete with a working bathroom. "Yes, the shower is still wet. Employees sometimes use it after working out."

The rental homes mainly come in transformation buildings. De Rooij: "We buy vacant office buildings cheaply and renovate them under our own supervision. This way, we can ultimately also make good margins on low middle rentals." He notes that it is challenging to build profitably for a rent of €900 at current construction costs. "But we can manage that in some municipalities."

The intention is for the homes to remain owned by Elfi. "Both Rudolf and I have built up wealth and can finance it ourselves." Last week, Elfi reported three purchases: a commercial building in Almere where 55 apartments will be built, a shop/cinema in Dordrecht (10 to 15 apartments), and an office building in Alkmaar (50 homes).

Twenty minutes
Such good deals are carefully selected, De Rooij explains. This is why Elfi stays away from big cities, where cheap middle-rental homes cannot be built profitably or quickly enough. "We want to be about twenty minutes from the city. We also have econometricians who conduct area analysis, such as demographics."

Crucial for Elfi is that the municipality cooperates well. "There are municipalities that actively stimulate the transformation of vacant buildings, and there are also municipalities that talk a lot about it, but where few permits are issued within a reasonable time. We want to have it completed within two years of purchase."