Fontana Residence, Cluj-Napoca

[Lsab]

Hi TGR,

It took me ages before I finally made the decision to go ahead and they were really patient with me, didn't try to push me to buy.

The figures look good I agree but I decided that instead of looking at the best scenario, I would look at their most cautious figures - and they still worked for me.

Obelisks exit strategy is always to look at the local market both as tenants and buyers rather than a more traditional approach of holiday lets on beach or golf resorts so with that in mind, Fontana made more sense to me especially now with the economy looking so bleak. people will always need to find somewhere to live but won't always need holiday accommodation.

Having said that I'm also buying a holiday apartment in Tunisia! Like many of the north African countries though, Tunisia appeals to Gulf nationals so I won't be relying on Europeans when it comes to sell.

May I ask who you are talking to at Obelisk - just out of interest? If you decide to go ahead, it'll be good to have someone to compare notes with!

[TGR]

Hi Lsab,
Thanks for the reply. I only learned about the Fontana project in the last 10 days, and I do not like having to make a quick decision. I have been dealing with Peter Henterson at Marbella office (nice guy). Do you know when was this project launched. Peter tells me that they are only about half dozen units left to sell, and they could sell within the week and if I was interested I would have to move quickly (that's the bit I don't like). It's a big decision when investing into a €100k project. As you said the figures do stack, I will think about it over the week-end.
Thanks

[David howe]

Originally Posted by TGR

Hi Lsab,
Thanks for the reply. I only learned about the Fontana project in the last 10 days, and I do not like having to make a quick decision. I have been dealing with Peter Henterson at Marbella office (nice guy). Do you know when was this project launched. Peter tells me that they are only about half dozen units left to sell, and they could sell within the week and if I was interested I would have to move quickly (that's the bit I don't like). It's a big decision when investing into a €100k project. As you said the figures do stack, I will think about it over the week-end.
Thanks

With all due respect to this company and this development


I is also quite possibe that they may not sell within the year. When are people going to realise.

1. Only guys who appear to be nice successfully sell property.

2. It is better to walk away from 10 good deals than get caught in 1 bad one.

3. You must know what you are getting and why and this information does not come from someone with a benefitial interest in the sale.


I have no doubt that any reputable agent will agree with these principles and they are in no way directed at the company selling, but to the person considering.


David Howe LLB. LLM

INVESTMENT ROMANIA - Investment in Romanaia, Property management, Due diligence, Renting in Romania

[Lsab]

Of course you are right but I didn't limit my research to what was told to me by Obelisk.

[mickthepropertyguru]

I cant believe what I'm hearing here
Has anybody here, that has posted already, actually completed on a purchase including furniture pack, rentals etc already with this company.
Because all that I'm hearing is a pitch (company credibility pitch) that i have heard many time over from many different companies, indeed i used the same pitch myself in the past. By reading the post you would swear you have already sold the property and made money. !
Did anybody actually ask them about their commission. I bet nobody did. and why.........because they are too nice......!

Don't get me wrong i wish everybody the best with their purchases but just a bit taken back by the posts, I was just struck by feelings of naivety and impulsiveness from the posts .
I have to say that i too suffer from naivety and impulsiveness too but i can recognize it in myself now...................am i waffling
All im saying is that ye are being a bit to nice, i hope you feel the same way in 3 years !

[Roadking]

"Has anybody here, that has posted already, actually completed on a purchase including furniture pack, rentals etc already with this company."
Good question, has anyone actually had a property handed over by this company yet? I've been offered an off-plan by them but have no idea if they have ever completed a project.
Anyone?

[David howe]

Anyone considering buying might be better to look at the Bucharest market in terms of rental return and capital growth. Also caution is best used with off plan as end results seem to differ from promises.

Existing is still best for investment, especially in the current market

David Howe LLB. LLM

INVESTMENT ROMANIA - Investment in Romanaia, Property management, Due diligence, Renting in Romania

[David howe]

Bucharest is still showing better returns in terms of yield and capital growth. Off plan needs serious due dilligence and in our opinion existing with a mortgage will show better dividents than off plan.

David Howe LLB. LLM.

