Investing in Romania, is it a good idea?

[robert@rominvest.com.au]

hello everybody. some very true points have been raised here. indeed bureacracy in Romania can be a nightmare (I know because I am Romanian) and also when you purchase land you have to ensure you do your due diligence (best with a conveyancing solicitor). but in saying that, this is the case everywhere in the world. here in Australia (where I live) you may buy a house and find out later that you don't own the land it sits on because you haven't done the homework. I'm going to invest in land in Romania and I'm looking for other investors who are interested in purchasing agricultural land (which comes in long blocks), bringing services (eg electricity) and re-zoning for residential. For anyone interested there is more information on my website, and I would appreciate any feedback on the website.

[robert@rominvest.com.au]

hello everybody

[robert@rominvest.com.au]

hello everybody, has been very interesting reading the discussion on romanian investment.

[Transylvania Investment]

Hello dear investor!

I am working for almost 2 years in the property investment field in Romania.
Taking tile in Romania is, as awkward as it may seem to some, a very safe procedure. If some are so cheap as to disregard legal and financial advice before buying, that is their risk and their problem. However anyone serious enough about his money would do this first: get information re the legal system of purchasing properties in Romania, check the market, find an adviser/financial/legal consultant or all of these and then invest guided by that person. It is maybe better to consider talking to more than one consultant before making a decission re who would represent you.
Taking title procedure in Romania is as follows: any property must be registered in the Land Book. There it is written who the owner is, what is the surface of the property, etc. A property which is not put in the Land Book can't be legally sold. When you close the deal, you go before the public notary who asks the Land Book for a copy of the statement that testify the things I mentioned above. No public notary will ever close a purchase contract without having the Land Book statement before his eyes. This is common knowledge re purchasing a property in Romania.
The real and interesting discussion comes from the value of the property you invest in. Here I strongly advise you get someone who knows property investment, a broker, a consultant, anyone with knowledge and honesty.
The price is not bigger when you are a foreigner. Actually Romanian investors have more money to spend unwisely than the foreigners who negotiate very hard!
All these things can go smoother, including the negotiation process if you have a local contact who is helping you with everything. This may cost a little extra, but your risk is reduced.

[K.Fahey]

Hi.I am interested in buying some land plot in Romania but do not know the country.I have a very limited budget of around 25,000.00 euro and am looking for somewhere in a goood area where the prices are set to rise/near airport/town and tourist area.Any help with which area i should look at would be appreciated.I know as a foreigner that i cannot buy land without a Company but am worried as there are a lot of unreliable agents out there.Thanks.

[Transylvania Investment]

I've heard many foreign investors saying they need to set up company in order to buy land in Romania. Most of the advisers in Romania teach them this is the only way to purchase land here. However there are serious reasons NOT TO form a company in Romania.
Reasons not to set up a company to buy residential property in Romania.

1. Rates/Council tax whatever you want to call them are 0.5% per year if you buy land in your own name. If you buy through a company they are 1.5%. This will equate to 1% of any gross rental income and probably close to 1.5% net rental income.

2. Costs for doing the accounts for a company will cost you in the region or in excess of 100 EUR per month.

3. Company formation is about 500 EUR and terminating the company will run you into into another 1500-2000 EUR.

4. When you sell as an individual you will be subject to 2% tax on the selling price, this is also applicable to a company. However, as an individual this is all you pay.

5. Additionally as a company you will have to pay 19% VAT on the sale price.

6. As a company you then pay an additional 16% on any profit made on your investment.

7. Then as a company you pay a further 16% on your dividends when you go to take your own money out of your own company.

More to what I've said before:
Buying residential property by setting up a LTD company is economic suicide. The idea is: set up company here ONLY if you consider doing business in Romania.
If you buy a property just to rent it or resell it when its value is rising, don't create a company here just to get the land under the building or if you buy land, the land itself. It's simply too much hassle. The last thing you want is to have to deal with accountants (here the accounting system is very complicated and good accountants are very important, rather hard to find and don't come cheap). Besides, to get over with the company takes a loooong time, so the costs are not only in terms of money, but also in terms of time.

I can tell you the ways on which you CAN buy in your own name.

The regions you want to invest in are around Bucharest, however your budget might prevent you to invest there, or Transylvania.

You can also ask for credit in Romania even as a non-resident citizen.

[K.Fahey]

[QUOTE=Transylvania Investment;13368] Hi, sorry as i do not know your name but i really appreciate you taking the time to answer me.I really am very surprised as everywhere i read it says that a foreigner cannot own bare land in Romania without forming a Company.It sounds indeed complicated and expensive and it would be brilliant if it was not necessary.Are you sure that i would not get into trouble???Is there any part of Bucharest better for buying in than the other[i know that i probably would not be able to afford much anyway]but should i look maybe somewhere outside Bucharest and if so where would you suggest to buy a plot of land.Are you in Romania??I really am grateful for your response.Katherine

[Transylvania Investment]

My name is Diana Marinescu and I am the Managing Partner of an association of specialists that offer property consultancy for foreign investors in Romania.
Yes, I am in Romania, in Brasov to be more accurate.
Actually if you look in google or yahoo or even other search engies you'll find us if you type transylvania investment or investment transylvania or property sibiu, property brasov, etc. We also host a forum on our website, dedicated to property issues in Romania.

Re your question about Bucharest: any place is good for investment in Bucharest. Soon Bucharest will become metropolitan area, which means the outskirts and nearby villages will be considered part of the city. This means land nearby Bucharest is an opportunity.
However, there are a few details you might like to know before deciding to invest there:
1. the northern part of Bucharest is expenssive
2. many try to sell their land for very big money, but if you actually take a look at the land you will find it is by far not that interesting and doesn't have a big growth potential and is already overrated comparing with the market price
3. many properties are not registered in the Land Book which makes their purchasing impossible. The ones that are registered can have problems too, so you need a specialist to look at the documents very carefully before you make the final transaction.

I hope to hear from you soon.

Regards,
Diana Marinescu

[meriaKre]

Y, is a very good business to invest in Romania ... 2 years ago.
The biggest dollars were made during the integration purpose.
Of course, now is also a good opportunity.
If you want to catch the new wave, like the one in Romania, is time to invest Moldova.
Moldova is the next targeted to be integrated in EU.
The real estate market has a very big growth potential.

[Transylvania Investment]

Yes, investing in Moldova can be interesting, however to think that Moldova will join the EU is by far a nice utopia. I wish luck to anyone who are so naive as to think Russia will ever agree to something like that. Moldova is economically controlled by Russia, ruled by the communists and the young population struggles to leave it by all means. Some are lucky to obtain the Romanian citizenship and this actually allow them to travel to other places in Europe to work and earn. Very little return.
Sure there is potential in Moldova, but for the business people who have knowledge, money (don't fool yourselves to believe it's a country where even the poor can invest) and very good connections, not only in Moldova itself, but also in "Mother Russia".
As for Romania, it's only at the beginning of its growth. The prices per sqm of building/land show this, no question asked.