Property Secrets, any good?

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Auto320 You have a very negative view. I wont argue with you though; Im just glad everyone doesnt look at things the way you do.

There is certainly no lack of expertise. PS employ a number of experienced property investors and developers who buy on many of the deal they have on the website.
 
I disagree that my views are negative; if you read carefully what I say you will find that I am in agreement that Constanta is a great market for investors. However I have also repeatedly stated that anyone going into a market with which they are not familiar should at the very least keep one eye on local rates, both for buildings sale and rentals.

I still stand by my very considered view that the rental projections that you are proposing for this development are at the very upper end of what is possible in the very best case scenario. To put it less kindly, you are dreaming if you think you can buck the local market to this extent. In addition, the purchase price is at best at the very upper limits of what anyone would pay in this area, and I could not see any local buyers on it at this level -- the acid test surely.

There are good returns to be had in Constanta, but not of this level on rental property. If you want good returns in that area, buy land, it is out-performing residential by a mile in the suburbs of Constanta. If you are selling residential units like this development, please try to sell at local prices if you intend to build a sustainable business in that area. If of course you only want to "hit and run", then flog them off to foreign buyers at the highest price you can get, and good luck to you.
 
I'm in total agreement with Auto320 here.

The projected rents in Residence Constanta (even allowing an adjustment of 2 years) are highly unlikely to be met. I speak with experience since I live in Romania and have bought, sold and rented-out apartments over the last 5 years.

It's a virtual certainty that the locals won't rent at these levels so you are left with the hope that you'll get an average of 400 Euro per month per year from foreign tourists.

Not wanting to rain on anyones parade here but the fact is that the Romanian Black Sea Coast is a ghost town for 6 - 8 months of the year. No sun, no icecream vendors, no tourists.

Last year the sea even froze in Constanta! See where I'm coming from?

The best investments in Romania are land (both residential & agricultural) and commercial properties. Lagging behind these are new-build apartments and apartments in old buildings which can be rented to the locals. A long, long way behind any of these are the sort of apartments which PS are talking about and which are mainly aimed at a non-existent, year-round tourist market.

The best value is to be had outside of Bucharest (where the prices are just nuts!) in cities such as Iasi, Cluj, Brasov, Timisoara, Oradea, Galati etc.

Try and stay away from the counties along the southern fringes (i.e. along the Danube) and the northeast, called Moldova, (with the exception of the city of Iasi) as these are historically the poorest regions. Look carefully at anything in Transylvannia and along the western border. That's where you will make steady, worthwhile gains.

Folks. Don't fall for the slick marketing and glossy brochures. The dreams they push are just that, dreams! Romania offers so many exciting, and very worthwhile, investment opportunities it would be a crying shame to get burned on your first foray into the market. Do your homework and stay away from the hype.
 
Having spoken with a Romanian property expert this morning I am confident these units will let. I am also confident they are a good price. When the second phase begins investors will have already made 10% - 15%. Not a bad return for a couple of months.

Locals will rent at these prices. The average wage for Romania is so low because 40% of the population still live in very poor rural areas.
 
When the second phase of the development launches it will be 15% more expensive than the first phase.

This does NOT mean first phase investors have made a 15% return. They've made the return when they've sold theit property and banked the money. Get over it!

There will be no year-round rental for these apartments at these prices, even 2 years down the road.
 
Works for PS?

The pity about all this is that there is plenty of good opportunity in Constanta, but lots of people will rush headlong at projects like this one that are nicely packaged, while ignoring the real treasures under their noses. The rental projections for this project are exaggerated, of that there is no doubt; no local person will pay this level of rent, there is plenty of accomodation that is available at far better value. If they are pitching it at the tourist market, forget it, that is a few weeks in the summer and nothing for the rest of the year. The city hall even fence off the entire beach and tourist area for the winter and put security on it, because it is all closed up with nobody home, typical for Black Sea resorts.

