Piotr123
18 Sep 2010
Real Estate / Is this a bad time to buy an apartment in Poland? [142]
I could write a book about it but I will try to give you some answers. I'm speaking generally from my experience in the international buy-to-let market; however I will also give my thoughts on the situation in big cities in Europe.
Firstly, it can be very hard to find people to rent out the apartment. In many hot markets the real estate agent might claim that the demand for apartments to rent is huge! The problem is that so is the selection of apartments to rent. Why, the developer might even give you a 6% a year rental guarantee but this is just nonsense because the demand is nowhere big enough.
In Spain renting out your holiday apartment is a hopeless enterprise because besides the low demand there are sometimes rules that prohibit you from even renting out the apartment. Brazil is a very hot market where there are many resorts that offer full rental management, although the developers giving rental guarantees just give empty promises because they cannot give such guarantees.
For example, in Natal the developers have spoken for years about a huge surge in tourism that is coming soon, always soon. The new airport was supposed to give tourism a huge boost. The problem? The old airport was not even at full capacity! The new airport was built for the world cup in Natal, not because of tourism demand.
The situation is the same in Spain, Portugal and Greece. People are also not going to rent apartments to spend their time in Egypt or Morocco. Another problem is the visa because even if you buy an apartment you cannot live as a resident in many countries. The most beneficial benefits are given in many countries in South America, giving you a residence permit for buying an apartment. Many of the countries also allow you to apply for citizenship only after a few years.
Why is this important? Because you will never be able to rent out your apartment in Montevideo from Montana, USA or wherever you live. The same problem applies to Poland regardless of Polish citizenship because you cannot rent out your apartment in Sopot in a practical way if you live on the other side of the world.
In many big cities in Europe you will not get good rental returns for the investment because the market caters to locals. Norway has among the highest GDP (gross domestic product) in EUrope and the rent for a one bedroom apartment in the city centre is about 800 euro. The average square meter price in Oslo is 6000 euro.
The square meter price is much lower in Poland, yet you will not get good rental returns there either. It could however be a good investment for the future if you buy the apartment and plan to live there. I do not know what the rules are in Poland but in many countries residential cooperatives have rules against renting out apartments. The reason for this is that the other residents do not want that someone buys an apartment in the building and never lives there, instead renting it out to different strangers that come and go.
You also need to keep an eye on the people you rent out the apartment to. Another problem is the wear to the apartment that will most likely require you to renovate the apartment if you plan to sell it later or live there yourself. This means that the little net profit you gain after the administration fees and taxes are paid will have vanished.
There are some cities in Europe such as London, Geneva, Paris or Moscow where you can actually make a lot of money if you can afford to buy a suitable apartment to rent out. Outside Europe the most expensive rental markets are Hong Kong and Japan. I think if you do some research you will initially come to the conclusion that the most profitable buy-to-let markets in gross profit margin in relation to the price of the apartment are developing countries such as Brazil, which is the reason why I think it was prudent to include information on that topic. Finally, one of the most important things to know is that many countries have a high capital gains tax, meaning that this will eat away your gross profit margin.
I know! The only thing I can do at this time is keep on asking questions.Tell us about some of those not-so-obvious factors that you know about, please.
I could write a book about it but I will try to give you some answers. I'm speaking generally from my experience in the international buy-to-let market; however I will also give my thoughts on the situation in big cities in Europe.
Firstly, it can be very hard to find people to rent out the apartment. In many hot markets the real estate agent might claim that the demand for apartments to rent is huge! The problem is that so is the selection of apartments to rent. Why, the developer might even give you a 6% a year rental guarantee but this is just nonsense because the demand is nowhere big enough.
In Spain renting out your holiday apartment is a hopeless enterprise because besides the low demand there are sometimes rules that prohibit you from even renting out the apartment. Brazil is a very hot market where there are many resorts that offer full rental management, although the developers giving rental guarantees just give empty promises because they cannot give such guarantees.
For example, in Natal the developers have spoken for years about a huge surge in tourism that is coming soon, always soon. The new airport was supposed to give tourism a huge boost. The problem? The old airport was not even at full capacity! The new airport was built for the world cup in Natal, not because of tourism demand.
The situation is the same in Spain, Portugal and Greece. People are also not going to rent apartments to spend their time in Egypt or Morocco. Another problem is the visa because even if you buy an apartment you cannot live as a resident in many countries. The most beneficial benefits are given in many countries in South America, giving you a residence permit for buying an apartment. Many of the countries also allow you to apply for citizenship only after a few years.
Why is this important? Because you will never be able to rent out your apartment in Montevideo from Montana, USA or wherever you live. The same problem applies to Poland regardless of Polish citizenship because you cannot rent out your apartment in Sopot in a practical way if you live on the other side of the world.
In many big cities in Europe you will not get good rental returns for the investment because the market caters to locals. Norway has among the highest GDP (gross domestic product) in EUrope and the rent for a one bedroom apartment in the city centre is about 800 euro. The average square meter price in Oslo is 6000 euro.
The square meter price is much lower in Poland, yet you will not get good rental returns there either. It could however be a good investment for the future if you buy the apartment and plan to live there. I do not know what the rules are in Poland but in many countries residential cooperatives have rules against renting out apartments. The reason for this is that the other residents do not want that someone buys an apartment in the building and never lives there, instead renting it out to different strangers that come and go.
You also need to keep an eye on the people you rent out the apartment to. Another problem is the wear to the apartment that will most likely require you to renovate the apartment if you plan to sell it later or live there yourself. This means that the little net profit you gain after the administration fees and taxes are paid will have vanished.
There are some cities in Europe such as London, Geneva, Paris or Moscow where you can actually make a lot of money if you can afford to buy a suitable apartment to rent out. Outside Europe the most expensive rental markets are Hong Kong and Japan. I think if you do some research you will initially come to the conclusion that the most profitable buy-to-let markets in gross profit margin in relation to the price of the apartment are developing countries such as Brazil, which is the reason why I think it was prudent to include information on that topic. Finally, one of the most important things to know is that many countries have a high capital gains tax, meaning that this will eat away your gross profit margin.