Meet a couple who bought four properties in Spain and Bulgaria, despite starting their empire as complete novices in the world of overseas property.
John and Lesley didn’t go on an inspection trip to Bulgaria, as they had holidayed there before, and their gut instinct was to buy!
At a Glance
Names: John and Lesley Porter
Ages: 55 and 47
Property 1: Bulgaria, Black Sea coast, Marina View
Property 2: Spain, Benalmadena, Arenal Golf
Properties 3 & 4: Bulgaria, Bansko, Aspen Golf
Agent: MacAnthony Realty, www.macanthonyrealty.com
Like so many of us, over the years John and Lesley Porter from Manchester had become enthused by the notion of purchasing a property abroad. Though their dream was to eventually retire to the Costa del Sol, by the new year of 2005, it was impossible to miss the glowing media reports surrounding property investment in Bulgaria. Lesley recalls, “We’d been skiing in Borovets in 1999 and so felt a bit familiar with the country. When we noticed that two property exhibitions, both including Bulgaria, were being held at Old Trafford and Bolton on the same weekend, we felt intrigued by what all the fuss was about, and also as first timers it felt good to have a small insight where other people don’t.”
John continues, “The first exhibition was at Old Trafford, hosted by MacAnthony Realty. Though we’d never heard of the company before, their set-up looked very impressive and there was a good range of properties on offer from many countries. The immediate attraction for us was Bulgaria’s most popular resort, Sunny Beach, on the Black Sea coast, and in particular the Marina View complex with its extensive leisure facilities. The following day we went to the other exhibition at Bolton, but out of the two, the first was by far the most appealing, and we knew we wanted to get on board the investment ladder straight away.” While the couple could have gone on an inspection trip to view the resort in person, the terms and price of the property were so good that their gut feeling encouraged them to take the plunge immediately with a deposit of €1,000 (£692) paid to secure a one-bed third-floor apartment costing €100,000 (£69,200) due for completion in the summer of 2006.
Despite being a snap decision, the Porters are satisfied that it really is the hot spot it claims to be: “Sunny Beach is only 15 minutes from Bourgas airport, so there’s no long journey to add to the couple of hours flight time, yet it feels like another world when you get there. There’s soft, golden beaches sloping down to a clear, blue sea, and loads of cheap bars and restaurants where a meal for two with drinks costs as little as £8!”
The Main Objective
Indeed, John and Lesley felt so satisfied with their initial venture that they decided to look into a second investment. “Now that we’d tested the water of buying overseas and felt very comfortable about it, we decided to make headway with our main objective – to get a foothold in the Costa del Sol. Also, we had concerns about the ever-upward rise in property prices, and felt there was a danger of not being able to afford the kind of property we really wanted if we left entering the property market until we were ready to retire,” explains the couple.
For this reason, they looked into the option of purchasing an apartment as soon as possible that could appreciate in value over the years, with the option of being sold when the time was right and the profit put towards their retirement home. An apartment would also create a great lifestyle option for their family to enjoy holidays, as well as a good rental income. Since Lesley’s mother will be making the move out with the couple when they eventually relocate, the deposit fund to get this next property acquisition rolling was made viable by her financial input.
The Spanish Acquisition
The trio informed MacAnthony Realty about their decision to buy in Spain, and were taken on a four-day inspection trip in February 2005. John reports, “Our rep John Triton had obviously done his homework, knowing that we wanted a property that would suit us as a holiday home and also a good investment, and took us straight to the Arenal Golf complex in Benalmadena. There are fantastic rental opportunities as the resort is only 30 minutes from Malaga airport, right on the coast with great golfing facilities. It’s a thriving resort with a superb atmosphere, the jewel being an elegant marina lined with shops, restaurants, bars and a dolphinarium, with other trendy bars and discos nearby.” In fact, they were so sure of the benefits that on the very first evening they paid a deposit of €6,000 (£4,152) for a two-bedroom, ground-floor apartment that would be completed by the end of 2006.
