Key Post: First Time Investor...thinking about Hungary!

Hungary

I am in a similar position to yourself and I am also seeking more info (especially word from someone who has invested there) on this subject.
I did find by looking on www.revenue.ie that there is a double taxation agreement between Ireland and Hungary and indeed 40 other countries.

Re: Hungary

Not being smart or anything but if double taxation agreements were news to you (and possibly even if there weren't) then I would strongly urge you to consider obtaining independent, professional financial and/or tax advice on this matter (not from the agent involved obviously)! Any first time investor who takes the plunge without such advice is taking a big risk!

Re: Hungary

I agree wholeheartedly with Clubman's advice. I would also suggest to any potential investor (in Hungary or anywhere else) that they should be very careful in taking advice from others who have already invested in the same market, unless they know and trust that person very well.

If someone has already invested in a property in Budapest, Boston or Bangalore, they would naturally be very keen to "talk up" the attractiveness of that particular city as a place for investment - both in terms of hoping for a property boom in that market, fuelled by new investors, and (perhaps subconsciously) justifiying their own investment decision.

Remember also that you rarely hear anyone admitting that a particular property investment was, in retrospect, a bad idea.

Hungary

I agree that advice should be taken in context but
I would still think it's better to hear a few stories rather than none at all!

C.

hungary

I am going to Budapest for a weekend. Can anyone recommend estate agents or other such links regarding buying property in Budapest?
Thanks

Can anyone recommend estate agents or other such links

Hi Maxine,

I can't recommend but I have been talking to this crowd...[broken link removed]

They in turn deal with a sister company, htp://www.casaro-hungary.com in Budapest. From my enquiries, they will set you up with an estate agent over in budapest when you want to travel over there, who can show you properties etc etc...

Not a recommendation so much as what's already ben posted.

There's also a crowd called Invstment Properties, based on Greelea Road, Terenure. Sorry I don't have a number. I've yet to telk to them.

I'd be very interested to hear how you get on over there so feel free to post what your experiences are here if you get the chance.

spotted this in the paper at the weekend

[broken link removed]

Good Idea Piggy

Hi,

I've been reading this topic and well done, Property is a good idea, this is the only investment that banks will lend you money for, and that speaks for itself! BUT, (There's always a but),I had a little cash in 1989 and bought a small house in Dublin. It grow in value and only really played off in 1999. I used the equity as leverage for another property! It took 10 years to really make an impact. I'm now on my third property. Apparently it's supposed to snow ball (And it is now). But you'll have to commit yourself to the long term - but it really pays off in the long run - according to a property millionaire I know.

I've a friend from Budapest, and here's there opinion on the best districts to invest in order of preference;
District 5
District 1 & 2
District 6
District 11 & 14.

I'm not so sure about Budapest anymore - everyone knows about it - no one knew about Dublin in 1989?
But I think, if a New car (BMW) is worth more than a property in any state, then theres somthing to look at. Just my opinion.

If I get any more news I'll pass it on. Good luck.

Re: Good Idea Piggy

this is the only investment that banks will lend you money for,

Click to expand...

This is not correct - It is possible to invest in stocks/shares 'on the margin', i.e. using borrowed money. You won't get the same loan-to-value percentage with a share portfolio - you might get up to 40%, whereas you can probably get up 80%/90% for investment properties.

Note that I'm not recommending margin investing - just pointing out that it is possible.

Re: Good Idea Piggy

Shaneo,

I don't think everyone knows about Budapest , people probably said the same about Dublin 5 years ago and look at it now.

I think that property in Budapest is probably reasonable value now , one thing is for sure its better value than Dublin!

M3

Property in Budapest

Hi Piggy,

A friend of mine just bought an apartment in budapest. He went with the casaro estate agent and was very impressed with them. They have avery interesting website www.casaro-hungary.com which gives a good idea of the types of property and their costs.

The casaro service was excellent though expensive (4% of cost of property + vat @25% = 5%). He spent 4 days in Budapest Sat. to Tuesday, saw c. 12 apartments and completed all of the paperwork to buy an apartment on tuesday. All the casaro contacts and solicitors spoke excellent english and all contracts were in hungarian and english including for the setting up of a company, opening a bank account and signing contracts etc.

Budapest is a beautiful city and certainly worth visiting if even just for a visit. The best districts apparently are 5, 6 and 7, then 8,9, 13 and 14 all in pest (south of the danube, buda is on the other side of the river).

Points of note: it will cost you about 20% to actually buy an apartment as follows: 6% stamp duty, c.6% to furnish an apartment, 5% to casaro (if you use them), 1.5% to a solicitor and circa 1.5% to set up a company, fly over there etc.

