50 - 70 grand to invest in overseas property. Need *safe* suggestions


I don't want this to end up as a slagging match, but I have to tell you that you are making wrong assumptions. It IS possible to predict outcomes in any business, using indicators that exist and using historical data. Property is no different, and fund managers world wide avoid the pitfalls that exist in markets like this particular one. It is interesting that none of the pension funds for instance have fallen for the guaranteed rental scam in Bulgaria -- their due dilligence process would quickly have picked up the following points:

1. There is currently no rental market of any size on this coast, with the exception of the very bottom of the market and the buyers going to view property.

2. It makes sense therefore to assume that when thousands of extra rental properties have been completed, the situation will get worse, not better. This is basic supply/demand economics, no way around this one.

3. The summer season on the Black Sea coast is about ten weeks long, with three weeks in August being the peak. Total annual rent right now on a 2-bed apartment, assuming full occupancy, is about 1000 to 1500 euro. From that you need to deduct management fees, community charges, cleaning, laundry, utilities, and repairs/maintenance. If you do well, and have a full season, expect about 500 euro per annum for your trouble.

4. Following on from the last point, how can developers offer ten times this amount as a guarantee? Answer: Charge it to you and then drip-feed it back to you, minus management fees of course!.

5. You have therefore paid too much for your apartment, i.e. two years at 5%, 10% too much.

6. It gets worse, commissions in this market have to be high to get agencies to overcome their scruples and to allow for several layers of agencies in the picture. Typical commissions in Bulgaria, I am reliably informed, range from 10% to an incredible 15%. So you have paid up to 25% too much already.

7. It gets even worse. The prices you have paid, even taking away this 25% markup, are devised as a multiple of a non-existent "rent" return. You are paying 20 times (return of 5%) of the "rent", so in reality the apartment is worth less than half what you have paid for it. The day you pay over your money, you have lost half of it, asuming you get out now.

8. So you wait and hold on, in your case for 5 years at least. By that time the people who expected the rent to cover repayments will all be heading for the door, creating an oversupply in the market. Add rising interest rates, and the outcome looks very bleak for this kind of "investment".

That is how any analyst worth his or her salt would read this market before investing in it. For this market to ever give a decent return, some as yet unknown factor would have to enter the picture; existing data bodes badly for this sector.

While I have just given an analysis of the coastal stuff, the same criteria should be applied to much of the ski property being marketed in Bulgaria. Anyone who does not at least get satisfactory answers to all these issues should walk away. The basic question, "show me the rental contract" is never asked, and just as well, because it does not exist. THERE IS NO RENTAL!!

I accept your point that the Irish market looks to have peaked and shows little future for investors right now. Comparing a real market such as exists in the major centres of population in Ireland with an artificial market that is largely smoke and mirrors is not comparing like with like however.

If the original poster wants to make a reaonably safe investment in property, he needs to go to a city location in an economy where the demographics indicate a future demand for accomodation over and above what is available. For his money, assuming he does not want to leverage on his limited funds, I still stand over my earlier post: Budapest, Cracow, or Riga will give him opportunities at this level, as long as he uses his head and invests wisely within these markets. Avoid the old communist style blocks in Riga for instance.

Plenty of people make vast sums from property. Many more make tidy returns. An even greater number lose a little or a lot; most of these remain in denial about it -- you never hear those stories down in the pub!
 
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I too d'ont want a slagging match. Suffice to say time will tell.
By the way I have 2 years rent guaranteed (built in I know) and fact is a 3 year rental deal has been signed with a major tour operator. So if I want to rent out after 2 years for a further year it will be available to me. D'ont agree that it's a 10 week destination either - more like 13-15. In 2 years time they'll be plenty more people taking their holidays in Bulgaria and numerous low cost carriers bringing tourists there. It's all about buying quality in the right location in the area you buy in. Of course some people will get burned in every country they buy in but if one sticks to these basics one should do o.k
 
I am genuinely glad if you have managed to buck the trend and find a genuine situation vis a vis rental guarantees. I assume from your posting that you have actually had sight of the contract with the major tour operator, and not just accepted the word of a salesman.

I think you know that you have already paid too much, from your comment that the rental guarantee is built in, so I am glad if you have found a genuine situation that will salvage some of your investment -- the first I have heard of in that market I have to say.

