Budapest District VIII

Budapest, thanks for the feedback. Yea, sounds too good to be true, these guys have no track record either but they claim to have worked for other agencies and management companies. I expect they are inflated but their charging structure does look competitive. At least they're not charging for an empty apartment which the other companies do, so the incentive is there to find tenants (yes, they will come back with a lower rent proposal). I wonder if it's worth taking a chance with them, more competition in the management is not a bad thing!.

Killian.

Thanks Budapest very informative to myself and shaneo. I know you probably are right in all these things youve said but having said that im in it for the long haul im thinking 15 to 20 years and i was over in Budapest 3 weeks ago and was quite impressed how close akacfa utca was to the centre also. The apartment im Buying is called akacfa utca built by hexacon homes which is a joint Irish Hungarian company. 2 Irishmen and a Hungarian to be exact and being sold by Mason Estates in Dundrum in Dublin. I was reading and researching and yes you're probably right that district 6 will get the main facelift but in that greenpoint interview given by the mayor seemingly in around weisselenyi utca and dohany utca are due for the facelift also which leaves akacfa utca straight dead centre of the 2 of them. Im not looking for profit overnight but it seems to me that there is a lot of potential there. so if you have any thoughts on this i would appreciate them regards

Killian, the no charge for an empty apartment does seem like a good deal and puts them ahead of the others over here. Maybe they'll try harder to impress as they're new. It'd be interesting to find out though which apartments in which streets have they already rented out and for how much. That would be a good indicator.

Seanieboy, any other queries, just ask away. I think Akacfa utca is a reasonably good location. Inside the korut is best when it comes to District VII. This area is not far from Liszt Ferenc ter and a lot of the newer bars are opening up in this part of VII - particularly around Klauzal ter, but also on Wesselenyi utca. It's still a buyer's market here when it comes to both buying and renting property and there are lots of places available at the minute.

Budapest
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Budapest, they are a small startup operation focusing on the new builds due in the next 3 - 12 months. As such they don't have an established clientele. However, they seem very keen, speak good english and are competitive and very responsive to calls. I would expect them to work hard to get their business off to a good start. They have a lower cost model and can afford to be competitive with their charges. They also provide a detailed breakdown of furniture costs and claim to pass off savings on bulk buys. I gather from all this that there is hidden margin in furnishing. There is a risk of course and I agree with you that they are setting rent expectations too high.

I'm working and living in Budapest for 3 years now.
I bought a place in district VIII a couple of years ago.
Parts of VIII are quite run down, but some parts are also lovely.
Generally inside and close to Joszef Krt are OK, but further
outside the Korut are pretty bad.
I think it's set to improve though. There's a large shopping complex
due to go up behind Corvin Koz, which will extend all the way
back to Futo Ut, and involve devolopment & pedestrisation
of some streets around there.
VIII is one of the cheapest places to buy in Budapest.

Hi friends, I am looking for advice and this definitely seems like the place to ask as you have done a lot of research also. I am investing in a property called city gates in District 9. It comes with parking, 263 apartments in total and they are selling quite fast. I have been viewing online availability on the good property websites and they are moving. What I thought was good, is that this is a very early stage and they are not complete until September '07. you don't pay the final 65% until completion. If capital appreciation continues at the rate it is going, by the time you pay the main installment it has increased in value quite a bit. The auctioneer I am dealing with does not guarantee rental obviously but does have contacts with the many local management companies over there. The region is called Ferencváros.I have paid my deposit now and oh well you can't take it with you

Basically I'd like to hear any advice on this as it is my first investment and I have done a serious amount of research etc, anyone anything positive to tell me about this? Thanks folks and best of luck with all your investments

Gunners

hows it goin there gunners. Ive bought an apartment in akacfa utca. Now i havent put my deposit on yet. Im actually going across next month to take the plunge and make my deposit. Ive got my solicitor organised, but i wonder how did the signing go. was it a smooth deal was there a problem with sending your money from an Irish bank to a hungarian bank and if not whats the procedure for making youre deposit? does it cost much? and what kind of rate of exchange were you getting from the bank in Ireland ? if you see a good rate of exchange can decide to change currency and say lock it in at that particular rate for youre future transaction?

