| The Romanian
Profit-Machine |
| Investing
In Romania |
| by Kevin Stillmock |
| June 2005
Sooner or later
just about all of us come to the painful realization that money does not
grow on trees, no matter what kind we plant or where we plant them. I’ve
traveled to a lot of countries and I’ve always made a point to check out
the local trees and see if any of them, by some odd twist of fate, have
started to turn green with dollar bills. I’ve never completely given up
hope that one might exist by some miracle, somewhere.
It’s been said
that “sometime the answer is right under your nose.” For those of us searching
for cash-bearing trees, I have discovered that the answer is indeed right
under our noses. |
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We’ve simply
been looking in the wrong direction, we have been looking up instead of
down. Trees may not grow money but the land on which they sit most definitely
can. The land on which Romania’s trees grow is of the most fertile cash-yielding
land in all of the world.
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Average annual
returns currently vary between 25 and 100% based on the amount and location
of the investment property. Returns of as much as 200% or more are not
at all uncommon. |
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| It never ceases
to amaze me how much the average investor seeks to complicate his or her
investment unnecessarily. The rule of thumb seems to be “the more complicated
the better.” It sounds almost unfeasible that a simple investment in
raw land could be more profitable then multi-layered industrial and commercial
investments or refurbishing or renovation of an existing property. Indeed,
all of those opportunities are quite valid and can yield significant returns
but often not nearly as much as would a more simple investment in raw land.
I prefer to
listen to the age-old words of wisdom “keep it simple stupid” also known
as the “KISS rule.” The name of the game in Romanian land investment
is to buy the right land at the right price at the right time and then
to sell it at the right price and the right time. This is where an experienced
investment management team in the local market becomes invaluable. |
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Offshore
Resources Gallery
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| There are
a number of ways to add value to property in Romania i.e., subdividing
it for new developments, re-zoning agricultural land for residential or
commercial purpose, compacting land from various owners, so on and so forth.
(Of
course the best is simply giving it a little bit of time.) The trick
is in knowing which way(s) suits your investment property best and which
direction is most worth your while in the overall larger picture of your
investment strategy.
To highlight
this concept, an example; a colleague bought several hectares of land at
14 euro per square meter (about $17) outside of Bucharest that was zoned
agricultural. Having it re-zoned for development purposes cost him another
1.5 euro per square meter. The surrounding property was selling at the
time for 20 euro a square meter, meaning he had an immediate profit potential
of 4.5 euro per square meter. He waited six months when the land
was selling at 30 euro a square meter. He then sold his land at a profit
of 14.5 euro per square meter, more then the original amount he paid per
meter when he bought it. An investment company bought the land and surrounding
land and subdivided it for construction purposes and sold it to a construction
firm at a substantial profit. At every level investors are making money
with land. |
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| Investors
at virtually any entry-level can find similar cash cows today.
The planting
and harvesting time in Romania is NOW. Many people have already harvested
substantial returns on investments made just a short time ago, whether
it be six months or six years ago, when they originally planted their investment
in land. How many times have I heard stories of people who have watched
their property go up as much as or more than a hundred percent in an incredibly
short period of time. It seems like these types of stories, rather then
being the exception are becoming the rule. Sew.... and so shall you reap.
Think about
it....even if your investment doesn’t show as high returns, if it is even
half as good, it isn’t half bad!
Romania will
become a European superstate. |
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| It is predicted
to become the ninth largest country in the European Union and offers Europe
and world tourists the mountains, sea, city and village life all at once.
Foreign Direct Investment (FDI) is already higher in Romania then any of
it's neighbors, including Hungary, in second place, which receives a whopping
one billion less in FDI a year. Savvy investors are clearly seeing what
the future holds and are wasting no time in staking their claim in Romania’s
fertile soil.
Whether a long-term
investor or a short-term investor, whether investing at a higher or lower
level, profit grows here at a faster rate than does corn. This will continue
for a while as Romania joins the EU and for a limited time period after,
but obviously cannot last forever. Just ask the people who missed investment
opportunities in the Czech Republic and Hungary. The dilly-dallier and
the slow-poke stand no chance and will have to keep hoping to find somewhere,
a magical cash-producing tree.
Yes, there
are other investment opportunities in Romania that should be considered
by some. Many wise type of investments will pay-off and some of those quite
royally. Yet, the simple fact remains that most investors should put at
least initial focus in purchasing the right land. It is the least risky
(project constructions can cease before termination and leasing companies
have went under at an alarming rate) the most accessible and often most
profitable investment opportunity out there.
Getting started
is easy. For ownership protection rights one should form a Romanian corporation.
This is a relatively easy and inexpensive procedure. The only alternative
to this, is to invest through a previously established Romanian entity
in conjunction with partners, which can also hold significant benefits.
Such opportunities readily exist.
Investment
opportunities in raw land, as well as an entire array of other investment
options in Romania, are available in presentation format via request
to readers, by sending an e-mail with phone number and a brief specification
of investment needs.
I have personally
reviewed each presentation with local real estate experts to select the
most attractive and promising offers on the market.
Land prices
in some parts of Romania may seem high, especially to the American investor,
but remain undervalued and will continue to experience high growth in value.
The fact of the matter is, that you are investing in valuable cash-producing
soil, that has a track record of yielding much more then it costs to acquire.
This simple investment mechanism, lacking any confusing gadgets and gizmos,
is Romania’s best profit-making machine, and it is currently available,
limited time only, for the ready investor. Personally, I'd rather have
this profit-making machine that a magical tree anyday.
"Procrastination
is opportunity's assassin." ~ Victor Kiam
Speculations
made in this article should not be construed as investment advice. Past
performance is no guarantee of future performance. The author has attempted
to present advice, fact and figures based on sound study of the market
but makes no guarantees of any kind to the reader. see: www.romaniareport.com
For articles
on Romania by Kevin Stillmock see below:
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Article
Index ~ Balkans
Index ~ |
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