Raising capital

hey,

im really interested in investing in property in europe and i reckon there are bargains to be had in places like bulgaria, poland and berlin........my problem however is that i do not have cash to buy one of these properties and was wondering what is the easiest way to raise capital bar working ever hour under the sun and saving every cent for the forseeable future?!.........coz that aint gonna happen!!!!

if i wanted to invest in a property in berlin for example and rent it out through an estate agent (costing typically 10% i believe), would a bank here give me a mortgage for the full amount? ie: if a property costs e200,000 plus say 10% for fees etc.......would a bank give u e200,000?

im not so much interested in making a killing from the rent - once it more or less pays the monthly mortage requirements im happy.....im more interested in the year to year potential capital appreciation on the value of the property...........

my status is, 26, college grad, just started new job, no mortgage in ireland......if any of that is relevant to the answer...........
cheers......

Re: Raising capital.........

I think that you are expecting too much.
If it were that simple then every person in Ireland would have 12 appartments in Berlin. Do you not think that there is a reason that they don't.
You need to have money to make money so I think that the bar work is your best bet. After that the sky is the limit.

Re: Raising capital.........

Ah, so you're not looking for some sort of get-rich-quick sheme, you're just looking to get rich. And quick!

Hi Tyler, before you go off and convince someone to lend you all this cash you should look through a number of the property investment posts in this section to get an idea of the pitfalls that you may encounter in investing overseas. I would be interested in finding out what screening criteria you used to find so many bargain properties in Europe.

Out of interest why are you not concerned with income generation beyond covering cotsts? A long long time ago property used to be viewed as an income producing asset with the potential for capital gains thrown in.

If income is not required and you are happy to borrow a load of money in the hope of making some cash overseas you should talk to one of those nice sales people at your nearest overseas property expo - but hurry before all those bargain properties are snapped up by other shrewd FTBs.

getting burnt and negative equity will be a great teacher for you

yes i am aware that a lender will only lend what it thinks u can repay back - i did know there was a reason not everyone could afford to have 12 apartments in berlin - thanks for that 'woods'.............

however, 100,000 - 200,000 invested in somewhere well researched like bulgaria or poland will get u a much better place than that same money would get u in ireland (ie a tarted up caravan as far as i can see at current house prices) with a greater potential for capital appreciation .........

what im asking is, will a bank give u a mortgage for this full amount without any current assets?i will have about 60,000 come april to invest......

in reply to JohnBoy as to why im not that interested in income generation over covering costs - i simply think that the potential return is too low to be overly concerned about - if it happens it happens but im more interested in the value of the property increasing as u stand to make a hell of a lot more money..............

in reply to howitzer, yes i am looking to get rich quick - im not interested in paying large sums of my income over in income tax to a wasteful government.......

tyler_durden said:

in reply to howitzer, yes i am looking to get rich quick - im not interested in paying large sums of my income over in income tax to a wasteful government.......

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Sounds like you need to do some more research re. tax treatment of rental income and capital gains on overseas property....

tyler_durden said:

what im asking is, will a bank give u a mortgage for this full amount without any current assets?i will have about 60,000 come april to invest......

...

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You will have a problem getting an Irish bank to lend money on a foreign property as essentially they will have no comeback if you default and decide not to pay

You could try borrowing from a local bank. I know from experience however, that a Polish bank will not give you a 100% mortgage, in fact you would probably be looking closer to 80%

why are you considering investing if '..the potential return is too low to be overly concerned about..'?

minimising your income tax bill appears to be prudent enough, but doing so by buying a low yielding asset may not be the shrewdest of moves.

You ought to check out how house prices in these countries have moved over the past 5 years. Hoardes of overseas buyers have descended upon these markets so bargains may be difficult to find. Look at how house price growth has moderated in the UK & the US after recent booms - house prices are far from being a one-way bet. If capital growth fails to materialise then you will have sunk all your capital into an asset that is not increasing in value & that produces very little income. This property could turn out to be a financial millstone.

The responses so far have all been fairly negative because what you are proposing is extremely risky and to state that bargains are to be had when you have plainly not visited these countries appears to be naive to say the least.

