Property in Bulgaria (or that region) again!

Hello,

My partner went along to a foreign property show in city west last week and came home extremely excited about buying a foreign property in Bulgaria or Turkey. I'm sceptical at the best of times but when she went through the brochures alarm bells began to ring. Needless to say my partner is now hell-bent on acquiring a property in Bulgaria. We have no experience with foreign investment or investment in general other than we have a house.

I asked a few people about buying property abroad and no one seems to know, good bad or in-different. I went to my old man (first point of contact for all things concerning money) who had looked into foreign investment but had decided against.

So here I am! Can you tell me if I'm getting a good deal and how can they guarantee three years rental??????? that will more that cover your repayments?
The property is two bed rooms and two bathrooms furnished to highest standards (apparntly), kitchen box with dining area and living room air condition unit as well at a price of €123388, 109.83 sq.m, the resort is in a place called Varvara, south coast bourgas, Bulgaria. Reckons there is three golf courses going up in that area.
Can anyone advise????????

KScal said:

Can you tell me ... how can they guarantee three years rental??????? that will more that cover your repayments

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Easy - they bump up the selling price by the equivalent amount of the so-called guaranteed income.

You then end up paying tax on your own capital.

Thanks for the reply, but I'm not sure I'm with you????

Plenty on reading which should give you an insight to Bulgaria.

KScal said:

Thanks for the reply, but I'm not sure I'm with you????

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Simple example:
Price at 'market rates' = €100,000
Price charged by developer offering 'guaranteed income' = €140,000

In a nutshell - the guaranteed rental return is the management company paying you back your own cash. They can afford to do this because you will probably have paid over the market rate for this appartment (the so-called Paddy price) as this development is being sold to foreigners and not locals.

You are probably right to be sceptical but it would help if you were to provide some information on your financial circumstances (in particular how you would plan to fund this).

Given how many fairly naive investors are rushing into buying overseas property I would tread very carefully if I were you.

Hi All,
€123K in Bulgaria- Are you mad?? I am involved in some bulgarian property sales myself & I would advise strongly against that apt for €123K. Small cheap apts with all the FULL VAT paid, for between €40-55K are the way to go. Or else, some commercial property in Sofia with a decent return. -Thats my opinion.

Hi There, I'm quite familiar with Bulgaria and never heard of that resort. By the way, there are 3 international golf courses being built north of Varna. Work is under way on at least 2 of them. I haven't heard of any new golf courses south of bourgas (a couple of hours drive from the northern golf courses). They certainly haven't started them and no big names behind them...

I wonder if anyone can provide verifiable information on rental yields in Bulgaria. I know that developers offer a sale and leaseback 7-8%, based on an inflated initial purchase price, but what is the open market going rate yield?. I think that lots of people are being carried along in an unthinking speculative stampede, with no clearly defined exit strategy. I know people who bought in Spain four years ago who have attempted in the past to sell up with no success. They have removed the property from the market and let it for a few weeks during the summer, the rest of the time it’s empty.

Will the Bulgarian market peak like the Spanish and then disappear off the radar to be replaced by some other faddish location; Maybe Morocco, Albania, Lebanon or the Western Sahara Coast. I think people are losing the run of themselves entirely.

Any info on the town of Nessebar......looking a a 2 bed villa there for 108e....Any tips on questions i should be asking the developer...??

Yes, I would ask where it is. It's highly unlikely that it's in Nessebar because there's not much room for any more development. You're probably at least a few miles past nessebar. Don't buy unless you go over and see the exact location. If you actually got a villa in the centre of Nessebar it would be really expensive.

If they say it's a couple of hundred metres to the beach, add on a couple of hundred more and also assume there is no direct walk to the beach!

Check out the exact finishing on the house, what exactly do you get - kitchen, tiles etc.

If you're buying a house you generally need to set up a company as you can't own the land. If this is not required then find out what is happening the land.

Ask about the maintenance/management fees.

Find out if they are putting the full value of the property on the notary deed. The dodgy practice of putting a lower value will cause problems with CGT in the future.

