Have you ever bought or sold a house or a condo in America? If yes, then how many 5 inch stacks of $100 dollar bills were involved, and how many years were you required to wait between the purchase and moving in? If you can’t answer these very simple questions, you are not ready for the Russian real estate market.
The hottest market is, of course, Moscow and its suburbs. The prices for a condo range anywhere between $60,000 for 400 square feet on the outskirts (a few hours from downtown) to tens of millions of dollars. Houses start at about $200,000 even 30 miles out of the city (which can be a three hour commute one-way), they become closer to 3-5 million dollars towards the city, and having a house in the city, or in a nice setting right outside of the city limits can cost as many zeros as you can imagine.
The rent for the apartments within the city limits in downtown area will amaze even New Yorkers. Just follow this link and see how much you have to pay for a 400-600 square feet studio or one bedroom apartment ($1,000-3,000). The prices you see on the websites are in American dollars.
Houses in Russia these days are built without any modesty, and they can imitate French castles, Italian villas, glass and metal artistic objects, etc. The waterfront legally can’t be private, but try to argue with the guards, securing the yachts by the villas armed with submachine guns. Security for such houses costs anywhere from $20,000 to $200,000 a year.
This post is not spontaneous, because a few days ago the first arrest of a building company executive took place. Mr. Nazim Darimov was born in Baku, Azerbaijan, and has lived and practiced business in Russia for 25 years. His company “Print Capital” received many awards as a leading builder of condos and apartment buildings. Mr. Darimov himself is a very popular character back home, in Azerbaijan; he was even spoken of as a possible nominee to run for Prime Minister in Azerbaijan, due to his extended connections in Moscow. However, he refused, there’s just too much money to be made in Moscow for him to worry about things back home.
Mr. Darimov's connections have guaranteed his impunity from prosecution. He has appropriated millions of dollars through “Print Capital”; the money was wired to his own bank, and later used for his own companies. There is nothing special or outstanding about this story, because many followed Darimov’s example, and now there are several thousand families whose money is gone, and who are still homeless. People are so upset, that through the number of demonstrations and protests they’ve gotten the government’s attention, and Darimov was the first sacrificial lamb offered up, though his trial promises to be lengthy and will probably go nowhere.
How does it work? The credit system in Russia is very undeveloped, and almost all purchases are done 100% in cash, in American dollars. This goes for multi-million dollar homes as well. The only way to get an affordable “deal” is to save up money, and buy your future condo before it is built.
Usually you have to invest $25,000 to $100,000 cash within 48 hours, and then you wait for two or three years for the building to be built. Mr. Darimov was the first one to realize that you can sell the same condo to many people, playing with the word “co-investment”. Also, you don’t really have to finish the project, if the money is safely tucked away, and local government officials are bribed to freeze your project. Many middle class Russian families invested their life savings, and now they are left without any clear answers on how to get the money back, or at least to move in into an unfinished building.
Many co-investment contracts were pure fiction from the very beginning. Generally people are uneducated in real estate issues; they sign huge contracts, give the money, and don’t realize that by signing the paper they just assumed the risks of the investment in something that might fail and not give any return to a so-called “investor”. There is no legal way to get your money back in this case, however construction executives went even further, they started selling the same space to several people, and even to high-ranking real estate and insurance companies at the same time. That’s where they got burned, after thousands of deceived people went out in the streets and demanded government protection, the government had to punish someone. The large corporations that got ripped off along with common people were even more upset.
Knowing Russia, you can be sure that many criminals will get away unpunished, and the investigation will produce just few more enormous bribes. As for the common people – that’s how Russians become homeless or poor, and that’s why a homeless person in Russia with 5 dollars a month is not in quite the same position as an American homeless person.
When you purchase a condo or a house from a private individual, a lot is based on trust and your personal connections that could produce armed people to secure the “deal” of transferring the cash.
The complicated part of the real estate purchase is taxes. If your condo is more expensive than $30,000, the seller has to pay 13% tax, with no exemptions. This is truly insane for the families that can barely afford the upgrade, because taxes end up in the tens of thousands of dollars. Russians can try to avoid the ridiculous taxes by declaring the price below $30,000. However, this leads to citizens signing legal contracts which state that, lets say a $300,000 apartment is worth only $25,000.
