Saturday, November 12, 2005

Is older investment property in Bulgaria best?

Independent Online Edition - After buying an old house near the Black Sea, Robert Nurden has tips on how to handle the process:
Published: 02 November 2005

There were bureaucratic snarl-ups, the sale was delayed, there were disagreements between vendor and agent and misunderstandings between agent and buyer (me), and solicitor and buyer. Essential personnel in the local authority were away when they were needed, and when the time came for exchange of contracts, a vital document was missing. Eventually the sale went through - two months late.

Nothing new there, then. Except that this was Bulgaria, where I had summoned up the courage to buy a charming, stone, newly renovated two-bedroom bungalow with a quarter acre of land in the picturesque hill-top village of Avren, 20 minutes from Varna and the Black Sea. Its huge flat roof had an ancient bread oven in one corner and commanded pan-oramic views of the Kamchiya valley. Price: £37,000. It was a nerve-racking business, but when isn't it?

I had originally gone to Bulgaria to inspect a new-build apartment block in Sofia, where I had put down a deposit on a two-bedroom flat - price: £35,000. Rather than use it, I was going to rent it out and treat it solely as an investment.

But while I was there, I saw ads for country houses selling for as little as £5,000. I abandoned the apartment idea and concentrated on old houses in the Varna area. On the internet I found agents Living Bulgaria, whose English managing director, Martin Hunt, agreed to show me round some rural properties.

Being near the Black Sea resorts, they were pricier than inland. Mine was the first one I saw. It was in good condition after extensive renovation, and the owner was English.

It was only after we had driven an hour inland that the £5,000 price tag became a reality. There were any number of properties with up to an acre of land on the market for under £15,000. Most were empty and needed considerable work but they were certainly not shells. Every owner, as far as I could see, was desperate to sell.

For the most part the houses belonged to elderly couples, who were waiting to join relatives in the city. They needed the cash: one went down on bended knee hoping I would buy. He owned a smallholding of an acre, and a 200-year-old farmhouse with five bedrooms, balconies, countless outbuildings stuffed with yokes and carts, two cellars, wine press, olive press, and a well. A couple from Colchester were thinking of sinking their life savings into it and setting up a guesthouse."

If you are thinking about buying an investment property in Bulgaria consider buying a house like the writer of this article. In the long term it I think it will turn out to be a far better investment than buying an off plan apartment. Apartment blocks can be thrown up by property developers at will and there will eventually be a glut. Houses with land in great locations (not in the middle of nowhere!) are always going to have a uniqueness and rarity which gives them value.

Chris Bell


Friday, November 11, 2005

Spain wakes up to property threats

"Despite numerous surveys and reports suggesting that eastern Europe is the hot destination for the buy to let market, many Spanish property developers have not been listening - until now.

The threat from countries such as Bulgaria and the Czech Republic had been dismissed for a long time by property developers in Spain, especially while the property price boom continued and prices remained high. But as property price inflation has cooled during recent months, Spanish daily El Mundo has revealed that property professionals are now getting a little worried by the new competition.

While the buy to let market has seen a major increase in countries in eastern Europe, the traditional haunts of British investors have felt something of a squeeze, which is now beginning to bite in Spain. However, the new competition could prove to be of value to property investors, as Spanish developers realise that they no longer have the monopoly on foreign investment and will have to work hard to ensure prices remain low.

Otherwise, there is a threat that people will start to look elsewhere, in a move that would be very damaging for the Spanish market and economy as a whole. Therefore the Spanish government will also be looking to reduce the cost of new buildings in the country as a way to deliver fresh impetus to the market and attract more investors back to the region."

Be extra careful if you are considering investing in Spanish property. If capital appreciation is what your looking for think about investing in the hotspots e.g. Bulgarian property or other Eastern European property.

Chris Bell


Save 10% on house prices

"Savvy buyers can save as much as ten per cent on the asking price of a house, according to new figures.