It is almost inevitable however that this kind of virgin market will attract large development/marketing companies who naturally will extract the last ounce of value from it. This project will probably sell out, but not to local buyers -- they will know the correct price and won't go over it. The people that buy this will look back in five or ten years time and realise that they could have made substantial gains from their investment if they had done a bit of checking before they jumped.

I agree with Ancutza, there is a world of difference between property rising by 15% and property being put up by 15%, but many amateur buyers can't seem to be able to tell the difference between these two scenarios.

Its very simple really, pick the best areas in the city, pay local prices, base your business plan on rentals that are being achieved in the market, and you will do ok. On this project, not all of the above criteria exist, so conversely you won't do ok. It really is as simple as that.
 
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Could I not volunteer to source property out here for Irish buyers? After all I'm on the road, all over the country, all of the time. Oh! I speak the language too.

We buy chairs in Piatra Neamt, cabinetry in Reghin, Cluj and Satu Mare, veneer in Constanta, components in Timisoara and upholstery in Iasi, Arad and a couple of other places.

I could just 'drop-off' in my hectic schedule to any of the many developments I pass in the car every day and get a price-list, i.e what they are being sold at to the locals. Thereafter I could post the results somewhere, not sure where yet, and anyone who is interested, well, then I'd hold their hand ( can't collect them from the airport though, too busy).

At the end of the day if they think that my services are ok and that they've bought at the right price (once I've organised the lets of course), then they could make a 'donation' to me. Alternately just stick the cash in the 'Save the Children' box in front of the cash register at any Rotten Ronnies (my favourite eatery when on the road) and everyone would be happy.

It bugs me intensely that organisations such as PS, MacA et al are now targeting Romania for the next chapter in the 'guaranteed rental' scam.

The country has a bad enough rep already without thousands of well-meaning individuals getting ripped off out here and saying to their grandchildren that Romania is populated only by ghosts, goblins, realestate agents/highwaymen.

By the way, I'm NOT really interested in selling property but pay attention to the less vested interests here and you'll save youself a fortune. In fact if you listen to the more informed (not some sales agent in the UK who hasn't even visited the country) then you probably will actually do very nicely indeed.

Sorry, Clubman, rant over. I'll never do it again. Promise!
 
If you have any sense Ancutza, you will stay away from Irish buyers! A substantial minority of them, apart from the posters to this board of course, will mess you around as much as possible and then resent paying you for your time and trouble. I know a lot of people in the business, one or two of them really well, and I marvel at their patience! For some reason, without descending too much into racial stereotyping, a percentage of Irish buyers don't want to pay anyone for their time, and will jerk you around like a conker on a string. My hat is off to people who deal with them for a living.

For a brief period, some years back, I used to help out people who were referred to me by contacts in the business; knowing that I was active in the purchase of property on a fairly large scale, these people wanted to hang on to my coat tails and make nice investments for themselves. Initially I was happy to help out friends of friends, but I soon wised up. If I had allowed this arrangement to continue, I would have had no contacts left in the world of developers and finance, talk about a bunch of messers! I made it a policy to just say no to all such approaches in the future, and my life returned to being simple and manegable!

My best advice is to stay out of it; otherwise do it on a business level and charge them properly (and well) for your time and efforts, but there are a thousand ways of making a few bob without this kind of grief.

I have probably offended everyone here now, but that is the truth of it! My rant is not meant for everyone, but there is a sizeable number of "cute" operators out there that no sane person should have to work with.
 
Auto360 & Ancutza,

Sounds like ye know what ye are talking about?

Ancutza, I hear you mention Commercial. I have a bit of cash I am pulling from UK investments at the moment, want to put it into various rising markets across the globe, one being Romania (for residual vincome).

Can you advise what is considered 'good' from a commercial perspective (yield wise etc) and where is good for commercial. (Obviously something like 9% yield on an office block let to a bank for the next 10 years would be alright!!!)

VERY general I know, but a general answer would be great! You/ye seem to know a good deal about the market.

Basically thinking of a recky in about 2 mts time, so where do i start??

Thanks Lads
 
Hi Guys,

In need of depserate advice, I was looking at a ski property in Bulgaria but hav eno experiecen dealing with people or agents there.

