What are the next areas to develop

Hi
I am considering on buying a house/apartments for investment.
Where do you reckon I should look for in order to find the new developing areas or the next undiscovered yet?

Thanks!

falul :

Where do you reckon I should look for in order to find the new developing areas or the next undiscovered yet?

Why would someone who knows let you in on a good thing, for free, so you can compete with them and cut into their profits? Might as well ask a gold prospector where his next gold prospect is. :/

Who might answer: promoters seeing someone who is not fully aware of the local market and who might just be sold anything if wrapped around a lot of creative "promotion" or "investment" rhetoric. Real estate can be a contact sport, especially for flippers chasing new development and the "next undiscovered".

Better, and safer, for the smaller investor to just buy existing property with a solid history as a rental income earner. Such a property will work for you immediately upon purchase, as well as in the long term.

For investment purposes, either you buy an apartment/house and collect rent or buy one, refurbish and sell. In the first case, it is best and easiest  to buy a new or a few years old/refurbished and  furnished apartment with all kitchen equipment, renting that out in the heart of Bp can be profitable. ingatlan.com is a good site for checking out places and prices.  5th and 7th districts of Budapest are best, also part of the 8th. A huge project is Corvin as an example.

In the latter case, buy a cheap apartment, invest into refurbishment, you can sell it very well as the real estate market is hot now due to social policy support. 

Should you have a more decent budget, a good idea is to buy a larger apartment (3-4 rooms), set up a dentistry/rent it out for medical center purposes,
Should you be interested in legal services concerning the above, look for me among the service providers listed in Hungary.

Thanks!
What exactly is the social support?
Can I benefit from that somehow as an Hungarian who've  never really been living in the country?

Thanks again for the detailed answer

Social policy benefits those who want to raise children and buy a used or new apartment or house. As you are a Hungarian citizen, I am sure you are eligible, in case you are married and under 40. The more children you have/declare to have the larger the amount is. The support is channeled through the banks.

getting married is okay, but what should I do with the children after getting the discount?
hahaha :)

Thanks! I'll keep it in my mind for the future

drveghistvan :

In the latter case, buy a cheap apartment, invest into refurbishment, you can sell it very well as the real estate market is hot now due to social policy support.

This can be profitable only if you have very good relationship with companies (or preferably contractors) who perform the refurbishing. Otherwise, even if you speak perfect hungarian, you will have a hard time finding a reliable electrician, plumber, etc. If you go with a single company that does everything as a turnkey project, with their price you will not be able to sell the apartment and make a profit.

Thanks
I heard that there are massive construction in the city. Do you reckon prices will go down in a year when they will be completed?

No, most apartments are sold before they're finished.

atomheart :

Otherwise, even if you speak perfect hungarian, you will have a hard time finding a reliable electrician, plumber, etc.

Reliable and competent. If one wants just "anyone" to do such work, one can fine "anyone" here to do it. But then the bathroom plaster will start to fall off in a few years because the plumbing was done wrong and it is leaking.

I have an excellent general contractor. He organized most of the renovation for our own house (what I did not DIY), from putting on a new roof, full external replastering, all new electrical, etc. Even he had to juggle scheduling of competent tradesmen, and work could be put on hold for weeks waiting for them to become available (because I insisted on competent professionals, not just "anyone").

And all this was years ago, long before the current building boom.

Hey all, i invested in a store in sector 7 and want to rent it...is a nice old store underground with +/- 170m2 but is being difficult to find someone to rent it and no idea why. What new projects are coming to this zone? any info in web? I would appreciate some help here as i am a little lost =)

Michel Silva :

a nice old store underground with +/- 170m2 but is being difficult to find someone to rent it and no idea why

I will take a stab at some ideas:

Location : underground is not easily accessible and less desirable for many retail businesses, especially for those that benefit from window shoppers becoming random walk in foot traffic as with street level stores.

Size : That is actually pretty large. Many small businesses don't need something that big.

Price : Maybe your asking price per month is too high.

Possible solutions: You can do nothing about the location, but you can remodel and split up the space into a multi-store space, and rent to multiple tenants (added benefit is if you loose just one tenant, your income does not drop suddenly to zero). And look into if the price you are asking is reasonable for what you are offering, and if it may need to be lowered.

