Article - June 30, 2007

 

Investing in real estate in a foreign country always implies thorough planning. There are quite a lot of decisions to be taken and many of them have to taken in a short amount of time, often after only one visit to the respective country. There is also not much time to find and compare prices for similar property thus there is a risk of buying an over rated piece of property (among many other risks). It would probably be best to explain the process one step at a time:

Choosing the type of real estate. You know you want to buy Romanian property, but you are not yet sure if it’s going to be land for future development, an apartment, a house etc.
This depends on a multitude of factors; the most important being how much money you have available. At this type probably the most financially beneficial investment would be building a block of flats or a suburban development somewhere near Bucharest or another large city like Cluj, Iasi etc. Another good investment for the future would be purchasing one or more apartments – off-plan or not - (especially in Bucharest ) or even an old house in the city center for future renovation. Of course all this depends on how much time you are willing to invest in the Romanian project(s).

Another decision that has to be taken is what agent you are going to work with. There is the possibility of working with a Romanian real estate agency, a Romanian branch of an international agency or a foreign real estate consulting company. There are quite a few Romanian agents available online through a simple Google search or just check our link page here. A Romanian branch of a foreign agent (like www.colliers.ro) would have the advantage of being trustworthy and more experienced in working with foreigners. The third choice would be working with a foreign consulting company. There are more and more of those working on the Romanian market (an example would be http://www.romanianpropertiesltd.co.uk ). Most of these have the advantage of already having local contacts such as agents, lawyers or even local employees. Obviously the disadvantage is that these intermediaries will charge an extra fee (mostly a percentage of the purchase price).
The third decision that would have to take is choosing local lawyers to assist or represent you in the purchase. We can recommend Ionita, Enescu & Cuc for both incorporating a Romanian company and actual assistance. You must note that the presence of the buyer in Romania is not necessary when signing the sell/purchase contract; a lawyer would be able to sign in your name with the help of an official Power of Attorney.
Once the contract is signed you will still have to find a local accountant to handle bookkeeping for your Romanian company and decide what to do next with your property. You can email us to provide you with contact details of a local accountancy firm; while deciding how to proceed regarding your property depends on the your type of property:
- land for development: supposing you already made due diligence before you purchased the land and know details such as percentage of the land which can be built upon, height limitations (if not you can contact a Romanian real estate Law Firm here) la etc., you will have search for Romanian constructions companies to give you fee quotations. We believe it would be absolutely necessary to travel to Romania and meet with more than a few constructors as prices might significantly differ
- apartment in a block of flats: you should probably contact a Romanian real estate management company, they could rent the apartment for you and you could start gaining profit. A company offering this service is http://www.therightmoveabroad.co.uk.
- Old house situated in the city center: you would still have to contact a construction company for renovation or even reconstruction of old architectural elements. This latter procedure would prove to be expensive but very much worth it in the near future.