Why is a married couple from the Baltics investing in real estate in Austria?

Investing in real estate: a new step for Elena and Bogdan

A married couple living in the Baltics, Elena and Bogdan, made an important decision to invest in real estate in popular European resorts. This step allowed them to create an investment "portfolio" and effectively protect their finances from potential economic changes. In a recent interview they gave to our publication, they shared information about their new purchase — comfortable apartments in Kaprun, Austria.

Why was the choice made for foreignreal estate?

— Why did you decide to invest in foreignreal estate? — the question was asked. — Our family has a long-standing tradition: for over ten years, we have been spending our winter holidays in the Austrian Alps. We have always preferred renting apartments rather than staying in hotels. At some point, we realized that the apartments we rent belong to someone who earns income from renting them out to tourists, just like us. Ultimately, we came to the conclusion that it would be wise to purchase our own vacation property that could generate income when we are not using it.

First experience or a new stage?

— Is this your first real estate deal? — we asked them. — No, this is far from our first transaction of this kind. About five years ago, we started building our "portfolio" of income-generating properties. Investing in properties located in economically stable countries not only helps preserve our money but also provides an opportunity to earn passive income with minimal effort on our part.

Previous investments and the choice of Austria

— What properties have you already invested in and why did you choose Austria this time? — we continued the conversation. — We already have several properties in Estonia, Croatia, and the UK. Austria is considered one of the safest countries in Europe. Moreover, we love the local Alps and appreciate their magnificent nature, delicious cuisine, and rich culture. The ski resorts in Austria offer an extraordinary combination of beautiful natural landscapes and modern amenities — it's truly appealing.

Choosing between tourist apartments and city apartments

— Were you specifically looking for tourist apartments or were you also considering city apartments? — we asked. — In our "portfolio," we already have various properties because we believe that risk diversification is an important strategy. That’s why we analyze all possible options. In our opinion, tourist apartments in Austria, especially in Kaprun, represent interesting investment opportunities. Ultimately, we are true skiing enthusiasts, and we enjoy earning income from renting out apartments in well-known tourist areas, as well as taking advantage of the local infrastructure when we come to Austria for winter vacations and stay in our new property.

Researching other resorts for investment

“What other resorts besides Kaprun did you also explore for investment?” we asked them. “Kaprun is our favorite ski resort in Salzburg, which is why we decided to stay here. We hope that our new purchase will not only be a source of income but also a place where we can spend wonderful winter days and enjoy time with family.”

Real estate search in Austria

Recently, while coming across a real estate listing in one of the picturesque areas on a specialized website, we concluded that we are interested in purchasing an apartment located in the center of the village and close to the ski lift. This decision has truly become a catalyst for us to take action.

Exploring alternative options

However, our partners from Austria suggested several alternatives, among which we decided to explore a number of locations around Salzburg: places like Zell am See, Bramberg, and Neukirchen, and then we continued our trip to Tyrol. Each of the places we visited had its own charm, but the project in Kaprun caught our attention with its unique location.

Selection criteria

When choosing, we focused primarily on the length of the active season at the resort:

• Thanks to the proximity of the Kitzsteinhorn glacier, there is an opportunity to enjoy skiing and snowboarding almost year-round.
• For summer leisure enthusiasts, various activities are available: golf, cycling routes, hiking, and many other entertainments.

This creates a constant interest in local real estate.

Recommendations for resorts

If you are interested in the resorts of the Austrian Alps, we recommend checking out the guide "Ski Resorts of Austria: Accommodation for Living and Investment."

Difficulties in the search

Have we encountered any difficulties in our search for the perfect property? What aspects have become decisive for us in the selection process? We only considered liquid options in wonderful locations at popular international resorts.

Reliable management company

Given our busy schedule, it was not possible to constantly monitor the condition of the property ourselves, so a reliable management company was of utmost importance to us. It needed to organize interactions that wouldn't require us to invest additional time and financial resources. Furthermore, the project itself had to be new, so we wouldn't have to worry about repairs and additional investments for many years to come.

Project status

It is worth noting that similar projects in the Austrian Alps can only be found at the construction stage. When it comes to a completed property with only a few apartments left, it is essential to carefully assess the details:

• It often turns out that the view from the windows isn't the best.
• The price is inflated.
• The building is located far from key infrastructure facilities.

Thus, if you are looking for the best offers, you will most likely have to consider only new residential complexes that are in demand based on project plans and price lists. Apartments with such a convenient location as our apartment in Kaprun are truly an exception. In most cases, all available plots of land near the lifts and urban infrastructure are already built up.