THe deal is a 2 bedroom apartmetn 48,000 euro with a guarateed return of 80% in 2.5 years guaranteed by the developer.

Can they be trusted?

What do people think of the Borovets ski area please?
 
Fiona22 said:
In need of depserate advice, I was looking at a ski property in Bulgaria but hav eno experiecen dealing with people or agents there.

THe deal is a 2 bedroom apartmetn 48,000 euro with a guarateed return of 80% in 2.5 years guaranteed by the developer.

Can they be trusted?

What do people think of the Borovets ski area please?
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No offence but judging by this post you might be well advised to reconsider your reason for investing in this or any other foreign (or even domestic) investment property. If you do an objective analysis/appraisal and do ascertain that property investment is the most appropriate investment for your specific circumstances, particularly in comparison to the other options available, then do some detailed research before getting into it.
 
Evolu,

It's really hard to be specific in response to your query. All such investments are 'situational' i.e there are a multitude of factors which come into play in making your decision as to what to buy and what not to buy.

There are, however, a few definites with regard to Romania

The first thing to do is to narrow down your search area. Pick a city/area where you will be able to have easy access. For example fly into Budapest (Hungary) and you have the entire western border area within your reach. Fly over London and you can reach Tirgu Mures which put's one of Autos favourite places, Cluj, on your doorstep. Stay away from Bucharest! You'll be eaten alive! Even after all these years and speaking the language I still always have to deal with a 'situation' when I visit there albeit as simple as a smart-assed taxi driver with a 'broken' metre asking me to pay him what I think the journey was "worth".

Once you've picked your area then the really hard work starts. With regard to your interest in commercial properties then I have a rule I stick to, rigidly. If it doesn't yield 9% absolute minimum then it's not to be. The only exception to this would be a freehold property on it's own site where there would be a good chance of gaining planning for a block of apartments, for example. In otherwords the site value will soon become more valuable than the premises. Such opportunities will be very rare. Romanians are not idiots! They are well tuned in to the 'price'. That said it has NOT been my experience that (with the exception of Bucharest) they will try and rip you off, particularly if you can demonstrate that you know the local prices and don't suffer fools gladly. Rather you will find them less willing to haggle with you on the price. Hey! Your foreign, you're loaded so why would you NOT pay top dollar? You'll have to find your own way 'round that one. My response would be a more polite version of the two fingers....

Usually I'd shrug my shoulders and walk away at a gross yield of less than 10%. I've come across a few gems, however, and actually own a couple of commercial properties where the yield is 15% on one and just over 20% on the other (after renovation costs). That said I was exceptionally lucky and in the right place at the right time to buy them. Note these opportunities occured just twice in 5 years. By the way there is absolutely nothing glamourous about either property. They are shops, not banks or ritzy offices but the yields are there.

10 -14% yields would be a more achievable goal for you but only after alot of due dilligence. You're simply NOT going to walk off the plane and have these things land in your lap. I'd recommend a MINIMUM of 6 months of reasonably frequent trips (say once to twice a month) to your chosen location before commiting yourself.

The next thing, and definitely THE most important thing to do is to check title. You'll need a good specialist property lawyer to this for you. I pay my lawyer 80 Euros an hour to do this for me which is a bloody kings ransom in Romania but she is worth her weight in gold. More times than I care to remember she has really, really saved my bacon. Her advice is gospel as far as I'm concerned. She's bullet-proof.

By the way title problems don't only relate to who owns the land. Often I've bid on a property where the owner definitely owned it but other strictures have appeared which meant he couldn't legally close the sale to me so I had to, sometimes reluctantly, walk away. Your head (and your lawyers head) must always rule your heart however painful it may be. If you hear about laws L112 or L150 in relation to a property then more often than not you'll be walking away, especially L150. If you want a more detailed description as to why then PM me. To long-winded to get into here.

