Real Estate Investments: Everything You Need to Know
In the dynamic investment spectrum of real estate, more and more people are asking themselves: “Do real estate properties preserve our money?”. According to Yordan Yordanov, Managing Director of “Nov Dom 1”, the current situation is extremely favorable for investments. Real estate properties have been the best financial instrument in the last four years. The expert in the field highlights the market stability and the advantages of the Bulgarian tax system.
Do real estate properties preserve our money?
Yes, of course! Currently, this is the best financial instrument for the past 4 years. Firstly – it is stable, secondly, it is difficult to move, and changes are easily predictable. We can analyze it and know what is happening in the market at any given moment. Realistically speaking, for the past 4 years, even for the past 10 years, there have been absolutely no market shocks in real estate. There is a slow and steady increase. The growth is good and at the moment, it will continue to have even greater growth. We define it as the most stable at the moment, the easiest to forecast, and extremely profitable.
Why is Bulgaria one of the best places to invest in real estate?
Our tax system is very low, meaning very cheap. We have only a 10% corporate tax and a 5% dividend tax. This gives us a huge advantage and opportunities over all other countries, as in some of them the total of these two taxes reaches up to 65% of the profit. In the West, the most well-known investment is buying property for rental purposes, while in Bulgaria the best and most profitable real estate investment is for capital gains from buying and selling properties. This allows us to make large profits in a short period of time, making the investment even lower risk. What could be better than earning much more in a short time, but with very low risk? At the same time, the tax due is very low, while in other Western European countries, as well as in the USA and Canada, the tax can reach up to 65%. Imagine – you make a profit of 100 thousand units! Everything, except for the minimal taxes, remains for you! In this ratio, we have a huge advantage and a huge opportunity.
According to “Capital” statistics for 2023, in Bulgaria only 21% of real estate transactions are made with loans. On a global scale, for example, in England, France, Germany, and the United States, the percentage is 80-90%, which means that properties in Bulgaria are still extremely affordable. People can afford to use available funds, and they have been using available funds for the past 10 years with much fewer creditors, which is a very good sign for our country.
There has recently been a change in mortgage lending. Is it wise to use credit for a purchase?
Great! They are mainly used by people with predictable and increasing incomes. Not suitable for buyers with very low incomes and no financial discipline. They offer a huge opportunity to achieve great wealth. And finally, let me give you an example! If we take out a loan of 100 or 100,000 currency units at an interest rate of 2.5% or 4%, or some consumer credit, and invest these funds in real estate, this is considered an investment. In one year, this investment can generate a minimum net return of 12.5% or even 13%. Assuming a more conservative scenario with a 10% return (which is relatively low), we will still achieve a significant result. The loan of 100,000 units will result in interest expenses between 2500 and 4500 units to the bank. At the same time, the investment will bring at least 10,000, and possibly 12,000 or even 20,000 units of income. What happens? You borrow money and thanks to them, you realize a good profit. In reality, your loan servicing cost is between 2500 and 4500 units, while the return is significantly higher.
With an investment ranging from 2500 to 4500 leva, you can achieve an income of 10, 13, 20, 30, or even 40 thousand leva. People with good financial discipline, who understand what they are doing, can use credit to significantly increase their wealth or accumulate assets. This is the path to success, but it comes with risks and is not suitable for everyone. Those unfamiliar with investing may make mistakes. For those who understand investments, however, bank loans can be a powerful financial tool, even if they rarely use them themselves. If you lack sufficient experience in investing, it is wise to seek help from a specialist who can assist you. With the support of a proven expert like “Nov Dom 1,” you can achieve financial freedom.
Why is flipping a better investment than renting out?
If we buy an apartment for 120,000 euros, pay notary fees and commissions – 8,000 euros, and add another 40,000 for finishing and furnishing, the total investment will be 168,000 euros. By renting out this apartment for 600 euros per month, the annual income will be 7,200 euros. After paying taxes (720 euros), the net annual profit will be 6,480 euros. Over 10 years, this amounts to 64,800 euros, assuming 100% occupancy and no need for repairs or improvements.
The conclusion is that it will take more than 25 years to recoup the investment, making this type of investment long-term. It is also mentioned that 25 years is a long period, and if a person is over 40 years old, they may not live to see the end of the investment.
If you invest 300,000 leva and actively manage these funds, it is entirely possible to double your investment and reach 600,000 leva within 5 years. Over time, in 20 or even 30 years, the amount can increase even further.
Thanks to the investment opportunities in Bulgaria, you have the chance to accumulate wealth much faster, ensuring you a better standard of living. Success and financial stability will make you feel satisfied and happy.
With the right strategy and taking advantage of the favorable economic environment, tax system, and real estate security in the country, you can have a wonderful life with less effort.
Renting out on booking brings higher profitability, but it is an additional business. In other words, if you are already working on something or have a business, it means you have to deal with an additional business, take extra care of it, maintain it, which is a commitment. The most valuable resource in the world is our time. And no matter how little it is, it is constantly being spent, and we actually earn income for our time. The program we have created, “Make money while you rest,” does not waste a second of your time, on the contrary. You provide free time and while you rest, you can make money.
Should people worry about additional expenses related to the investment such as commissions, municipal fees, taxes, and so on?
If they invest, they do not worry. If they invest with a gradation and do not worry that they will not have incurred any expenses. Everything is calculated. Note that I am talking about net profit. I am not talking about profit from which, after deducting the expenses, almost nothing remains.
What is the best formula to achieve a minimum profit of 13% through real estate?
With a good payment scheme, every investor can avoid problems when selling the property. It is important to understand that excellent returns can range from 10% to 20% depending on the conditions, for example, 10% at 90 out of 16 or 20% at 80 out of 16. However, the key factor is the price at which you buy the property. Therefore, it is wise to trust professionals in the field.
There are risks associated with missed opportunities and losses. For example, a friend of mine is looking for an apartment in the perfect center at a price of 180 thousand euros. He plans to contact a bank to assess the property, and if the assessment is positive, to buy it. Although he will pay a commission of 5 thousand euros, the value of the property is 280 thousand euros.
The problem is that due to insufficient time and information, he may miss the opportunity to save a significant amount. In the end, without paying for professional services, he risks losing around 90-100 thousand levs in missed benefits.
One must invest in services to achieve the financial stability and success they seek.
Always trust professionals!
For Bulgarians, investing brings concerns and confusion. Real estate brings order to investment processes, as it is the most stable asset in which you can invest your funds and potentially gain multiple times.
Therefore, if you want to achieve financial freedom and build a stable future, real estate investments can be the right choice. With the program “Make money while you rest”, “Nov Dom 1” offers clients the opportunity to achieve a minimum net profit of 13% on the invested amount, thanks to the professionalism and experience of the team in real estate management. Additionally, real estate investments are considered relatively secure, and the company guarantees full capital recovery at the end of the investment period. The key to success is to trust specialists, follow a strategic approach, and take advantage of market opportunities. Investing in real estate is not just a transaction – it is an investment in the future.