hi , little advice for my first investment

[george27]

Hi people. I have recently decided that i want to invest in property I need a little advice for my first investment.

Firstly im really undecided as to were to invest first, i have been sprawling the internet for a few weeks now lookin for the best investment oppertunities. At present i have a list of 3 places which im considering.
They are
Ras Al Khaimah UAE,
Sofia - Bulgaria,
Bucharest - Romania.

i came to a decision on these places due to speaking to property sellers of these areas telling me how good of an investment it would be due to high rentle yeilds and capital appreciation and that the areas are developing well but i would like a none biased view about these places if possible. I have a budget of around 70k - 80k for a property based on my deposit.
Which of these areas would you choose for an investment?
Would you choose somewhere else?
Also where will i find the best mortgage offers for these places, do any of the developers in these areas offer finance??

Sorry about all the question but it would be a great help if you could answer some for me and point me in the right direction.

Thanks

George

 

[Olly]

Olly

Hello George

First, please be aware I am a Licensed Realtor & International Property Specialist trained and affiliated to the world's largest real estate corporation.

I would warn against each of the countries selected for several reasons unless you are prepared to invest for a minimum of 7 years and, in some instances, longer.

Bulgaria, Romania & UAE have one important limiting factor for any serious property investor - exit strategy. Buying is (in the main) easy in most places across the world. However, realising one's asset and maybe profit, can be an elusive excercise for most inexperienced investors.

Yes, they all have another thing in common they're all low-priced. (Not that this means 'cheap' since everything is related then to the local market place not a foreigners perception of value.)

Bulgaria & UAE are grossly oversupplied or, have so much inventory about to come on to the market over the next few years, that realising a good ROI (Return on Investment) will be problematic in my view and experience of the global markets.

Romania is possibly the best bet of the three but corruption is rife and buying without 'independent' advice could prove a disaster.

OK, so now you've read the negative, please, please do not be put off. The secret is Due Diligence regard the target market / country and, then, the actual new-build project and its owner or, the resale house you intend refurbishing...or whatever. Promise this real estate business is fascinating and there are so many ways to make a good profit.

If you want a free guide as to where I'd be delighted to oblige and, 'NO' that's not via me, it's just that as a brand new member I believe I have to refrain from dropping names and websites onto the Forum.

Whatever you decide, take your time. Except!!! The GB Pound is losing value and this is forecast to continue so it is high time to open a forex account. You can fix the rate well in advance of changing currency. And, whatever you do, DO NOT use a High St Bank for this purpose. The average sum lost by a buyer using this kind of facility is circa GBP 7,500. Yes, they are that greedy!!! Again, you need to be careful even in your selection of forex operator but I'll willingly give you a heads-up on what to look for and what questions to ask.

Very best of good hunting to you...

Olly

 

[andyk2]

Exit strategy comes first!

Hi George,

Whatever area you are looking at, it is far easier to get in than get out, You are going to have to consider where your future buyer is coming from and what they want to get from their investment.

If you are thinking of buying off-plan in Sofia and Bucharest, your end user is going to be looking at rental yields probably from the domestic market.

Ras Al Khaimah may have a more international market, but there will be plenty of competition after the same busimess.

Look at your investment strategy and decide what you want to get from your investment, and then what your end user (purchaser) will get from your property when you want to sell it on.

Think about it before committing to whatever your agent recommends!

Andy

 

[george27]

thanks alot for your replys, theres alot to think about with investment, it didnt even enter my thoughts about an exit strategy. i think i need to do a bit of research before i commit.

thanks again

 

[Investy]

George youre about where I was 4 years ago, and I can tell you there is so much other stuff that wont have occured to you. For example if you are seriously ill or die, what is the process for your guardians or next of kin acting on your behalf? Many countries do not operate anything close to what we Brits would consider 'natural law'.

The other posters are spot on about exit stratergy. You will find when it comes to selling agents will have you over a barrel what with you not being in the country so you ahev to 100% put all your trust in them. Many will want at least 10% fee to sell.