Elena and Bogdan's choice

Elena and Bogdan decided to purchase an apartment in a complex with a wellness area that includes saunas and steam rooms. In the end, we chose a project that is a classic apart-hotel, perfectly matching our needs and expectations. Now we can confidently enjoy all the delights of life in this amazing place.

Amenities of the complex

This residential complex offers various amenities, including a reception area and a high-quality wellness zone with a sauna and steam room. There are also auxiliary facilities such as underground parking and storage space for sports equipment, like skis.

On the first floor, there is an excellent restaurant owned by the developer, which is rented separately from the apartments. This creates certain advantages for us, as investors, since we do not receive income from the restaurant's operations, but we also do not incur expenses related to its maintenance.

The role of the management company

As for the management company, its role in our project is very important. This company is responsible for the management and overall functioning of the complex. Interestingly, the developer and the management organization are the same legal entity, which gives us confidence in their interaction and understanding of the project's needs.

The mentioned company, located in Zell am See, is already successfully managing several apartment hotels in the region. My partners and I took a familiarization trip to a few of them to assess possible formats and features for our own project.

Introduction to the process of buying real estate in Austria

Questions regarding the process of purchasing real estate in Austria have been very relevant for us. We were curious if we encountered any difficulties when opening an account, completing the transaction itself, and registering property rights? Our first experience acquiring real estate in this country was a real eye-opener, as we discovered how different it is from similar procedures in other European countries.

Supply and demand in the real estate market

It was particularly surprising that the demand for tourist apartments in the resort areas of Salzburg significantly exceeds the supply in the market. Our apartments were located in a hotel, the construction of which was still in the planning stages, and the land designated for development was occupied by old buildings, the demolition of which had not yet been scheduled. At that time, the developer was unable to provide confirmation of the land transfer in the cadastre.

Start of the sales process

Nevertheless, as early as November 2014, the developer presented the project for the future hotel complex and began actively selling apartments. By January 2015, the number of available apartments had significantly decreased, with only about a quarter of the total remaining. Before our visit, we had narrowed down our choice to two properties that had similar layouts and prices, so we could assess on-site which one suited us better.

Difficulties with choosing objects

However, upon our arrival a week later, we learned that one of the options we were considering had already been purchased, and the other was in the final stages of a deal with a British investor who, although he had not signed a preliminary agreement, was close to doing so.

The real estate market and the need for quick response

In situations where the number of interested buyers exceeds the supply, an immediate response is required. The principle is simple:

• Whoever signs the contract first will get the desired property.
• All questions related to mortgage processing, understanding tax implications, and choosing the right acquisition scheme should be addressed in advance, before starting property viewings.

Document preparation

We discussed these points in advance with our consultants and Austrian partners, who helped us select three financing options from local banks.

After a thorough analysis of the proposals presented, we selected the most favorable terms and quickly gathered the necessary documentation. The document package included the financial documents of our company, on behalf of which the purchase was made.

Financial terms of the deal

The bank agreed to accept our apartment as collateral.He provided half of the amount needed for the purchase at an interest rate of 2% per annum for a term of 20 years. It should be noted that the situation in the Austrian real estate market is characterized by high competitiveness, which requires quick responses from buyers. Decisions need to be made promptly — whoever signs the contract first becomes the owner.

Overcoming challenges after obtaining a loan

But this was just the beginning, as after obtaining the loan, we faced new challenges. We literally had to "fight" for the apartment, as the competition was extremely tough, and we had to put in significant effort to successfully close the deal. We carefully analyzed all possible risks and continue to monitor all new offers so as not to miss our chance in this active and rapidly developing segment of the real estate market.

We thank our partners for their unwavering support: they organized a meeting at the developer's office and assisted with the necessary documentation, which allowed us to be among the first to sign the purchase offer. It is worth noting that the final sales contract was prepared by lawyers and signed by the parties only six months later, in July 2015, after which the construction work began.

By that time, almost all the apartments in the project had already been sold, and according to our data, only two expensive penthouses remained. Looking at the situation from the outside, one might think that we were taking a risk by signing the offer without a draft contract and at a stage when construction had not yet started. However, we were observing experienced investors who are not afraid to sign such documents at an early stage. We realized that if we allowed ourselves to delay, we risked missing out on a great opportunity.

Minimization of risks

Now we are confident: the risks associated with purchasing real estate during the construction phase in Austria have been significantly reduced.

• First of allWe didn't make an advance payment, which gave us a level of confidence: if the deal fell through due to the seller's fault, our losses would be limited to just the loss of time.
• Quality of constructionIn Austria, the system is at a high level: payments are made in stages, and a trusted person acting as an official representative oversees compliance with all regulations.