If you really really like the property pay a refundable deposit to reserve it for a few weeks (e.g. 500 euro) and ensure you get a note saying it's fully refundable and then go over to Nessebar and check it out. Nessebar is a nice spot if you are actually in Nessebar!

doberden : Thanks for your reply. The brocher says 2km to Black sea and few mins drive to Nessebar. All tiled finish but kitchen+ furniture pack extra 9k and decent private pool(322 sq. ft.) extra 12k. maintenance fee 990e/yr. The booking deposit is 1k and its non-refunable..??Will definately go over for look before purchase but would like to put deposit down first..There is land approx. 2000 sq. ft, so presumably I would need to set up company..Can you tell me more about how to go about this..??

AFAIA using a company to purchase a property has complications with Irish Revenue when you eventually sell or take any money out of the company. Similar to buying property in Ireland through a company.

I seems now that the developer itself is the company for the whole site and not split into individual sites.which saves us 600euro setting up our own company..but each purchaser is still owns his own plot..or thats the way I understand it. Also asked about notary deed which turns out to be 70%, but they say will not matter as whoever your selling to down the line you can give them the same deal........ Will have to get Solictor to look into further as they have send me Example preliminary contract.

A foreigner cannot own a plot, you have to be Bulgarian or set up a Bulgarian company. I think they can get around the problem by setting up the contract such that they do not have any right to building on the land, not sure about this so you need a good solicitor.

If they put 70% of the value on the notary deed that is not too bad. A lot of them will put 20 to 30%.

I seems now that the developer itself is the company

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But you still have to withdraw the money/funds from a company and AFAIA you will run into problems with Irish Revenue when you sell

I have been asked for recommendations for Irish or UK based solicitors with Bulgarian counterparts, i.e. a firm who can do the conveyancing on a Bulgarian property investment purchase, check out the title, read the contract and is expert in Bulgarian law.

Does anyone on AAM have any recommendations?

why do you want Irish or UK based?
I used this firm which I found recommended on another website. They are based in Bulgaria, but as you can see from their website, cater for the English speaking client. I found them excellent to deal with and had no problems whatsoever.

http://www.georg-tod.com/

Helen said:

why do you want Irish or UK based?
I used this firm which I found recommended on another website. They are based in Bulgaria, but as you can see from their website, cater for the English speaking client. I found them excellent to deal with and had no problems whatsoever.

http://www.georg-tod.com/

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Thanks for the recommendation.

Unfortunately, they declined to answer any emails sent to 3 of their email addresses. I'll look elsewhere.

This related thread has some suggestions.

KScal said:

Hello,

My partner went along to a foreign property show in city west last week and came home extremely excited about buying a foreign property in Bulgaria or Turkey. I'm sceptical at the best of times but when she went through the brochures alarm bells began to ring. Needless to say my partner is now hell-bent on acquiring a property in Bulgaria. We have no experience with foreign investment or investment in general other than we have a house.
I asked a few people about buying property abroad and no one seems to know, good bad or in-different. I went to my old man (first point of contact for all things concerning money) who had looked into foreign investment but had decided against.
So here I am! Can you tell me if I'm getting a good deal and how can they guarantee three years rental??????? that will more that cover your repayments?
The property is two bed rooms and two bathrooms furnished to highest standards (apparntly), kitchen box with dining area and living room air condition unit as well at a price of €123388, 109.83 sq.m, the resort is in a place called Varvara, south coast bourgas, Bulgaria. Reckons there is three golf courses going up in that area.
Can anyone advise????????

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Land title in Bulgaria is not clear, and exit strategy is no longer viable as oversaturation is kicking in.

Any guranteed rental income deal on any property needs to be in your contracts which you need to go throught with a solicitor before you sign. Any gurantede rental income deal offered by any developer is simply in the margins of the property. If you are getting lets say a 5% pa inccome for 2 years they are simply selling you the property at 2x that abve what you could buy it at. You shoudl have the option of buying with the rental income knocked off as a discount or generally developers give you lets say 90% of the total income they are guranteeing you.

Think about the money they are going to get has to come ffrom somewhere. But i am afraid it is you that is paying it. The bueaty is certainly if you are finacnig with mortgage that you are actually lending the money to pay yourself the income!

I am currently looking at a condo hotel investment in Florida. If it is an income return you want to cover your mortgage lending this is a close to a gguranteed income as you can get if you want more info PM me.