Property Management in Sofia (feedback)

[d_blam]

Hi,

I bought (with my wife) a property in Sofia two years ago. I am now planning to travel to Sofia in March to furnish the apartment & choose a property management (PM) company to rent it out. I have been emailing several PM's since last month asking several questions about their services but as much as I ask, as more questions I have. Could someone help me to choose the right one? This is my current list of PM's...

- SofiaCasa
- SofiaLettings (or Podnaembg)
- CityBul
- PropertyManagementBG
- CityManagement
- Sash-solutions (new)
- Edal (new)

I was surprised about their high fees. To give you an idea it is something like...

- 1 month rent + 20% VAT to find the tenant.
- 10% to 12% monthly rent + 20% VAT
- 300 EUR/Year + 20% VAT to deal with Taxes, Council fees, bills monitoring, etc***

So over 300 EUR/Month potential rent, their cost is between 20% to 32% from yearly rent income (before taxes!). Is that what it should be??? One of them told me that 250 EUR/year for common parts fees was an extortion! That was after telling me that he will charge me 1170 EUR/year for full property management! :congrats: So I had a good laugh! :laugh:

Not all of them asks for the item*** as they include it into the 12% fees, however I was wondering if I could monitor and pay the bills, taxes and fees my self so I don't have to pay an extra 300 EUR for it. Does anybody deal with taxes, fees, bills, etc from outside Bulgaria. Is that possible to do?

Right, so... I am looking for private landlords that deal with any of the PM's in my list that are willing to share their good or bad experiences about them with me. Comments/Suggestions for PM's that are not currently in my list are also very welcome.

If I am lucky enough and I get some responses, we could also discuss some terms and conditions that appears in their contracts (I asked them to send me their contracts between tenant/agent, landlord/agent). For example, is it common to add a clause that allows me to stop the contract with the agent at any time by giving some period notice (even with current tenants)?

Thanks all for you help in advance.

Dan

 

[KayJay]

Hi, Dan, and welcome to the forum!

You might want to add Sash to your list - I am not impressed by them myself (but then NONE of the agents has impressed me so far) but I know that others do use them and have achieved results.

As regards furnishing, you're definitely better off doing it yourself if you have the time - I'd say that you might be well advised to put the exercise off until IKEA opens in Sofia (currently scheduled for this July). Many of the agents will offer you a reduction in their rates if you let them furnish for you but we all know there's no such thing as a free lunch

The market is tough here right now and rates are low (depending on what and where you have on offer) - obviously, the more the agents think they can get out of you, the more they'll push your property.

As to the contracts, don't accept a "standard" contract unless you're 100% happy with the terms - just negotiate what you think are decent rates and acceptable conditions from your point of view. Most of the agents have BS ads which show photos of other apartments, rates which make no sense, and offers which don't exist; very often their professionalism is non-existent and they're only too obviously just scrabbling to make a buck. You may find it as good, if not better, to talk to whoever does the maintenance in your apartment building or to advertize in the BG letting sites.

Hope that's of some help to you.

 

[d_blam]

Hi KayJay,

Thanks for you reply. I will add Sash-solutions to my list and contact them for details, thanks.

I totally agree with you with regards to the furniture. I haven't received an offer attractive enough in price that convinced me yet. When I will travel to Sofia by mid-March, I plan to visit... Como, AIKO, YAVOR, Labirint and others I found on internet. Unfortunately I can't wait to July as everything is paid and booked for me to travel.

About the contracts, thanks for your tip. It is good to know that I can negotiate terms and conditions. I found interesting things in their contracts that I would like to discuss with them... see some examples...some of them shocked me !:vollkommenauf:

1) When the agent finds a tenant, If I don't give them an answer in 48 hours (let's say I am on holidays) they take the right to rent the apartment without confirmation as far as they meet my initial requirements (however, they also take the right to modify these requirements based on market conditions)!!!

2) They require power of attorney. I am not sure for what exactly. Is that normal? Can I provide power of attorney from UK or I need to be there?

3) Two of the art. are... To reauthorize third persons with all or part of the rights under this Power of Attorney. The Power of Attorney is not time-limited. The rights under this Power of Attorney shall be interpreted broadly in favour of the authorized person. :banghead:

4) I must take a content insurance (which makes sense) however, they ask me to install a security system (around 150 EUR + monthly fees) !!!

