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Tough times need tough investors

As regulars readers of the news stories here will know developers in Spain are going out of business or suffering severe financial difficulties. However there is an indication on the forums this week that other countries are suffering too. A thread on the totallyproperty.com Turkish forum reveals major problems with developments in Bodrum and Istanbul.

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Both developments appear to be in financial difficulties with the Turkish lawyers advising investors to pay €2000 to obtain a lien as a security against the developer's assets. It is not clear how much protection this will offer should the developer go bust.

The frustrations of buying property in Switzerland are aired on a thread on the Channel Four overseas forum. It is a long thread detailing the trials and tribulations faced by investor buying chalets. Although it is a long thread, started in 2005, it is worth reading for a better understanding of the Swiss process which is very different to buying in many other countries.

In particular there is advice on heating costs, taxation, rental yields, obtaining a mortgage etc. There is also information regarding residency, work permits and the cost of setting up a business. Swiss rules are quite strict and can vary from Canton to Canton. One poster reports that one rule is that foreign owners can only live in their Swiss property for 11 months and one week per year.

It also includes horror stories like one builder being two years behind with new chalets, three of four year waits for permits, concerns about leaseback schemes and the experiences of one investor who bought and then wanted to sell within the normal five year restriction and found they could only sell if they didn't make a profit.

Over the border in Germany property is generally regarded as a safe if long term investment. Various forums mention that taxation is high, rental yields low but the chances of a major drop in prices is low.

On the totallyproperty.com German forum there are warnings to choose your location carefully. Apparently there are some areas of Berlin where apartments are being offered cheaply with tenants already arranged but they are in perhaps the less desirable areas of the city.

But one way to get a good deal is buying at auction. One poster points out that savings can be made through public auction houses but that substantial savings can be found through court auctions.

'The best method we found for acquiring investment grade property as cheaply as possible was to buy at Court Auction – an arcane little known system, but very useful as properties can be up to 60% cheaper. The properties come with the safest type of German property title and we felt for this reason is a safer method when compared with buying at Public Auction,' says senior member Investy.

Types of property vary from single apartment to blocks and rental yields are claimed at 10%.

Mortgage lenders come under severe attack on the singingpig.co.uk forum. Poster Nick Ham points out that fewer mortgages means that buy-to-let investors, whom he regards could boost the currently dismal property market, are restricted at a time when they should be encouraged to buy. 'With a growing rental demand and better yields on offer, professional landlords, even against a background of higher interest rates, would seem to be the lender's best hope of averting a total collapse in property prices and the consequent repercussions throughout the economy,' he says.

He gets a lot of support from fellow members who agree that mortgage lenders need to support the buy-to-let market in the UK. The subject is also covered on the Movechannel.com forum. One potential investor points out that having found several properties to buy to buy at 20% discount using a closed bridging loan and a buy-to-let remortgage, he can't find a lender.

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