Home buying service The County Homesearch Company reveals that its agents, acting on behalf of buyers, have been receiving this level of discount on properties across the country.

'There has been a significant change in pattern from the start of the year. House prices across the country are showing near zero growth and our home searchers are generally being able to negotiate discounts from the asking price,' said County Homesearch managing director Jonathan Haward.

But with the stagnant market and discounts available, buyers are becoming overly confident.

Buyers have become pickier when it comes to the homes available to them, and while the market has shifted in their favour, complacency means over-ambitious buyers are still losing out when it comes to securing their dream home.

'There is still a shortage of good homes for sale as sellers have sat tight and as a result our clients have become more choosy and think they have the luxury of more time to make a decision,' Mr Haward explained."

For the property investor a 10% discount should be a starting point. If you look at enough deals on investment properties and make enough low offers you will find a few will be accepted if you only deal with house owners who are desperate to sell.

How to find desperate sellers

Chris Bell


Thursday, November 10, 2005

Europeans boosting UK buy-to-let

9th November 2005

"The growing number of immigrants arriving in the UK from the newly-accepted EU states is having a major impact on the country's buy-to-let market, it has been claimed.

According to Richard Everitt of estate agents Winkworth, the influx of people from eastern Europe and even Russia is helping to drive the UK's buy-to-let market despite the fact hat the overall housing sector has been in decline over the past 12 months. Speaking to the Independent, Mr Everitt also highlighted that many of the new arrivals are not – as many feared prior to the accession of the new states – unqualified people hoping to live off the UK's welfare state. Instead, he reveals that many are talented and qualified professionals intent on furthering their careers.

As such, the properties that are being let to many of the new arrivals are at the higher end of the buy to let market, providing a much needed boost for property investors in the UK.

One example of the people taking advantage of their country's accession to the EU can be seen from the increase in the number of Poles arriving in the UK. Poland became part of the EU on May 1st 2004 and since then there has been a steady flow of Polish people arriving in the UK to live and work. They have helped to ensure that the buy to let sector has continued to remain buoyant as the housing market continues to slow."

Judging from personal experience, I am sure this is true.

Chris Bell


Wednesday, November 09, 2005

Home Information Packs: a problem and an opportunity

(Filed: 09/11/2005)

"Seller's packs unravelled

Government plans for a seller's pack could damage an already fragile market, TV presenter Kirstie Allsopp tells Caroline McGhie

If she had her trademark stiletto boots to hand, she might use them right now on the Deputy Prime Minster John Prescott. Not the sort of thing we expect from Kirstie Allsopp, presenter of almost all the property programmes you can think of. Her work hut, where she wrote her book How To Buy A House, is as sweet as a Wendy house at the bottom of the garden. Her little flat in North Kensington is full of pretty things, from china-blue floral curtains to silver-framed photographs of a blessed childhood. But today she is genuinely irate and it rather suits her.

Her dark eyebrows are arched, making her look more Monica Bellucci than Mary Poppins. Yet she still has a Bedales ring to her voice, befitting the eldest daughter of Lord Hindlip, the former chairman of Christie's. She is about to flit by helicopter to a mansion in Devon for the weekend with her property developer boyfriend Ben Andersen, who sells Notting Hill to the stars. So what has curdled the cream?

The Government plans to introduce Home Information Packs (HIPs) in 2007, in order to speed up the housebuying process in England and Wales. Anyone selling a home will have to produce an HIP, which includes paying for your own survey (or "home condition report"). A "dry-run" will start next summer. Her argument against them begins with some Kirstie gems."

Check out the original Telegraph article. While everyone is speculating about the effect SIPP's will have on the market very little has been said about the possibly much bigger effect of HIP's: that is, a depressing effect on the housing market because of the costs involved for the seller. But they could also provide an opportunity for the smart property investor who seeks out buying opportunities direct from the potential house sellers.

