Investments in Italy
Attorney · Member since 2021 · 11 posts · 14 votes
Investments in Italy
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Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
5yWould be cool to have a little STR place in/around Florence. It's pretty much equidistant from Milan, Venice and Rome, with Bologna even closer. Make a little money and carve out 1.5 - 2 weeks of deductible vacation each year would be nice : ).
20 Replies
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I see all over the news about the houses on Sicily being given away ??? probably to isolated and not much going on with those but it is interesting way to try to keep little villages from dying. Good luck !!! we really like the lakes region north of Milan.
- 5yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
I'm not sure what your objective is but you might consider the following:
On the one hand, Italy is arguably one of the most beautiful countries in the world. Many people agree since it's one of the most visited countries in the world by tourists. It's also part of the European Union, which is a huge advantage.
On the other hand, sadly, it's a total disaster politically, economically and demographically. As a result, while the world has experienced a huge real estate boom since the Global Financial Crisis, real estate prices in Italy have been declining over the last 15 years and there's no end to that in sight. Italy never really recovered from that crisis while most of the rest of the world boomed when the world economy recovered.
If you can get a deal on a property in Rome, Florence or Venice and use it as a short-term rental, it can be a great cash flow investment. Don't bet on capital gains though, unless you get a deal and/or can generate forced appreciation.
For anything else, good luck to you, unless you buy for mainly lifestyle purposes!
Also, dealing with the bureaucracy can be excruciating there but your knowledge of the Italian language might be an advantage.
As the saying goes, there's no free lunch. You can get those properties for free on the condition that you "invest" a minimum of $60,000 in the renovation. You won't get any rental income on capital gain so I wouldn't call that an investment. It's only interesting for people who are happy to have a holiday place in the middle of nowhere for their own use.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Mike Lambert Ya that was my thought when i read it.. good deal maybe for some Brits or others that are only a short plane ride away..
- Attorney · Member since 2021 · 11 posts · 14 votes5y
@Jay Hinrichs - I've seen those too and done my research on them. Agree with you and Mike - they are a lovely way for southern Italy to attract vacationers to love and care for previously abandoned land, but that is about it. They are not worth the trouble for investors.
@Mike Lambert - Thanks for your thoughts. Having previously lived in both Milan and Calabria and worked in Milan, I'm familiar with the bureaucracy and political problems that exist in Italy, and in particular, in the south. You mention Rome, Venice, and Florence, which are nice vacation spots and I agree with you that an investment in a vacation property there could potentially be profitable. On the other hand, Milan, Bologna, and Torino are cities that are bustling with universities and/or hospitals. Milan, as the corporate center of Italy, also is home to most of the young professionals in Italy. As you know, neighborhoods with universities and hospitals are reliable sources of rental income. I understand that the real estate market in Italy is not the place to buy and sell for a profit. It is, however, a fine place to generate rental returns and returns from vacation property holdings.
Thanks again everyone for the attention to this post, introductions in the areas that we've discussed are welcome!
Gina
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Gina Russoniello Tiwari:
@Jay Hinrichs - I've seen those too and done my research on them. Agree with you and Mike - they are a lovely way for southern Italy to attract vacationers to love and care for previously abandoned land, but that is about it. They are not worth the trouble for investors.
@Mike Lambert - Thanks for your thoughts. Having previously lived in both Milan and Calabria and worked in Milan, I'm familiar with the bureaucracy and political problems that exist in Italy, and in particular, in the south. You mention Rome, Venice, and Florence, which are nice vacation spots and I agree with you that an investment in a vacation property there could potentially be profitable. On the other hand, Milan, Bologna, and Torino are cities that are bustling with universities and/or hospitals. Milan, as the corporate center of Italy, also is home to most of the young professionals in Italy. As you know, neighborhoods with universities and hospitals are reliable sources of rental income. I understand that the real estate market in Italy is not the place to buy and sell for a profit. It is, however, a fine place to generate rental returns and returns from vacation property holdings.
Thanks again everyone for the attention to this post, introductions in the areas that we've discussed are welcome!
Gina
out of curiosity how would a US citizen be taxed on rental income generated in Italy ?
- Attorney · Member since 2021 · 11 posts · 14 votes5y
@Jay Hinrichs It's a good question - I'm definitely not an expert but I found this short article very helpful: https://www.globalpropertyguid...
- Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes5y
Would be cool to have a little STR place in/around Florence. It's pretty much equidistant from Milan, Venice and Rome, with Bologna even closer. Make a little money and carve out 1.5 - 2 weeks of deductible vacation each year would be nice : ).
- 5yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
You're welcome and good luck with your investing journey. You're on the right path education yourself before you strike! :-)
The whole point of being exposed to the tourist market is to be exposed to the booming international economy and impending travel boom rather than the stagnating Italian economy. Next to the fact that short-term rentals are much more profitable than long-term rentals, especially in areas with high year-round occupancy.
