The Herd Mentality In Property Investment (bulgaria)

The latest 'Boom blindness' fall out in Sofia!
Buyers as we have discussed before in this blog seemed to rush in and buy based on sexy CGI's & fancy media write-ups promising luxury finishing for their off-plan investment purchase. Sadly all too often the final product does not meet expectations created by the promise found of the glossy sales brochures!

In fact I would call it 'boom blindness' the urgency not to miss the boat led to a classic herd mentality buyers diving in, consequences be dammed! Now comes the fall-out.

Whilst Sofia Casa Ltd. can spend a whole day convincing clients to pay as little as 50 Euros per month in management fees the same clients did not hesitate when signing a purchase contract for over 150,000 Euros & a monthly maintenence contract of upto 3 times that amount with the developer's FM company. If as much time & diligence had been dedicated to probing the original contracts, payment schedules, specifications and penalties for delay they might have saved themselves the headache in the first place!

By the time clients reach us they have often been stung, bitten and brow beaten more than Evander Hollyfield making it very hard for them to take a rational decision to sign up with a competent property manager. They are in effect trapped between fear of risk and wounded pride, mourning the loss of spectacular capital returns, like an heiress cut out of daddy's will at the last minute.

Such investors have to pass through the classic psychological phases of denial, anger and frustration before they reach acceptance! In many ways this is understandable, as once bitten twice shy! We only ask do not shoot the messenger i.e. us your property the manager! We are here on the ground doing our best to 'tell it as it is' rather than paint a fantasy as too many agents did in the halcyon days of the BGN bubble!

The denouement is illustrated by last night's block meeting experience. I found myself sitting in a Block Meeting organised by owners and their representatives (ourselves) discussing the energy supply contract to the Complex.

On that note I have to express a grudging admiration for the careful planning that went into setting up a racket which allowed the Developer to monopolise then pass on all the FM responsibilities to sub-contractors, whilst simultaneously avoiding responsibility & charging owners a fortune for the privilege! Under cover of 'boom-blindness' they were able to slip an onerous Maintenance Agreement into the sales contract which all owners had to sign effectively giving them carte-blanche to serve up minimum FM for maximum FG (financial gain!).

Owners had mostly paid FM fees in advance and with boom-blindness still in effect none of them seemed to notice that the pool & spa facilities were kept back for the developer. The developer owns the magic wand and it is he who decides if he wants to turn the frog into a prince and back into a toad again when he sees fit! Even if owners get together and manage to oust the developer's FM provider they still run the risk of being Cindarella at the ball without a prince! The developer and his chosen FM firm can waltz off into the sunset leaving the owners over a barrel thumbing their noses at the owners and denying them access to the on-site spa facility. Of course this Spa Complex was the centre piece of the sales & marketing strategy and allowed the developer to shift apartments like hot 'banichka' back in the day!

Back to the block meeting. For those of you who have not had the privilege they are about as entertaining as watching Geoffrey Boycott man the crease back in the day or listening to a footballer's WAG discuss global warming!

At times like these you turn to your imagination for entertainment and we found ouselves giving nicknames to the smug collection of FM Directors and Developer's representatives, as they squared off against the collective wrath of the owners! There was 'Ghost-rat' (a pale FM manageress with doe eyes), 'Duner-gia' (the Director of the FM company, like someone you might meet if you are in the habit of buying kebabs at 03:00 am after 10 pints!), 'Alc-face' (the developer's representative, looks like he starts the day with a liter of vodka!), 'Hairmouth' (an owner able to talk seemingly without breathing from a mouth that protrudes from beneath a gargantuan fringe!), and 'Sinouka-lujets' (roughly: 'blue eyed liar', the Block Maintenance Manager who looks like a well known BGN politician, indeed might even be him on his night off?!).

The moral of the story is, to avoid meeting this illustrious cast, read contracts, get independent legal advice and ask if you have a share in the on-site facilities before signing! This will help you to avoid those unscrupulous developers who intend to set up a cartel on the back of a Faustian agreement that requires you to hand over a small fortune in perpetuity for sub-standard FM services!