Here are my thoughts on current state of BP property market. Property market have changed in HU in the last 4 years. Apartments are overpriced in all central areas V, VI, VIII. Purchasing renovated apt. and then renting it is no longer that profitable. The return will be 2,5-4% annual on the money invested. Lending for non-citizens has ground to a halt. Huge opportunity for private banks that goes unfulfilled. Not sure why. 5 years ago KBC was willing to loan me money to buy property , today they require for me to reside in HU full time. Essentially Budapest became cash buyers only city. Additionally, Hungarians do not want to purchase apartment in the center of BP. This is not even economic decision it is inexplicable aversion to anything from 19 Century. I have looked at apartment in one of the palatial buildings in BP with a young Hungarian agent. She explained that even if this apartment was perfectly modern inside her friends would not want to rent it , they prefer standard box with purple ceiling lights and fake accent walls. They dislike old 19C buildings, 4 meter ceilings, and the rest of it. So when one buys investment property in BP your tenants most likely will be tourists or foreigners who still prefer to live in the listed properties. Thus you will enter smaller rental market with bigger competition & hard to find long term tenants.
There are still opportunities in BP , but only for those eager to deal with renovation which is incredibly hard to manage due to lack of skilled labor.
To buy in BP now ; it has to be a passion project . Some unique property you fall in love with , else it is not worth to bother.
Side note on Balaton region. I know it has been popular with British expats and it might still be , but I would suggest to visit Slovenia Julian Alps before making a purchase of a house near Balaton.

"Lending for non-citizens has ground to a halt. Huge opportunity for private banks that goes unfulfilled. Not sure why."

Few years ago, when banks were giving out loans easily, lots of people have burned themselves with mortgages they couldn't pay, there was a huge public outrage, banks have come under scrutiny and received a lot of negative sentiment, now they're more careful.

"Hungarians do not want to purchase apartment in the center of BP. This is not even economic decision it is inexplicable aversion to anything from 19 Century. I have looked at apartment in one of the palatial buildings in BP with a young Hungarian agent. She explained that even if this apartment was perfectly modern inside her friends would not want to rent it , they prefer standard box with purple ceiling lights and fake accent walls. They dislike old 19C buildings, 4 meter ceilings, and the rest of it."

Well the number 1 argument against old buldings in the center is their price. 4 meter ceilings feel pleasant until you receive your heating bill in the winter. Even if those apartments are fully renovated, modernized, thei're still in a 100+ years old building, unless the entire building is fully renovated, don't be surprised if the stuff your neighbor flushes down his toilet comes up in your bathtub.

Last, not everybody is comfortable having his windows face either the inner court, next to the hallway, or a noisy street with lots of traffic and drunk, noisy people during the night.

MOHCTEP :

Side note on Balaton region. I know it has been popular with British expats and it might still be

Some British pockets, but mostly I still run into more Germans and Austrians.

MOHCTEP :

, but I would suggest to visit Slovenia Julian Alps before making a purchase of a house near Balaton.

The Balaton and the Julian Alps are two entirely different types of geography, climate and culture. I would not say one can really compare them, but rather one makes lifestyle choices based on what each region has to offer.

atomheart :

"Lending for non-citizens has ground to a halt. Huge opportunity for private banks that goes unfulfilled. Not sure why."

Few years ago, when banks were giving out loans easily, lots of people have burned themselves with mortgages they couldn't pay, there was a huge public outrage, banks have come under scrutiny and received a lot of negative sentiment, now they're more careful.

I read about it. Government made banks convert loans away from Swiss Frc etc. etc. Irish investors went bust in early 2000s before that. However one would expect banks to tighten requirements for down-payments and request strong collateral from everyone. Instead they don't land to non-citizens which is absurd. I wish some mortgage originator would come to HU market and gobble up all the foreign business. Let's just say if one to offer collateral property to the bank as security for the loan and the bank gave loan = 50% LTV and then slapped 7-8% APR which is not unheard of in HU what they would have is 99% security they turn profit . The banks would pray their borrowers would default on these loans, as it would be extremely profitable to auction off property that you own at 50% of the wholesale price. Not to mention foreign buyers have more disposable income thus present less risk.
There is still Russian Sberbank that makes 55% LTP loans, so not all is lost.

MOHCTEP :

The banks would pray their borrowers would default on these loans, as it would be extremely profitable to auction off property that you own at 50% of the wholesale price. Not to mention foreign buyers have more disposable income thus present less risk.

With the recent volatility on the real estate market they'd also have to pray prices grow or stay high... Evicting people from their homes has also become more and more problematic and scandal-ridden, what the simple hungarian proletarian sees is the evil banks ripping them off and make huge profits. With citizens banks have more tools to recover their losses, e.g. they can have their client's employer automatically wire some of their salaries to the bank, can't be done with foreigners...

MOHCTEP :

Not to mention foreign buyers have more disposable income thus present less risk.

Why don't they get loans in their home countries if they have a stable income?

The interest rate of a loan isn't good as taking a mortgage...

MOHCTEP :

I read about it. Government made banks convert loans away from Swiss Frc etc. etc. .

The important details to your banking theories are lost in the etc. etc.. There are a few political whipping boys here in Hungary. And for some time now Banks are one of them (others include, but are not limited to George Soros in particular, and Brussels in general). So banks do not quite have the political latitude to do what you suggest even if they wanted to.

Which is why it may be a good idea to follow Hungarian politics, if one is going to invest in Hungary, because politics and the ability to do business are linked in every country.

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