Bought a gaff in Bulgaria

Shep Smythe

Hi there,

Myself and two mates bought an apartment in Sofia, Bulgaria - Dragalevsky (SP) to be precise.

think it's close to 100 sq m, two beds, garage. Nice pad. All mod eastern cons.

We paid 105 K in total including all fees and furnishings air con etc. We bought outright between us. Should be rentable very soon..

We visited last year, looks fine, just wondering if anyone else has bough in Bulgaria and what their opinion on the overall medium term outlook / returns will be?

S

Carpenter

Shep Smythe wrote:

Hi there,

Myself and two mates bought an apartment in Sofia, Bulgaria - Dragalevsky (SP) to be precise.

think it's close to 100 sq m, two beds, garage. Nice pad. All mod eastern cons.

We paid 105 K in total including all fees and furnishings air con etc. We bought outright between us. Should be rentable very soon..

We visited last year, looks fine, just wondering if anyone else has bough in Bulgaria and what their opinion on the overall medium term outlook / returns will be?

S

Hi
Any pic,s links

ronbyrne2005

Shep Smythe wrote:

Hi there,

Myself and two mates bought an apartment in Sofia, Bulgaria - Dragalevsky (SP) to be precise.

think it's close to 100 sq m, two beds, garage. Nice pad. All mod eastern cons.

We paid 105 K in total including all fees and furnishings air con etc. We bought outright between us. Should be rentable very soon..

We visited last year, looks fine, just wondering if anyone else has bough in Bulgaria and what their opinion on the overall medium term outlook / returns will be?

S

105k for bulgaria seems pretty expensive to me. what do apartments in this area get in rent and have you verified you will get that level of rent? unless the rent is 10k a year i think its expensive and risky.

lomb

anyone who expects 10% rent yield is living in a land that doesnt exist. best u can hope for is 5%rent,and whatever the capital increase. if i was to buy in the new east, id b looking to houses near the capital as opposed to apartments , far higher capital increases..

ronbyrne2005

lomb wrote:

anyone who expects 10% rent yield is living in a land that doesnt exist. best u can hope for is 5%rent,and whatever the capital increase. if i was to buy in the new east, id b looking to houses near the capital as opposed to apartments , far higher capital increases..

just because 10% yield is fantasy in ireland doesnt mean it is fantasy in other countries.my aunt bought an apartment in porto banus spain and was making 10% yield from the start.10% is a minimum i would expect in a developing country like bulgaria in order to compensate for the risk of investing in such a country.people used to make 10%yields here in ireland before the madness taht is here now. i could name dozens of upcoming international cities where you can by property yielding 10%

Shep Smythe

ronbyrne2005 wrote:

105k for bulgaria seems pretty expensive to me. what do apartments in this area get in rent and have you verified you will get that level of rent? unless the rent is 10k a year i think its expensive and risky.

Yea, twas 90 K but we went for the fully finished, furnished and euro mod-con version. With garage plus all legal fees paid.

I'll look up the rent thing aain, kind of put it on the back boiler for the last year.

S

lomb

ronbyrne2005 wrote:

just because 10% yield is fantasy in ireland doesnt mean it is fantasy in other countries.my aunt bought an apartment in porto banus spain and was making 10% yield from the start.10% is a minimum i would expect in a developing country like bulgaria in order to compensate for the risk of investing in such a country.people used to make 10%yields here in ireland before the madness taht is here now. i could name dozens of upcoming international cities where you can by property yielding 10%

indeed 10% was the norm here in 1999, however interest rates i think were twice what they were now. the thing is only a crazy man would sell a house in ireland with prices rising 10% a year. so u have to figure the 4% yield hre with the 10-15% capital increase..
can you name the most well known cities that you know that yield 10%, i might be interested. problem is the hassle factor/tax factor, probably not worth it unless buying more than one. also what must be looked at is supply and demand. nice in france is the best place to buy from what ive seen, strangled supply, coupled with relatively low prices, with high rents.

ronbyrne2005

lomb wrote:

indeed 10% was the norm here in 1999, however interest rates i think were twice what they were now. the thing is only a crazy man would sell a house in ireland with prices rising 10% a year. so u have to figure the 4% yield hre with the 10-15% capital increase..
can you name the most well known cities that you know that yield 10%, i might be interested. problem is the hassle factor/tax factor, probably not worth it unless buying more than one. also what must be looked at is supply and demand. nice in france is the best place to buy from what ive seen, strangled supply, coupled with relatively low prices, with high rents.

theres places where you can get long term capital growth and good rental yields. within the next 5-10 there will be a correction in the irish housing bubble,i dont wanna be invested in it when that happens.

BrianD

What are the property taxes, service charges, rates etc. like there?

Is there a double taxation agreement in place between Ireland and Bulgaria?

lomb

ronbyrne2005 wrote:

theres places where you can get long term capital growth and good rental yields. within the next 5-10 there will be a correction in the irish housing bubble,i dont wanna be invested in it when that happens.

