Buying a property with loan

@TonyFF

I think LT fixed rates are a very American thang. Elsewhere, 30-year fixed-rate mortgages are like unicorns. :-)

I don't think you can say it's "prudent" to borrow in Bulgaria (if you can), and save in USA. Prudent is avoiding risk and uncertainty, and leverage and interest-rate arbitrage (plus a bit of Euro/USD currency speculation) is the contrary! :-) Many folks have done such things and greatly regretted their decision.

But, sure, if you have lots of dollars and can earn a high interest there, and you can borrow at a low-interest rate here, then I can certainly see the temptation. Especially as we seem to be in a period of high property inflation in Bulgaria.

But, hey, I'm Mr. Conservative... zero debt... no crypto... all properties purchased for cash. I'll admit it's very dull. But I'm very relaxed, I don't care what interest rates do, or what happens in the property market. :-)

Well... I do have almost exclusively dividend-paying stocks in my portfolio. That's a little bit risky, innit?!

I've never tried/needed to obtain a loan/mortgage here but, from what I've heard, for foreigners it's pretty much a forlorn hope!

@gwynj

I understand  your point. You feel better if you do not owe anything to anyone.

You may end up underselling  your properties one day though. When the war in Ukraine started a lot of Russians undersold their properties  at the Black Sea for fear of hostilities against them.

I am a very conservative in general. During Trump administration the mortgage interest rates were between 2-4 % . Now they are close to 7%     If you purchased a property/or refinanced an existing one between 2016-2020 let’s say at 2.5 %  and got 30 year fixed loan this is a win-win situation.Very cheap financing. And low monthly payment. You can borrow even more money within the loan and invest it and your house may end up being free.

If you do not have a mortgage in America  you pay much more money in taxes( I mean thousands of dollars more in the pocket of Uncle Sam).  For investment property cash is always king .

I am exploring and studying the Bulgarian market. It is totally different and at this point I am only learning and I am  biding my time:)

@TonyFF

I *may* get run over by a bus tomorrow. But, in the meantime, I live an almost entirely stress-free life. Not entirely down to my views on debt, but certainly that's a big part of it. I don't usually think of myself as a FIRE guy, but I'd guess most of them would approve. :-)

I believe the USA to be a very different situation. You've highlighted two key aspects of their housing system which you don't typically see elsewhere. Those are long-term fixed-rate mortgages... and extremely favorable homeowner tax treatment for mortgages. It can go wrong, of course, if your timing is very bad (e.g. very high interest rates, or just before sub-prime goes poof)... but, in general, most folks there would see it as prudent to borrow as much as they're allowed, for the maximum term possible.

If I'd stayed in the Bay Area, and stayed in a high-paying tech job, I'm sure I would be paying a mortgage right now. Indeed, the prices are so ridiculous that it's almost impossible for most folks to buy anything there without a massive one!

San Francisco and Marin County are wonderful. My all-time favorite walk is up Mt. Tamalpais and down to Stinson Beach. At the time, it was a tough decision to leave my buddies behind... and I wondered if I could stay on the farm after seeing Paree. :-) But Bulgaria has surprised me... and rewarded me. And I think the country deserves to be better known as a retirement destination.

However, while I am invested in the Bulgarian property market... I did not come here for investment reasons, and I don't advocate for Bulgaria as an investment destination. Rather, it is simply a rather nice place to buy a property to live in. And that's probably a good way to start. I suggest a nice apartment in a park-adjacent district of one of the largest cities (Plovdiv, Varna, Burgas, Stara Zagora... I ding Sofia and Ruse)... or, a nice country house in a good village, somewhere very scenic.

Good luck with your search!

@TonyFF

I am glad you enjoyed the Bay Area- it is a very unique place. My wife and I own a house for a long time in the East Bay  ( we have a lovely ocean  view). Re. Bulgaria- we are exploring possibilities. I have my extended residence which I will keep renewing.  As we get older it is possible to make a permanent move.

We like Pirin mountain and the area around Sandanski ( the mild climate, the  mineral springs ,the proximity to  Sofia and the Aegean Sea). 

