Studio Apartment bought in Bulgaria

Johnnyb_2

Hi,

I'm after some advice..

I bought a studio apartment in Bulgaria in 2006 for 61,500 EUROS and own 50% of the apartment. The complex is now complete and the developer requires the remaining 50%. = Paid £27000 owe - 37000 EUROS -

I've used finance in the UK to fund the first 50% and at the time (2006) planned to fund the remaining balance through an overseas mortgage. However due to the climate we're currently in no lender in Bulgaria is willing lend to anyone in the UK market, especially on studio apartments in Bulgaria.

I've contacted the developer, who so far has been quite reasonable. I've asked to make payments direct to the developer and am happy for interest to be charged. The developer can only do this on a short term basis, which is understandable?

I'm trying to exhaust every opportunity possible and am asking if there's anything else I can do. Bearing in mind I have nothing in the UK or overseas, unless I've missed something out there, which you know about?

We already own a villa out right, but we can't even remortgage the villa to fund the remaining 50% of the balance as this is also classed as high risk.

I may have to approach the developer for him to sell my 50% , but I'm worried about doing this incase I loose everything, as don't really know where I stand?

Any advice, much appreciated as my head is battered!!!

PM me if you want to see/know more details..

Kindest Regards

porscheking

Johnnyb,

This is a rather difficult situation to solve. I found myself in exactly the same position as you - pretty much an identical price, same type of apartment, same country, at the same time!

I tried multiple lenders to finance the deal (having remortgaged previously to pay for 60% in advance). I tried Piraeus in the UK but they won't finance a studio?

Eventually, I decided to bite the bullet and use a fair chunk of my savings to buy the apartment outright but this was a last resort. I've tied up money that needs to be elsewhere now.

Why did I do this;

*Defaulting would have resulted in penalties
*The developer already had 60% of my cash and I had nothing for it
*The more people dropping out (for the same reasons - inability to finance), the greater the risk the complex itself fails to complete
*The longer before I assume ownership, the greater the risk that the developer goes bust or disappears and it's Bulgarian Dreams Part II.
*The quicker it's finished, the quicker Act 16 can be applied for and I'd have (albeit slim) chance of re-advertising it for sale.

I can't help you with advice to raise finance but I would say you are in a very compromised position. At present, you own nothing for your investment thus far unless your lawyer has organised securities on your behalf.

It's unlikely the developer will have much chance selling until at least the summer time. Only the best deals are achieving sales at present.

I spoke to my developer about reselling my apartment - the prices have crashed and 20% of Bulgaria is estimated to be up for sale. I'd say I'd have to take 10-15% off the price I just paid to get someone interested. I've already offered my apartment back to them with a 10% discount but this isn't really enough to tempt them plus their expectation of sales is v low.

Do also bear in mind that you'll perhaps need £3k in legal fees/stamp duty etc plus maybe £2k for a furniture pack - it all adds up. I do hope you have your own lawyer and not the one associated with your developer.

This has been a v poor investment for me but much has changed in the last 2 yrs and many people will have lost much more than £8-£10k I stand to lose if I get a sale sometime this year.

I'm sorry this post hasn't helped you solve your problem but I hope it's at least been slightly informative. You're not the only person in this situation and at least your development is still under progress.

Best wishes.

GDB2222

Is it an option to simply walk away and write off your existing investment? Sorry to be so gloomy.

simpywimpy

Obviously I dont know where your investment is situated but the purchase price seems about 3 times the average cost of a studio. Personally I would look at how much agents are selling a similar property for in the area and if you see that you are paying too much for yours, I would walk away rather than lose even more money.

Johnnyb_2

Hi, I've since contacted a couple of solicitors in the UK and am just waiting for a response; and re-read over the contract which say's the following:

The section regarding payments being late it says - In case of delays in payment of any of the installments as per section II of this agreement for more than 30 days, the seller may terminate this agreement and shall reimburse to the buyer all amounts paid by the latter till the date of the termination of the contract excluding the deposit as per act 2.2.2 (which is 18,572) and after deduction of the amount of the penalty (no figure given)

porscheking

Johnnyb, where is your apartment? I see that an earlier poster mentioned you seem to be paying over the odds - however, I've assumed you're perhaps buying a v large studio or a penthouse studio. If so, in some good areas which are under developed, then your price is typical of what developers were asking 2-3 yrs ago. What they are now worth is different.

I'd say if you can get your money back then GO FOR IT. It's just a gamble in case it takes time and something happens with the developer in the interim period.

Good luck.

Johnnyb_2

Thanks for your advice,

The development is Mountain Residence 7, Bankso (permission to use, has been released) it's a studio apartment but the build and finish look fantastic. If you PM me your email I'll send on the up to date pics. When I've seen the pics it's made me more determined to fight to keep it.. It's a 5 star resort.

I was going to ask if there were other owners in a similar position on the Mybulgaria forum to see if we could maybe put something together for the developer as a group.

My mate has bought the one next door and is also holding back on payment until we know what might happen with mine after 6 months.

I'm out in May in Bulgaria, where about is your development??

Kind regards

SouthCoast

Bump............................

GDB2222

I bought a studio apartment in Bulgaria in 2006 for 61,500 EUROS and own 50% of the apartment. The complex is now complete and the developer requires the remaining 50%. = Paid £27000 owe - 37000 EUROS -

Out of interest, how do you end up owing €37k? 50% of €61,500 is under €32k.

Johnnyb_2

Hi,

I paid extra for ski storage and car park, good idea at the time!