There are a heap of considerations that you ought to be aware of before you make a decision. Without diverting this thread into another discussion on the merits of property investment you might get a better response if you were to tell us why you have decided that property is the best way for you to achieve your financial goals?

Otherwise good luck

Have

Tyler - if you have €60,000 to invest you may be better off buying in Ireland to start out. There are many pitfalls investing abroad especially for a FTB's with little experience. Bulgarian banks lend to 70% LTV with very little questions asked, however, it's very easy to get your fingers burnt there and corruption is a national past time. Over construction seems to be a big problem and I think a lot of Irish will get burnt there. If you have €60,000.00 to invest I would start with home - you need somewhere to live anyway.

I do not think that any property (in any country) will garantee to pay off a 100% loan (plus the cost of legal and purchasing expenses) after tax.
In the past I have found that the only thing that has a chance of doing this is to buy a business and you will have to work hard then to repay.
I think that you are being unrealistic to expect that it will.
If you can wait untill you have your 60K and then convince a bank that you deserve an interest only loan then you will have some chance but even then you should expect to have to supplement the repayments to some extent.
Getting the loan will not be your only problem. Repaying it will be a bigger problem.

Hi Tyler,

There's nothing to say that in the future, capital appreciation with be higher in Eastern Europe than in Ireland. The best investments over here are in properties, which can generate a good income on a continuous basis. In Budapest, for example, desirable, well located properties can generate a 6-7% return. This, along with good potential for capital appreciation is why most people I know have invested here. To rely on capital appreciation alone is a concept that the Irish market has gotten more used to in the last few years, but in my opinion, it's not a good basis for property investment.

I don't see an Irish bank lending you that much money for an overseas property, but if I were you, I'd at least wait until April, when you have a good deposit and then look at your options. It's a lot of money in spend and there's no rush as markets over here don't shoot up a month by month basis like they seem to be doing at the minute in Dublin.

I also think, for many reasons, both financially and otherwise, that it's best to own your own home before investing in property.

Berlin was build by Hitler and his mates to house 20 million people. There are about 3.5 million there now. It has large empty spaces in it's centre. Therefore I wouldn't hold my breath for capital appreciation there for a few years yet.

hey again,

hmmmmmmmm.........some good points being made people! what im basically getting from these replies seems to be - forget foreign investment as a first time buy and stick with home.............my origional question as to whether a bank would give me a loan appears to be a resounding 'no'! ................

im just convinced that there is great value to be found as i have been to eastern europe and seen it first hand - i have been to poland, latvia, lithuania, estonia and hungary and i can see alot of potential growth -there is no chance in hell i wud pay for a property at a fair in ireland without going to the country first as suggested by a couple of u in ur threads- ive spent alot of hours workin trying to save money and i shall not part with it before researching any potential investment thoroughly............if ur gonna do it properly in my opinion u have to go and talk to unbiased locals...........

i just fail to see property investment in these countries as 'risky' once u make an educated and very informed purchase ...........u gotta speculate to accumulate and all that ..............i just feel that buying a place in a well researched area for say 150k (with a deposit of 30k, so say 80% mortgage-and id still have 30k from the 60k to play with for repayments etc) with the potential to double in value over 5-10 years is a better option than buying in ireland where im not gonna get a whole heap for less than 300,000 and the mortgage repayment will be considerably higher with less chance of as much capital appreciation - am i makin myself clear - well it clear in my head anyway!!!

I have made 200k in two years in a property in Dublin that I bought for 330,000, I put down 10% deposit at the time. There is a bubble but I think the economic fundamentals will support the market going forward. Ireland has an 80% home ownership rate and unemployment at around 4.3%. The tax system is good by international standards and rising interest rates are a positive thing in terms of sustaining the market in longer term. Ireland has been in a low interest environment for far too long given our economic success.

Suggestion - if you are a professional and can earn a decent salary working in the EU - say Slovakia, you can get a 100% mortgage there. Buy a small place - a flat say. I was offered a 100% mortgage in Slovakia where I work but chose to buy over the border in Hungary because I was able to come up with a deposit.