“Why invest in apartments of 1 – 2 rooms and not in the ones with 3 – 4?”
(Replying to your comments)
Today I will have the pleasure to reply to some of your comments. I have tried to choose several opinions of people who disagree with me and to reply to them briefly. This does not mean that I don't want to thank all of you for your hundreds of emails, most of them for congratulations. But I guess you will agree with me that it makes no sense to present to you the nice words.
1. On 02.06.2010, Dan P. wrote to me regarding the post: Primele 5 luni ale anului. 5 + 5 lectii pentru piata imobiliara
"When negotiating a residential property, the margin is not more than 5 – 7%"
"Example: An average property in Bucharest was in the past around 100. Now the asked price is 60 and the real price is 40. I don't expect this price to be down with 10 -20 but there will be many more properties for sale for 35 – 45. (in some cases, the prices will be bigger, other prices smaller)."
You want to say that for an apartment (I guess you were referring to) you succeed to negotiate from 60,000 euro to40,000 euro? This mean a negotiation of -33%. I honestly doubt that you succeed this. The only exceptions from the rule are just some "occasions" when people need urgent money and they drop from the price (from 60k to 45-50k) but I doubt that they will drop the price to 40 k. Maybe you are referring to CF2 apartments or apartment with various legal problems, or with stupid neighbors, infected neighborhoods (considering above mentioned issues automatically the price was 60k and the owner , just tried to reach the sky, maybe he would have found a stupid.
Lately I saw that you publish on your blog the fact that the margin of negotiation for residential properties are bigger and bigger.
For other type of properties, (especially land) I know that are negotiable even up to 50% depending on different characteristics but for residential, the margin it is not more than 5-7% (I here refer to Bucharest)
I was referring to properties in general, I didn't specify a category of them. My rule applies to acquisitions of higher value than 50.000 – 60.000 Euro, where the price does not allow too much "space for negotiation". But still, I consider your 5 – 7% too little (except if the asked price is already modified and it is close to the real one). We buy properties when we consider the price good for us. If not, we move on to the next property.
2. On 02.06.2010, Florian wrote to me regarding the post: http://http://www.iliaspapageorgiadis.ro/en/primele-5-luni-ale-anului5-5-motive-pentru-piata-imobiliara/
"Here we are in the Balkans, we have our own spirit, we are not Germans, British or Japanese"
"I watched from close the problems you experienced with hiring of personnel. Fine, I have notice that you give only negative examples, the others being just "normal" and it sounds more or less as an exception. You must understand that Romanians passed though a communistic period when the state was giving you (what it could give) and you were expecting to receive. Of course when you stopped receiving the state was to blame, also the work were somewhere between meaning that you were tricking the state and you were also stealing because if you steal from the state it doesn't matter.
I don't defend Romanians – sometimes they are ridiculous but there are also other people. I don't think that we must make a rule just because some people are jerks . And moreover, the spirit of Balkans is very alive in this area, Romania, Buglaria, Greece, etc.
Remember Zorba the Greek ( Anthony Quin) he loved life more than work .
That is the "balkanic" spirit.
We are not germans , british or japanese .
And i am not proud you know.
See you Ilia"
I am very proud for some of my colleagues over the last 6 years I am in Romania. And ofcourse in my blog I write to you about the exceptions and not the rule. But what should I write? Did we reach the level when news is when someone is serious? I hope not.
Call me romantic, weird or however else you like, but I believe a lot in Romanians. I think that things can improve only when we criticize and present the mistakes, in order to fix them. Also like this it will be an indirect "congratulations" to the serious ones in this country, whose number grows every day and week.
About Balkans… I will contradict you by saying that people in this part of Europe not only know how to work hard, but most of the times they bring better results comparing their competition. Unfortunately they decide to sit down and work hard only abroad, as the local environment many times does not appreciate these values.
3. On 02.06.2010, Mobutu wrote to me regarding the post: http://http://www.iliaspapageorgiadis.ro/en/preturile-cerute-nu-sunt-cele-reale-puteti-sa
"The real prices will be smaller"
"I make a quote:
"Taking into consideration the REAL prices, I insist, we reached the rock bottom".
Honestly, the hard times we will experience in the rest of 2010, also 2011 (international as well as in Romania) I seriously doubt that "we reached the rock bottom"
It is obvious that the REAL prices will be smaller.
Who has money, can wait……if you buy now, for sure he will be scamed".
I agree with you. Comparing to the asked prices today, the real prices will be much lower in the near future. On the other hand, we should keep in mind that when we buy a property, we don't buy only having in mind the price. Location, quality, future appreciation and many more factors should be in our mind.
4. On 27.05.2010, the same reader also wrote to me regarding the post: "Razboiul" intra in ultima sa faza. Cine va castiga? Dezvoltatorii, clientii sau bancile?
"The property of 100.000 Euro will drop to 50.000 Euro next year"
"Who will win this war"? Nobody! When a war starts, all parties have collateral damage. Therefore we suggest the three parties to sit down and reconsider. If they will not collaborate now, will all lose in the future".
I wonder what will "lose" the client if he doesn't buy now with 100,000 euro and will buy for example next year with 50,000 euro.
Misinformation, the only problem is exclusively at the developer and financier, the end customer does not have anything to "lose"."