There are also significant costs attached to renting out the apartment: management fee c.10% (12% with casaro), tenant finding fee 1 months rent, accountant fee for company c. 450 Euro/year, tax to be paid in hungary on rental income.

Some good points - property is very inexpensive in budapest compared to almost any other european capital city, they will join the EU in May next year, they just devalued the Hungarian forint by circa 15%, Property in budapest increased in value by 40% over the last 3 years, it is forecast to increase by 25% this year (estate agents forecast and may be wildly optimistic but..) + many other subjective good points e.g. fantastic metro system + trams+buses (travel is easy and cheap), beautiful old buildings, lovely city, beautiful weather at least in summer and a lovely friendly people, also cheap to eat out and have beers etc.

All in all he is optimistic about the venture and was very satisfied with casaro. Though expensive, they offer a very good service to someone who doesnt know the language, the local set up, have contacts, legal work etc. etc.

In my opinion, budapest has been known about for quite a while, but people have not yet started to invest over there in any great numbers yet. There has been a lot of ads both in the papers and on radio recently and this may generate bigger interest.

Hope this has been of some help.

DM

Re: Property in Budapest

tax to be paid in hungary on rental income

Is "foreign" rental income also assessable for tax in Ireland?

Property in Budapest

Hi Clubman,

As i understand it you pay tax in hungary. The irish taxman allows you credit for this when/if he taxes you. There is a double taxation agreement between Ireland and hungary so you dont pay tax in both countries.

DM

Property in Budapest

Just wondering if anyone has concrete figures on the rental yield and if it is difficult to rent out there ???

Re: Property in Budapest

Hi DM - From my non-expert knowledge of double taxation agreements, these are designed to ensure you don't pay double-tax on the same income. However, I think it's an oversimplification to assume that once you pay tax in Hungary, you would have no tax liability in Ireland. The general principle would be that the tax you've already paid in Hungary would be deducation from your Irish tax liability, but you may still have an Irish liability where the relevant Irish rate (e.g. 42% income tax) exceeds the rate you have paid in Hungary - you have to pay the top-up in Ireland.

Note that I'm not a tax expert & I've no particular knowledge of any Irish/Hungary agreement. I'm open to correction on this stuff, if I've got it wrong.

Property in Budapest

Hi Guys,

I am told that rental yields in budapest are generally between 6 and 7% - some areas may be slightly better.

Rainyday, you are quite right, you are liable to pay tax in ireland if the tax payable in ireland exceeds the tax paid in hungary i.e. the irish taxman will allow you a credit for the tax paid in hungary. I am not a tax expert either but have read the double taxation agreement and that is my understanding.

Property in Budapest...rental yield!

Hi DM,

Thanks for that. It's nice to hear of a good story about Casaro/ BudapestInvest.

I plan on going over sometime in August to take a look at properties. I have talked to one person who said they'd heard that it was difficult to get good rents...or at least could possibly be difficult to get what you need. I think they were saying that it was tight. You might not have to put your hand in your own pocket but you might only be taking home the price of a mars bar at the end of the month. I think this is what turned him off the idea. Obviously, it's all dependant on what property, where, furnished to what standard etc...etc...

I'd be very keen to hear how easy or difficult your friend is finding it to get someone to rent and what kind of lease. Are they mainly short-term or long-term. Anyway, you may or may not want to post that info. Regardless, thanks for the posting. I'll update whatever my experiences are in the future.

Piggy

Re: Property in Budapest...rental yield!

You might not have to put your hand in your own pocket but you might only be taking home the price of a mars bar at the end of the month. I think this is what turned him off the idea.

Presumably there are a few ways to look at such a purchase:
<!--EZCODE LIST START--><ol><li>As a medium/long term investment with capital appreciation as the main goal</li><li>As a short/medium/long term investment with rental income as the main goal</li><li>As some combination of the previous two</li><li>As a holiday home/leisure investment where some of the benefit accrues in non monetary form (e.g. nice place to spend the hols)</li><li>Etc.</li></ol><!--EZCODE LIST END-->
Anybody considering buying property in addition to their own PPR, whether at home or abroad, would want to carefully consider what their goals are, ensure that such an investment is the most suitable for their circumstances and overall "portfolio" and do some number crunching to verify that such a plan is financially viable (which can mean different things to different people, but break-even is a good base line!) before they take the plunge. In this regard Tommy's list of issues to consider earlier in this topic is worth reviewing.

Re: Property in Budapest...rental yield!

