Distressed Bulgarian Properties
With the current state of the property market worldwide more or less, but particularly in Bulgaria, there are many people desperate to sell.
The definition of distressed property sales is the urgent sale of assets under negative conditions or a rapid, urgent sale of assets, often at a loss. Distressed sales usually occur when cash is needed to cover immediate needs or debts or when someone decides they cannot afford the property for one reason or another, for example they cannot afford the mortgage repayments or the management charges. Or sometimes for personal reasons such as divorce, relocation etc.
There are currently many British and Irish desperate to sell the apartment they bought in the Bansko or Pamporovo or Sunny Beach and they are prepared to sell for much less money than they paid for it. These buyers were often promised high guaranteed rental yields of 5 to 10%, which they thought would cover their yearly management fees and mortgage repayments but have not seen a penny in rental returns. Or they were enticed into buying 2 or 3 apartments (often by being given a discount on the full purchase price) in the same complex and told that the property would double in value in a couple of years. Of course the opposite has happened…..
Over the last few months I became interested to find an apartment along the Black Sea coast to buy for a weekend getaway and also a ski apartment for rental. However, apart from the odd good deal on ebay, it was incredibly difficult to find genuine distressed and below market value properties in Bulgaria. Sure there are numerous websites and agencies supposedly offering distressed sales and properties below market value, but these are still incredibly over-priced in today’s market. Sure people are selling a large 2 bed apartment in Bansko for 40,000 Euros less than they paid for it two or three years ago, but then they were completely ripped off at the time they bought and paid a stupid price for it in the first place. Knocking a few grand off what you paid for a property does not now make it below market value or a distressed property when you paid double the amount it was worth when you bought!
A quick look on a few websites advertising ‘distressed property sales’ shows a one bed furnished apartment in Bansko for 44,000 Euros – advertised as being the original sales price……but this is hardly below market value, let alone a distressed sale, given prices in Bansko are down by at least 50% and had never really increased in value over the last couple of years due to over-development. A more realistic price for this apartment would be around 20,000 to 25,000 Euros. Bansko was marketed as being the best up and coming ski resort, on a par with top European resorts. This was simply all hype. The skiing and snow cover is nowhere near the quality and quantity you get in France, Italy, Austria or Switzerland. That would have been fine if the prices reflected this but at the height of the boom people were paying well over 120,000 Euros for a 2 bed apartment there and 40,000 to 50,000 Euros for a studio or small one bed. And prices for food and drink and lift passes steadily increased until the prices were similar to what you pay in France and Austria. I live part of the year in the largest ski area in the world and in the most expensive department in France outside of central Paris and you can get a ski apartment here for 60,000 Euros!
Another website that promote themselves as offering Below Market Value properties advertise their sales as below the ‘regular’ price which is stated as meaning 20 to 50% discounted (presumably from original sales price although on a quick glance there were none at 50% of regular price and most were around 20 to 30% below the price paid for them). They even state that these properties can be bought and ‘flipped’ for gain – highly unlikely, if not impossible! Otherwise these sellers would be selling these properties easily!
And of course even if you find a really cheap property you still need to be very careful of location. There are plenty of studio apartments in the Sunny Beach area for under 10,000 Euros but these are in awful developments, on the edge of the road or in the middle of nowhere. Similarly in Bansko many apartments for sale are nowhere near the ski lifts and town are are in fact in a field somewhere along the road to Bansko – rental potential basically non-existant. Maybe they are advertised as being close to the golf course but can you actually ever use the golf course – probably not as often only those who bought into the developments surrounding the course can use it.
So I have decided to start a page for distressed property on my website. These properties will be VERY cheap compared to other similar properties on the market. There are no agency fees involved, you will deal directly with the buyer. If you would like to list your property on the site, you must be prepared to offer the property for at least 40% of what you paid for it, better 50% or less. As well as being listed here, your property will also be listed on TheTravelBug Facebook page and details will be sent to all on TheTravelBug mailing list (sent out once every two weeks), and listed on eBay. A sale is of course not gauranteed but if your apartment or house is very good value you will likely get a sale. For example apartments in the ski resorts or around the coast for 10,000 to 15,000 Euros or less or rural village houses for two or three thousand Euros. I will be doing my best to market this page and the properties listed to investors.
The cost for a listing will be £50 payable to paypal or moneybooker (rachel@thetravelbug.org) or I can take a UK cheque or bank transfer. Your property will be listed until sale.
