Buying A Property In Croatia
Despite this positive outlook, a foreign property investor wanting to buy a property in Croatia may come into difficulties and may be disappointed with their return on investment. The following are the most common problems we see foreign investors face.
Investing away from your hometown means you can face obstacles such as language, lack of knowledge of local customs and laws, and having no trustworthy contacts. Not having these on your side may mean you end up signing a contract that doesn’t protect your interests. We have heard horror stories of contracts not handing over ownership, pre-existing mortgages on the property, and problems with the property only being discovered after the sale.
Buyers often look for quality, and sellers often say they offer quality. But quality is one of the most abused and empty words. Price seems to be a good indication of quality. However, the highest price can be misleading. It is simple and fast to manipulate numbers, and often villas are built for a lot of money, but the construction hasn’t been properly supervised and the build quality suffers. Without a standard set for quality, and an agreement establishing this, it is very hard for quality to be guaranteed.
Apart from having to dedicate a lot of time and effort into marketing your property to prospective guests, there are significant risks and uncertainties when renting your property, such as:
- Late or no payments;
- Guests damaging the property and not paying for repairs;
- Unexpected maintenance costs;
- The law supporting the tenants not you, in case of problems.
These risks and uncertainties mean that often you don’t know what your income will be, and it’s normally lower than expected. It also means you don’t know what your costs will be, and they are always higher than expected.
Renting a property is also very time consuming. Once you have guests booked in, you have to welcome them at whatever time they arrive, make sure the property is clean, do the laundry, fix any problem, and be available 24/7 for their every need. If you don’t have a team responsible for managing your property, it can be more engaging than a 9 to 5 job. If you do go for a management company, they can end up taking a significant portion of your income.
5. Re-sale problems
The day may come when you want to capitalise on your asset. But selling your property in a foreign country can be as difficult as purchasing and how can you guarantee an agent will represent fully the value of your property. It is important that you are fully represented to maximise your return. It is equally important that you invest in a country where property prices are growing, so you don’t lose value when re-selling your property.