5) No mention in their contract that I have the right to stop the contract if they don't provide the services agreed so I am tight to them for contract period.

6) 120 EUR fees if a tenant renews the initial contract at the end of the tenancy agreement (which I found an extortion just to send a letter and get it signed-off (I may be wrong on my simplicity)

Right, I am not sure if those statements are common and required (as I am new with all this) or maybe they can be re-worded and changed.

So, any suggestions will be very welcome so I can become confident about my request to them and I get prepare on my negotiation skills.

Many thanks in advance,

Best Regards,

Daniel

 

[KayJay]

Dan

Some of this stuff is maybe better discussed via PM rather than entirely on an open forum. Why don't you run up a couple more posts - maybe on the "Say Hi Here" thread at the top of the Bulgarian part - so you'll have access to the PM system?

 

[SofiaOwner112]

Another one that is worth a try

Hello Daniel,

Might worth be looking at 'newestate' too, they installed furniture for free for me and are now recouping from the rent - none of the other agents i contacted offered to put money into my apartment before actually doing something, they all just wanted to sell over priced furniture packs before finding a tenant.

I would have preferred to buy everything at Ikea but it was still not open (January 2011). I looked in the local furniture shops (on the ringroad) and especially the cheaper promotion items, but none carried much stock (mattresses always seemed to come from elsewhere) and they could only deliver after 10-20 days. This would have meant a return trip to Sofia for me, so more money on flights and time off work. In the end, I accepted the deal on the furniture pack, which i calculated was about 300 Eur more than i could have done it for myself. To be honest, they said a lot of it was from the same places i had visited and apparently i had discovered the best deal places!

Bottom line is that I didn't have to shell out 2k from my pocket to get started and get rental coming in, the agency basically took the risk for me and of course i was happy about that after the loss i have made on the apartment itself.

Took a week for them to find a tenant. I wasn't sure at first that they were telling me the real rates for rental so i did two dummy viewings with other agents in the area. I quickly realised that 250 eur / month is the rate at which tenants really do have choices, so for me it was best to accept the current market rates rather than leave it empty or lose a few months of potential income and have to drop it later anyway. So much for the 450 / month i was promised when it was sold to me!

Thought my experiences might help before you travel.

Good luck

Peter

 

[siesta]

I have had dealings with Zlati Dimitrov and Maia from Citybul and they are trustworthy which does not of course guarantee you will get the desired by you results but at least they are not conmen IMO.
Vasil

 

[KayJay]

Dan/whoever else is looking for a Management Agent

You also need to be a little careful about some "interesting" practices which I've come across living in Sofia (and I'm sure they're not unique to Bulgaria!)

Phantom Tenants - who live in an apartment, courtesy of the agent, but of whose existence (and rent payments) the owner is blissfully unaware.

Problem Tenants - an agent will regretfully inform the owner that Tenant X has stopped paying the rent and utility bills, often a few months before. Eviction proceedings need to take place but these will take some months and prove costly - what does the owner wish him to do? What the agent hasn't mentioned is that Tenant X is actually a friend/relation of the agent (and may even still be paying the rent) but in any case the agent is happy to let the situation continue. He sometimes even suggests that the owner should consider paying the tenant to leave. If the tenant is finally evicted through legal action, the agent then produces a bill for his "assistance" in resolving the situation.

There's no shortage of tenants willing to pay a reasonable rent for a decent property in the right (for them) area and no shortage either of agents who talk up a storm but who either can't or won't deliver the goods. Some of the "big boys" will tell you they'll be representing you at General Meetings of your complex but actually have no idea of what is actually required for them to do so.

Finally, another candidate for your list: Edal (www.edal.imot.bg/). I don't know them personally but I have heard good things about them from people who rent literally dozens of apartments through them - apparently Peter Traychev is the guy to talk to but I don't even know if he speaks English, I'm afraid.

As regards furniture - add Aron if they're not already on your list, and Jysk MAY be worth a visit (next to the big HIT supermarket in Mladost) a lot of their stuff is tat but they do have some quite nice solid wood furniture at good prices. You can also buy furniture etc from IKEA in the UK (or even eBay!) and get it delivered to Bulgaria for a lot less than you might think....