What about Tax? In Bulgaria you must submitt annual accounts to thier revenue? Dont for a second think the revenue will write to you in your mother toungue!

SOME POINTERS;

1) Absolutely understand your exit stratergy

2) Absolutely understand that if you die your next of kin may never be able to claim the asset, unless you had very robust legal help when you purchased. Same goes for getting funds out of a country - this can take years unless all set up up - front.

3) Think about how you will get the rent into the UK. Will there be currency exchange costs each time? Will you have to open a foriegn Bank account? How? Who?


In a nut shell I came to this realisation;

Only invest where everything is pre arragnged for you and where there is a ready demand from Brits (makes it easier to resell) and where English is generally used at least on the development.

Secondly only buy from recognised developers. Imagine trying to get a snagg list done by a one man band Bulgarian whos long gone.

The best I found was the Royal backed Saidia resort in Morocco about 60km from Spain. The developers even took the trouble to ensure all monies paid are pre registered with the Moroccan authorities to make repatriation straight forward. On site rental agents manage eveything year round. The development is massive and will have the biggest marina in the Med.
The King planned this from 1999 and his core commercial aim was to ensure the development is busy all year round.

Many exclusive very large dramatic resorts being built in Morocco so should be quite up market compared to Bulgaria etc.

 

[DC]

Investy good comments.

Clear Entry, Exit strategy
Objectives to purchase. ie. why are you buying.
Financial Leverage, using other peoples money ie. banks.
Why these markets. It is not about cheapness more about value.
What is your investment strategy. Buy to Let, buy to hold, buy to sell.
Tax strategy. Capital gains, inheritance, Tax on income. Double taxation treaties.
Contigency. What if it all goes pear shaped, can I afford it to mess up.

This is not an easy thing, but once you start in the big sea, you will float or drown, but you will learn. You only learn by doing it and listening to professionals.

I must disagree with Ollie, in any market you can make money, if you buy right and sell right. To say Bulgaria, Romania or UAE, there will be deals in all markets, if you have the contacts and the skills to find them. And they must make sense to you.

ie. If you are buying at 50% below market price, and you sell for 25% below market price, you have good entry and exit points. So go with your instincts.

Good luck.

 

[DC]

Sorry Olly, I can not agree on things

To quote - the secret is due diligence. This is not a secret, it is a matter of fact. Without research and labour, you are not going to get anywhere in any market.

 

[Olly]

Please don't take offence Goldberg Global...we'll have to agree to differ!!! 'Due Diligence' is of course a matter of fact for 'US' within the business but, for the new investor it is still very much a secret. (Believe you've accidentally overworked my motivation and explanation?!!)

Forgive me again but, absolutely nowhere on your website could I find a mention of Due Diligence Reports or Packs being made available to your customers. Why not?

I was very pleased to learn 'D-D' Reports are under serious consideration by the EU as a reuirement for ALL agents selling property to its Citizens.

I'm not trying to score points here even if it might appear so. As a professionally trained and qualified Realtor & International Property Specialist working with a division of the world's largest residential real estate corporation, I am ultra-keen to see this industry raise itself from the dark perception metered down via the media. Sadly, in many instances based upon true situations created by those regulation will help to remove - or at the very least diminish.

Global Person / Moderator / Senior Member...sincerely wish you good trade and a professionally rewarding year in 2008.

Bestest!!!

Olly

 

[geester]

I agree, an exit strategy is most important. A friend of mine purchased 3 properties in Bulgaria, then sold 2 to get some cash back for a UK venture and it became a nightmare, he finally got the money 4 months later than he should....

 

[DC]

Olly,
That is a fair point, providing packs for our clients on due diligence, we advise our clients with facts and advice, and illustrate things. It is like legal advice, we can not recommend a lawyer as it is impartial, but we will recommend a chamber of global lawyers for them to choose.
With Due diligence surely as well as us, the client would do well to research where they are going to invest in, we discuss this and strategies and objectives, when you are well partnered globally , you can have topical discussions of whats hot and whats not, things are always changing internationally, so DD packs though interesting may not be up to date, the market and money is fluid, and each person is different so we tailor to our knowledge base and the clients requirements.