”As previous buyers in Bulgaria we were included in the MacAnthony Realty investor club which highlights the investment opportunities in all their various locations. Being a member gets you slightly ahead of the game allowing you to get in first. When we found out that the company was taking on their first development, Aspen Golf, at the foot of the Pirin mountains in Bansko, it seemed too good an opportunity to miss. Bansko is located about two-and-a-half hours from the airport and capital, Sophia. Due to bid for the winter Olympics in 2014, it’s now the number one ski resort after a multi-million pound investment. Aspen overlooks a stunning 18-hole course set in 300 acres of the beautiful Razlog valley, and being just 3km from the ski resort, gives it double the rental appeal. The more we thought about the potential the more we were hooked on the idea of buying into it, so I contacted Danny Trude, a MacAnthony Realty investment specialist, and after a long discussion he recommended buying two studio apartments, as not only were they selling fast, but by buying two it would give us an exit strategy for half the investment, if at any stage we need to recuperate some money back. We took his advice and paid a deposit by credit card over the phone of €6,000 (£4,153) for two studio apartments costing €50,000 (£34,616), each to be ready by the end of 2006. It really was as simple as that!”
As complete novices with their first overseas property, John and Lesley seem to have got to grips with the challenges very quickly. Lesley says, “There haven’t really been any obstacles or pitfalls as such, but there’s certainly been plenty of new things to learn about such as money transfer, foreign mortgages, the tax situation on rental income and possible capital gains tax. Along with our first property abroad came a very steep learning curve, and you definitely need the help of a good agent to help you get through it. Employing a reliable agent will save you a lot of time and allow you to concentrate on other projects.”
The Mortgage Question
Having purchased four properties spread over two very different countries, the couple found surprisingly little difference in the buying processes; “Due to MacAnthony recommending good lawyers in all three locations, the procedure has been more or less the same. Up to now the only thing we’ve noticed is that the response from the Bulgarian lawyers is not quite as quick as the Spanish when dealing with any queries, but this hasn’t caused a problem. Our Spanish mortgage will be arranged by Capital Financial Partners who have been very helpful but, unfortunately, the Bulgarian mortgage facilities are a few years behind the times so are quite expensive and don’t yet provide interest only options, so we had to rule this option out. The Spanish property, however, is doing so well that we will probably be able to combine the Aspen properties and the Spanish balance on the Spanish mortgage.”
With financial understanding a key part of playing the investment game well, the Porters are clear about the benefits of buying off-plan. John explains: “On average we’ve only had to put down 30% of the final price. That then means the CA is also going on to the 70% that you have not even laid out. Say your property is €100,000 (£69,219), you pay €30,000 (£20,766) as the deposit. Then, say it takes two years to build and increases at 15% per annum, after two years your capital appreciation is €30,000 (£20,766) – a 100% return on your initial investment – you then get a mortgage for the balance which is funded by the rental income. Too good to be true? Well we’ll soon find out I guess! We’ve been pretty quick at picking up the key points I think and can already see the best way to approach investing.
"If I was to advise others, I would say that more new opportunities are coming along all the time, so do plenty of research and try to find the next ‘big thing’ then go for it when the time and place is right for you. Then go for the best location and quality you can afford to maximise the rental, as this is a crucial aspect in the overall funding. Beware though, as with any investment there are no guarantees, so make sure you have plenty of leeway built into your overall plan to cover any setbacks.”
Words: Tricia Willis
Reasons to Buy in Bulgaria
• Bulgaria is an up-and-coming destination with prices likely to soar
• Bulgaria has an incredibly low cost of living for property owners and holiday-makers to enjoy
• Bulgaria is joining the EU which will unlock relocation and business prospects in the future, with EU accession funds already evident in the improvements to tourist areas and infrastructure
• Splitting purchases between two destinations spreads the financial risk
• By purchasing properties in different countries, buyers gain a wider understanding of the difference in buying procedures, aiding judgement when looking for a new location to purchase in. An agent that operates in various destinations will handle this for you
• Choosing properties with more than one activity for holiday-makers such as ski, golf and beach, means greater potential for year-round rental income