Ur underestimating the termendous desire of irish people to own property, stronger than the desire to eat in some cases. i have known people that said to me they werent seeing the doctor for something serious cause it cost 50 euros and the same person is on their third property!

onlineshopper

Lomb,
Yours is the exact attitude that has led to every bubble that has ever been.
"Buy because it can't go down." "Why sell now - it's going to get better"
UK house prices fell month on month in the late 80's & early 90's for 34 months straight. You can verify this on charts of the Halifax house price index.

Just add 2% in 18 months to EU interest rates. (the UK and US both have done this ) Add 3% to Irish unemployment. (French unemployment is 6% higher than here) Subtract 50 -100k foreign workers with poor english who decide to pack up and go back to where ever with their money made.(as the Irish did in Saudi in the 80's and Norway in the 90's)
Then see how much demand there is to stop house prices falling at less than 30% inside 2 years !

lomb

Well i see u are a professional investor from your bio, and i like ur thinking in maths terms, thats the sort of thing im in to doing. emotions dont or shouldnt play any part in investing in anything.

have you figured that people who come from europe, some will stay, as soon as people have kids, there is an automatic bond to ireland. i notice people bring their girlfriends/wifes also.

also factor this- the government are about to embark on a massive spending push on infrastructure that will attact alot more people than there is work for.

i have looked at the figures and tbh, if u buy property that has good schools, is freehold and not leasehold, has a garden, in close proximity to dublin(not edenderry and no further than D22, and is a modest 3 bed semi, u will make 15 % next year and 10% after that.

if u think im crazy suggesting those figures fair enough but i think u will find the figures stack up..

antoinolachtnai

um, what's the issue with leaseholds exactly that makes them less valuable? (if they are long or can be converted into freeholds) Most apartments are leasehold arrangements, for very good reasons.

lomb

antoinolachtnai wrote:

um, what's the issue with leaseholds exactly that makes them less valuable? (if they are long or can be converted into freeholds) Most apartments are leasehold arrangements, for very good reasons.

basically, leaseholds are becoming very common. all communal property is leasehold so that they can screw u with service charges. there is a supply and demand issue at stake

also at stake is increasing resentment to service charges as well as dilapidating apartments and common areas as the years pass. in many cases new apartments are worth 15-20% more for the same sq footage in the same area than a 8-10 year old one. explain that one..

finally current late twenties earlky thirties people buying apartment getting married/having kids swillbe trading up to houses in coming years, near to schools further attacking dwindling stocks of it.

its all supply, demand and interest rates, wages at the end of the day coupled with irrational need to own property at any cost. its a complex interweb but an interesting one to study from a psycological point of view as well as an economic point of view.

onlineshopper

Lomb
"its all supply, demand and interest rates, wages at the end of the day coupled with irrational need to own property at any cost. its a complex interweb but an interesting one to study from a psycological point of view as well as an economic point of view."

I'll agree with the general observation. Where I disagree is on 'herd psychology'. I think that when the rot starts the rush of the "own property at any costs" to get out will trample many underfoot. I have several UK friends who were in negative equity for over 10 years { circa '87-'97 } and I know a Japanese student whose father's prime location Tokyo apartment is worth 35% of what it was bought at in 1990.

Laguna

Forgive my 'laymans' interpretation of the situation, but €105,000 for property in Bulgaria?, do you know something the rest of us don't?, this is the Bulgaria I'm thinking of right?; where people are leaving en masse due to poor wages etc etc. How will you make a return on your investement?

antoinolachtnai

Lomb: So you are talking about apartment blocks, not leasehold property in general?

I don't see what better way an apartment block could be run. There's nothing wrong with the structure. If anything, the structure could do with being more weighed towards the welfare of the building as a whole rather than towards the individual owners (the way US coop buildings are, for example). The problem is the standard by which it is administered.

I have no problem agreeing with you that the standard of apartment management in general seems pretty shabby and that it is dragging down the value of the apartments.

However, there are exceptions. There are old blocks out there with strong management committees and even stronger balance sheets.

To be fair, I think the standard of apartment design and construction has improved a bit over the years. The stamp duty exemption for new properties also makes a difference to the value.

ronbyrne2005

lomb wrote:

i have looked at the figures and tbh, if u buy property that has good schools, is freehold and not leasehold, has a garden, in close proximity to dublin(not edenderry and no further than D22, and is a modest 3 bed semi, u will make 15 % next year and 10% after that.

if u think im crazy suggesting those figures fair enough but i think u will find the figures stack up..

