Management/ Rental Issues

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Management/ Rental Issues

Postby Admin » Tue Dec 14, 2010 3:16 pm

Hi all,

During our practice on the law field we have always beared the fact that most foreign investors were purchasing Bulgarian properties for making profit out of it. The most attractive way to make profit via buying off-plan or completed apatment or villa in Bulgaria, has been successfully advertised to be the rental income in its various forms, incl. the very popular “guaranteed rental income”. There have been huge soap bubbles spread by former agents and developers (mostly on off-plan property purchases) about huge income, beating even the interest on deposits in UK and local banks. At the end of the day, most owners are facing small income, or even no income, where at the same time the holiday complex where they have bought in, is applied “full” for the whole season. Here we will brake couple of such lies and will try to clear your view about how your own property should be managed or rented out.
First of all, you need to hold your Title Deed. Secondly, there should be proper management company, which to be interested in renting your apartment. Per the Law they should rent the apartment from you, via signing a contract with you. You should not be connected with their prospective activities (renting it to third parties), in other words – you should not allow being involved in securing the manager’s profit.
We are talking about securing the real rental income from your apartment. This is why on the other hand the management of your apartment should not be connected with any maintenance of the common parts of the building, where you could give the manager legal instruments to reduce your income (i.e. to rise their profit) via charging you fees for cable TV in the guardian’s kiosk, for example.
Also it is important to know that proper management and renting out of your apartment means 10% Capital Gains which the proper management company should enter directly to the local Tax Authorities on your behalf, because they are obliged to do it per the Law. Not doing it means something is wrong with the management of your apartment, respectively you should expect troubles on a later stage.
There are lot more legal points that have to be covered, but on the base of the above you should consider carefully the renting out of your apartment, and to choose the most appropriate option for you, in order to ensure the real income which you will receive (yes, the local tourists are also inportant part of the market). This is why contacting trusted local lawyer or solicitor in advance is advisable - we can design the best rental contract from you, also we can prevent you from putting you head in the bag via signing long-term management contracts which may lead to no profit for you but only to continuous expenses. A good rental contract would secure your investment on the matter.

Bulgariandeals Team

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