Buy affordable here or apt in Croatia

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Paddylast

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Hi
Looking for advice on this one. My girlfriend and I are considering putting our names down for affordable housing at present. However, I've seen a beautiful 2 bed apartment in Croatia for 130,000 euro and I wonder would we be better off purchasing one of these (3 year guarantee rental income), then sell this in a few years and perhaps then buy here. We both live with our respective parents at present. As we are both 24yrs old and only 18 and 12 months respectively in our current jobs, are incomes are too low to afford to buy anything decent here. Would this make any sense? the bottom line is we can afford the Croatian property and the rental income would certainly help but we can't afford 350,000 for a property here. We could continue saving as both sets of parents are agreeable to take a reduce amount to help out (not living for free now so don't bash me over the head), plus the rental income over the 3 years would go a long way toward paying for the Croatian property.
 
Re: Buy affordable here of apt in Croatia

Buying in Croatia has a few pitfalls. One of the main ones is buying something with a clean title. A great deal of property in Croatia is owned by more than one person (sometimes a whole family will have a claim on a property) You may find uncles coming out of the woodwork in years to come, looking for their 10th acre.

It could take 18+ months for you to actually own the property. There is this official form that takes absolutely ages to process. You can still rent it though while this is being processed. There's also a tax of about 5% to be paid when this is processed.

Be careful of the estate agent as well. Some of these will want cash under the table for a portion of the sale. Goes without saying to avoid this scenario. Some estate agents will charge you for them to take you around properties. We saw this as a kind of scam. I'd advise to go with a Croatian estate agent (rather then an Irish one)

How exactly do they guarantee the rent? What if no one wants to rent your apartment?

One last thing. Have you considered just moving out of Ireland altogether, to a more affordable country? This is probably what I'd do if I was back in your situation.
 
Re: Buy affordable here of apt in Croatia

Buying a property (even abroad) will mean the loss of your first time buyer entitlements (e.g. to lower rates of stamp duty, higher rates of mortgage interest relief etc.) in relation any Principal Private Residence that you eventually buy. You need to bear this in mind. Don't forget to factor tax liabilities (e.g. on rental income and Capital Gains Tax on the eventual resale - here and/or abroad) into your analysis. Ultimately you need to do a bit of number crunching to weigh up the pros and cons of this strategy. Don't forget that future capital appreciation is not guaranteed in any unregulated housing market.
 
Re: Buy affordable here of apt in Croatia

130k seems very expensive for croatia! the average wage there is only 10k a year and your prepared to pay 13 times average income.
those guaranteed rents for 3 years are just marketing propmomtions to try and get you to buy,if its a good investment why would they have to offer you a 3 year guaranteed rental? what happens is they sell you an apartment that has a price of 100k for 130k and they will give you 3 years rent worth say 10k a year so you are really paying extra to get that 3 year "rental " guarantee.
you could buy a 2 bed apartment for less in germany italy cyrus or many other EU countries with good economies and established tourist and local rental markets.
dont be rushing to jump on the foreign property "gravytrain" and if you are going to buy abroad do loads of research and crunch the numbers or get a professional to do it for you.
 
Re: Buy affordable here of apt in Croatia

IF buying foreign for investment purposes, you should check on whether there is a Tax Treaty between that country & Ireland.... I releand have tax treaties with about 40 countries which means that if you pay tax on a treatied country then you are not liable to pay in Ireland...if not then you end up being taxed in both..... there are specialist law firms who provide advice & service on this.

ninsaga
 
Re: Buy affordable here of apt in Croatia

bearishbull said:
130k seems very expensive for croatia! the average wage there is only 10k a year and your prepared to pay 13 times average income.
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The average industrial wage in Ireland is c. €30K and 13 times this (€390K) would not be unusual for a domestic property these days here given that the national average property price is c. €300K.
 
Re: Buy affordable here of apt in Croatia

ClubMan said:
The average industrial wage in Ireland is c. €30K and 13 times this (€390K) would not be unusual for a domestic property these days here given that the national average property price is c. €300K.
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yeah but foreign property attracts people because they beleive its cheap, if you look at other countries with similar average incomes of 10k the average property is around 50-70k,in poorer countires the average income multiple is normally a lot lower.also in ireland the economy is doing quite well and female participation in workforce is a lot higher than in poorer countries which increase amount coupples can spend on houses.in poorer countries your wage meets the basics of life like food huseholdbills etc and amount of income to have to spend on housing is as a percentage of income lower than the likes of ireland.
anyway comparing property fundamentals in ireland with the rest of the world would be a futile exercise,we are one of the most expensive in the world.
 
Re: Buy affordable here of apt in Croatia

bearishbull said:
anyway comparing property fundamentals in ireland with the rest of the world would be a futile exercise,we are one of the most expensive in the world.
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As is determining the value for money of a foreign property based on how many multiples of the local average wage it costs?
 
Re: Buy affordable here of apt in Croatia

ClubMan said:
As is determining the value for money of a foreign property based on how many multiples of the local average wage it costs?
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i think this measure can be usefull , but it would be only one factor to add to any analysis,average national wage or average gnp per capita gives a good indicator of incomes and there is a correltaion between income and house prices,income levels and population growth are two most important factors in high price inflation in a rational market but speculation plays its part too
 
Paddylast said:
Hi
Looking for advice on this one. My girlfriend and I are considering putting our names down for affordable housing at present. However, I've seen a beautiful 2 bed apartment in Croatia for 130,000 euro and I wonder would we be better off purchasing one of these (3 year guarantee rental income), then sell this in a few years and perhaps then buy here.
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There is no such thing as a free lunch. The cost of the guaranteed rental income has been built into the price you are paying for the property. It is your own money you'll be getting back.
 