10% a year after that,for how many years after that?? peoples wages as a whole dont rise 10% per annum so where will new buyers get money to pay for the 10% rise every year? owning a house will only get more unaffordable as interest rates rise and i cant see how houses could rise much more when they are allready overpriced when you look at rental yields of 3% in dublin.the supply of housing will catch up with demand in next few years and then there will be a correction thats unless the interest rates or global economic slowdown doesnt cause a drop first.
anyone who thinks property is a good investment now is a fool.

lomb

ronbyrne2005 wrote:

10% a year after that,for how many years after that?? peoples wages as a whole dont rise 10% per annum so where will new buyers get money to pay for the 10% rise every year? owning a house will only get more unaffordable as interest rates rise and i cant see how houses could rise much more when they are allready overpriced when you look at rental yields of 3% in dublin.the supply of housing will catch up with demand in next few years and then there will be a correction thats unless the interest rates or global economic slowdown doesnt cause a drop first.
anyone who thinks property is a good investment now is a fool.

hmm alot of property today is 'fools gold' i agree with that, examples are 400 grand apartments in tallaght. with or without tax incentives the figures dont add up.
but look around u, u say supply wiil catch up? i agree, but what is the qualityof the supply out there? how many proper homes do u see being built?
there are going to be too many apartments for sure, that time will come.

but the stock of proper homes is dwindling by the day(as theres no more being built), its these i recommend. 15% and 10% after that will be easy money , after that, im not sure what will happen.. the influx of immigrants is continuing, and more than likely will continue for some time. i believe the government are embarking on a massive spend shortly on infrastructure so that should support the whole thing temporarily.

put it this way, in india where average income is less than 1000 euros (in delhi) a year, u will pay 100000 euros for a modest apartment in new delhi, outside delhi 3 hours by train away in a slighly industrial town ul pay 50000euros for a house, and thats where u can make 300 -600 a year. doctor makes 2000 a year.
true india is overpopulated but property was always and always will be dear. anyone expecting a drop is in a state of denial.

lomb

ronbyrne2005 wrote:

so where will new buyers get money to pay for the 10% rise every year?

inheritance in one word, some ordinary working folk out there are worth million and millions of euros, they not only pass property on, but sometimes it sold and the profits of it used ot fund properties for the hiers.
i know a few people on the dole and there houses are worth 1.2 + million euros!

ronbyrne2005

lomb wrote:

put it this way, in india where average income is less than 1000 euros (in delhi) a year, u will pay 100000 euros for a modest apartment in new delhi, outside delhi 3 hours by train away in a slighly industrial town ul pay 50000euros for a house, and thats where u can make 300 -600 a year. doctor makes 2000 a year.
true india is overpopulated but property was always and always will be dear. anyone expecting a drop is in a state of denial.

100k for an apartment where average wage is 1k means nothing,the vast amount of poverty distorts any comparisons,in a country of nearly a billion your gonna get some rich people (theres about 200million people in india who are middle class). compare the average wage for india to the average property price then you have a more accurate view of that country .

ronbyrne2005

lomb wrote:

inheritance in one word, some ordinary working folk out there are worth million and millions of euros, they not only pass property on, but sometimes it sold and the profits of it used ot fund properties for the hiers.
i know a few people on the dole and there houses are worth 1.2 + million euros!

yeah because everyone is gonna inherit a million! really mate the average irish house price is under 300k so the amount of people living in million euro houses is few (maybe not in your area) plus theres usually a few siblings inheriting legacies further reducing the amount any individual gets,plus this happens once in a lifetime when your parents die and only 30000 people die a year in ireland,if you expect inheritence to fund indefinite increases in property prices you are living in fantasy world.

IvaBigWun

Id be very wary of the "New East" everyone is hoping onto at the moment. I was considering foreign property myself this year but I think the market is very falsely inflated at the moment. All hype and little to back it up.

lomb

ronbyrne2005 wrote:

this happens once in a lifetime when your parents die and only 30000 people die a year in ireland,if you expect inheritence to fund indefinite increases in property prices you are living in fantasy world.

u are partly right, it wont increase it indefinately, but remember for every piece of land out there bought at an inflated price, someone gains, usually the older generation land owners. now u and i both know they cant take it with them...

many children are spending their inheritance before they even get it. hence thats there plan B for paying down there 35 year loan..

in many ways its a zero sum game. someone wins someone loses, but no one can take it with them,(although they can spend it on imported goods which partially scuppers my argument but how many new cars can u buy for the average house price in dublin or how many lcd screens can u watch? think about that..

lomb

IvaBigWun wrote:

Id be very wary of the "New East" everyone is hoping onto at the moment. I was considering foreign property myself this year but I think the market is very falsely inflated at the moment. All hype and little to back it up.

thats what they said about ireland , 10 years ago.
one thing that goes against investing there is that we know nothing about it. u need local knowledge.

RainyDay

BrianD wrote:

What are the property taxes, service charges, rates etc. like there?

Is there a double taxation agreement in place between Ireland and Bulgaria?

Brian is asking the right questions. What about currency risk?

onlineshopper

I have just seen the JVC of a villa a friend has bought in Apuglia, near Bari, in southern Italy.
The 800 sqm, 12 years old villa comes with 2 separate detached apartments, 1x60sqm 1x125 sqm, mains water/electric/phone, pool, broadband. Bari 18km.
Set into a hillside, built to a better standard than any house here, it has it's own driveway, with 8500 sqm land, 4000sqm of which is olive and 500sqm of orange and lemon trees.
Total cost - €245k
And there are at least 10 of the same on the market in the same area for around the same money. He was originally looking at an even bigger and better villa, which was cheaper, but he couldn't get broadband.

BigEejit

They say that France has some of the cheapest property in europe due to some regulation about mortgage size vs wages .... is that right? ... a previous poster mentioned Nice as a good investment idea