Considering buying apartment in Dubrovnik

[irac]

I know this is probably going to be laughed at, but very very often in apartments and in smaller hotels, out of season the price drops when you show interest, up to 50% at times. But the thing of "not letting the neighbours know" is an issue, and it goes the same with selling property. If people are genuinely looking to rent or sell, they will, if they don't want the hassle (cleaning apartments or papers seem for some folks to be equally as difficult) they won't.

[darcy]

I agree, out of season you can find few specials, but you need to know, it would not be easy and you will need to be "immediatelly available". (Nobody will hit you with a "3 for price of 1 for a limited time only".) There are not that many tourists without advanced bookings.

However, regarding renting outside of the rules of the pack, I do not share that opinion and my experience is quite different. Relationships in Croatia are extremely important. Their society is not based on the rule of law but on the rules of the pack and the rules of the mutual dependency. I can't put myself in a position to fight for every single peace of paper (like star rating, for instance, even when I well exceed all requirements). Now, we are their guests, so ... Hopefully that will change and they will be our guests soon!

[Carol]

This is just an idea, not market testing for a new service! After reading this forum for four years, the impression I get is that foreign owners face difficulty in running a buy to let business in Croatia because:-
1. Bureaucracy (they find it difficult to keep abreast with legislation and market practice)
2. A short season (everyone says it could be lengthened as the weather is good, but no one wants to put the effort into the advertising to do it)
3. Finding good managing agents, such that the service is reliable and the cost is proportionate to revenue/ profit
4. Marketing their property i.e. spending a reasonable amount of time and money to get reasonable results
5. As Darcy describes above, sometimes there are limitations imposed by the neighbouring holiday let owners, so a sign outside saying “half price rooms here” is not acceptable.

On the other hand, they own a property in a country which is popular with tourists, all of whom need somewhere to stay on holiday. The second advantage at the moment is that Croatia is dominated by private apartments and villas, rather than big resorts (although this will change in a few years). However, even though there are big resorts on their way, this is not all bad for the villa owners because the resort owners will pay for advertising of Croatia as a holiday destination and they will bring facilities to their resorts, such as spas or golf which will be accessible to all tourists.

So here is my idea. Why not form a consortium/ co-operative of private villa and apartment owners. Pay an annual subscription and use the money raised to:-
1. build a website which will be THE place to find private Croatian holiday lets. The annual co-op subscription would include a free placement on the website. It would be multi-lingual (which isn’t difficult to do if you have enough money to employ translators and use standard terms for the searches). The money raised would also cover a google adwords campaign to help optimise the search engine rankings.
2. employ a full time person as administrator and researcher. The research would be aimed at keeping up to date with legislation and other matters affecting tourism. There would be a regular newsletter emailed to all subscribers.
3. Maybe if you all banded together you could also pressure the government to ensure even-handed treatment for local and foreign owners.
4. The subscriptions could also pay for some limited advertising in the foreign press. At least print ads directing people to the site. Advertising in in-flight magazines might be beneficial.
5. Further revenue could be raised by selling advertising space on the website. I’d buy space on something like that which people who are coming to Croatia would be looking at and i am sure others would too.
6. By acting en-masse, you’d be more likely to find a series of reliable managing agents, accountants and perhaps get discounts for your clients for certain tourist attractions or restaurants.

[zorro]

On the one hand you are talking about a profit making organisation and on the other you are talking about a political pressure group?

[Carol]

no I am talking about a not for profit organisation. The revenue would be reinvested to pay salaries and advertising. Maybe it doesn't work, or it is unbelievably niave. Maybe it would work.

[zorro]

Oh OK, well in that case I think that it would be a good idea.

[darcy]

Idea is great, I hoped foreign real estate chains and franchises will fill that spot, but independent organization, an industry group is fine as well. I will also add to the list:
- standardised accommodation and honest start rating, so people know where they will stay and how much they get expect to get for their money.

[irac]

Carol, what you posit is very sensible, decent and workable, however, it's Croatia we're talking about and if you've even driven down to find the place you're staying, ask for the address and then find yourself "directed" to a totally different spot because the person you've asked has their own place and wants to fill a spot - it's too cut throat, and the only big foreign real estate companies operating in Croatia are looking for a big kill and largely being used to, well, dry clean money.

[andrei]

Hi,
I live in Split and work in property management throughout Croatia for 4 years, my site is www.borgandimbroll.com . Re renting 18 weeks in Dubrovnik is max and you will certainly not get enough to cover your mortgage since this is by far far far the most expensive location you are looking at in Croatia. Things are changing a little re tourist season but the first area to start getting a long season of around 30-33 weeks will be Istria. This region which is extremely well connected due to many airports around is developing several golf courses and high end tourist facilities. Also it is a villa market which is always longer. Look at the site of Villas Forum to see what kind of tourism I am talking about. If however you are looking for the beauty of Dalmatia which is certainly different from Istria then I would invest in the cheaper Split area.Trogir is a good alternative to Dubrovnik. Certainly Brac is the best place to invest with the vicinity to Split and the major investment going on there. I would also consider Peljesac for great deals as when the bridge will be completed it will become very accessible. Anyway, if you are ready to invest top money for an apartment in Dubrovnik it will still not go down in price in the future due to the low availability and unique location but it will not give you a great return and i don't think there is much space for increase though ! If you need more advice feel free to contact me.

[hb]

People do not seem to think that investing in an apartment in Dubrovnik is a good idea, due to the high costs of property and the low rentals. Many seem to recommend Istria but there you seem to have the problem of still quite high cost on the coast or in lovely hilltop towns(where presumably people want to rent mostly) and you have a short season.
Given that I read a report today that said property prices in Europe are falling with the exception in Poland and it seems better not to invest anywhere. Can somebody give me a good reason to buy property anywhere in Croatia... please?

[mambo]

There is no good reason to buy property in Croatia if you want to buy only for investment purposes...........period.

In Istria you will be lucky if you can rent an apartment 6 to 8 weeks and only if you put in a lot of effort (read: advertising, marketing = cost) you will be able to rent a bit longer.
Then you can start deducting the cost of maintenance, cost of letting the place etc and I think we can safely conclude that indeed you will not be able to pay the mortgage with that money.

Prices of houses and apartments have not gone up a lot and the ones that are asking ridiculous prices will remain for sale for years to come.

If it would be for investment purposes I would look for a max of 12 times the yearly rent as a maximum price for the apartment or house. In Istria we are talking about 20 to 30 times the yearly rent, is a bit out of sync if you ask me.

If you want to invest in anything I would go for building houses or apartments yourself and then go for a different concept: build them as cheap as you can, so as to keep the price low or go into timeshare (which will also reduce the price for the buyers).
Timeshare can easily be achieved by making the buyers stockholders in the company that owns the house/apartment.

I.o.w. if you want to do something in this country you need to be creative and get out of the standard idea of 'oh, beautiful country, let's buy a house'. Unless you have money to burn Croatia is not really real estate friendly to foreigners.