As a result, our hotel was built and put into operation within the strictly established deadlines, and in early December 2016, we were able to move into our new apartments located in the center of Kaprun. The developer organized a wonderful event, inviting all investors for two days to the resort town so they could visit their apartments and assess the quality of the work done.

We noticed a few minor issues with the equipment, which were quickly addressed and resolved. Currently, our apartments are successfully rented out to tourists, and the only regret we have is that we didn't acquire more properties in this complex.

Real estate registration for non-residents

Is it possible to acquire real estate for a non-EU resident without an Austrian residence permit? It's difficult to give a definitive answer to this question, as the purchase was made through a company registered in the EU, whose main owner is an EU citizen. With this approach, the process of registration is the same as for Austrian citizens.

Tax benefits when purchasing

Are there any tax benefits when purchasing such apartments (VAT refund, possibility of "second registration")? The Austrian tax authorities have recognized our rental model as professional, unlike the amateur category, where the investor uses the property for most of the year, or when expenses over a long period exceed rental income.

Tax benefits and opportunities

We took advantage of tax benefits, which allowed us to get a refund.20% VATfrom the cost of purchasing our apartment, as well as the garage and furniture. However, we cannot register a "second residence" in this apartment, as its cadastral status restricts this, since it is intended for tourist use.

Apartment characteristics

As for the apartment's features, it includes three rooms, with particular emphasis on the spacious kitchen-living room. The other two rooms are designated for sleeping and can accommodate up to a total ofsix people.

There are also two available.bathroomsOne of which is equipped with a sauna, which is an additional advantage for winter vacations. The approximate total area of the apartment is about83 square meters.

Additionally, it is worth noting that there are two entrances, which allows for the division of the space into two zones and provides a separate area with its own bathroom.

Changes in the project and furniture selection

When purchasing real estate at the initial stage of construction, we were able to agree with the architect on all the desired changes to the project. We chose the furniture ourselves, which allowed us to create an interior that matches our preferences.

From the windows facing the south and east, there is a magnificent view of the traditional houses of the region and the picturesque mountain landscapes.

Future plans

As for our future plans, we are currently determining how much time of the year we would like to spend in this apartment. We have no restrictions on the duration of our stay under the lease, but financial institutions impose their own conditions.

It is important to consider that if the owner uses the tourist property for morefive weeksIn a year, he is transferred to another category, which may lead to the loss of the right to VAT refund. We can plan our stay for a period of up totwo weeksWhether it's for six months or two weeks, if the dates we choose are free from tourists. During this time, we do not generate rental income and are obligated to cover the costs of maintaining the apartment, such as cleaning and various services.

Investment strategy

In the future, we intend to continue investing in Austrian real estate. We have chosen a strategy based ondiversificationto avoid the risks associated with investing all capital in a single project.

This allows for investing money in various properties located in well-known and popular tourist areas. We concluded that this strategy is more effective than concentrating all funds in one outdated hotel, which requires significant financial investment for renovations and takes a lot of time to manage, especially in an unfamiliar business environment.

This approach helps to minimize risks associated with specific locations and the peculiarities of doing business.

Conclusion

In conclusion of my story about purchasing real estate in Austria, I would like to emphasize that for us, as a couple, this is not just an investment, but also an opportunity to create a cozy space for family vacations. We understand that real estate is a long-term asset that not only protects our savings from economic risks but also provides a stable income.

Kaprun has become a unique place for us, where our dreams of a comfortable winter vacation come true amidst stunning Alpine landscapes. We are confident that our choice was driven not only by our love for this resort but also by a conscious desire to diversify our asset portfolio, which is a sensible step in today's conditions.

Advantages of purchasing real estate in Austria

• Creating a cozy spacefor family recreation.
• Protection of savingsfrom economic risks.
• Stable incomefrom the rent.
• Unique alpine landscapesthat inspire relaxation.

It is extremely important for us to have the opportunity to enjoy our vacation in our own apartment when we decide to spend time in the mountains, as well as to earn income from renting it out at other times. We believe that this form of investment is becoming increasingly relevant, especially in the context of an unstable economy.

Tips for those considering buying real estate abroad

• Don't be afraid of risks, but always study the market.
• Choose liquid assets in good locations.
• Make sure to involve professionals to minimize your troubles and worries.

We are happy with our choice and eagerly await the new horizons that will open up for us thanks to our investment in Austrian real estate. We hope that our experience will inspire others to take similar steps towards creating a comfortable and profitable environment for living and leisure.