Study medicine in Budapest for free? This strategy works.

Imagine your daughter or son studying medicine at one of the most prestigious universities in Europe, living in a great city in a safe environment and at the end of five or six years not only has it not cost you anything but you could even have more money than before.

Sounds too good to be true, right?

In this video I'll show you how to do this and calculate it exactly. There are of course numerous other universities in Budapest that offer international degree programs, but today I will limit myself to the Semmelweis University of Medicine.

Studied medicine at Semmelweis University in Budapest

There are over 1,000 students from Germany at Semmelweis, and the number is rising. One of the reasons is that students here are able to gain significantly more practical experience than is the case in Germany.

The university's philosophy is that theory and practice are given equal weight. Another reason is that large parts of the course take place in German. This is extremely unusual for a university abroad and of course also practical, especially if you plan to return to Germany during or after your studies.

But there is also a very pragmatic reason:

You can study medicine here even if your Abitur average does not reach the extremely high numerus clausus of German universities.

Which is a shame and often unfair, like recognizing the best doctors by the fact that they have an A in all subjects. So also in geography, sport and French.

The irony is that the students who are 'worse' in terms of grades - at least the ones who are really serious about it - could end up getting better training and starting their careers better prepared. At least that's what I was told.

Of course there is a catch: tuition fees!

If we look at that Semmelweis Faculty of Dentistry look at it, then we initially come to costs of 8300 euros and later increase to 9900 euros. This results in study costs totaling €92,000 for the entire period. Now add housing costs of €500 and after 10 semesters you'll get €120,000. Anyone studying human medicine would need 136,000 euros because of the longer duration of study.

So how can you end this time with a financial gain?

This is not about scholarships or dubious additional income. It's simply about a real estate investment in Hungary's capital. One that is geared toward student housing.

There is an acute shortage of that here.

I get to know quite a few doctors who have sent their children to Semmelweis University here in Budapest, and they talk about the great time they had and that the city impressed them and that they are thinking about buying an apartment here. Just way too late!

Because they had the chance to get their offspring’s entire education for virtually nothing. But back then, I didn’t stop looking at it.

Student housing as an investment strategy

In my opinion, the strategy of investing in student housing has three important advantages

1. Anyone who invests in student housing will have nominally lower income than an Airbnb investor, but you will be buying significantly cheaper because university locations and tourist hotspots hardly overlap and you get a much better price per square meter. You then have to invest significantly less in renovation because you don't have to meet the standard required for short-term rental. That's why you can start earning money much faster. We have already taken over an apartment two weeks before the start of the semester and then immediately found the tenants.
2. Student housing is crisis-proof. There is hardly any regulation against Airbnb in Budapest, but that can of course change. However, rental agreements for 6 to 12 months fall into the long-term rental category and there are no restrictions to worry about. It was also interesting that during the pandemic, the medical students were allowed to stay here because diagnoses and medical procedures cannot be practiced in Zoom meetings.
3. International students pay the equivalent of around €15 per square meter for living space. The offer is small, the demand is high due to Budapest's popularity as a place to study. The overall package of purchase price, production costs, rental yield and increase in value could be similar to that of an Airbnb model - with significantly lower risk.

Depending on the available equity capital, there are two options:

Model A: you buy a small apartment or
Model B is an entire student shared apartment

In any case, you need equity or you can take out a loan for free use on your existing property in Germany. This can be through a bank or privately. In both cases it is secured via the land register.

Model A – Single Apartment for rent to medical students

Let's start with the first model: Small apartments near the university, where nothing or very little needs to be done, currently cost around €100,000. With additional costs and some budget to prepare it for students, you might invest €110k to €115k. This apartment is just a few steps from the dentistry and even has its own terrace.

37 sqm for €600 to €650 net per month.

In this case, you will save the net rent for a single apartment of, say, €600, i.e. €7,200 per year. If you assume rent increases of 3 to 5% per year, which is not that unlikely given the current inflation, we will end up with €38,000 in unpaid rent over the 5 years.

Now the question comes: does the apartment increase in value?

In the past, the increase rates were 10 to 15% since 2013, but there were also setbacks due to Corona and the Ukraine war. Today we see that despite everything, at least for the low six-figure investments, the market is very lively. And because prices are still very cheap compared to Europe, an increase in value is very likely, especially in good B locations.

And with very few exceptions, this applies to university districts.

So if we assume an increase in value of around 5% per year, that means that a sales price of around €140,000 in 5 years means €25 to €30,000 more than you spent. Together with the rent savings, that would be at least €60,000 in profit for a fairly small investment.

Unfortunately, that's not enough for completely free study and stay.

Model B – Buy a complete student shared apartment with 4 rooms

Therefore model B: a larger apartment for €200 to €250,000 including additional costs and renovation.

It must then have at least four separately accessible rooms, one of which you live in yourself, the rest are rented out for €400 each, net of course.

If we also assume rent increases of 5% per year, at the end of the time after deducting the 13.5% taxes, the total amount saved will be €70,000, plus the rent saved in this case, calculated on a €400 basis, is another €26,000. So we have almost reached the break-even point, and we haven't even taken the increase in value into account.

At 5% that would be around €58,000.

Of course, no one knows whether that will happen, but I think we have quite a lot of potential here.

In an optimistic scenario, at the end of the 5 years you will have completed your medical studies, lived rent-free for 5 years and have €40 to €50,000 in pocket money. Of course you have to sell the apartment!

The best thing about it is: the profit is tax-free after 5 years or you can simply keep it and let us manage it. Of course this costs something, but in return it is really passive income.

Because then we take care of everything.

By the way, there is no inheritance tax on direct relatives.

However, please speak to your tax advisor in Germany if this is an important factor for you.

We are your local partner for the entire process, from selecting the apartment to renovating and furnishing it to renting it to students. Our network will help you achieve your goal without you having to worry too much about it.

So just get in touch and we'll talk about it.
Until then, all the best!