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Investment Strategies

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Investment Strategies

In the years of “real estate fever” to earn real estate investment in the short term it was relatively easy. The fact is that the world economy has been booming since 2000, which normally led to a dynamic investment environment and, accordingly, to increased demand. The real estate sector, as one of the most important parts of the economy, was also not overlooked by this development and, accordingly, reached a global “boom” in prices. Specifically for Bulgaria, at that time an average annual growth rate of about 20% was recorded for property prices, according to calculations of the experts of Excel Property.

This development brought substantial capital gains to property investors around the world, but unfortunately the price bubble burst in 2006 in America, and quite logically, following the “domino effect”, the collapse of the real estate market reached Bulgaria over 2009 year. The ensuing global economic crisis and financial recession, which has led to property devaluation in some cases by up to 50%, has put professional real estate investors ahead of great trials that have forced new rules to be written in this game.

In our role as consultants, we at Excel Property will try to help you with our advice to find the method and the most suitable real estate for investment.

First of all, budgeting is always the basis for future growth and profit generation. This is the key factor in which you must be realistic about your investment opportunities. Here we have to note that there is a risk for any investment, including real estate. These risks can be categorized in a variety of ways – such as your own risk, economic risks, and others. Every good real estate broker will tell you that the risks are not a scary thing, just a proper strategy selection is needed to minimize those risks and thus choose a profitable investment approach.

The next step is choosing a promising investment region, which in no way means the most expensive or cheapest. Here the location, land and construction indicators for its construction, demographic criteria, etc. are of key importance. The main factor determining the price of a real estate and the prospect of its development is the way of permanent use of the property, which is divided into three main categories – residential properties, holiday properties, offices and commercial areas.

Last but not least, there is the choice of the type of property to invest in, depending on the strategy you choose. This can be a house, a villa, an apartment, an office, a shop, a plot of land and more.

There are many other circumstances that play an important role in selecting a real estate for investment such as number of bedrooms, property status, garage, garden, pool, etc. All of these are considered individually, in the aspect of the particular transaction, related to the pre-selected investment strategy.

Undoubtedly Bulgaria as a country is quite interesting in terms of its geographic location. The real estate market remains one of the most preferred investment alternatives for Bulgarians and foreigners for a number of reasons.

There are many different ways of investing in real estate, such as buying, renting, repairing, collecting and dividing property, changing the purpose, etc. Identifying and choosing the right investment strategy is at the heart of success.

Now we will introduce you to several key strategies for successful real estate investment:

1. Buy and Sell Fast – This strategy is based on the principle of real estate purchase and quick sale. An investment of this type is recommended to professionals – people who have developed commercial flair, make fast decisions and are ready to take risks. Very often it may be that in this type of investment, after deduction of capital costs, agent commissions and tax charges, the profit is very low, but to be cost-effective the most important remains the period for which it is realized.

Another important condition here is that players with CASH positions on their capital invest. The basic principle in choosing this strategy is the purchase of a real estate whose price is well below market value. This low price is determined by various force majeure circumstances, for which the owner is forced to sell his property quickly.

There are many variations of this type of investment, with only one example of this being the property auctions sold by private enforcement agents in Bulgaria.

2. Buy and Keep – This is the most commonly used real estate investment strategy because those looking for stability and security for their capital set up long-term tasks. If you put yourself in the position of a long-term investor, it is a difficult task for you to carry out in-depth studies, comprehensive analyzes and studies of the particular real estate and the prospects for its development.

This is a rather complex process and there is a set of professional evaluation factors that you must take into consideration before selecting the most appropriate investment opportunity for you. Excel Property real estate brokers, as experienced professionals, have the necessary information on economic performance, demographic data about the region, up-to-date information on legislation, construction and the real estate market based on real-world deals.

This strategy can be very strong if you have enough time to develop the full potential of the real estate in a cycle that maximizes its value.

3. Buy and rebuild – the most important condition for success in this strategy is the choice of the right location of the property. In essence, this strategy is an investment in real estate at or below market value, in a high potential area, the repair and sale of which will lead to an increase in your own equity.

The purchase of real estate and its renovation to add value has gained popularity in the years of the boom in the property market – years in which, we at Excel Property, have gained valuable experience in this type of investment that we are ready to share with you.

The liquidity of the property under this strategy is very important because resale must be done on time and provide sufficient capital for a new investment. This way, you can significantly multiply the available funds with which you have started the investment process.

A prerequisite for this is that the property, once repaired, acquires a commercial appearance that meets the requirements and preferences of potential buyers, regardless of the actual repairs that have been performed.

4. Buy and lease – the conditions of slow economic growth, low interest rates on savings deposits in commercial banks, and stock market volatility outline the investment in real estate for rent as a guaranteed passive income for people with sufficient financial capital.

Key indicators for the profitability of this type of investment are the rent-to-income and cost-to-income ratios. Internal migration processes towards large cities such as Sofia, Plovdiv, Varna and Bourgas lead to an increased demand for rental properties – a factor that further tempts professional investors.

Like any investment, there is no 100% guarantee on buying a rental property, but if you have planned such an investment, Excel Property Consultants will help you absolutely free of charge with a few honest and objective pieces of advice to make this investment more successful.

Do not be misled by low property prices for sale, look for areas with guaranteed employment and high rental rates. As a very good alternative to this strategy, in recent years, renting property in major cities on a hotel basis has emerged.

If you are serious about investing in real estate in Bulgaria, but you have additional questions or want to discuss in detail different strategies, please contact us by email, phone or at a convenient time in one of our offices.

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