When the question of buying or renting a home arises, then, as a rule, people begin to weigh all the pros and cons for a long time and painfully. And most Bulgarians have (as well as immigrants from the countries of the former socialist camp – ed.) There is a strong feeling that renting housing, in comparison with its purchase, is, so to speak, "money down the drain".
The result of this attitude is the fact that the percentage of owners of their own housing in Bulgaria is one of the highest not only in Europe, but also in the world. Among the "competitors" are mainly the countries of Central and Eastern Europe, including Romania.
If you remove emotions and habits, then before buying real estate (for living), you need to ask yourself two questions – do you plan to live in this house or apartment for the next 15 years and do you get a stable income? If your answer to both questions is "no", then don't waste time thinking further about buying a home. There is another important aspect for this issue – the presence of a sufficient "stash" for life. Experts advise buying real estate only if you have at least 20% of the purchase amount left after the purchase.
Here are several pragmatic approaches that determine the financial the expediency of buying or renting real estate.
Rule of 15 "leases"
Some highly respected experts are convinced that buying a home is a financially profitable enterprise if the price of a house or apartment does not exceed the amount of rent for 15 years. For example, if you live in a two-room apartment in Sofia and pay about 250 euros for rent, then it will be considered profitable to buy the same housing at a price of up to 45,000 euros.
Taking into account the current prices for housing in the Bulgarian capital (according to the imot.bg website, on average about 1 thousand euros per square meter), it turns out that for this money your housing will have an area of about 45 square meters, which, you will agree, is not much at all for a two-room apartment. If the housing is larger in area, then most likely you will not fall into the "frame of expediency". Unless you manage to find an option at a price below the market average.
If we talk about a three-room apartment, then with an average rental cost of about 350 euros, the price The purchase should be somewhere in the region of 63,000 euros. This means that the area of a three-room apartment will be about 60-65 square meters, which is also very small for a full-fledged two-bedroom apartment. Hypothetically, the choice in favor of buying will become a more profitable enterprise if the growth of rental prices outstrips the growth of purchase prices…
The 40 percent rule
This method of determining the feasibility of buying before renting and vice versa applies to the purchase of housing with a mortgage. Some experts are sure that you will most likely not face a problem when repaying the loan if the amount of the mortgage payment does not exceed 40% of your monthly income.
Let's say you have 20% of the purchase amount to use as a down payment. Then, in cases of buying the above-mentioned two- or three-room apartment in Sofia, the situation will look like this: to buy a full-fledged apartment with an area of 60 sq. m., with an average cost of 1 thousand euros per meter, you will need about 60 thousand euros. If there is a 20% "stash" for the down payment, the mortgage amount will decrease to 48 thousand euros. If you manage to take a loan on the most favorable terms offered by Bulgarian banks today (foreigners sometimes manage to get a loan on the same terms as Bulgarians – ed. MC "OvBg"), then you will need about 270 euros per month to repay the loan.
In case this amount does not exceed 40% of your monthly income, then it must be at least 675 euros or 1350 BGN. If we take a three-room apartment worth about 80 thousand euros as an example, then after paying 20%, the amount of the loan balance will be 64 thousand euros, and the monthly payment will increase to 370 euros. This means that your income must be at least 925 euros per month.
Currency Calculator
The third way to determine the feasibility is to use a currency calculator. As a basic condition, let's take the current level of the cost of renting and selling a three-room apartment with an area of 85 sq. m. with financing 80% of its value with a mortgage (we also set the current basic inflation data – 2.3%, expectations of an increase in the cost of rent – 2.5%, purchases – 3% and the rate of alternative return – from 4%).
In this case, buying becomes a more profitable venture before renting if you cannot rent the same apartment for less than 360 euros. But the reality is that today in Sofia it is possible to rent a three-room apartment for the specified amount. In other words, renting and buying a home today are equally profitable. But this statement is true if you plan to live in this housing for the next min. 9 years.
This means that your decision in favor of buying or renting a home is more of a personal matter preferences and expectations from the real estate market. It is impossible to assess the prospects of which in any single correct universal way. However, the use of several approaches will help you decide which option to choose in the end – to rent or buy.
The opinion of Bulgarian experts about the cost of living in Sofia was given in in this article. By this link You can get acquainted with the properties for sale from the owners.
Based on materials: money.bg
MC "Window to Bulgaria"
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