 

[george27]

Hi cagla

I chose those 3 countries based on what id heard from agents, they told me that the way these areas were developing ie (lots of new businesses in sofia) would bring back the best ROI.
I was also after an ivestment that i could let out long term, may 12month contracts to locals. I was told that it would be no problem finding this type of tenant in these area, was I informed right about ????

Would i be capable of getting all year rental in Turkey because this is an area that i have overlooked? Also what are the rental yeild % in turkey?

Cheers

Hi George,

Why only that 3 countries?Why don't you think Turkey?
Bodrum as a luxury place, Didim a cheaper place both of them can make your money back max. in 5 years.Didim is supported by government to be a touristic seaside town and they start to build marine and put out some lands to tender for golf courses and 5 star holiday resorts which will make the lands valua high and in a chain the property prices will be higher..
We are a building company and we do our investments on lands.
On the financial reports written as;
In all historic time of Turkey, the top investment subject was buying a property which has a big increase like 20-30% and it never lost its value.All the top businessmen in Turkey still do their investments in properties and these years are now gold time since there are mortgages for local and foreign people which cause a big demand.
Just search also for Turkey and you will see that I am right!
Best regards,
Cagla

 

[Investy]

Bodrum / Gumbet is not a luxury place, I have been there. It is quite down market full of drunk English and the beach is not too attractive.
Much better to buy on massive 5* developments with multiple golf courses ON SITE (not down the road),own private beach and massive modern marina. Morocco has these and the aim is year round rent, not just May to Septemeber.

 

[Investy]

George I found only the massive Royal resorts being buit in the Med in Morocco had the possibility of year round rent. NO OTHER TOURISTIC DEVELOPMENTS WITHIN 3 HOURS OF THE UK HAVE THIS FEATURE.

The reason why the rent season is so robust is that the sites (for example SAIDIA) have giant purpose built marinas - Saidias will be largest in the Med and can take the largest luxury boats - larger than Peurto Banus in Spain which is about 60km away.

Also the leisure and sports facilities eclipse anything in Spain etc. 60 permiership footballers bought the luxury homes on Saidia including Rio Ferdinand, John Terri and the Neviller brothers.

Prices from £54000 with 70% mortgage.

Professional large international rental agents ON SITE will do everything for you year round.

You also get a 7km beach ONSITE (no golf development in Spain has its own large beach and massive marina unless you have a few million spare).

500 shops on this development that include Gucci, Channel etc.
17 golf club houses onsite. 3 golf courses ONSITE.

2 large French supermarkets onsite.

11 hotels on the site -imagine the year round marketing they will do to expose the development which will benefit you.

The King planned all this from 1999 and the reason its taken so long is he kept ammending things to ensure year round resorts are possible - his main aim was to avoid 'winter ghost' developments so common in Spain, Turkey etc.

Unlike many here I am not an agent. I cant beleive people would even consider anything else as they are all just the same old sismilar products. NOTHING COMPARES TO SAIDIA. NOTHING.

 

[george27]

I will seriosly look in to Saidia, it does sound a good place to invest. how did you go about buying your property there, what website did you use, what agents did you use?

 

[Cagla]

Hi George,

I don't know the other countries but I know TR very well and buying a property is always as having a gold.It never looses, the worst thing can be to get a small profit.Renting is a different subject which is up to the city.If it is a big city like Istanbul and Izmir, you will get very good rental incomes per 12 months.As an other option it can be an office which has a higher income than houses.
A good house with 3 bedrooms gets you at least £350 per month in these cities and go to £1300 for best locations in Istanbul.So it is up to location.
For the seasides; if you just need it for rental income, no need to buy from here, prefer big cities!
If you want to spend your holidays in here and then rent it out for holiday visitors per week, its price begins from £150 to £350 per week according to the season.Of course, spring and summers are more expensive.
If you will not stay in your summer house, then you can rent it to local people which is in a demand here, then the prices begin from £130 to £220 per a month for min 2 bedrooms.