INVESTMENT ROMANIA - Investment in Romanaia, Property management, Due diligence, Renting in Romania

[Richard_222]

I thought long and hard about investing in Cluj with Obelisk. After reading about Obelisk in the press and going on my gut reaction to some extent, I felt that I would take the plunge. At the tail-end of last summer, it seemed a smart move, but after the shift in the economies of the world, it seems that unsurprisingly prices are now falling in Romania too (15 - 30%). What I'm finding hard to establish is the current situation in cluj in terms of a) the investment from overseas investors such as Nokia as Seimans - is this still continuing with the vigour it was 6 months ago and b) how will this affect the shape of the rental market.

Will the project be put on hold I wonder?

Richard

[Pukanui]

Hi Richard,

Hmmm what a difference a little under a year can make in the world of property investment!!! I, like yourself, gave this investment a lot of thought and of course I questioned the figures being quoted by Oblisk and searched the internet for answers to back up some of their statements on the economy as at that time Romania was being quoted as recession proof!!! My conclusion was that this seamed a fair investment even after discounting the profit figures being quoted. In hind-site I could have delved further and only after looking through the glossy brochure again I realise there are some things mentioned that deserved further investigation. (I will not the afore mentioned with a D'oh! as this post develops). But alas the clever marketing of Oblisk reassured me of any lingering concerns and I happily parted with the best part of £30k GBP.

Anyway, as I am sure you know this project is going ahead and I have been told that the Completion Insurance is in place so at least it will be completed. It sound as though it is on track for completion September 09 if not slightly sooner.

This information has prompted me to look into how the market is actuall doing in Cluj at the moment. I called a representative from Remax (D'oh!) who are the international estate agents quoted in Oblisks sales pitch as being the company who will market these for sale/rent upon completion. They informed me that property prices are down in Cluj by 20-50% with an average of around 35%. When asked if he thought the Fontana residence was value for money when launched (D'oh!) his reply was it wasn't and due to its distance from the centre of Cluj and lack of public transport and general population. Further more the developments which Oblisk used to show how cheep Fontana Residence was were closer to the centre thus justifiably demanding higher prices. Bottom line in terms of falling property prices the closer you are to the centre of Cluj the less the value has fallen.

When asked about rents (D'oh!) his estimation for a two bed furnished apartment was 300 euro's PCM. Yes thats right per month!!! Not quite the 5.5% yeld quoted by Oblisk???

Let me do a basic calculation using a formula which the banks use as the minimum criteria when approving a buy to let mortgage in the UK. (D'oh!)

Property price............ euro 130,000k
30% deposit.................euro 39,000k
70% LTV (mortgage)......euro 91,000k

Bank formula: Loan amount x interest rate % x 125% divided by 12 (months) and this should give us the magic number for the rent amount.

91,000 x 8% (average Romanian rate at present) = 7280 x 125% = 9100 divided by 12 = 758.33.

Hold on I must have missed something? hmmm x hmmm x hmmm div hmmm = Ohhh S**T!!! (D'oh) (D'oh) (D'oh). So how was the rent ever going to cover that???

Ok, now bearing in mind the current economic crises in the world I have to accept that it is not only Romania where property prices have fallen. In the UK my place have dived by £40K since this began so I won't be beating myself up too badly on that count. However this doesn't make the situation any easier to sort out. When asked if the end is in sight for a flattening of the Cluj property market Remax said that their research indicates March 2010. So if we estimate that by completion of Fontana in September 2010 properties in this semi remote area have declined by a conservative 35% the banks will obviously need to revalue the 70% LTV which we bought into.

So for my apartment the basic calculation works like this:

Purchase price.................. 130,000K
Revalued 35% less.............85,500K
70% LTV (mortgage)......... 59,150K
Leaving 26,350K + 14,500 (difference after revaluing excluding deposit) which I need to find upon completion. Add that to the 30,000K already invested gives me hmmmm + hmmmm + hmmmm = 70,850k Ohh S**T (D'oh) (D'oh) (D'oh).

Now having accepted that large pill does the projected rent now cover the new mortgage?
59,150K x 8% = x 125% = divided by 12 = 492.92 = Ohh S**T (D'oh) (D'oh) (D'oh).

So in summery for the rent to cover the mortgage and yes I agree that this calculation is more geared to UK landlord overheads which may differ in Romania but as a general view a loan of 35,000 at 8% will have repayments of 291.66 PCM. Meaning in my situation I will need to cover 95,000K of the purchase price on completion.

It would be great to here your views on this and potential solutions short of poking myself in the eye and claming insanity.

Pukanui