Chris Bell


Tuesday, November 08, 2005

King of real estate 'getting out'

"The world's best real estate investor has made billions in the U.S. market. Now he's cashing out and buying overseas. Should you cash out too?
By Shawn Tully

Tom Barrack is driving a dusty Chevy Suburban around his 1,200-acre mountain ranch near Santa Barbara, Calif. Nestled between the Ronald Reagan estate and Michael Jackson's Neverland, Barrack's spread is a medley of vineyards, pastures, and paddocks. Barrack cruises past the lovingly restored manor house, a rambling adobe aerie framed by allees of cabernet franc, then weaves through a cluster of stables sheltering 60 horses that munch homegrown wild oats. Even in this magical setting, real estate is never far from his thoughts. He stops the Suburban at his favorite spot, a vast polo field planted with delicate, lime-hued Bermuda grass that's easy on the horses' hooves.

Then Barrack launches into a parable. 'I feel totally safe playing polo on a field full of pros,' says the bronzed 58-year-old. 'But when amateurs are all over the field, someone can get killed. They have more guts than brains. They charge after every ball and don't know when to hold back.' It's the same with the U.S. real estate market right now: 'There's too much money chasing too few good deals, with too much debt and too few brains.' The amateurs are going to get trampled, he explains, taking seasoned horsemen, who should get off the turf, down with them.

Says Barrack: 'That's why I'm getting out.' "

A great article by someone who should know what he's talking about. Read it all.

Chris Bell


How is your house sale going??

"good grief !!

I thought the penny would have dropped by now that selling houses in UK and hoping to start out in Oz flush with cash was a thing of the long dead past.

Has one not heard that house prices in Australia are overpriced as they are in UK, that major house price falls across the east coast of Oz have already begun.

That the Australian dollar is far too strong to be sending large quantities of Sterling over right now.

That mortgage rates in Oz are almost 8% and climbing

I will not go into the subject of work practices - just do not expect open arms, bags of money and promotion for washing up on Ozzie shores from windswept UK.

On my part - I have done the full circle, sold up in UK, Bought in Oz, sold up in Oz and now back in UK

FWIW - I would stop listening to smarmy estate agents and the bull on TV about house prices "never falling", and that the "lift" in house prices are just round the next corner. I would start listening to what the buyer is willing to pay and accept the fact house prices have fallen month on month across country.

We are now in a house price falling cycle, it is going to get nasty as more and more people are stung with job losses in UK. Credit debt increases, divorce and family breakup occurs, business bankruptcy and the death of the newbie BTL landlord. All these factors are going to cause prices to fall rapidly.

At the bottom end of the property ladder - cheap state housing projects and housing association "deals" will remove what is left of the FTB group from the housing market - stagnation followed by house prices plummeting are the obvious next step.

Selling at the price buyers are willing to pay in hard cash / mortgage in line with today's buyers in your area is the only way to go, swallow the loss if you have to and start out again in Oz with renting.

Put the money in the bank and wait out house price falls in Oz and buy up when the price is right.

As for those who are utterly mad enough to withdraw equity on a house and then watch the house prices falling month on month will really get to understand the meaning of the word negative equity D-E-B-T.

I can just hear it now .... "teacher" what do you call those people who go into debt re-mortgaging and then going to a new country and getting into more D-E-B-T at this stage in the property cycle when house prices have stagnated and ready to fall ?.

BTW - recovering debt via Australia is easier than you think

I sold off 2 houses in UK in '98, and bought houses and flats in Oz over the last 7 years "WHEN PRICES WERE A THIRD OF WHAT THEY ARE NOW, I sold the lot last year and returned to UK.

Take it from me, it is the guy with cash in the bank who is king in UK as well as in Oz when it comes to house buying - and will be for the next few years.

I am starting to cherry pick buying quality property again in UK for letting purposes, I am offering 20 - 30% below the offer price and I am getting results.

