How to choose the best rental investment in Budapest ? And in a good neighborhood! Are you looking for a residential rental investment in Hungary to boost your portfolio?

You have flair!

Hungarian real estate can bring you attractive rental returns provided you make the right choices.

But aside from the potential returns, facing the unknown of the market can be daunting for many investors, even experienced ones.

Regardless of the country of investment, real estate remains a complex project. That's why it's important to do detailed research before committing to master all the parameters of real estate investment. Here are the most important elements to consider when purchasing a rental property in Hungary.

KEY POINTS

• Study the neighborhood thoroughly - its attractiveness and amenities are essential.
• A high vacancy rate in the neighborhood is obviously never a good sign. (Find out as much as possible about the type of residents: locals, foreigners, tourists, travelers, etc. You might be in for a few surprises.)
• Check local selling prices (excluding agencies) to get an idea of ​​the local market value.
• Identify your typical tenant: student, tourist, expat, luxury?
• Find out the average rent in the area and work from there to determine if the deal is financially viable.

How to start your investment search in Hungary?

Start your property search on your own before hiring an agency. An agent will often push you to buy before you've found the investment that's right for you. Furthermore, since the real estate agent profession is unregulated in Hungary, their skill levels can vary greatly.

Exploring the market on your own will help you narrow down several key features you want in your property: property type, location, size, and amenities. Once you've done this, you may want to hire a real estate agent to help you finalize the purchase.

Your search area will simply be limited by your ability to manage the property yourself or your ability to hire someone else to manage it for you. If you use a property management company, proximity is less of an issue.

The 6 criteria to consider for a profitable investment

1. The districts of Budapest

The neighborhood you buy in will, of course, determine the types of tenants you attract and your occupancy rate. Districts 5 and 6 are the most upscale and can attract a high-end tourist clientele. While some neighborhoods, such as the 7th, 8th, and parts of the 9th District, are more suited to students and city-trip tourism.

2. Watch out for the “Bérleti jog”

You may be mistakenly attracted by certain properties whose prices appear to be significantly below market prices. The Hungarian state grants the Hungarian population a rental right under certain conditions. Indeed, these low-income citizens can rent certain properties that are not available to foreigners to purchase.

3. Schools & Universities in Budapest

If you're buying near a university, it's likely that students will dominate your pool of potential tenants, and you'll need to find a rental solution for the summer months. However, student rentals remain a great market even during the crisis.

Several universities are located in the center of the Hungarian capital. In 2019, there were 30,000 international students , most of whom were staying in Budapest.

The overall value of your rental property comes into play when you resell it. A property near universities will have a higher value. If there are no good transport links to the university, this will obviously affect the value of your investment.

4. Look for expats in Hungary

Besides being an excellent source of information for you, knowing where these expats live in the majority is relevant information for the investor.

In fact, many foreign companies have set up in Hungary and welcome foreign expatriates with substantial incomes for a few months.

They therefore represent a top-notch rental clientele for foreign investors.

5. Budapest facilities and transport

The Hungarian capital is extremely well connected, not least thanks to its international airport, but also throughout the city, where the metro and trams play a prominent role.

Visit different neighborhoods and discover parks, restaurants, sports centers, museums and operas, and all the other amenities that attract tenants. Tourist information points will provide you with all the promotional materials you need to conduct your research.

6. Costs of owning property in Hungary

When we talk about common charges in Budapest, simply know that it represents the maintenance costs of the building. These costs are very reasonable (count around €30 for an 80m² apartment).

Besides the charges, other costs such as insurance are also very low (count €8 monthly for home insurance). Finally, for rental management, the costs vary from one agency to another. In addition to their management fees, the seriousness of the agency in terms of monitoring is also an essential element to evaluate.

Things to remember to successfully complete your Hungarian investment project

Keep your expectations realistic. As with any investment, a rental property depends on many factors that must be considered before making your decision, and rushing into choosing the wrong property could be a disadvantageous mistake for some time.

To best support you, consider working with an experienced partner on your first property and help you make the most of the opportunities in the Hungarian market .

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