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Hello and Help!!!

Discussion in 'Bulgaria Property' started by new venture, Aug 6, 2008.

  1. new venture

    new venture New Member

    Well let me introduse myself first.
    My name is tracey, and i live with my partner Paul. :)

    We have our own plastering contracting business.
    We are looking to buy a property in Bulgaria, this is totally a new venture for us and dont want to go into it blind, for obvious reasons. :cool:

    We are still at the stage at loking at properties on the net, which is giving me a headache as it is sooo vast!!!

    I would be grateful to chat with someone who has or is investing in Bulgaria, any advice would be gratefully appreciated.

    I have been told so many different things, so much that i am totally confused (thats not difficult) :D

    Is it best to use an agent?
    Is it best to buy in leva rather than euros?
    etc etc :eek:

    many thanks

    Tracey :)
  2. Jain and Chris

    Jain and Chris Senior Member

    Hello Tracey - welcome on board.

    Good to see you on here and hope we'll be able to answer some (if not all?) your questions.

    Good to use an agent?
    Well, personally I would say "yes". However, what have you been told? There is so much silly gossip about buying overseas, let alone Bulgaria. Going in blind, as you say, is not the thing to do. A reliable and trustworthy agent can be a God-send. One who is not can be a whole different kettle of fish. My advice would be to research, research and research again. By this I mean use all possible resources - although I would have to add to be careful with what people tell you. Fortunately, the situation is changing with agents - for the better I must add. Many of the fly by nights are going to the wall and those which are established and reputable are remaining (much like the situation in Spain and France some years ago).

    It's really difficult to come over to Bulgaria and spend a couple of weeks or longer looking around to see what you can achieve with buying property. Not to mention the language potential language barrier. You'll probably only have limited time and still might not find anything you even remotely like. If you find a GOOD agent (once having decided the area you want to live in - have you done this yet?) then they will really help you make the most of your visit here and could save you thousands in wasted time and trips.

    Buy in leva or euro
    It really doesn't matter as regards the price as the leva is fixed against the euro. Where it will matter to you is if you have your money in another currency. It is worth talking to currency brokers about this and how to mitigate against currency exchange fluctuations. The worst thing that anyone can have happen is finding themselves in a position to find an extra few grand at completion! For example, if you are living in Britain and have your money in pounds sterling, then when you look at a property to buy in Bulgaria (whether in leva or euro it does not matter as their prices are fixed against each other) you will calculate that price against what it is on that day in pounds. A month or even a year down the line when you are about to complete the exchange rate could have changed and you find yourself having to find more than you bargained for. We've done an article on this very thing not so long ago and if you'd like a copy of it, just let me know and I'll email it to you to help you. Also, do an internet search on foreign exchange companies and take a look at how they can help you avoid this potential pitfall.

    All the best, Jain and Chris
  3. new venture

    new venture New Member

    Thank You

    Thank You Jain and Chris

    So much to think about, but hopefully get there in the end.

    We quite like the look of the Yambol area, although havent seen a property to buy yet.

    We have yet to set up ltd company, which i think i would be happier doing through an agent, (although more expensive this way than going to bulgaria and doing it yourself).

    Initially we want to buy a cheap property, do it a up and rent it out whilst not there.
    We will need to find a local builder to do any works, but wont be able to oversee this as will be in england most of the time because of our business here.

    Failing this we would have to do the property up ourselves, slowly and surely.

    Do you know if buying and renting out property will have any effect on my tax in this country?

    Many Thanks

    Tracey and Paul
  4. Jain and Chris

    Jain and Chris Senior Member

    Hi Tracey and Paul

    I think the Yambol area, like so many others, has pros and cons... you have to decide if it is the place for you. What do you want? Town or country; facilities; easy access from UK; etc... I don't think anyone can answer this for yourselves.

    My advice on setting up a ltd company is to get your own lawyer who is acting independently for yourselves and not to rely on any agent, then you have control yourselves indepdent of the agency. This is not at all more expensive than using an agent to do this:indeed it can be far less expensive and they will be acting for you alone :)

    As you are looking for a property which you can do up and then rent, please give serious consideration to its location (access to airports, etc), activities, heating, plus what you have to offer over the others which are renting in the same area. How much rent do you want?

    Finding a reputable and reliable builder here - this can be hard work, you need to give some real thought to this. Overseeing a project from the UK in any country is thwart with potential difficulties.

    For renting out a property in Bulgaria and asking about tax... Can I assume you are in the UK? If so, of course it will have an effect on your taxation in the UK, any overseas income will do so. Actually it would do so anywhere in the world.