After that the only way to transfer the payments is cash. That’s where you need to chose the right real estate agent, who has a good safe; “good” means secure and spacious (for the little stacks of American cash). Also, make sure that you have the valid credentials, a legit address and the name of your realtor, so in case he disappears with your money, you can find and threaten him or his relatives, so he will “re-appear”.
The worst case scenario is if you changed your mind and want to back out of the deal, because that can upset the realtor, and legally he is obligated to give you only $25,000 out of the actual price of $300,000.
One might wonder why Russians put up with all this BS. Well, because that’s how things are done in this country, and because $40,000 in tax, non-deductible and collected in cash is not something people with few hundred dollar salaries can afford. There is also no other way to perform these operations, unless you are super rich, but then even the very rich still prefer the fake paperwork and cash, because they can hire more muscle to supervise what is done with their money and property.
Comments
Everyday there are new ways to earn huge profits over the nternet with Real Estate.
Posted by: John Beck | September 26, 2006 11:57 AM
Dear colleagues,
We are Avalon Real Estate and Developer - a Bulgarian real estate agency with main office in Sunny Beach - the biggest and the most famous sea resort in Bulgaria .
We work successfully with English, Danish, Irish and Spanish agencies. Because of the growing interest in Bulgarian properties, we decide to look for partners in your country as well.
Two are the main reasons for investments in Bulgaria :
1. The entering to the European Unioon.will lead to a steady economic growth and raising of the prices of the real estates. If you buy an apartment today, next year you will be able to sell it at double price.
2. You will also have the great opportunity to give your apartment for rent and you could receive an annual rental income, which is about 5 % of the selling price.
Working with the biggest developers in Bulgaria- Dreamville, Eurobuild, Galaxy Group, Diamond, we will offer you properties of high quality, competitive prices, and flexible payment structure. We work individually with our clients according to their own, personal requirements and possibilities. We also have our own development - Winter Dreams - apart hotel with 300 apartments for sale in Pamporovo – the most famous ski resort in Bulgaria .
If you are interested in this offer, our sales managers will send you more information about that how we can work together and what is the percent which you are going to receive from a successful deal!
Best Regards:
Avalon Ltd
Avalon Property Consultants
Building"Golden Dreams"
Offices 4 & 5 ,
Sunny Beach, Bulgaria
tel./fax: +359 554 221 61
mobile: +359 889 300 989
mobile: +359 887 201 233
Skype: avalonestatebg
e-mail: avalonbg@hotmail.com
www.avalonestatebg.com
Posted by: Yana Georgieva | March 5, 2007 2:42 AM
Dir Sirs/Miss
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Tel: 0097142970068
Cell: 00971502584464
Fax: 0097142970118
dalia@greenvalleydubai.com
www.greenvalleydubai.com
Posted by: Dalia Mahmud | April 24, 2007 7:14 AM
I have a house in Cyprus for sale
Posted by: Georgia Komodromou | July 17, 2007 3:47 AM
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www.homehuntersasia.com
www.golfandcountryhomes.com
info@homehuntersasia.com
Posted by: Scott Malone | August 6, 2007 10:34 PM
Dear All,
Our Real Estate Company has a lot of projects in Dubai for sale, which are ready, under construction and pre-launched.Prices are normal, location is perfect! If you are interested, you can contact me directly.
Posted by: Govhera | August 26, 2007 1:40 AM
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Posted by: Abdulhamed | October 15, 2007 4:46 AM
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Posted by: Lea Dimmeler | March 5, 2008 3:25 AM
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Posted by: Albrecht-Realestate-International | April 25, 2008 1:34 AM
i have a 3 bedroom, 2 bathroom apt for sale in nyc about 20 minutes from mid manhattan. it is on the same street as a large apt. building used to house russian u.n. employees and their families. the building is well cared for and has two elevators
Posted by: i gerringer | April 25, 2008 7:56 AM
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Posted by: Nasir Amin | April 29, 2008 11:26 AM
Many Russians are now investing in the Republic of Panama. With its global banking center, world trade route and tropical climate this small offshore haven has many good reasons to invest.