And after 5 years, you can sell it back with an increase so it is always as buying a gold!

With £30k, you can buy two bedrooms apartment with a communal pool in Altinkum but it is nearly impossible to find in these rates either in Bodrum or Izmir, Istanbul.This is the other fact!

I hope it helps you.

Best regards,
Cagla

 

[DC]

Can you tell me what exit there is in Saidia?
Yields and income you will need to cover mortgage?
How you differentiate one unit from another?

ie. Is there a rental market. If everyone is doing the same thing.
How many thousand units are there?

Timing? Saidia been in the market for several years already. Is it the best time to buy? Prices already gone up.

But investy does make some good points.
Others mmm. Just because the likes of premiership footballers buy does not make it a good buy. If Mr Warren Buffett was buying then i would have more confidence. I have seen units below 54k but like all investments check what you are getting for your money.

ie. If you pay 54k make sure you are getting income from rent. Otherwise it is not going to be worth that much.
Also if they over build, as it is several thousand, the prices will come down. Simple economics. Supply Demand.
Also the timing issue, when to buy in the curve. Always at the beginning for max capital appreciation.
Saidia has been around a while.

 

[Olly]

Due Diligence Reports...

Hi Again

Advising your clients won't be sufficent under the new EU regulations. Indeed, all 'advice' will need to be supported by fact and those facts updated every 6 months to remain within the law. (Price Waterhouse Cooper is formatting the actual DD document right now in collaboration with several governments in the EU.)

The intention is to ensure all brokerages come into line with Financial Services. In other words hold a a Legal & Fiduciary responsibility to each client - buyer or seller. (This will mean providing DD packs independently verified and not paid for by the developer concerned when involving new-build.)

In practice this will probably knock out 80% of the rogue element, the remainder will have to catch up. Personally, I always conduct a formal DD on every development I handle and, have this legally verified. (Not that I would consider using the international network of lawyers in the UK since they charge circa GBP 2,500-3,500 per project. Forunately I am qualified to do most of the work myself and then have it sanctioned. A lot, lot cheaper but, still validated for each client and regularly updated.)

As for not recemmending a law firm...oops, beware!!! You should never introduce any less than 3 different law firms, else you can be sued for 'negligent referral'.

Hope you find this constructive and useful? Anytime you want to investigate further, by all means conact me off site.

Bestest!!!

Olly,
That is a fair point, providing packs for our clients on due diligence, we advise our clients with facts and advice, and illustrate things. It is like legal advice, we can not recommend a lawyer as it is impartial, but we will recommend a chamber of global lawyers for them to choose.
With Due diligence surely as well as us, the client would do well to research where they are going to invest in, we discuss this and strategies and objectives, when you are well partnered globally , you can have topical discussions of whats hot and whats not, things are always changing internationally, so DD packs though interesting may not be up to date, the market and money is fluid, and each person is different so we tailor to our knowledge base and the clients requirements.

 

[DC]

Olly, what are you talking about. Where are you from? You seem a little off beat.

Which EU bureaucratic regulations are you talking of?
Advice, Brokerages? Legal & Fiduciary? Has your company given you some new books and language to play with.

Clients should select their own lawyers. It is in the client interest.
Financial and Advice rules should be adherred to in the country that one provides them in.

If you have unearthed a new big block buster EU rule. It would be interesting to hear it and be shared amongst others. And what it is exactly, and what it pertains too.

 

[DC]

Financial Service rules depend currently on national laws. UK FSA, Spain has 2, which covers investment instruments, stocks and shares but not property and mortgages.

Different countries have different rules. If there is new Super EU rule, then lets see it, or is it in discussion and coming out in 6 months? or maybe it wont.

 

[DC]

Where did you get this as well..

As for not recemmending a law firm...oops, beware!!! You should never introduce any less than 3 different law firms, else you can be sued for 'negligent referral'.

There are many companies in the market, including some of the biggest, who recommend their own lawyers. Maybe you would do well to speak to them Olly.