 

[KayJay]

Gosh, Simon - certainly can't keep a good advertiser down, eh! :boring:

My comments on the now-deleted thread last year still stand: Ikea in both the UK and Bucharest is still a lot cheaper than the "Thessanlonki" one, even including the shipping from the UK or your "Ikea trip" competitors who sensibly go to Romania rather than Greece. There's also plenty of second-hand but good condition Ikea kitchens and furniture going all the time on eBay UK. The prices in Sofia Ikea are reportedly going to be "the lowest in the Balkans" but that remains to be seen, although I certainly hope they'll follow the Lidl pattern and really under-cut the over-priced local, mostly foreign-owned, supermarket chains. So far, the present furniture/household goods competitors of Ikea show no signs of waking up to their impending demise - unfortunately for them the classic Bulgarian "head in the sand" approach isn't likely to work this time.

A mid-September opening for the Sofia Ikea wouldn't surprise me at all, although the official story is still mid-July. I pass the site every day and it's impressive how quickly they've progressed and how fast the ring road upgrade is going, in order for that section to be ready for the Ikea opening.

 

[d_blam]

I have had dealings with Zlati Dimitrov and Maia from Citybul and they are trustworthy which does not of course guarantee you will get the desired by you results but at least they are not conmen IMO.
Vasil

Hi Vasil,

Thanks for your reply. What do you mean by "conmen IMO"?

Dan

 

[d_blam]

Hi KayJay,

Your notes are giving me valuable information. Many thanks.

Phantom Tenants - who live in an apartment, courtesy of the agent, but of whose existence (and rent payments) the owner is blissfully unaware.

Wow! Scary stuff. Mmmm! To minimize this risk I will try to meet a couple of neighbors and ask to report to me if something like this happens.

Problem Tenants - an agent will regretfully inform the owner that Tenant X has stopped paying the rent and utility bills, often a few months before. Eviction proceedings need to take place but these will take some months and prove costly - what does the owner wish him to do? What the agent hasn't mentioned is that Tenant X is actually a friend/relation of the agent (and may even still be paying the rent) but in any case the agent is happy to let the situation continue. He sometimes even suggests that the owner should consider paying the tenant to leave. If the tenant is finally evicted through legal action, the agent then produces a bill for his "assistance" in resolving the situation.

I don't think I will sleep tonight. Do agents provide an invoice to the tenant to prove that they have paid? So the tenant can prove or not that they have paid.

There's no shortage of tenants willing to pay a reasonable rent for a decent property in the right (for them) area and no shortage either of agents who talk up a storm but who either can't or won't deliver the goods. Some of the "big boys" will tell you they'll be representing you at General Meetings of your complex but actually have no idea of what is actually required for them to do so.

Right, I will write what I am expecting them to do and discuss during meetings (when they offer this service). I'll try to find out when those meetings take place and if the agent was present. I think I will start asking for an investigation agency

Finally, another candidate for your list: Edal . I don't know them personally but I have heard good things about them from people who rent literally dozens of apartments through them - apparently Peter Traychev is the guy to talk to but I don't even know if he speaks English, I'm afraid.

Thanks, I will add them in the initial list.

As regards furniture - add Aron if they're not already on your list, and Jysk MAY be worth a visit (next to the big HIT supermarket in Mladost) a lot of their stuff is tat but they do have some quite nice solid wood furniture at good prices. You can also buy furniture etc from IKEA in the UK (or even eBay!) and get it delivered to Bulgaria for a lot less than you might think....

Great ideas. I did not think about it I will have a look. I discovered so far COMO, AIKO, LABIRINT, YAVOR and MEBELI.

Thanks for your reply. I do appreciate your time. Very interesting tips.

Best Regards,

Dan

 

[JonathanHargreaves]

Dan

Agents should provide you with a regular statement of rental income received and transfer these funds to you as agreed in your contract.

As for residents meetings, my property manager attends and sends me reports/minutes of the meeting. If though you wish for the agent to vote on your behalf then you will need to provide them with a Power of Attorney with apostille in order for them to vote on your behalf and how you have instructed them to do so.

My representative also inspects my property on a quarterly basis during tenancy agreements to ensure that everything is in order. I then receive a report from this inspection.

Hope this helps

 

[KayJay]

As for residents meetings, my property manager attends and sends me reports/minutes of the meeting. If though you wish for the agent to vote on your behalf then you will need to provide them with a Power of Attorney with apostille in order for them to vote on your behalf and how you have instructed them to do so.

