Just back from a few weeks in Croatia and heard the good news yesterday as regards to confirmation that Croatia will definitely be joining the EU in July 2013.
We even had some positive feedback from our own Prime Minister
Welcoming Prime Minister Jadranka Kosor of Croatia to a meeting in London on Friday, David Cameron, the British prime minister, said it was a “historic day for Croatia.” “Croatia in my view belongs in the European Union,” he said.
Croatia is different to a lot of eastern European countries. The house prices are not rock bottom like Bulgaria and Romania although significantly cheaper than the United Kingdom if you invest in upcoming areas. The market is fairly stable. In fact property prices have increased for stone houses over the last few years and I don’t believe the prices will drop for two reasons:
- The majority of houses in Croatia are mortgage free. Its rare for a Croatian to have a mortgage. Houses are passed from generation to generation.
- Croatian home owners are in no rush to sell houses. Often they will inherit land and houses which are surplus to the houses they live in.
This is good news for my Croatian Stone House renovation project. Paperwork should become easier along with rental licenses. Now my renovation is drawing to a close I will be in a position to rent the property with no mortgage by 2013.
Currently its difficult to secure a mortgage in Croatia so the best way to purchase property is by cash payment. You can do this by taking advantage of equity release on a UK home (although Im aware this is more difficult following the credit crunch). You can also combine this with a standard personal loan perhaps over 5-7 years. This short term means you should be mortgage free very quickly rather than the 25 year term you are probably fixed at on your UK property. With Croatia joining the EU in 2013 I am confident that securing overseas mortgages there will become much easier. I will definitely be seeking out these mortgage products once they arrive.
Following a 2 year renovation project in Croatia I have learnt from my mistakes. I would do things differently if I set upon a new renovation project. I’ve put together a list of some recommendations below.
Tips for Overseas Renovation Project
* If you are clear you will be renovating a buildings internal structure from the beginning (knocking down internal walls) then focus your efforts on buying a run-down ruin and paying a low cost initially. This is a lesson I learnt after buying a property that was in a condition that was suitable for living. I could of trimmed off several thousands of pounds if I had bought a similar property in a dilapitated state.
* Try to delay the start of renovations until you have had a visit from the tax office to value your property. The valuation of your property affects your tax bill. In Croatia you must pay 5% tax on the valuation of the property. If the property is a ruin when the inspector visits there is a high chance it will be valued at a lower price.
* Always seek out builders & construction workers that come with recommendations from neighbours, friends or the real estate company you are working with. Ask to visit houses that they have worked on previously to check their quality of work. One way to crash and burn is to find your builders do a bad job and you are left with a loss of several hundred pounds.
* If you are working in a residential area try to keep your local neighbours happy and keep high levels of noise to daytime hours. Problems with neighbours can cause issues further down the line and having on them on you side can be a benefit giving you an insight into the area. This can also increase security for when you aren’t in the country.
* If you dont speak the language hire a translator who can assist you with negotiations. You will find you can reduce costs as much as 50% if you deal with builders that deal primarily with construction project in their own country. Project managers and companies that deal with foreign clients will elevate their costs. A translator can also assist with communication with neighbours and help you build better relations.
* Invest in areas which are upcoming rather than areas that are already thriving with tourism. There will be higher gains in upcoming areas and if you are prepared to invest in the long term the profits could be huge.
* Source as many items as you can from your local country if possible to reduce costs and refurbish the property to Western standards. It can be difficult sourcing some furnishings locally and non standard items will be significantly higher
* Build up other contacts of property owners who have also invested in your chosen country. Its likely you will visit your overseas property at different times of the year and can help each other out. Also carry out property checks free of charge.
* Use property forums found on the internet for your property investment questions. You can find answers to most of your questions regarding your property renovation with recommendations from other property developers.
* Be very careful when designing your house from the beginning. It can be very expensive changing the design later especially when internal walls support staircases etc. For example installing an outside tap to a roof terrace with plumbing is a lot easier during the construction process than after the construction has been completed. Small details like this can be overlooked until after the finished product.
If there are any investors looking to work on property projects in Croatia then please do get in touch via the contact link. Id be happy to provide any assistance I can and have a good source of contacts who can streamline the process. There are still some great opportunities in the Country prior to EU membership.
Over and out for now.