Even with your optimistic projections of a 15 week market however, my analysis of this market is still the same -- the figures don't stack up. You need to sit down and write down the projected income, based on realisable local rents, and then deduct your costs. It is my bet that even on 100% occupancy (never happens) you will not be making money.

My view on this scam will only change when I see the serious players getting involved, but that isn't going to happen --they have also done the math.

All this scenario has been played out before in other places, with the same end results -- stagnation (at best) in prices and properties that are impossible to sell. For the purposes of this exercise,i.e. to advise the original poster (remember him?) as to what he should do with limited funding, my advice remains the same, don't go there!
 
A property fund or an apartment in Buenos Aires (10% rental yields in a growing modern economy)
 
just to prove that theres no end to the joy of overseas property last Sunday the Sunday Times home supplement carried a full page add for property in .............................................................................................................
Islamabad, Pakistan.
 
Well if the only place you can find positive "analysis" is on a PR company's website, that doesn't say much...
 
If you read the review you will see at the end that Ammerland has no affiliations with any development company.

There are other reports and many you can find by googling
'bulgaria property' news.

I only posted this because it is an independent review on Bulgaria (which I can only take at face value) and indeed a lot of reports do tend to be developer related stories.
 
Daddy said:
If you read the review you will see at the end that Amberlamb has no affiliations with any development company.
Click to expand...

Indeed. The prweb site says...
...Amberlamb is not a site selling property nor do the property investment experts at Amberlamb have any relationship or affiliation with developers, agents or vendors of property anywhere in the world.
Click to expand...

... yet the www.amberlamb.com website is riddled with adverts and obvious advertorial material for overseas property developments and mortgage companies.

Their http://www.amberlamb.com/index.php/a/advertise page screams in large text "Advertise Your Property Developments With Amberlamb"

About as "independent" as the Sunday Independent property section...
 
Hi,
My partner and i have put a deposit of €1000 on a two bed app in sunny beach, the only way we can finanace it is to use the three properties we have at home (one of which has no morgage) and pay intrest only or so we have been told. The app is €160,000 im nervous help..?
 


henessys. Need to know a little bit more really to pass comment. My initial thoughts are yes you should be nervous. Is it offplan or resale? If its offplan i imagine you will be making stage payments. If it was me at 160,000 i would look to gear against the property i am buying and want to pay an minimal initial depoist on a property with nothing else to pay until completion, (but from the sounds of things you cant do this i.e. theres no mortgage available). This is my philosphy unless it is a real gem and carrys less risk i.e. its less expensive and has a range of external factors which would lead me to invest. By raising 160k against another property back home whetehr it be in one lump sum or indeed if you have a drawdown faciltity you are parting with alot of cash. I would suggest the development has no bank guarantee? If this is the case if it is a large project with say 50 to 100 units plus then i definatley wouldn't go for it. You would be risking alot of cash outlay, in a market which quite simply is overcooked already. NOt to mention if there are no bank guarantees to underpin the project you could be left servicing a chunk of your 160,000 borrowing without a property to show from the exercise. Are you confident the developer will finish the project? what have they built before?

I am sure you will find many posts on bulgaria and sunny beach in particular around AAM.
 

By far the best option for you is just to walk away from the 1,000 euro and consider it a cheap lesson. The apartment is worth no more than 40 or 50k on a good day, even if you add two years "guaranteed rental" of say 8 or 10K, i.e. some of your own money back, you are still being fleeced. You stand to lose far more if you go through with the sale, it would make far more sense to count your blessings that you have such a small deposit down.
 
The safest advice you're ever going to get about overseas investment is to take your time, visit and then decide if it all stacks up before commiting yourself.
 
Per Knight Frank's Global House price Index just released for the quarter
Latvia (Riga) is ahead followed by Bulgaria and Denmark.

Link posted in Overseas Property forum.

Well all you negative posters I'm glad to report Bulgaria is holding its own.

Long may it continue.
 
Prices in Sunny Beach don't seem any higher than last year, ya see them in the newspapers all the time. Bulgaria as a whole may have risen but in many overbuilt resorts i doubt prices are rising much as the reality of the rental market etc hits home.
 
A rising boat will lift SB also.

If prices go up by 10% in Bulgaria per year they will at least go up by 5%
in SB.
 
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