I have never regretted the move and the selling/buying property. Thank god I did it while property prices were in a sharp rising market in Oz with capital used for the purchases from sterling at a time when the Ozzie dollar was crap.

Those times are well and truly over.

The dread of falling house prices and related debt misery will seem like an endemic plague to homeowners with large mortgage DEBT and little capital and plummeting house prices - save yourself the hassle of negative equity and try thinking outside the box.

It takes balls migrating, and it takes cold hard reasoning to ensure financial freedom."

A great post I saw on a forum.
Chris Bell


Sunday, November 06, 2005

Buying below market value - is it a myth?


"The housing market is well known for its snappy abbreviations. The latest phenonema described in three letters is the apparent successful purchasing of property at BMV, (below market value). The property is then either rented out or flipped, a term used to describe re-selling the property quickly for a modest profit.

Many purchasers obtain property at reductions by preying on distressed sellers. In fact some purchasers have actively begun to market their desire to buy. Small advertisments in the property sections of local newspapers are a popular method. Usually highlighting that the purchaser is a cash buyer and can help stop the threat of repossession. Typically the buyer will advertise that they are willing to pay approx.10% below the current market value, a value that they set in negotiation with the vendor.

There are inherent problems with this method of purchase and the resulting position the re-seller may find themselves in. Firstly in establishing a price there are few benchmarks for comparison. There is no trade data available, other than the various reports available and searching price databases for similar properties, to establish what a below market price for the property actually is. Even the most experienced surveyors are struggling to agree valuations in the current climate.

If the adage of the house is only worth what someone is prepared to pay for it is reliable, then this would surely suggest that the BMV figure is irrelevant. The BMV price is in fact the true value. An argument could be put forward that the purchaser is simply helping to chase values down."

Now I don't know where the 10% figure comes from since anyone seriously involved in property development would be looking for a much bigger reduction. In fact, the average buying price in today's market is only 93% of the asking price - already a 7% reduction. The real point is that you have to follow up a lot of properties (20 to 100) that are being put on the market by distressed sellers to enable you to find a real bargain that will make you money when you renovate and sell.

To find out how a professional property developer finds bargain properties click here.

Chris Bell


Property abroad Gold Rush?

Brits with property abroad set to double, reveals new research from Barclays.
The number of Brits who own property abroad is set to double to 4.4 million, according to new research by Barclays. Five percent of those surveyed already own a home abroad (the equivalent of 2.2 million people in the UK) and a further five percent said that they are definitely going to buy a property overseas in the future. In addition, a staggering 37 percent of respondents said that they were considering a purchase abroad.

However, before the dream can become a reality, there are concerns that need to be overcome:
58 percent of those who are definitely or considering buying are concerned about getting caught out by local legal or tax issues.
17 percent were worried about keeping the property secure while it is empty.
A further 14 percent were concerned about being able to understand the local language well enough.
Only eight percent were worried about being taken for a ride and paying too much for a property.

And if a red-tape, trouble-free purchase could be guaranteed, the following countries would be the destinations of choice - with a couple of surprise destinations outside the European property hotspots making the top five.
Top countries for Brits planning to buy abroad:
1 Spain (inc Balearics and Canary Islands) 30%
2 USA 15%
3 France 14%
4 Italy 10%
5 South Africa 6%
6 Dubai 5%
7 Portugal 5%
8 Bulgaria 3%
9 Croatia 2%
10 Morocco 1%
11 Don't know 9%

Suzanne Clay, Head of European Business Development at Barclays comments: 'The trend towards owning property abroad shows no signs of abating..."

In a gold rush there are those who strike it lucky and there are those that lose. A cautionary note about Spain... I recently spoke to someone who had purchased two apartments off-plan but when they were complete she was unable to find buyers - and she could not find any tenants either. She has now had to re-mortgage her UK home to raise the cash to pay the mortgages on her Spanish 'investment'. There is a huge amount of new building flooding the Spanish market.

Chris Bell