@TonyFF

East Bay... house... ocean view... lucky you! You can sell it and live like a king in Bulgaria. :-)

I lived in Berkeley for a time, and my sister has been living there for many years (San Leandro then Walnut Creek). She's downsized to a dinky little apartment, and I was shocked when I Zillowed her street and saw prices in the 600k-800k range. Plus, of course, $500 a month for HOA, and 3 or 4 grand a year in taxes. It is rather shocking to a rube like me. My Bulgarian property tax is $150 and the HOA is $120 (both per year).

I think Pirin is a great option, it's a beautiful. You might also consider Razlog/Bansko as the biggest ski/mountain resort area.

The Balkan Mountains and Rodope Mountains are also pretty spectacular. Plovdiv is between the two ranges, and only 15km away from the foothills of the Rodopes.

If you miss your sea view, I reckon it's worth looking at Balchik, Pomorie, Sozopol (or even Varna, Burgas).

If you did end up in Sandanski (or Bansko), it might be worth bearing in mind that many Bulgarians have been buying nearby in Greece. I read that Kavala has been very popular, only a couple of hours drive away. The Aegean is FAR nicer than the Black Sea!

I'm not a borrower , I've never had a credit card and am careful to live within my means that's why as a UK born pensioner I'm living in Bulgaria.

@Kath948381

I suspect this Charles Dickens (in David Copperfield) quote is still on point. :-)

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

@gwynj

You have made it in Bulgaria! Very very low expenses. Good for you.

I would have never even visited Bulgaria if it wasn’t for my wife. She introduced me to

this lovely country.

Re. Bay Area- we are blessed  that we bought our house years ago.( Now California has become the most expensive real estate market in the US.) We have low balance, low mortgage payment, low interest, doable property taxes. A few years ago we were going to sell the house but we changed our mind. The pandemic , the war in Ukraine made us think twice  and we decided to have a plan B. If a disaster happens in Europe( god forbid ) we go back  to the US and vice versa.

I have nicely rented my house as of June and we are coming to Sandanski. I am negotiating an apartment there to rent. The plan is to explore Bulgaria for a full year, go to the Aegean Sea often, travel and of course enjoy my hobby scuba diving.

@TonyFF

Bay Area rent, Bulgarian expenses. Another excellent recipe for happiness. :-)

@Kath948381 me neither.  I haven't had a credit card or loan since 2010.  I got into debt back then, but cleared most of the big debts and a mortgage, after getting the Citizens Advice Bureau to negotiate with the banks and, later, selling property.  I never bought another property in the UK and rented for ten years, which meant I could escape the UK at any time I liked - albeit, I had other commitments with my late, elderly parents.

Never looked back and I'm very glad I now live on what I earn!

I had a small mortgage once to help me buy my first house 24 years ago. I have never had one since and on my 4th and last house. I also haven't had a Credit Card, my current bank card acts as one (Master Card (Debit Card) so only takes out what available funds in my account. I do have tabs at 2 of my local bars, if I run out of cash and can't be bothered to run to the ATM. But they are cleared the next day or 2.

@gwynj

I did not even mention our really good retirement incomes. We worked our butts off for years and I am proud of our achievements. Now we deserve to have good retirement years as  everyone else deserves.

My mother-in-law owns a little apartment in the Lozenetz district of Sofia. We can always stay there if needed. One day we will inherit it. Real estate prices in Sofia are off the charts.  And this is also a win-win situation for us.

@TonyFF

I figured you had nice US pensions too, but I didn't want to belabor the point of how well off you were. :-) No disrespect was intended to your hard work, and I congratulate you on your efforts. Rather, I was trying to highlight how comfortable life can be for you here if you have foreign income (whether from rents, dividends, pensions, or some combination). Arguably, Bulgaria doesn't get enough attention as a potential retirement destination.

Aside from the low living costs, I think the medical system is very good, especially when you can take advantage of private treatment (thanks to the affiliation of private hospitals in the public system). Many folks don't even know this exists, yet it is truly exceptional value for money. If you haven't got yourself included in the public system yet, I heartily recommend you do so at the earlier opportunity.

Another interesting aspect is the very low "holding costs" of property, in terms of property taxes and monthly utility charges. In many locations (e.g. UK, USA) owning an additional property can be very expensive. Here, the property taxes are low, and most utilities are currently usage-only charges (i.e. zero usage in an empty property = pretty much zero bill).