I take it that where youre talking about you bought near the danube im not exactly sure where youre talking about but if i find out any info ill pass it on a.s.a.p. on the area, All i know is that when i was doing my research was to stick with district V and district VI and some parts of District VII so i ended up buying in district VII. I was also told that if i was inside the innner ring road in Budapest in these particular areas you were ok also .where im talking about is along krt erzsebet ,korut jozsef ,and down along ferenc korut, leading onto boraros ter, and the bridge petofi hid so hope it works out for you and the best of luck ill definitely find out info when im over there again and if theres any particular questions just give me a bell my regards ,
Seánieboy

Hi harryd.
I was in Budapest last w/end on an Investors trip. Thought you might be interested to know that a guy on the trip with me ( who owns lots of property in England ) bought 2 apts in District V111 on the strength of that shopping center. He reckons that between the new center & the inner districts will be developed shortly ....for what it's worth.
For myself I'm going the classic route. I think the older buildings when renovated are far nicer than any of the new builds I've seen.
I agree with Budapest on that one......
Good luck to all of us ! We'll be checking with great interest on the Hungarian economy from now on !

Seanieboy.
Re your sending the money over. If you've agreed a price in Euro, you can send it without charge,if it's under €50k (It will be in instalments I gather ) If you're paying in HUF there will be a charge & it's also worth keeping an eye on the rate & booking it when sending the transfer. I meant to check out some of the banks when I was over & see what their charges are. I will do next time.
I saw that site in Akacfa Utca & it's very near the Synagogue & a big Price Waterhouse office.

Enquiries by some of our group brought back info that there aren't near as many ex-pats as we were lead to believe.

perplexed did you think the site at akacfa utca was worth buying an appartment on?? when you were there. Yes it is quite close to the synagogue and price waterhouse and it is because of those i thought it might be a good area for business. I also bought a car space and wondered what you thought of that idea. I know that everyone seems to have a car here in this city and nowhere to park, i spotted at least a dozen times people parking on top of traffic islands. I know also that the transport system is very efficent here in the city but it does look as though a car space would be a valuable asset to have . you're opinions would be appreciated. my regards

seanieboy. One guy on my trip thought car parking spaces such a good idea he was looking into buying a few, without buying an apt at all !
Yes, it looks like a good spot allright. I find it hard to visualise an apt block from looking at a vacant space now used as a car park ! It is central & close to a lot of business buildings as well as the synagogue which is beautiful.
I think it was said before & most of my group would agree that the best place to buy is within the ring road ie districts V,V1, & V11. Everything else just spreads out from that.
Did you go on an investor trip ? It's very informative listening to the other investors. Some of them are very experienced & know exactly what to look for. It was an education for me being a novice at all this..

gunners said:

I am investing in a property called city gates in District 9. If capital appreciation continues at the rate it is going, by the time you pay the main installment it has increased in value quite a bit.

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Hi Gunners, District IX used to be one of the worst in the city but it's been transformed in the past ten or fifteen years to a more respectable area. The part of it in which the City Gates development is located is fine. It's close to Raday utca, which is one of the best streets over here for good restaurants, bars, etc. It's also close to the 4/6 tram route, which basically operates as another metro line around the korut. The new National Theatre is close by, while the Trafo theatre and club is around the corner on Liliom utca.

I'd be very dubious though that the prices of this development will rise much in the next few years as capital appreciation is not high in Budapest at the minute. Depending on the area, it's between 5 and 10% per annum at best. Estate agents regularly lie about this to potential investors. The city is a ten year investment and the price of your apartment will not shoot up overnight.

Best of luck,
Budapest
www.thepropertyviewer.com

Hi Buda, the all seeing all knowing eyes of the locality!! What do u think of this package. Appears a little expensive to me. Its called Amber Square.
Agents are local Galway firm, with an office in Dublin and Partner in Budapest. Kendar Holdings Ltd. The block is in District VII on Klauzal Street next to Greenpoint 7. A 2 bed apt is selling from 110K euro. If u go with the furnishing package of 9500euro they're offering a (4% of purchase price) guaranteed rental return over the next 2 years.Rent paid bi annually. (A Parking space is available as an extra for 16500euro.) Size of Apt from 60sq m. This package includes the full management service too.
I think the guaranteed rental is built into the asking price. The sales pitch speaks of the regeneration programme where District VII Municipility HAVE already allocated 1.5Billion Huf to the re-development.Is this true. This firm developed another residence in District VI, on Eotvos street, all sold out. I wonder how they are doing. maybe its not built yet.
I havent seen many of these packages to date, I would like your opinion

just wondering am i doing this computation correctly for Hungarian tax for a rented property and then doing the irish tax thing here goes

suppose the rent is
€7000 car spac &apt
less 25% hung tax €1750
€5250

Irish tax then on full amount


€7000
minus expences
management etc
wear and tear
12.5% per year €2500 €2500
taxable at 17% €4500

17% * 4500 = irish tax payable €765.00

so total tax payable would be €1750 Hungarian tax
€765 Irish tax
€2515 Total tax
would i be right in saying this critisisms welcome

my question is this is this the correct way to make out my tax form to the revenue here in Ireland when calculating tax from youre Hungarian property.Im buying there as an individual and know theres a double tax agreement with Ireland.

