Condominium in Budapest: What do I get for €120,000?

Condominium in Budapest: What do I get?
for €120,000?

What else do you think you can buy for 100 to 150,000 euros in Germany? As a habitable property? Then imagine if it were in a city of millions, close to the center, in a period property from the Founding era?

I think this is a rhetorical question at least now.

And that's why I'm taking you to Budapest now.

I'm Tim from Budapest Invest. In the video I show you an apartment that might shock you at first. First, let’s take a look at pictures from the real estate exposé!

What we see here is not for the faint of heart, and often such apartments are really no good, but in this case we noticed a few features that made us sit up and take notice. What you can already guess here: It is a period property with a ceiling height of around 3.70m, with parquet and central heating. By the way, the building dates back to around 1900, like many things in Budapest.

If we think about all the clutter and just incorporate a few principles of modern living space design into the renovation, things look completely different.

But that's not the most important thing.

The most important thing is of course – the location.

The apartment is located in the sixth district of the capital, very central and therefore in a very, very desirable area. Parliament and St. Stephen's Cathedral are just a walk away, and the famous nightlife district is practically on your doorstep. Fortunately, due to the courtyard location, you don't notice any of this acoustically.

The second is around 60 square meters: ideal for singles, couples and, with the appropriate floor plan, also for shared apartments for two.

Budapest with its approximately 25 universities is, after all, a magnet for good 40,000 foreign students, including a lot of German medical students who love living in one of these central and very safe districts.

(According to the Numbeo Index, Budapest is significantly safer than Berlin, Frankfurt or Cologne, but that probably won't surprise anyone who knows these cities)

Buy a condominium in Budapest – prices per sqm

Let's come to the price of the apartment: A price per square meter of 2000 euros is also very affordable here and still leaves a lot of room for improvement.

If the apartment had already been renovated, we would have to pay around 3,000 euros per square meter.

And of course this is also a model for you: Renovate and take the increase in value tax-free after 5 years.

Let's look at what the apartment will actually cost us. So first of all there is the purchase price of the equivalent of 106,000 euros.

In addition, there is the property transfer tax of 4%.

Another 4% goes to research and consulting services as well as the lawyer (who acts as a notary in this country) – all of this is our part.

You should also plan for renovation at the beginning. How that turns out depends on your strategy. In this case we're keeping it simple because we want to rent as quickly as possible. Fortunately, we have much cheaper local craftsmen than you are used to in Germany. That's why we would calculate a budget of around 5,000 euros.

In total, that's 120,000 euros for an apartment, period property, 60 square meters, downtown location in Budapest.

Condominium in Budapest – the rental income

Let's get to the revenue. In a comparable location, i.e. even on the same street, you can look around to see what is currently available for rent and in this case you will end up with 500 to 550 euros.

The additional costs, i.e. electricity, gas and internet, are passed on.

We deduct a house fee of 50 euros (which often also includes the cost of water).

We should set aside half a percent of the purchase price per year for repairs and maintenance, which is 50 euros per month.

Finally, let’s talk about the taxation of rental income. A flat rate of 15% tax must be paid on 90% of the rental income, i.e. ultimately 13.5%. That means 75 euros in our example.

The result is 4500 euros net per year.

Based on capital investment, that would be 4.5% BEFORE taxes and 3.7 percent after taxes.

But that's not everything.

Because there is still such a thing as increasing value.

Condominium in Budapest – what increase in value is realistic?

The past has shown over the decades that the increase in value is usually at or above the level of inflation - in Germany, for example, a value of 2% is often used when making corresponding forecasts.

This is more relevant today than ever before, when there is much to suggest that prices will generally rise more sharply - at the moment we have between 3 and 5%

Specifically: After 10 years you will only have between 60 and 75,000 euros in purchasing power.

In Hungary, property prices generally rose by 80 - 90 percent between 2010 and 2019 - depending on which statistics you believe.

So anyone who bought a property here, let's say 10 years ago, could easily double their assets because they also had top rental income.

But even though we might wish that, it doesn't always have to go on like this. There can also be a period of stagnation and there have been slumps in the past, for example even in 2010 to 2013 as a result of the global financial crisis.

In 2020 it was the Corona pandemic - here too, prices collapsed to a certain extent, but have recovered much more quickly since then.

Your time horizon decides:

If you think you might urgently need the money again in 2 years, stay away from it. If you have the patience for 5 to 10 years, you can easily ride out such crises.

What does it currently look like? The economy is growing again, according to the latest forecasts by 7%. The city center is gradually filling up with tourists and students again, and life goes on. Corona no longer occurs in everyday life at all.

Will real estate prices continue to rise at the usual 10-15%? Budapest is still FAR from overheating, and yet it would be negligent to bet on it.

That means: a conservatively calculated three to four percent net return, and a performance in the range of the inflation rate.

That doesn't sound particularly exciting, but I think we have a solid investment.

If you want, we can talk about this in detail.

We can also look for suitable condominiums in Budapest for you and accompany you when it comes to carrying out this.

That means: from the research, to the negotiations, to the contract, to the entry in the land register. And beyond that in renovation, administration and rental.

That's what we're here for.

And if you're interested, Simply book one of the appointments on our website.

These conversations are free. And of course we look forward to welcoming you here soon and exploring with you.

I already know one thing: you will be thrilled.