As well as our downtown Plovdiv apartment we have a wonderful house in the Balkan Mountains and a holiday studio in Bansko, the country's largest ski/mountain resort. The overhead from this is minimal, and I'm confident in saying this is one of the few places in the world (and definitely the only place in Europe) where we could have afforded such pompous self-indulgence. As we're both Bay Area aficionados... I'll admit that this is my poorman's attempt to replicate my best buddy's Silicon Valley lifestyle with his big house on the slopes of Mt. Tam, just outside Mill Valley... his vacation condo in Tahoe... and his downtown pied-a-terre near Golden Gate Park. :-) This lack of overhead is what made me grab a couple of city studios too, as a potential future supplement to my meager (British) pension.

Going back to your original question, given that you're pretty well off, I don't see any point at all in taking any debt/complications for your Bulgarian home. You can afford to rent until you know where you want to live. And then you can pay all-cash and haggle over the price. Given your background, I feel Bankso and Sandanski are very nice... but too small and too far from civilization. Maybe you'll enjoy it, but I reckon it might be worth taking a closer look at Sofia, Plovdiv, Varna, Burgas.

Plovdiv, our choice, is small by world standards, but it's big enough that it feels like a proper city... yet it's small enough that it fits the very modern concept of the 15 Minute City and the 5 Minute Neighborhood. There's currently a lot of drama about these ideas, but, now that I live in one, I can say it's friggin' awesome. :-) Our zone (Hristo Smirnenski) is only 3km from the central pedestrian zone (and the myriad attractions of downtown Plovdiv). This is totally walkable, or an easy 10 minutes ride using our bikes or escooters (on the city's bike/walk network). Closer to home, within a few minutes walk, we have large supermarkets, Mall Plovdiv, several hospitals, a fresh food market, a fancy gym, and some very nice cafes and restaurants. Most importantly, we're right next to three lovely parks (Regatta and surrounding woods and Maritsa River trail, Youth Hill, and Bunardzhik Hill) so there's plenty of fresh air and daily exercise. I love Bansko and Pirin, it's delightful... but it's just not fair to compare them. I'd say Lozenets, Sofia is pretty similar (just more crowded/expensive), so if you like that kinda thing, it might be time to pack your mother-in-law off to Sandanski. :-)

@gwynj

Very good points. As I said you have made excellent choices in Bulgaria. And it’s great  that you are sharing your experience.

We like visiting Varna, Sozopol, Nesebar, Plovdiv, Veliko Turnovo and of course Sofia. We have only been to Sandanski as tourists. The surrounding villages are very peaceful. Again - I have zero knowledge about  any details.  We could possibly consider buying a property  there,  in Chernomoretz, somewhere to the north of Varna or somewhere near Sozopol. We love water: seas, oceans, mineral springs….

The problem is this: we want a small  very modest house with a garden, public sewer system, electricity and water( most houses are huge).The only luxury we want is  our own swimming pool. If there is one within 10 minutes drive even better: no pool.We do not want condos, apartments, town houses,  gated communities. No home owner associations, no dues. We like our independence like the Udens( too bad we do not have their skills). As far as my mother-in-law is concerned she is very stubborn and does not want to leave Sofia, but maybe one day she will change her mind.

@TonyFF

That's very interesting and give me a better idea of what you're looking for. Thanks for sharing!

While that's an easy spec in the US, I think it's tricky in Bulgaria.

We all like public sewerage... but most village houses here use septic tanks. This means you'd need a house in a city or large town, or perhaps a larger village close to such place. Houses in the large cities are very expensive, so there's a potential cost associated with this particular requirement.

What I can say is that Bulgarian septic tanks are very low-tech, with minimal maintenance, and little or no regulation. They are also pretty cheap to empty. Our village house has a septic, and it's absolutely no problem... certainly far less aggravation than my father's house in the UK. Our village is an unusual one as it does have a mains sewer system, so I was pleasantly surprised to find this out. Unfortunately, we're downhill from the nearest access point, but we put in a connector at the back of the house that goes approximately 200m downhill to a secret access point I found on my walks. This was 2 years ago, and I still haven't emptied the septic in order to get the plumber in to connect my current outlet to the new out pipe instead of straight into the septic. So this kinda shows how minor the septic issue is here. :-) (Or it just shows what an incredibly lazy guy I really am these days.)