Thanks for all that advice. It appears the main warning is against properties promising guarantee rental income together with checking out the tax agreements between here and Croatia.
However, I'm still left with the problem of being unable to buy here. I've checked some websites over the last year and the property prices in Croatia are definetly getting more and more expensive especially in areas where tourists are keen to holiday. That was my reasoning behind buying there. One property I looked at on the net, a very large two bed (no guarantee income) was on the market last May for 85,000. a similar property in the same area is now 104,000 euro. I guess I am just frustrated at not being able to get my foot on the ladder and am trying to find a sensible way of getting around this. I had thought the guarantee income would be a good way of covering the mortgage and would also relieve me of the hassle trying to find tenants. So my money would be working well, while I could still keep up my savings here.
As a matter of interest this is the company (English) and the property I've been look at

http://www.rightmove.co.uk/search.rsp?lo_u=107401&lo_n=Zadar+%28Zadar-Knin%29%2C+Croatia&nh_st=1&stc_s=false&tr_t=buy&pa_n=2&eventsubmit_dosearch=1ing (http://www.rightmove.co.uk/search.rsp?lo_u=107401&lo_n=Zadar+%28Zadar-Knin%29%2C+Croatia&nh_st=1&stc_s=false&tr_t=buy&pa_n=2&eventsubmit_dosearch=1ing)
 
Paddylast said:
However, I'm still left with the problem of being unable to buy here.
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I thought that the other option was affordable housing?
I've checked some websites over the last year and the property prices in Croatia are definetly getting more and more expensive especially in areas where tourists are keen to holiday.
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Past performance is no indication of future returns.
I guess I am just frustrated at not being able to get my foot on the ladder and am trying to find a sensible way of getting around this.
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Find and buy a property within your means. Be flexible in terms of aiming for your "ideal" home situation because chances are you will never achieve it.
 
Paddylast said:
Hi
Looking for advice on this one. My girlfriend and I are considering putting our names down for affordable housing at present.
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Do it. I think it's a good scheme that many eligible people may miss out on.

You're only 24-you have plenty of time to get your 'foot on the ladder'.
 
Bear, I don't know if you're familiar with the current prices in Croatia (and not those on property programmes with very set agendas), down in Dubrovnik you can expect to pay 130k and more for a simple 1 bed. It's ridiculous certainly, but the pressure on land in that area has seen land prices rise massively, but then move just a wee jaunt up the coast and closer to the action and the prices drop by 20-50% right away.

There are bargains left in Croatia, but the days of 40,000€ for a beach front stone cottage in need of tlc (which never existed anyway) are long gone!
 
almo said:
Bear, I don't know if you're familiar with the current prices in Croatia (and not those on property programmes with very set agendas), down in Dubrovnik you can expect to pay 130k and more for a simple 1 bed. It's ridiculous certainly, but the pressure on land in that area has seen land prices rise massively, but then move just a wee jaunt up the coast and closer to the action and the prices drop by 20-50% right away.

There are bargains left in Croatia, but the days of 40,000€ for a beach front stone cottage in need of tlc (which never existed anyway) are long gone!
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go to the other side of the adriatic to italy and you'll get better value than that.
 
I did, looked and looked, esp in and around Udine, Pordenone etc, and the buying process was even more complicated than here! And whenyou consider that a 2 bed apartment, not on the beach, in Portugal costs from €130,000 but a 4 bed house (here) just 60m from the beach costs less....then again, not every place is suited for everyone!

Here in Croatia you're always better off buying a house and some land, apartments (unless they come in at under €100k) are not going to be as good value unless they're in a really well set up complex, of which there are precious few in Croatia.
 
almo said:
I did, looked and looked, esp in and around Udine, Pordenone etc, and the buying process was even more complicated than here! And whenyou consider that a 2 bed apartment, not on the beach, in Portugal costs from €130,000 but a 4 bed house (here) just 60m from the beach costs less....then again, not every place is suited for everyone!

Here in Croatia you're always better off buying a house and some land, apartments (unless they come in at under €100k) are not going to be as good value unless they're in a really well set up complex, of which there are precious few in Croatia.
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are the croatian islands more expensive to buy on??
 
Whatever about expensive I believe that the Croats are bringing in new legislation to restrict who (especially foreigners) who can buy where in relation to the islands. It was reported in the media in the last few weeks.
 
Ireland have tax treaties with about 40 countries which means that if you pay tax on a treatied country then you are not liable to pay in Ireland
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With respect this advice is totally incorrect and likely to land the OP and/or anyone else in serious doo-doo with the Revenue if acted upon.
 
The point you appear to have not grasped, deliberately or not, is that both you and your gf will BOTH lose your first time buyers status. This means at least 26k to youse. Do you expect your Croatian pad to increase by this amount after ALL fees and taxs are paid by the time you, presumably, cash it in to finance your own home in Ireland? (20% increase on 130K)

If not, stick your hard earned in a high yielding account, cash or equity, and wait till you've saved enough and stop panicing about keeping up with the Joneses. Full stop.
 
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