Brian010 said (11/7/03 11:38 am)

Investing in Hungary
------------------------------------------------------------
I am planning to invest in a property in Hungary shortly. I am using a company called Eurozone Investment Options Limited. Wondered if anyone had any experience with them?


piggy said (11/7/03 11:51 am)

Investing in Hungary
------------------------------------------------------------Hi Brian,

I know there will be a moderator along at any minute to tell you that this is a re-post. There's been an ongoing debate about this here...pub145.ezboard.com/faskab...=538.topic

As for Eurozone Investments I know little about their operation apart from visiting their website. From the few investors I have talked to though it would seem that they are charging pretty high prices and I've been told you are far better off getting your hands on an older apartment in an older building. I think I remember Eurozone's cheapest apt being around 170k if memory serves me right. For that kind of money you could buy yourself a pretty swanky place in a very nice building, location etc...Just a thought! Would be interested to hear how you get on though if you deal with them.


I have been keen to invest over there for quite a while but have talked to a few people who have temporarily put me off the idea because it seems that rents are virtually impossible to get at the moment! One property developer (not Eurozone) who is also building new apt's in Budapest, when I pressed him about it, did admit that really the investment is about capital appreciation as rents are very hard to get at the moment as there appears to be a glut of apt's to rent over there...probably a bit like Dublin I guess. Anyway, that may suit you perfectly. Either way best of luck with it. Maybe someone else can shed more light on this company for you.

Piggy.

Re: Property in Budapest...rental yield!

shnaek said….

property abroad - Estonia or Hungary?

Due to the unreasonable price of property here and my belief in historical economical cycles no matter what people say about Ireland being 'different', I am considering investing abroad.

I am considering two places at present. One is Budapest. I have read all the posts on Hungary here with great interest, and I have attended an open day with a property company who deals with property in hungary (budapestinvest.com). By all accounts property here seems to be good value, although I must look further into the tax and finance implications.

But I can find nothing here (or anywhere else) about property in Estonia. I read an article in The Times a long way back and it certainly presented a tempting picture. Unfortunately I haven't found any further information on Estonia since, and I would never consider moving an inch on anything I hadn't researched to a reasonable level.

So in this round about way I am asking if anyone here has information on buying property in Estonia, especially Talinn? I was also wondering if groups of people who have invested in property abroad ever meet to talk about their investments, in a club or such like?

Thanks for the help,
Sean


piggy said

Re: property abroad - Estonia or Hungary?
Just on the Budapest market shnaek, I was keen on the idea there myself but was put off by two people, both property developers, one of whom is currently developing in Budapest right now. The first said, that he believes current prices reflect Hungary already being EU members.
The second guy (guy developing there) had to admit that renting over there was an absolute nightmare because the market is flooded. He said it might take 6 months or more to rent, and if I was purchasing it would really be for the capital appreciation. This is what ultimately put me off given that I don't own property here as of yet.

On the Estonia point, I too looked into other Eastern European countries at the same time as I was looking at Budapest. There isn't much on the Internet concerning Estonia, Romania, Croatia or Bulgaria for that matter. I would imagine you either have to track down a developer in Ireland who has interests there or else find an estate agent in Estonia. It might be worth travelling there yourself.

Piggy.

Dasher said…

Re: property abroad - Estonia or Hungary?
I am afraid that I can not comment on Estonia but I have invested in property in Budapest recently.
I had some free cash and a bit of equity in my existing home which I used to fund the investment.
It took approximately 2 months to organise furnishing and rental of the property. But all is going well at the moment.

Obviously there is hassle involved in purchasing in Budapest but there is a low entry level to the market and less risk of negative equity occuring than purchasing in Ireland in the current climate.
Capital gains are never guaranteed but are quite probable.
Property there may be slightly overpriced at the moment but again, compare this to irish property.

When investing in these Eastern European countries, location is paramount. You can learn a lot about this from just looking at local estate agent websites. If you buy in the right location and furnish the property appropriately then you will have a very good chance of ensuring rental of your property.

The best advice that I can offer you is that it is more important for you to get the proper legal advice abroad on the local purchasing laws than it is for you to have someone locate a property for you. This is the easy part and often these agents can be biased. So be very wary of these agents, even the Irish based ones. These agents charge up to 5% commission, when in fact in most European countries there is no buyers fee involved in purchasing property. The seller pays the fees.

Get a very good solicitor, find the property(on the net maybe) or use an agent if you don't want the hassle and the lawyer will take care of the purchase for you. Not as difficult as it sounds.

piggy said…

Re: property abroad - Estonia or Hungary?
Did you use a property management company Dasher...and if so who if you don't mind me asking?