The best thing you can do is INFORM yourself, and seriously. If you want to post any queries here then I'll deal with them as best I can. Also it would allow Auto to add his obviously indepth knowledge to the equation but probably a new thread needs to be started on this subject as this discussion is more than straying from the original title of this thread. By the way I have no personal connection to Auto. In fact I took umbridge at some of his earlier comments, but I've come to the conclusion that he can be trusted to advise in a pragmatic and impartial way. Alot of what he say's, particularly about Romania, is very pertinent.

Another reason for me suggesting posting in this public forum, rather than by PM, is that I'm no out-and-out expert and don't claim to be. Believe me I've made mistakes out here, big and small, and I'm learning all the time as many of you will be too in the coming years. If I don't have an answer to your query then others likely will. This is a great board to 'sound-out' on.

Anybody want to split off this discussion into a seperate thread with a meaningful title?

Best of luck with it.
 
Thank you VERY much Ancutza! A lot to digest there. It is moving from the origional topic alright, so i will post a new thread early next week (unless one has started) on 'Roaming Romania'.

It is my full intention to 'Roam' in the very near future and your advice to get a good few trips under the belt is advisable and something I would always do!

Thanks again! I will be in touch.

PS: Congrats on some of your yields, v. nice!

PPS: I have been in the UK for the last 4 -5 years, have made a decent amount and couldn't agree more with Auto320 on Romania's pending rise... thats where I am heading!
Cheers...
 
This is my first post on this site I cannot resist asking why you do not borrow to puchase a couple of units for yourself If the investment is as sound as you suggest no bank will refuse you.

curious theplumber
 
If only it were that simple in Romania, but unfortunately it is not.

The banking system in comparison to Ireland or the UK (indeed anywhere in western Europe) is very underdeveloped and over-regulated by the government.

As things stand I can ONLY apply for a loan from the bank based on my declared salary. My assets can't be taken into account. That's THE LAW crazy as it may seem to you/me.

It's VERY frustrating indeed and the banks are lobbying the goverment hard to have it changed. As a property owner with several valuable properties on my books, upon which no loans are owed, then the banks would LOVE to lend to me but they are prevented from doing so by central government. I know, I know! That's nuts but its the present state of play out here.

The banks are trying to get around this issue at the moment by offering 'lease back' deals to owners of commercial and industrial premises. They send in their valuer, he puts a price on the place and the bank 'buys' the property and you lease it back from them over a period of say 5 years. In fact I seem to remember that, once again, the government interfers in this process too by setting the time limit on such a deal.

I also have the option of applying for a company loan based on the value of my rental contracts with my tenants but you can work out for yourself that such a loan will never amount to anything worthwhile given that it doesn't/can't address the actual equity I have in the building itself.

For the moment the only solution, if I want to expand my portfolio, is buying, selling, renting and trading up, down and sideways! Oh! Plus loads of hard work and savings.
 
I bought an apartment from PS in Wroclaw last summer.

I'm happy with the prompt service I received.

The stages are;

Deal comes to market via their website.

Register to confirm interest

Read all of their research material (got at least a week)

Read other research material....I did lots of reading on population projections, FDI, Knight Frank surveys etc

Then confirm your interest

Then apartments are released.....if you register early (not necessariliy within '30 mins' as someone posted earlier, you get a better opportunity to secure the unit of your choice.

Then contracts are drawn up etc

They are honest and up front with fees etc....no-one by any means forces you to buy.

I had a very long conversation with the deal broker to be absolutely sure.

Anyway, I like what I see in Poland and their fee saves me the hassle of doing all the leg work...I'm sure I'll be rewarded in 5 years time....15% p.a. is just fine for me.
 
And you are going to look at the project before you sign anything? Of course you are also going to make comparisons with other similar property available locally, no? Also you will look at other information that was not supplied by this agency?

Of course you will. You were only joking about believing the sales pitch and not double checking!
 
Seems like the whole PS sales force is now replying to this board.

Now that they've been shown to be providing inaccurate information on Romania they start to push the polish side of their business.
 
That was my initial thought, but I didn't want to be impolite in case it was a genuine (but really naive) poster who was going to buy something on the word of a salesman alone.
 
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