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

What do you think you can still 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 an old building from the Founding period ?

I think this is a rhetorical question at the latest now.

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

I’m Tim from Budapest Invest. In the video, I show you an apartment that may shock you at first. Let’s first take a look at pictures of the property exposé!

What we see here is not for the faint hearted, and often enough apartments like this 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 an old building with a ceiling height around 3.70m, with parquet and central heating. Incidentally, the building is from around 1900, like much in Budapest.

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

But that is not the most important thing.

The most important thing, of course – the location.

The apartment is located in the sixth district of the capital, very central and therefore in a very, very popular area. Parliament and St. Stephen’s Cathedral are just a stroll away, and the famous nightlife district is virtually on the doorstep. Fortunately, due to the inner courtyard, you don’t hear anything of it acoustically.

The second is the size of just under 60 square meters: ideal for singles, couples, and with an appropriate floor plan also for 2-person shared apartments.

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

( Incidentally, according to the Numbeo Index, Budapest is much safer than Berlin, Frankfurt or Cologne , but that probably doesn’t surprise anyone who knows these cities)

Buy a condominium in Budapest – Prices per sqm

Let’s get to the price of the apartment: A square meter price of 2000 euros is very cheap here too and leaves a lot of room upwards.

If the apartment had already been renovated, we would have to pay around 3000 euros per square meter.

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

Let’s see what the apartment will cost us specifically. So first of all there is the purchase price of the equivalent of 106,000 euros.

There is also a real estate transfer tax of 4%.

Another 4% is accounted for by 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 a renovation at the beginning. How it turns out depends on your strategy. In this case we keep it simple because we want to rent out as soon as possible. Fortunately, we have much cheaper craftsmen on site than you are used to from Germany. That is why we would calculate a budget of around 5,000 euros here.

So in total that’s 120,000 euros for an apartment, old building, 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 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 includes the cost of water).

For repairs and maintenance, we should set aside half a percent of the purchase price per year, in this case, converted to the month, 50 euros.

Finally we come to the taxation of rental income. A flat rate of 15% tax has to be paid on 90% of the rental income, i.e. 13.5% in the end. That means 75 euros in our example.

The result is 4500 euros net per year.

In terms of capital employed, that would be 4.5% BEFORE taxes and 3.7 percent after taxes.

But that’s not all.

Because there is still such a thing as increase in value.

Condominium in Budapest – what is a realistic increase in value?

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 in corresponding forecasts.

This is more relevant today than ever, when there are many indications that prices will generally rise more strongly – currently we have between 3 and 5%

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

In Hungary, property prices have generally risen by 80 – 90 percent between 2010 and 2019 – depending on which statistics one can believe.

So if you bought a property here, let’s say 10 years ago, you could easily double your assets, because you also had the rental income on top.

But even if we might wish that, it doesn’t always have to go on like this. It can also stagnate for a time and there have also been slumps in the past, for example even in 2010-13 as a result of the global financial crisis.

In 2020 it was the corona pandemic – prices have also collapsed a bit here, but have been recovering much faster since then.

Your time horizon decides:

if you think that you could need the money urgently in 2 years, keep your hands off it. If you have the patience for 5 to 10 years, you can sit out such crises with ease.

How is it currently? The economy is growing again, according to the latest forecasts by 7%. The city center is gradually filling up again with tourists and students, and life goes on. Corona does not occur at all in everyday life.

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 very exciting, but I think that gives us a solid investment.

If you want we can talk about it in detail.

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

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

That is why we are here.

And if you are interested just book one of the dates on our website.

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

I already know one thing: you will be amazed.