The basis im going on is this, that i pay 25% Hungarian tax and seeing that im 42 cents in the Euro here in Ireland im taking it that i have to pay the remainder in Tax ie 17% would this be right?? or is there another way to do this computation does anyone know how to do this??

I was wondering where you got the 17% tax rate in Ireland from!!

I'm not a tax expert, but as far as I know this is the way it would go

1. You pay your tax in Hungary (ie 25% flat tax)

2. In Ireland you calculate your rental profit as if the rental property was in Ireland. ie

Rental Income
Less expenses(I don't think Travel expenses etc to Hungary are acceptable)
Less 12.5% of fixtures & Fittings
Less mortgage interest

3. You calculate your tax liability in Ireland

Rental Profit X 0.02 (Health levy 2%) + Rental profit x 0.2 or 0.42 (depending on what tax bracket you pay tax)

4. Due to the double taxation agreement you can deduct the amount of tax already paid in Hungary from your tax liability in Ireland.

well don,
I was thinking that since i was paying the 25% tax in Hungary and if i was on 42% in Ireland the differance would be 17% to pay in tax liability. Im no tax expert either but appreciate youre opinion. 1 thing i dont understand in your post was the

rental profit * .02 (health levy2%) + rental profit * (.02) or .(.42)

where does this calculation come into the equation .

would i be right also about Hungarian tax that when youre rental income goes over €6000 a year the tax goes from 25% to 38% for the remainder could you throw any light on that subject and if so what way does it effect this computation my regards don,
Seánieboy

emnc said:

The block is in District VII on Klauzal Street next to Greenpoint 7. A 2 bed apt is selling from 110K euro. If u go with the furnishing package of 9500euro they're offering a (4% of purchase price) guaranteed rental return over the next 2 years.Rent paid bi annually.

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Hi emnc,

The area around Klauzal utca is fine. It's close to the city centre and should do well in years to come. I can't recommend most of the city's new build projects though and 110k for a 60sqm apartment is at least 50k more than the cost of a classic apartment in good condition on the same street. As regards the 4% rent guarantee, I would recommend that an investor should look for between 5-7% return, so this isn't particularly impressive. Have you looked at second hand properties yet? If you find a good one, then in my opinion, you're in a much better position for the long term.

Budapest
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seánieboy said:

well don,
I was thinking that since i was paying the 25% tax in Hungary and if i was on 42% in Ireland the differance would be 17% to pay in tax liability. Seánieboy

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This logic doesn't make sense really. In Hungary you pay 25% of your rental income. In Ireland you pay your taxes on the rental profit ie rental income less allowable deductions. You're paying a percentage of different amounts in each country.

seánieboy said:

rental profit * .02 (health levy2%) + rental profit * (.02) or .(.42)

where does this calculation come into the equation .

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You must pay 2% health levy on your rental profit, and you must further pay tax of either 20% or 42%(depending on your tax bracket) of your rental profit.

seánieboy said:

would i be right also about Hungarian tax that when youre rental income goes over €6000 a year the tax goes from 25% to 38% for the remainder could you throw any light on that subject and if so what way does it effect this computation my regards don,

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I'm not sure about this one but I don't think it is the case. I will have to check. The 38% could be for other sources of income(ie employment) rather than rental Income.

DonKing said:

I'm not sure about this one but I don't think it is the case. I will have to check. The 38% could be for other sources of income(ie employment) rather than rental Income.

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There are two options for paying tax on rental income as a private individual:
1. You pay 25% on all your rental income in Hungary for amounts less than 1M HUF per year, but an additional health levy of 14% if your rental income exceeds this.
2. For amounts under 1.5M HUF per year, you can alternatively pay 18% with an additional 11% health levy, but a 10% allowance for expenses (or actual invoices). 36% tax above this.

Budapest
[broken link removed]

budapest said:

Hi emnc,

If you find a good one, then you're in a much better position for the long term.

Budapest
[broken link removed]

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yes I've come across one secondhand in Dist VI, Revay ucta.. a 2 bed at 82K euro. There currently a tenant in situ paying 350 mth. So its a better yield. what do you think of the area? I might use your services to get a better view!!