We purchased two off plan apartments in Tallinn, Estonia in 2006. We did visit the site before buying and were happy with the apartment location – just outside the old town in the port area.
The apartments are due to complete next month (March 2008) and we find that not only have the prices not increased over the last 18 months as we had hoped but prices have fallen by at least 10% as other investors start to move out of the market.
A second issue is that rather than being self funding as we had hoped, when rented there will be a total mortgage shortfall to be met each month of €900. This is primarily due to significantly increased interest rates available to overseas investors and the lack of an interest only option.
We’re fully aware that we broke all investing rules and that property investments should be self funding on an ongoing basis. We’re also aware that we were swayed by the hype of overseas investing and the great capital appreciation to be had (that boat has sailed!).
Rather than look back and say how stupid we were, we’d like to move forward and decide what’s the best way to move forward. We think we have the following options:
Option (A): Hold for the Medium to Long Term
Our fear is however that we’ll send over nearly €10,000 each year and prices will continue to fall and we’ll be throwing good money after bad.
Option (B): Sell One or Both Apartments at a 10% Loss
This loss will be significant. As well as the loss in the value of the apartments we also have to take into account all other fees associated with the buying & selling process. The total loss would be in the region of €70,000.
We’d really appreciate any advice particularly from anyone who has a knowledge of Tallinn.
Thanks in advance!
The apartments are due to complete next month (March 2008) and we find that not only have the prices not increased over the last 18 months as we had hoped but prices have fallen by at least 10% as other investors start to move out of the market.
A second issue is that rather than being self funding as we had hoped, when rented there will be a total mortgage shortfall to be met each month of €900. This is primarily due to significantly increased interest rates available to overseas investors and the lack of an interest only option.
We’re fully aware that we broke all investing rules and that property investments should be self funding on an ongoing basis. We’re also aware that we were swayed by the hype of overseas investing and the great capital appreciation to be had (that boat has sailed!).
Rather than look back and say how stupid we were, we’d like to move forward and decide what’s the best way to move forward. We think we have the following options:
Option (A): Hold for the Medium to Long Term
Our fear is however that we’ll send over nearly €10,000 each year and prices will continue to fall and we’ll be throwing good money after bad.
Option (B): Sell One or Both Apartments at a 10% Loss
This loss will be significant. As well as the loss in the value of the apartments we also have to take into account all other fees associated with the buying & selling process. The total loss would be in the region of €70,000.
We’d really appreciate any advice particularly from anyone who has a knowledge of Tallinn.
Thanks in advance!