Hi All

I need the tribes advice on something. Ive got an opportunity to buy a villa in spain (polaris world) direct from the bank.

 

Background

Polaris went bust owing the 4 main banks they used an awfull lot of money. They are basically too big to fail so have struck up certain deals with the banks where the banks took some properties and land back.

 

The villa is a 3 bed detached with its own pool in a 24 hour secure compound, shops, restaurants, bars etc usual stuff

 

The property im looking at was selling for 400,000 euros 18 months ago and i have picked it up at 265,000, but thats not the best bit.

 

I have been offered a 110% mortgage with the bank (bank popular). i dont have to pay any deposit and all my fees are paid.

 

Its 2 years interest only at 2.5% fixed then 0.5% above eurobor repayment

Ive had a couple of trips over there and the region is stunning, lots to do, Murcia is a huge cosmopolitan place (not what i expected) and the europe version of paramount world will be only 20 mins away

 

Its also on a Jack nichlaus Golf course so renting to golfers is definitley a possibility.

 

As im a control freak ive checked and double checked the figures as i would when i buy a property or even a business, but something is still niggling at me in the back of my mind, probably as its that far away (2hrs 30 isnt that far though)

 

Has any one had any experience of buying abroad, any additional advice would be greatly appreciated.

 

Thanks

JP

 

PS - Thought about renting to LHA but i dont think Easington council stretch that far

Hi JP,I hope you enjoyed your holiday.That financing sounds really suspicious to me tbh.  It was that kind of financing that caused the Spanish market to collapse in the first place.Most banks have gone completely the other way with much larger deposits and cherry picking clients, so I think it strange that any bank would make such an offering.  And do you want to be in 10% negative equity from the get go?  Spain is in a terrible state and may need a bail out soon, plus the Euro is in a dire way.  In a recession, people do not travel far, which is why the U.K. holiday let market is booming.  Also, interestingly and BTW, the motorhome market.  There are some very attractive BTL opportunities for motorhomes, including 100% finance and rental guarantees.  A motorhome for Glastonbury weekend (sleeping six) costs £1500 to rent and they were all booked by October last year!!If it sounds too good to be true .... etc.  Also, find out about the management company and how many people are in arrears with their service charges.  Lots of overseas developments are falling into terrible disrepair because investors have stopped paying the service charges due to being financially challenged in the U.K..  This means that you cannot rent your property out because the swimming pool is dirty and the communal areas have had electricity cut off.  I suspect this problem is going to become a really serious issue in developments with high levels of "boom time" investors.

JP,

 

I know just the person to speak to, I'll pass on Louise's details when we meet up tomorrow.

Yes, speak to Louise Reynolds, Helen Eade, and Tumbit for further input.

Hi V
The management is done by one of my staffs parents, who I have met before. I've also been over there 3 times to meet them. Their from the same area as I am so I'm happy to trust them. If I didn't know them I think it would be a different matter
Regarding the bank, I've also met the bank manager and the solicitor handling the transaction, so feel pretty comfortable with them
Still wary as its in a different country, probably nerves. I feel the exact same way when I bought my first property, the exciting butterflies and nerves.
I've also got 9 weeks booked in already from friends and contacts so on paper it seems a no brainer

My Initial thoughts are that the property is still overpriced. At the moment Spanish banks are in a position where they hold too many assets in property and have a deadline to meet in order to reach core capital ratios of between 8 - 10% (depending on whether a listed bank or a caja). Add that to the fact that there are still a number of properties on the various Polaris resorts that are unsold / have been repossessed recently and I believe that you could hold out for a better deal.
- On the plus side, the Paramount theme park (to be open by 2015) and the new Corvera airport (to open later this year) 'should' have a positive impact on the region.
Tread carefully here and don't be too keen to rush into making a decision - some experts are estimating that property prices still have as much as 8% yet to fall.
http://www.tumbit.com/news/articles/3250...-open.html

Seems expensive, I was offered a 3 bed detached villa off plan in 2007. It was in the Santa Ana golf development in Jumilla (also Murcia not far from Polaris World) and expected value was only 200,000 euros before the credit crunch kicked off.

 

I didn't go ahead as I saw the Northern Rock crisis on the news and figured a run on a British bank means the sh*t was about to hit the fan. As far as I know the development never completed, it was marketed by Equity Property Portfolios who subsequently went under despite offering all types of guarantees. The lesson I learnt from this lucky escape is I would never touch Off Plan with a bargepole.

 

As the one you have been offered is already built then obviously the off plan issue isn't there, I guess my point is 265,000 seems high for Murcia considering Santa Ana predicted 200,000 pre-crunch.

 

 

Hi Tumbit
The thing I can't get my head around is that villas are getting sold at around 300, this one was cheap as some one pulled out at last minute and I could move quickly with regard to viewings etc.
Do you have an opinion on the different polaris resorts, its on the el valle resort, the apparant flag ship development.?
Thanks in advance

I know this is a bit sensitive as it involves people you know but, how do you know that villas are getting sold for 300 Eur? Is it because someone has told you that or, because you have checked against the equivilant of the Spanish Land Registry?

 

In either case how many 'villas getting sold' are there? and over what time period, what spec. etc.

Hi JP would also say it seems a lot of dosh in current market. We bought just over 3 years ago, completely wrong time but as I had to do as I was told by SWMBO (well it couldn't possibly be my fault could it). Lots and lots of empty props in and around polaris world so my view would be if you really want it (for yourself) and can afford it, then do whatever your gut tells you to do... but if you want it as investment and are swayed by the finance as you've described it, then I'd pass.

 

ps - also when you say it's secure etc assume it's part of an existing community (i.e. pay proportionate charges to the community). If so ask to see figures from last AGM which will give you an idea of numbers of defaulters and so you'll get a fairly accurate impression of the current state of play there. Agents etc wont know anything on that score only other people in the community. It's fine getting someone to rent the first time but will they want to go back again? thats what I'd be asking myself.