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Bulgaria

The 7 Golden Rules of Property Investment

1. Only buy off plan property in High Growth Markets
2. Aim to invest in properties that are Below Market Value or where market values are rising very rapidly
3. Either buy properties in the early phases of developments or early phases of neighbourhood regeneration
4. Only buy in markets where there is growing demand from the local population
5. Minimise risk by ensuring contracts are robust and you have a good lawyer
6. Buy at the best possible payment terms and take advantage of long development lead times where possible
7. Invest quickly in great deals - don't wait for the perfect deal that may not exist

Find out more »

• Located in the aspirational residential area of Vitosha, this landmark luxury development incorporates swimming pool and spa with views of Mount Vitosha
• White finish is included in the prices which is very unusual for Bulgaria. The total price of units, including white finish, can be mortgaged
• Prices start from £79,164 and an independent valuation has valued our units at 10.9% below market value - excellent value for a capital city
• Property Secrets have negotiated a 5.5% discount off the list price. We also have payment terms with only 20% down initially
• New metro line due to be completed in 2014 and nearest stop will be 750 metres from Vitosha Tulip

Choosing where and when to make an investment can be confusing. This is why Property Secrets has developed The 7 Golden Rules of Property Investment.

We practice what we preach. Any investment opportunity that appears on our site will be based on these 7 Golden Rules.

How do we achieve this?

Property Investment companies will either generate revenue from receiving fees direct from the developer, or by charging their clients a fee - or sometimes, they will do both!

At Property Secrets we believe that choosing to pay a fee is a great way to ensure you are accessing the best deal.

Why?

When choosing an investment, we believe it is essential that you only work with a company who are committed to putting their clients first. Choosing to pay a fee is a great way of ensuring this. When you pay a fee you can be much more confident that the property investment company is working for you, not for the developer.

What's more, when you chose to pay a fee you can expect to get better terms on the investment and to also access the very early phases (even the pre-release phases) of opportunities when developers simply will not want to pay anyone a fee themselves - and this is what we do to meet the 7 Golden Rules of Property Investment .

However, we also recognize that for a number of investors, it is becoming increasingly important to minimize the level of the initial cash outlay. We are now finding that investors are becoming more willing to sacrifice some elements of the deal in order that any fees are effectively collected from the developer as a part of the price in return for weaker payment terms or loss of discount.

So is it really possible to find a no fee deal that meets the 7 Golden Rules of Property Investment?

In the early phases of an emerging or new investment market then the answer will almost always be no. In general, we believe that investors should always pay a fee as this is the only way to ensure that they can access a Below Market Value (BMV) deal and secure reasonable payment terms not offered to the local market.

However, in maturing emerging markets such as Czech Republic the situation is a little different. A larger number of the developers - and their finance partners - are more sophisticated and as a result are a little more flexible.

Given Property Secrets' track record of success in these markets we are now finding that developers will offer us a choice - either take a 5% discount on their list price or accept a 5% fee from the developer. This means that so long as the list price is below market value, we are able to structure a deal that enables investors to take advantage of a deal that meets our 7 golden rules - without having to pay a fee up front.

Which is best?

Our view remains the same. Deals that involve the client paying a fee will in the long term prove to be the best investment opportunities. However, we also believe that in maturing emerging markets (and in exceptional cases of international developers in newly emerging markets) the margin of difference between the fee and no-fee deals is reducing.

As a result, we remain committed to the client fee based deal - but we accept that the short term cash flow needs of certain investors dictate that they can only invest in a deal where the fee is collected from the developer.

Therefore, we have decided to search for best value and the best opportunity under both structures. All our deals will meet the 7 golden rules of property investment, but we want to let you - the client - decide which route best fits your personal investment needs and which will offer you the best return on your investment.

Table 1 (shown below) compares the different deal structures available in a mature emerging market. Clearly option 2 offers advantages for clients looking to minimize the initial cash outlay, even though the total price of the property is higher, and as such is an example of a deal we may choose to run as a no client fee deal.

Table 1

	Purchase Price	Below Market Value	Payment Terms	Sourcing Fee	Total Property Cost (exc. Legal Fees)	Upfront Cash Required
Option 1: Client based Fee	100,000	13%	10 / 90	4,000	104,000	14,000
Option 2: Developer based Fee	110,000	4%	10 / 90	0	110,000	11,000

However, there are also occasions where asking the developer to pay the fee just doesn't work for you you. An example is shown in Table 2.

Table 2

	Purchase Price	Below Market Value	Payment Terms	Sourcing Fee	Total Property Cost (exc. Legal Fees)	Upfront Cash Required
Option 1: Client based Fee	100,000	13%	10 / 90	4,000	104,000	14,000
Option 2: Developer based Fee	105,000	9%	15 / 85	0	110,000	15,750

If you would like to find out more about the different investment options, or would like to discuss the difference between fee and no-fee deals and which is best for you, please contact our Portfolio Development team on +44 1270 539 576.

Happy investing, whichever route you take!

Neil Lewis
CEO Property Secrets

• Located in the aspirational residential area of Vitosha, this landmark luxury development incorporates swimming pool and spa with views of Mount Vitosha
• White finish is included in the prices which is very unusual for Bulgaria. The total price of units, including white finish, can be mortgaged
• Prices start from £79,164 and an independent valuation has valued our units at 10.9% below market value - excellent value for a capital city
• Property Secrets have negotiated a 5.5% discount off the list price. We also have payment terms with only 20% down initially
• New metro line due to be completed in 2014 and nearest stop will be 750 metres from Vitosha Tulip