    My best advice is get a really good lawyer, particularly if you can find one who will act for you in the area you are considering buying and who can help with a local builder, etc.

    Have you visited Bulgaria yet? Apart from Yambol, what other areas are you considering? What is your wish list for a property here? All these answers will help me give you some more advice.

    Cheers, Jain
  5. new venture

    new venture New Member

    Hello Jain and Chris

    We havent visited bulgaria yet, but have looked at diff places on the net and diff areas.

    We wanted to find houses, that were near the coast, but realise that they have become expensive and too commercialised.

    I think that not all ppl are looking for holidays by the sea, im sure there are ppl that would like ski holidays, or some ppl would like somewhere peaceful and quiet, maybe moutainous areas, which offer fishing, hunting.

    So choosing an area is a difficult one.

    Quite liked Yambol, Sofia, kardjali, veilko tarnovo, targo vishte.
    Have seen a prop near sofia, very cheap but needs work doing to it.

    I have spoken to a woman on another forum who lives in kardjali, she loves it there, but not really appropriate for renting out as it is undiscovered there (until border opens)

    She has said for us to go and see her and she will help us form company with solicitors between 500- 600 leva.
    She requires no money for this, just pay for her diesel, meals and thats it.

    She seems to think its better not to go through an agent as they whack approx 30% on to the property.
    She said she bought her property in leva which saved her alot of money.

    Very difficult for me to understand it all, as this is totally alien to me.

    Always helpful to hear from ppl in the know.

    Many Thanks

    Tracey and Paul
  6. BGREDevelopment

    BGREDevelopment New Member

    Hi Tracy and Paul,

    What you have been told about the agents is not true - the commission of the agent ranges from 3 to a max of 5%. I would advise you to purchase through an agent as they make sure that all the documents are OK and, as they work on a lot of deals, easily spot the loops which later on may transform into problems. Buying in Bulgaria still remains a good investment, however you must make sure that all your documents are OK and that you run no risks!

    I would also recomment that you make your purchase through a Bulgarian agent as they do speak the language and know the market and the documentation much better, or to be advised by a Bulgarian lawyer SPECIALISED in real estate (you will have to check that this is the case). It is likely that the lawyers will charge you more than the agents.

    Also, not sure that you need to set up an Ltd - the registration of a company now takes months in Bulgaria (due to some reforms with the registry and an obligation for all companies to re-register by the end of the year). If you register a company you will also need to pay the 10% corporate income tax, which may come in addition to your taxation in the UK (this you will have to check with your UK solicitors).

    Regards and good luck!
  7. BGREDevelopment

    BGREDevelopment New Member

    One additional comment - the lev is pegged to the euro, so I can't see what difference it makes if you buy in levs or another currency...
  8. Jain and Chris

    Jain and Chris Senior Member

    Personally, I would be wary of anyone on a forum offering help like this and not taking payment. Most people do expect to be paid for work they are doing. I'm not saying she is not legit but do be careful as posters on forums can hide behind nicks, etc

    I think what she is saying about paying in leva rather than euro is that locals in villages would rather have leva. Also, it is likely that the vendor may ask for you to put a lower price on the deeds than you are actually really paying and then pay the remainder in cash. This is not to be recommended. Apart from the legalities of this situation, it means the you have on paper immediately made a gain which you have not made. Let alone the gain which will be shown when you come to sell and have to pay capital gains tax on.

    With regard to corporation tax on companies. Yes it is currently 10% but you only pay corporation tax on profits the company has made. If the company is not trading, then you will obviously pay no tax. If the company is trading (i.e., you run your rentals through it) then you pay 10% tax on the profits (turnover less any allowed costs). Then, of course, you have to declare this income in the UK and pay any other additional tax due there.

    The distances between the areas you are looking at are huge and it would take a mammoth effort to get around them all thoroughly. It would be helpful for you if you could trim the list down and settle on one or two areas to concentrate on.

    The internet is helpful when looking at properties but remember that many of these properties will be sold by the time you arrive. The bright side is that there will be plenty of others available. Don't be tempted to buy over the internet - photos can lie wonderfully!

    What the lady has said about agents adding huge sums onto the price of the property depends upon the agent. The way you can be sure of what is going on is to ask the agent what the price of the house is net to the vendor (make sure this is the price put in the contract) and what their commission is (make sure this is in the contract too). Do not let them persuade you to put a lower price in the contract and then pay the rest cash. Apart from what I've said above, this is one way that the agent can take that cash for themselves.

    Use a reputable agent and your own independent lawyer.
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