Hi David,
This week a friend in Bucharest wrote that he is attempting to purchase an apartment. He was approved for a loan of 75,000 euros, but at the last minute the bank told him he needs to pay 2.5% of the loan in advance, could I help him? Are purchasers normally required to pay 2.5% in advance, and is 75,000 euros a reasonable cost for a 2-bed apartment. Thank you for your help.
Mark

Southern Knight,

You dont mention what the loan to value is ? Generally the banks will loan to foreign nationals, but require anywhere from 10% to 35% deposit. So if you have a 1005 loan, 2.5% is reasonable. However being told this just before you need the cash, is typical of some lenders

Dean

Thanks for responding. My friend is a Romanian national. I believe the loan is for the entire amount of purchase, or close to it. I understand it is a special loan for couples with good incomes. He called the 2.5% a "tax" which may be a bad translation. I would be lending him the money, I just don't want to scammed.
Thanks again. Mark

Ok, its probably upfront 'commission'. I work with Credit Europe, Bancpost and BCR here. I would be happy to have a chat with our friend, if you want.

Dean

Is this 2.5 or 25% of the loan. 2.5% is very high for an arrangement fee. 25% of the property valuation is the norm. As for 75,000 for a 2 bed apartment. I know of no where in Bucharest that you would bbuy such a property for 75,000 euro. Average 2 bed apartment will be around 100 meters constructible including common area. Pure build costs on this alsone would make it impossible at this price. No one is buying a 2 bed apartment anywhere in Bucharest let alone Romania at this money.


David Howe

Investment Romania - Property Romania, Invest Romania, Investment Romania

Dear Mark, am also very curious where your friend found an apartment in Bucharest for so little money. Has he checked up the ownership issues thoroughly prior adventuring into purchase?
Also bank's arrangement fee is too high. Could you tell me what bank he used?
Thanks,
Diana Marinescu
Transylvania Investment

Actually, it may be possible to buy an apartment in Bucharest for this money. Obviously will be the end range of the market and in some bad condition. And for this I would NOT advise the purchase. If not exactly Bucharest city then again chances are even higher, since in the suburbs there still are offers in that range.

However, if you extend your search outside Bucharest then you can then buy a NEW 2 bed one in other cities. From Mark's message is not quite clear where his offered apartment actually is. That's why it is important that Mark uses a property professional to guide and help appropriately.

David,

I wrote to you on this yesterday but the guys here deleted my response. I can easily offer you better alternatives than 210000 EUR for 145 sqms construible. All new, and actually detached villas.

Romanianoffer, I agree with you if you buy a flat in a red dot building perhaps you could get it for 75k, perhaps I say, because in Bucharest there are so many schemers and also so many naives to please them. Most of the foreigners have no idea Romania is a seismic country (seismic refers to earthquakes) and we happen to be shaken quite often, not to mention we expect a big one soon (meaning degree 7 or 8 on Mercali scale, pour les connaisseurs). Red dots were placed on the buildings already affected by earth-quakes that need immediate consolidation and that might collapse even if a big truck passes on the street! And there are many such buildings, particularly in the well respected and let's say desirable areas of the Romanian capital.
You may also buy a flat in a "nice" neighbourhood like Ferentari or you can even venture to Magurele, however don't be surprised if someone beats you up just because you happen to have "a funny face" and you don't belong to the local street gang. Anyone willing to get a place in the ghetto? Not me, nor any sane person.
As for "luxury developments" such as Pipera or Tunari areas, I'm very certain when the real estate market will crush and will crush soon, those would be the directly affected areas (frankly, I can't wait!). Common sense, which is I think very handy to anyone who keeps the eyes open when walking on the street, can tell you a city with MAJOR infrastructure problems and no systematic program to remedy the situation on the medium term at least, is not going to put tenants into apartments/villas built too far from the hot spots of the metropolis. So no wonder so many investors call saying they are forced to set up company (very bad deal, btw) in order to buy new developments in the surroundings of Bucharest and are being pressed to buy furniture packs of 10k when the real value of the Ikea quality furniture the service company places in is 4 to 5 k! No wonder fortunes are being made in Romania over night! I thought snobbery is a Romanian issue, but I see how easy it is to ask and how many fools gather around you to give! Question is once you bought, can you resell for a higher value and after paying all taxes are you left with anything?
I don't like Sydney either. Of course everything that exists on planet Earth has a value, but is the asking price correct?

Regards to all,
Diana Marinescu
Transylvania Investment