Investing in Romania, is it a good idea?

[cpreston]

Has anyone investigated or invested in the development in Arad from Casa Rom - since transferred in a very unsatisfactory way to Bermo. I would love to know other people's views and experience. I refused to transfer my contract because they could not meet the legal requirements so am still holding the original contract but have received very little communication from Casa Rom, and nothing from Bermo despite several e-mails and phone calls.

[markf]

...and finaly first reports regarding falling prices in Bucharest: "Prices for old flats down with 10% in february 2008" - romanian Business Publication DailyBusiness.ro.

[David howe]

Originally Posted by markf

...and finaly first reports regarding falling prices in Bucharest: "Prices for old flats down with 10% in february 2008" - romanian Business Publication DailyBusiness.ro.

Dear Mark

Are you sure you are in Bucarest and not Budapest? Prices in Bucharest are not down, agents promote stories like this to try to drive demand for new builds in crap areas, hence why they are not selling. The demand is here for New and existing, the trouble with a lot of the New is that it is crap and the Romanians are far from stupid.

Example being I currently have 9 apartments that foreigners boutght through a well known overseas agent in August 06 and the Romanians will not even give me what the foreigners paid 18 months ago. Like any market, buy the right object and you will do well, but be assured prices in Bucharest have in no way dropped.

[markf]

For anyone who wants to be objectively informed, this is an article in English: zf.ro/articol_167194/ . This article is "hot".

[David howe]

Originally Posted by markf

For anyone who wants to be objectively informed, this is an article in English: zf.ro/articol_167194/ . This article is "hot".

For an informed opinion on this article have a look at Investment Romania • View topic - Romania: Think twice


This is in my opinion a very badly written rticle that focuses on the stupidity of investors who did not carry out any due dilligence whatsoever, yet the author tries to tar the whole Romanian market by this. The same article could refer to the Manchester buy to let market, and we all know Manchester does not represent the UK.

[markf]

Originally Posted by David howe

This is in my opinion a very badly written rticle that focuses on the stupidity of investors who did not carry out any due dilligence whatsoever, yet the author tries to tar the whole Romanian market by this. The same article could refer to the Manchester buy to let market, and we all know Manchester does not represent the UK.

David, there are a lot of good opportunities in Romania but the potential investor should be informed by people like you that scams are everywhere in Romania. Starting with economic reports that are based on data from 2-3 years ago and finishing with so-called "ultra-central" projects that are built in areas with no facilities, 50km away from the city center. But when one is 3000km away and has only some nice autocad drawings and 3D animations taken from a nifty internet website, these scams are very hard to comprehend.

[Goldberg Global]

Guys, lets keep it to the topic in hand.

From Romanians I speak to, the market has really gone up alot, and alot of stock is moving, personally I believe alot of it is speculation, but there is a need for good new housing stock in alot of towns and cities, but that is different product to offplan expensive foreign investment places.

Sell to the locals is where the action is best, and most recession proof. Land prices seem a bit out of control and still there are at best with land registry and legal issues. It will take time, 5 to 10 more years before it moves to a higher and more sophisticated stage.

Spain after 30 years is far from perfect, so think of Romania, it needs to grow up as a place, like Bulgaria. Long term buy to hold, from what I see, the yields are out of line with prices, which does not bode well. ie. seems over pricing is coming in.

Like all markets there are deals. Just make sure you get one. Just because it is cheap, does not imply it is good value.

[cochranehanna]

Originally Posted by 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.

HI

I would be very interested in any information you could give us on this "Company" thing in Romania. We are buying a house in the Sydney Development in Tunari just outside Bucharest on the way to the airport and a lawyer have just contacted us in relation to setting up a company... cost 1400euros. He had failed to mention accounting costs etc. and all the tax information too.
We would greatly appreciate info on credit in Romania as a non-resident and how we can buy in our own name

Many thanks

[David howe]

It appears as if it is the sellers lawyer and not your own when he is giving you such bad advice. Transylvania Investment is correct in what they say. Please proceed with caution.


David Howe

Investment Romania

[David howe]

Originally Posted by markf

David, there are a lot of good opportunities in Romania but the potential investor should be informed by people like you that scams are everywhere in Romania. Starting with economic reports that are based on data from 2-3 years ago and finishing with so-called "ultra-central" projects that are built in areas with no facilities, 50km away from the city center. But when one is 3000km away and has only some nice autocad drawings and 3D animations taken from a nifty internet website, these scams are very hard to comprehend.

If you take the time to read through our forum you will see we have been trying to safeguard Investors and allow them to make informed decisions. We have done everything in our power to protect, the trouble is people get a flashy bloke with a Rolex and he blinds them with Bull manure and then pressurises them to buy and they succumb. Only now that they are knee deep in manure do they make an effort to look elsewhere and come to us to try to bail them out or at least give them a true understanding of the market. I currently have one client with 3 studios in Greenfields and even with him taking a loss on the price he paid in 2006, the locals will still not buy the properties.

These agents or so called experts are whom people need to be guarded against.


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