Where are the good buying opportunities today? Beyond the developers.
In our previous blog post we looked at whether property prices could fall further. Although there is still plenty of room for a decline, good buying opportunities can already be found today.
The basic rule for a good deal these days is to buy away from the developers. Many developers in Bratislava have not yet reflected the current market situation and are still selling at the old prices. Of course, you get perks such as a subsidised mortgage, a kitchen, a storage unit or a free parking space, or a neighbour referral bonus. These perks will save you a few thousand euros, but you can still do better.
It's perfectly understandable that unless a developer is under pressure from the banks, it won't sell at clearance prices and would rather wait a while. One group of sellers, however, is under pressure: private individuals on the secondary (resale) market. Let's look at an example:
A flat in the Slnečnice POP new-build development. The developer's price is EUR 141,836. The price of an almost identical flat on the secondary market: EUR 119,000. The seller has been advertising the flat for more than 250 days. With a listing that has been up for so long, there's a good chance that if you act quickly, the seller will give you a discount – easily EUR 10,000–15,000. So we can get to a price of EUR 105,000–110,000. On top of that, most of the flats in this project will be handed over in the summer, and even more listings will appear.
With a purchase price of EUR 107,500, we add roughly EUR 7,500 for furnishing the flat, acquisition fees and payments to the building manager while the flat stands empty. That makes EUR 115,000 in total. A net monthly rent of around EUR 400 is achievable, and the monthly mortgage repayment with 80% financing at 4% p.a. interest comes to roughly the same amount.
The most important criterion is met – the rent covers both the principal and the interest on the mortgage. You don't have to subsidise the flat; it pays its own way. Later, when interest rates come down, we can expect the monthly repayment to fall and, over time, the rent to rise with inflation. Repair costs in new builds are negligible, and property tax on a flat of this size is minimal – under EUR 45 a year.
In this post we've given just one of many examples of how you can still buy a good investment property today. There are more options, though: watch above all the secondary market, wait until a listing has been on the market for some time (at least 4–6 months), and then contact the seller.
The analysis of the investment flat above is presented in the simplest possible form so that it's easy to follow. When assessing potential investment flats, we use more advanced methods that track far more parameters and variables. If you'd like a comprehensive assessment of an investment property, we'll be happy to prepare a tailor-made business model in Excel, which you can use to evaluate any flat.
If you have questions about how and where to find a suitable investment flat, we'll be glad to advise you as part of our consulting services.
