Real estate

Will renting an overseas mortgage pay off?

In European resorts, where they are buying up real estate, it is customary to use the services of a management company. Managers will monitor housing during your absence. The company can find tenants so that the house or apartments are not idle, but generate income. The wisest of investors have already been dreaming: if you take the local housing into a mortgage and then, handing it over with the help of a management company, repay the loan repayments. Will the rent cover the mortgage costs and the cost of paying for the services of the same management company? For answers, we turned to foreign experts.

Bulgaria: surcharge of almost 9 thousand euros per year

As Angelina Bakhova, manager of the Bulgarian company Zlatna Antelope, told the online real estate magazine Metrinfo.Ru, she manages residential complexes in Bulgaria either by the real estate developer or its subsidiary.

The list of services of a management company, as a rule, includes:

  • round-the-clock protection of the housing complex;
  • a comprehensive service for paying utility bills
  • support for the landscape design of the complex, pool, garage hygiene, cleaning of common parts

As well as service:

  • video surveillance;
  • TV and telephone network;
  • plumbing and sewer communications;
  • maintenance of the ventilation system of the complex;
  • power systems, elevator, air conditioning, electrical equipment in kitchens, electric tower clocks and automatic garage doors;
  • pool heating and clarification systems, cleaning systems;

The cost of annual service by the company is calculated from the footage of the home. So, for a one-bedroom apartment in Varna, with an area of ​​79 sq. M. meters it is 1100 euros. For three-room apartments with a separate entrance and an area of ​​207 square meters. meters, this amount is already 2900 euros. Maintenance of one square meter per year will cost you 14 euros.

In our opinion, this is a little expensive, given the rather modest list of services. After all, the management company is not involved in the current repair or maintenance of the plumbing and electrical equipment (taps, switches, bulbs).

As for utility bills, then, as a rule, for an apartment of 79 square meters. m. they amount to about 200 euros per month or, accordingly, 2,400 euros per year.

Let’s see if it is possible to rent out an apartment in order to cover the costs of paying out a mortgage loan.

The mortgage rate in Bulgaria is usually 7%. A mortgage can be issued for a period of 5 to 20 years and in the amount of from 5,000 to 200,000 euros.

The same apartment, with an area of ​​79 square meters. meters is worth buying 86,900 euros. Including interest, the annual payment is 10,430 euros. (The bank with which our management company works has peculiar conditions. Regardless of the conditions of lending, the bank tries to standardize payments based on the cost of the apartment.)

According to Theodoros sales manager Svetozar Panteleev, today management companies guarantee a 6% rent. And if we take the same Varna dvushka for 86,900 euros as a basis, it will bring a little more than 5,200 euros a year. Net rental income, if you subtract 2,400 euros of utility bills, 1,100 euros that go to pay for the services of the management company, will be approximately 1700 euros per year. Not much. In this case, mortgage payments are offset by approximately one sixth.

Thus, renting an apartment in Bulgaria can not be called a business. You just keep the housing in working condition and compensate for the payments of the management company. Renting will close mortgage payments by about one sixth, and you will have to pay 8730 euros from your own pocket.

Landlord expenses in Bulgaria for the year

Cost item Amount, Euro
Payment for management company 1100
Utility Payments 2400
Total: 3,500

France: surcharge – 7 thousand euros per year

Now we are transported from Eastern Europe to the most Western one. Let’s start with France. Remember, we wrote about the Cote d’Azur: “The apartment on the Cote d’Azur is available to Muscovites.”

As an example, we featured a double apartment with an area of ​​52 square meters worth 200 thousand euros. Let us leave it for this article.

According to Henri Olivier, an analyst with Polaris France, the cost of a management company’s services is between 6 and 15 euros per square meter per year.

The common “fee” is 13.8 euros per square meter per year, that is, almost the same 14 euros that we saw on the Bulgarian example.

However, for these “Evra” the company provides a much larger range of services. This includes not only security and video surveillance, but also the maintenance of the internal infrastructure of the home. That is, if the lamp burns out in the apartment or the switch goes bad, an electrician will come to you within one working day, and if the tap leaks, the plumber will rush.

So, the maintenance of one square meter per year will cost you about 14 euros.

A considerable share of expenses – about 250 euros per year – is insurance.

Utility bills in France are more expensive, but the French have learned to save, and lighting, water, etc. in our chosen apartment, it will cost 1200 euros per year.