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Locate city condos, suburban houses, office space, highland getaways or beachfront land with the professionals at www.real-estate.com.pa
Posted by: Clint Walton | May 5, 2008 2:35 PM
This is a wonderful opportunity to invest in Real Estate in the United States. The Pacific Northwest is a very popular vacation area with plenty of out door activities, cultural events and especially golf. There are great golf courses every where, even a few miles from this home.
This home is a 4 bedroom, 3 1/2 baths and is about 400sq meters in Gig Harbor Washington. Please see the link for more information and photos.
http://www.viviun.com/AD-105765/
Please contact Rick Altman
phone: (253)224-3576
Posted by: Rick Altman | May 10, 2008 1:51 PM
Dubai is one of the fastest growing cities in the world. It is a great oppurtunity for inverstors all over the world to make good money. It is great for both tourism and families. We have property in the palm and many office spaces availale.
Please contact Ola M
0097150 454-8699
Posted by: Ola Farahat | July 30, 2008 9:36 AM
Hey, US dollar is at its lowest right now. Because of that, people are getting a discounts of as much as 40% if you buy in currency other than the US dollar. We have many international buyers buying all the investment properties like commercial buildings, apartment buildings and businesses her in the US. Don't miss out!
If you're interested in buying here in Spokane, WA , please contact me at pavelg@windermere.com , or visit my website www.SpokaneVisit.com
Posted by: Pavel | August 26, 2008 10:56 AM
It can be difficult investing in a foreign market but if anyone is considering an investment in the Algarve, Portugal we can offer a unique service.
Tavira Porperty Brokers helps investors and buyers from all over the world, including Russia, locate and buy investment properties in the Tavira area.
With a huge number of contacts and a specialist team in Tavira we can offer a one to one service....and our service is completely free to buyers.
So if anyone is considering Portugal please contact us at www.tavira-property.co.uk or www.tavira-property.com
Posted by: Richard | September 19, 2008 8:08 AM
Good Evening to you all.
My name is Antonio Frances and im a professional salesman for E.R.A Lagoa, Portugal, Algarve.
If you are interested in buying or even selling a property in the Algarve,Portugal, i´m the man to contact.
Wide range of properties:
- Apartments from 90.000€ with sea view
- TownHouses in Golf condominiums from 200.000€
- All kind of villas from 100.000€
- Construction Plots near the sea from 100.000€
- Great Investments
contact me for more informations.
I´m here to help.
Best Regards
António Frances
mobile - 00351912511997
antoniofrances.lagoa@era.pt
Posted by: António Frances | November 5, 2008 1:57 PM
looking for a Russian or Swedish speaking person who can help market our project in Thailand,www.dusitwhitney.com
Posted by: John Whitney | December 17, 2008 12:25 AM
Investing in UAE is the best now days to get a high profit because the prices are going up,specially in Ras Al-Khaimha,where alot of investors are intrested in and alot of projects are bein built not, I offer lands in very good locations with very good prices. If intrested e-mail me and I will send you all the details
Posted by: Shorooq Jassim | January 3, 2009 11:04 AM
Dear Readers,
My name is Dimitris Leftakis and im manager of M&L Real estate Agency in zakynthos Greece ,in our website you can find many Luxry villas for sale next to the sea and also many businesses such as shoping centers and nightclubs for sale and in generally many leisure and tourism related properties thank you Dimitrios Leftakis
M&L Real Estate Agency
Alikanas Xechoriati Rd.
Pc:29090
Zakynthos
Greece
tel:+30 6946582508
Email:info@mlrealestate.gr
Web:http://mlrealestate.gr
Posted by: Dimitris Leftakis | February 21, 2009 8:28 AM
I have a large land parcel for sale in Koh Samui Thailand 19 lots subdivided -looking to sell or partner to develop-has 300 meter concrete road leading to a private hill/dome -great location
Posted by: John Whitney | February 28, 2009 10:33 AM