I am glad that you see the future with so clear perspective. Just one short comment. The way you talk reminds me of the people who were talking during 2007 – 2008. 90% of them "predicted" that the prices would skyrocket once more "in the next 12 – 24 months". I agree that the prices will continue falling, reaching the reality. And once more I remind you that this reality already exists: When someone really wants to sell his property, he receives a price which has absolutely nothing to do with the "official asked levels".
5. On 27.05.2010, Alexandru asked me, regarding my post: Cum sa scoti profit maxim din 100.000 euro
"Why not an apartment of 3 or 4 rooms?"
Because when we buy properties for investment purposes, we try to exploit our capital in the best possible way. Apartments with 3 or 4 rooms have lower rental price comparing to the apartments with 1 or 2. So, if I can buy 2 apartments of 2 rooms, I will have higher monthly income than an apartment of 4 rooms in the same building, with same characteristics (example: 2 apartments of 2 rooms.
Also, as each investment should have an exit plan, it is easier to sell a smaller apartment than a bigger one, the majority of people prefers small surfaces too.
Exception to the above: The apartment we buy in order to live in. Then it can be bigger, more expensive etc, as it is supposed to be part of our life for the following 15 – 30 years (average time worldwide).
6. On 27.05.2010, D. asked me a question about my proposal: http://http://www.iliaspapageorgiadis.ro/en/1adaugati-valoare-cladirilor-vechi/
"Did you ask any engineer about the life duration of old blocks?"
" It just my pure curiosity, did you ask any engineer- constructor about the life duration of the blocks constructed from concrete (especially the ones build from concrete boards and not turned on frames)?
Ask please and post the answer on your blog "
I did ask. The answer is that there are always techniques to prolong the life duration of a block made of concrete.
7. On 27.05.2010, Matei P. contradicted my proposal: http://http://www.iliaspapageorgiadis.ro/en/1adaugati-valoare-cladirilor-vechi/
"We will wake up in a city of polystyrene, painted in the cheapest possible way"
- We will wake up with a city of polystyrene obvious, "the cheapest" – painted and colored in all ways
- The lack of parking spaces it is hard to replace it, because of the high density of constructed properties
- The lack of parks/green spaces/ gyms/ sports field – the plumbing effect of the 80's ( In military is the botanical garden, and the campus of the Politenica University – none of them should be a park).
In conclusion, some areas can be renovated/ rehabilitated in order to sustain a modern housing project and as the other places they certainly are compromised without major changes .
The main idea would be to increase the variety of the façade finishes, and facades, ventilation, etc."
- When we start such a programme, it is obvious that there should be rules and restrictions, in order to avoid chaos.
- In Greek we say "no need to cry over the broken eggs". So, as this is a fact, we should live with it and try to improve things from now on.
- Do you know how much does it cost a project of urban rehabilitation, by "rebuilding" major areas? And who will plan it? The same people who planned the expansion without regulations over the last years?
But on the other hand, I also agree with you, it is better to build all the city from the very beginning. Is it possible? No. So shouldn't we try to improve our life today (and for the following years), as there is no clear sign that until 2020 we will be able to dramatically change the balance between new and old blocks? Or we should just remain idle, wishing things to improve by themselves?
8. On 27.05.2010, Bogdan A. focused on the energy part of my proposal: http://http://www.iliaspapageorgiadis.ro/en/1adaugati-valoare-cladirilor-vechi/
"Any part of Romania can support green energy investments"
The idea of rehabilitating old buildings is not new and it is profitable on a long term not only for owners of the renovated apartments but also for the national energy system and consequently for the energy security of the country. A passive house does not need heating or air conditioning and even if such performance cannot be achieved within old buildings a solid and sustainable rehabilitation would provide significant reductions in energy consumption as well as in electricity.
The cheapest (it is even profitable) and accessible investment in energy security is the energy efficiency, from generation to transportation, processing, distribution and consumption.
The money that is intended to be invested into gas pipeline ,from unsafe sources, can be proved to be a profitable investments when reducing the consumption at home. With this we can reduce at least 30% of energy need we consume here.
The energy efficiency measures together with an intelligent exploitation of renewable energy resources that Romania disposes off, could quasi provide us an energetic independency for the following 10-20 years.
Few people know that Romania has a good potential of all types in terms of energy sources (sun, wind, geothermal, biomass). There is hardly a region in Romania that could not sustain such a local resource. Implementing of energy efficiency and renewable sources (with reduction of emissions) are subject to EU directives that we theoretically speaking have adopted and will adopt in our national legislation.
Finally, the harsh reality , Romania deprives us of a beautiful future. Peoples thinking here is narrow and the only development method of which are capable the people who leads us are cuttings and inappropriate investments .
Unfortunately people are oppressed in the fight for survival and have no longer any mood to start something from their side with power. We are a starving and disgusted country led by some incompetent thieves..
Hopefully at a given period of time, skilled people, will take the lead and they will be able to give Romania a free way towards development and to revive people's enthusiasm..
I will not comment the part of your political beliefs, this is your own opinion. Regarding the rest, more or less I agree with you. But except the "bad politicians" that you blame, you should also remember that people are the ones who vote for them and they are the ones who really create our society.
Regarding green energy and the "intelligent" investments in a building, it is obvious that I agree with you 100%.