Now we’ll calculate how much the lessor will earn and how much he will pay if he takes a mortgage loan.

We perform all the same simple arithmetic operations. You can rent our apartment for 700 euros per month, for a year to get 8400 euros. It will cost 1,200 for utility bills. 1,000 euros – we give it to the city hall as a municipal tax. 250 euros will be required to pay insurance. Well, and finally, with 52 square meters, the services of the management company will cost 730 euros. Total expenses 3,180 euros. If you do not take a mortgage, then the net profit is 5,220 euros.

Landlord expenses in France for the year

Cost item Amount, Euro
Payment for management company 730
Utility Payments 1200
Insurance + fee to City Hall 1250
Total: 3,180

But this is if you do not take a mortgage. And if you take it? Mortgages in France are much cheaper than Bulgarian – 2.4% per annum. However, the price per square meter exceeds the Bulgarian more than three times – 3850 euros against 1100. Under standard lending conditions, per year mortgage payments for our apartment will amount to about 12 thousand euros.

The rental income covers these expenses only partially, and you will have to pay almost 7 thousand euros (6780 euros) from your own pocket. The appeal to a cheap management company will not save. In this case, your profit will be not 5,200, but 5,500 euros. So even up to half of the required amount does not reach.

Spain: closest to ideal, surcharge 2020 Euro per year

And finally, let’s see how things are in Spain

Miguel Rodrigo Villarreal, a leading analyst at Polaris Mediterranean, told us that in Spain the services of a management company are almost cheaper than in the rest of Europe. Many companies focus not on square meters, but simply on a unit of housing. Their services cost one euro per day or 365 euros per year.

Some companies specializing in renting your home charge typically 15% of the rental price. There are companies that calculate the cost of their services from square meters, but in this case, the more of these square meters, the lower the cost of one specific meter. If, however, calculate the average figure, then comes out 0.7 euros per square meter. meter per month or 8.4 euros per square meter. meter per year.

The cost of maintaining property in Spain is much lower than French. Utility bills in a 55-meter apartment, almost the same as that we saw on the Cote d’Azur, amount to only 180 euros per quarter – in Spain they pay quarterly, and not once every two months, as in France. Thus, we pay 720 euros per year for utilities.

Landlord expenses in Spain for the year

Cost item Amount, Euro
Payment for management company services 460
Utility Payments 720
Insurance 115
Total: 1295

Now let’s see if we can optimize our mortgage costs

How much can you rent an apartment? It depends on the season. Now for a 55-meter apartment you can take 510 euros, and in the season – 2130, but the average rental price is really 820 euros. You can conclude a long-term contract, but then it will be possible to return only for 700-750 euros per month with a fixed payment regardless of the season. Under a long-term contract, an average of 8700 euros per year will be obtained.

8,700 euros a year, of course, will cover all operating costs, but again they will not pay back mortgage payments – the mortgage rate in Spain is 4.75%. Under standard conditions, mortgage payments for our apartment per year – 10,620 euros.

The amount of rental income is 9900 euros per year. Subtract from it 1300 euros of operating costs. We will receive 8600 euros. Although this amount does not cover mortgage payments, you will only have to pay extra 2020 euros per year from your pocket – it’s very easy. Please note that we considered the “lower limit” of rental payments. And we do not exclude the option that with a certain dexterity, you can go “to zero”.


So, the most “economical” country we have obtained is Spain. Of course, we took into account only the large expenses of the landlord. For example, they ignored property tax, some mandatory fees. Moreover, according to our scheme, landlords do not visit their overseas apartments at all, even during the holidays, which in life seems to be rare.

In general, the total costs of utility bills and payment for the services of a management company are from 15 to 50 percent of rental income. In the case of mortgage payments, rental income never exceeds the latter, but ranges from 16 to 85% of their value. Of course, these incomes significantly ease the burden of mortgages, and therefore it’s still worth renting an apartment to partially cover mortgage payments.

In our opinion, it is good for people 35–40 years old to do these things. To have your corner in a warm place in 15 years.

Country Cost of management company services, euro per sq. meter per year
Bulgaria 14
France 6-15
Spain 8.4

Lessor’s income and expenses (Euro)

Country Rental income Housing costs Mortgage payments Mortgage supplement out of pocket
Bulgaria 5,200 3,500 10,430 8,730
France 8400 3180 12000 6800
Spain 9900 1300 10620 2020

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