The pool too is an issue. I like pools, and our house has one. It's an old Bulgarian pool, so it needs a complete overhaul to be functional... and 5 years later I have not done that either. :-) But I don't see many houses here with pools, especially nice, working ones. Those that have pools tend to be newer and larger (i.e. much more expensive). There are several fancy new builds in our village which have included pools.

The easy (and relatively inexpensive) option is an above ground pool. These are quite common here, and most houses will have big enough plots for you to fit one of these. But some folks don't like them, and it's probably not what you have in mind after a proper American in-ground pool. I have seen examples where folks have partially sunk such a pool, and then built a raised deck, but it seems like a lot of work to me,

Alternatively, I think it might be worth considering paying a bit of HOA. There are complexes around which have villas/townhouses as well as apartments, and have a communal (summer, usually) pool and other amenities. These villas/townhouses tend to be smaller (as you require). I've seen such places in Sozopol and Bansko, so they definitely exist.

I also saw a fancy new gated community just outside Plovdiv recently, in one of the upscale villages (Markovo, about 10km from downtown Plovdiv) in the foothills of the Rodopes. I believe these were all separate villas on their own plots with their own private pool. As separate plots they probably don't have HOA. They also had a variety of sizes from 2 bed 100m2 townhouse to 250 m2 4-bed villa. They're very nice, and I'd say this strikes me as quite American-styley. I'm sure there are similar developments just outside Sofia, and maybe Varna or Burgas too. But pricey... These Markovo ones started at over 200k, and you still have maybe 50k plus to finish them off (the usual Bulgarian Standard applies).

@gwynj

Oh well, a lot of reseach is needed. Regarding a pool- no way I will install a doughboy pool. Tacky!!! We are swimmers not soakers!

The idea of above ground pool though is nice- there are modular pools ( for ex. mod pools dot com).  Those are not bad.  The other type above ground pool is  like a lego kit - it is assembled piece by piece.

And then a deck is made around it and looks ok.

I  am sure  that there are companies in Bulgaria that can build those. I have to find a house first:)

@gwynj

That is the way to be ---no debt.   The biggest sense of security that I and my clients feel is knowing that no one can take your property away from you legally.  As for income stocks--we manage both dividend income and growth portfolios at VEM.  Growth (even the indices) has historically doubled  the return of income stocks and in the US,  Long Term gain  are taxed at half the rate as dividends.

@TonyFF

Having had both above ground and below ground pools I recommend in ground for many reasons except price.   In the USA a in ground pool costs at least $50,000, however I build a 6x10 m pool in Bg for E13,000 with Ceramic tile, heater pump and invisible edge.   I suspect you can purchase an above ground for half that price but it is not near as nice now will it last as long. 

@Johnavann

I definitely prefer in-ground pool; thanks for the tips.

@gwynj

You have always had excellent, wise and charitable contributions.  I underscore your comment to rent for a year and travel as much as one can.   There are many wonderful places and a wide variety of climates from sea to ski, farm to city.  Yes, Bg is economicial and affordable,  and the adage that real estate will make one a lot of money is not realistic.   One advantage is that for the price of the average home in BG or US a family can have an apartment, a farm and a ski condo for far less that the cost of the average home in US or BG. 

PS.   When I purchased my home in 1995 in Dallas Texas the annual home  taxes for real were $5,400 per year.   When I sold the home in 2022 the Taxes had risen to over $37,000. per year.   Even though I had paid off the home loan in 2010, the monthly tax was nearly as much as my original mortgage.  So one can never really own a home in America and many older people are forced into selling because their retirement income can't keep up with the taxes on their home.    Fortyunatly I made money on the home however those days are possibly over. 

@Johnavann

I disagree that you cannot keep your home in the US if you are retired. There are multiple options for people that have low income. You can rent part of your house to help with your expenses.

You can put an ADU( Accessory Dwelling Unit)  on your property and rent it as well. There are a few  assistance programs: ADU grant program, California Mortgage & Property Tax Relief Programs for seniors. In California there is also Prop.13: The assessed value of a property is limited to an increase no greater than 2% each year unless a change in ownership or new construction occurs. The 2% increase is originally applied to the base year value, and is thus referred to as the factored base year value.