A couple of management companies turned up at our last General Meeting with a bunch of paperwork "authorising" them to represent a number of owners. Unfortunately they hadn't bothered to acquaint themselves with the relevant legislation and were sent away with a flea in their ears. :hahaha:

 

[KayJay]

Daniel

I'm sure that Jonathan can, and will, answer for himself but let me give you my take on the points you raise.

Non-paying Tenants

By and large, you have to be prepared to put some degree of trust in the managing agent. There's no way you can be 100% sure that the tenant has paid or not if the agent says that they haven't. However, in the same way that the agent expects you to trust him to pay you each month, I can't see why you shouldn't reverse the usual procedure and simply have the tenant make his payments into your local bank account. That way, you can be assured that you will be the first to know if the payments stop. All the banks here offer both internet banking and emailed statements, so you can easily provide the agent with necessary figures for tax purposes and to show them that you aren't cheating them. If the agent is unwilling to do this and expects you to trust them but isn't prepared to trust you, then you might wonder why this should be; I'm aware of owners being cheated by agents but haven't come across the opposite situation. :wink: I'm sure that Jonathan can perhaps give us examples of this happening but the agent is in the position of being able to simply stop managing a property immediately if he feels the owner is behaving dishonestly.

POA

In Bulgaria one needs POAs (and the term is often used to describe any notarized document) for what most Europeans would regard as the most minor things; it's aimed at demonstrating that someone is duly authorized to do what they are purporting to do in a given situation. An example is that you need a POA from your spouse to say that he/she has no objection to you selling your own car - AND you'll need one when you sell it. If you lend a car to a friend (here it's the car which is insured, not the driver, by the way) you would be well advised to give them a POA (with or without time limit) to show the cops if they get stopped and to keep the insurance company happy if they have an accident.

It's imperative that you not only read the POA very carefully but also ensure the Bulgarian-language version is 100% identical with the English (or whatever language) version; it is the Bulgarian version which has legal effect and if they're not the same, that's YOUR problem. I'm aware of an owner here who recently discovered that he doesn't own what he thought he did (and had paid for) due to a discrepancy between the English and Bulgarian versions of the Notary Act.

Jonathan may well obtain POAs for residents meetings but I'd be more inclined to get them for OWNERS' meetings, if I were he! :wink: Moreover, the law is quite clear about just how many owners any authorized person may represent - and indeed who may be authorized. An agent turning up with a fist-full of POAs would be invited by the chairman of the meeting to read the legislation before claiming to represent more people than they are legally permitted to, and any decisions made by a GM in which invalid votes were cast may be challenged not only at the time but also in the future.

As for utility/municipal tax bills, you can usually check on-line if these have been paid - although this system doesn't always work quite as well as it might! However, they can be paid at most supermarkets (and other places) via automated terminals or at a special cash desk and again, they usually show up on the on-line systems.

I don't know the ins-and-outs of eviction, but I imagine an agent would need a POA to start the process but this will require you to pay lawyer's and court fees, and can take a long time; the BG legal system is not the most efficient and certainly not the fastest in the EU.

If you find yourself dealing with a dishonest/unscrupulous person armed with a POA, your risk exposure can range from missing rent/unpaid bills to someone selling your apartment from under you. In the latter case, you can almost always count on getting it back but it's not unheard-of for it to take several years and a LOT of money; this is a fairly rare occurrence but it DOES happen from time to time, thanks usually to careless/crooked lawyers and/ortaries (and sometimes Mafia involvement).

It's usual for a POA to be assignable to a third party in such situations as management agreements - usually the POA is between two named individuals, ie the owner and the agent, but the agent may well need to authorize another member of staff to act if he is away/sick or whatever. If I were you, I wouldn't accept a blanket reassignment clause but insist on having the alternative person(s) individually named and identified; this does mean that if the person(s) leave the company then you may need a new POA but I'd say that's a small price to pay.

You'd be amazed at what foreigners (and some unwary Bulgarians) sign over here - usually they don't suffer any ill-effects but that's certainly more luck than judgement. Do get a decent lawyer (NOT the agent's tame one) to look at all the documents before you sign them - again, it will cost you a bit more but you'll sleep a lot easier at night!

I notice that you've added a post about Newestate's "robust" policy regarding defaulting tenants while I was typing the above reply; I don't rent out my Sofia apartment, since my wife and I live in it, but I will certainly keep Newestate's details handy in case I ever want to. Believe me, if they really do what they claim to do then it's definitely a service that's worth its weight in gold over here.

Sorry to waffle on but I hope it's been of some use....

 

[KayJay]

Dan

On the subject of fees, taxes etc I wonder how many owners actually did all the calculations before they took the plunge - or did they perhaps just go along with the impossibly-optimistic forecasts of the "estate agents" who were pushing the property?

Using the rent you suggested, ie 300 euros a month, I make the worst-case costs of the first year as 1,240 including VAT, plus 360 tax. So basically we're looking at an income of 2,000 euros - and that doesn't take into account the cost of furnishing, insurance, wear and tear etc. If the apartment cost 100,000 euros to buy (on the conservative side for a two-bed bought a few years ago) then the return is under 2%, without factoring in the drop in capital value over recent years. In comparison with a deposit account offering over 6% even now, it's a sobering thought.....

 

[JonathanHargreaves]

Dan - I sent you an email regarding the POA, which I hope clarified the issues you have. If this doesn't please reply to this email.

KayJay made some excellent points concerning the POA issue and the necessity in Bulgaria to provide these in order to conduct duties requested. The law here in Sofia in this respect is quite strange to anyone coming from the UK as this is not common practice and gives the impression of the possibility of being open to misuse and mistrust. My Agent has permission to conclude the following:

1. Set up utility Accounts and other services providers such as Tel, Internet
2. Pay property/garbage tax on my behalf to the municipality
3. Attend General meetings of the Complex/Building (Residents/Owners Meetings)
4. To receive Rental payments and deposits
5. To sign Tenancy Agreements
6. Represent and pay withholding tax before the tax authority on rental income

The POA does not permit the set up of Bank Account or to sell the property.

The law states that a person provided with a POA can only represent 3 property owners (irrespective of how many apartments the owner owns) at a General Meetings of Owners.

Usually POA's permit the appointed person to transfer these rights in order to fulfil the duties required.

I have dealt with a number of people who have been ripped off by Agents, and in the main this is uncommon. The worst case was an owner in Park Residence, whereby the person who was managing the block was using and renting apartments out without informing the owners or paying them rent. This was resolved by changing the locks and keeping the contents inside until the outstanding monies was paid.

In my tenancy agreement which my management company sign with the tenant clearly defines the eviction process in the event that the tenant does not fulfil their obligations. My existing tenant is not the most consistent of payers, but the threat of fulfilling the relevant clause certainly helps with getting payment. Usually the threat of changing locks helps, but the removal of belongings is extremely harsh and this should be used as leverage to ensure payment of outstanding monies. My agent always informs me regarding unpaid rents and requests how I would like to proceed before going full throttle and evicting!

Management Agents will usually collect the rent as part of their services for a number of reasons, and this is common throughout the world. The main reasons are that they are able to check when rents have been received, start the process of chasing rents quickly and not waiting to be notified, deduct withholding tax at source (legal requirement),and to ensure their fees are paid in order to fulfil services. Although rents paid direct to owners bank accounts is the ideal situation but in practice it doesn't really assist the owner as they will spend so much time having to send money to different companies / authorities that it defeats the purpose of paying a company to provide this service and you might as well manage the property yourself!

The statements I receive clearly state what income my management company has received and what outgoings have been paid, the statement is provided no matter whether the rent has been received or not, this way I know how much I am due at the date of payment for the management company.

I hope this is of assistance.

 

[KayJay]

Jonathan

It's good to see the neutral tone of your posts but don't you feel that you perhaps ought to mention, when referring to what "your managing agent" does and doesn't do for you, that you in fact ARE a Managing Agent? Just a thought..... :wink:

 

[Peterbda]

great tips here, thanks.

How do I get PM rights?

Peter

 

[KayJay]

You have 7 posts, so you already have them! :hello:

Click on the name of the member you want to send a PM to and you should see the option there.

 

[Peterbda]

perfect thank you.

I am sure I will have many more questions especially if I pursue this.

All your tips appreciated

 

[Sofia_lady]

Hi Dan,
I am really suprised how much the PM costs. It is very expensive. I am a private landlord in Sofia and if I have to pay so much I do not know if it is worth renting.
Vesi