I'm not sure why you'd want any exposure to the Italian economy but, if you do, I agree that Milan and Turin and maybe Bologna are probably the better places. The question becomes what kind of rental yields can you get in dollar/euro terms and also after adjusting for risks (including capital depreciation) and hassle. If you find that the yields are very high, let us know! I have serious doubts though. And then you'd have to deal not only with the bureaucracy but with tenant laws that are much more in favor of the renters.
I imagine that you're either Italian or at least from Italian descent given all that you mentioned and your name. Don't let that cloud your judgement if you're looking at a pure investment property (which would be the case if you're looking at a long-term rental). Always remember one of the main rules of successful (real estate) investing: invest with your head, not with your heart. Investing is purely about numbers, adjusted for risks and hassle.
- North Royalton, OH · Member since 2016 · 41 posts · 48 votes5y
@Gina Russoniello Tiwari
Hello Gina,
I grew up in Italy, I was born in Calabria and moved up north when I was a teenager. I would recommend looking at Riccione/Rimini/Cattolica area. You can make 12 months of cash flow in 3 months in the summer time with str. It doesn’t matter how the economy is doing , Italians will still go on vacation in the summer and that part of Italy is always busy in the summer. Bologna is a good choice too, with the university there, you will always have students renting from you. Milan, I think it’s too expensive so is Florence.
- 5yGiani BrussichPro MemberNew to Real Estate · Bedford, NY · Member since 2018 · 22 posts · 10 votes
Comment bump because I want to learn more about investing in Italy as well.
- 5yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
It sounds like the Rimini area could be great for cash flow. The other side of the coin though is that you likely won't get any capital gain and, worse, your rental income could be wiped out by capital losses.
I'm not sure why you think Florence is expensive. It's not in my opinion. Mind you the concept of expensive is relative. If you buy say an old house in Florence, you can get a great rental yield and own a trophy asset. What do I mean by that? Florence is one of the most visited places on earth by both Italians and foreigners alike and this isn't gonna change anytime soon. There is no other Florence in the world and there's never gonna be any. Downtown Florence is completely built out and the building code is such that the housing supply cannot be increased. This means that, unlike in most of Italy, you can get capital gains there because your property has intrinsic value that can grow over time. You pay for what you get.
Compare that with Rimini. There's plenty of other Riminis across the world and along Italy's long coast. Are you going to buy one of these thousands of cheap properties they could build thousands more of? Your property will have little intrinsic value. You have plenty of risks like the area getting less fashionable than other areas in the coast. Even is the area stays busy, you'll have plenty of competition. Then, if there is a recession in Italy, you'll have to drop your prices and your property might lose even more value than it otherwise would. And then, you won't have those loaded international tourists that would pay up for a nice property like you have in Florence.
So, buying in Florence or Rimini? There's no contest in my book. Ultimately, whether in Italy, the US or anywhere in the world for that matter, you get what you pay for.
- Attorney · Member since 2021 · 11 posts · 14 votes5y
@Bernardino Graziano Really appreciate your perspective as someone who's lived across Italy and seen the various different areas of demand first hand!
@Mike Lambert Would love to learn more about your experience with international short term rentals in general (not just Italy/Europe). If you don't mind, I'll send you a direct message on that. Your cautionary point about not letting one's passion for their Italian heritage cloud their judgment/reminder to invest with the head and not the heart is well-taken. For my own family at this time, our primary income is still from my work as an investment funds attorney and my husband's work as a physician. (We are just getting into RE investing, and I'd love to see that reality shift into predominantly investment-driven income in the future.)
Now, I'd be lying if I said that the entrance into an Italian investment property wasn't passion-driven - it certainly is. Let's look at it this way: if the goal is to buy property in Italy anyway that I can visit with my family, I want to do so in a way that will be a good investment. Notwithstanding certain aspects of the Italian economy that I know all too well, I know that there are good vacation rental investments to be found there.
Regarding investment income on residential rentals: I'm genuinely trying to learn about the viability of such an investment. The answer to that may be "not right now"/"pick another country". I've seen the university and hospital driven demand in certain Northern Italian cities, but I'm not sure such an investment would be the right choice. A hospital neighborhood... maybe. A student neighborhood... probably comes with a slew of problems (I'm thinking tenant damages) that may be best left out of our portfolio!
Finally, in addition to Florence (for which Mike makes a solid argument), Rome, and Venice, I'd suggest that areas that are consistently visited by more and more tourists and will never go out of style also include the Amalfi Coast, Cinque Terre, and Lake Como (in particular Bellagio).
Gina
- 5yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
Yes, feel free to send me a private message if you think I can help. You didn't need to ask for my authorization first.
- Member since 2019 · 6 posts · 1 vote4y
A question for those in the know. Do these international investments typically require the investor to purchase in cash? Unless one is based in Italy or has Italian income I assume it would be impossible to obtain financing? I am interested in obtaining a property in Florence or the surrounding countryside. While my last name does not reflect it, 50% of my family resides in Italy and I do speak the language. My current goal would be to purchase and have it cash flow via STR for 10 years or so and then once I retire make it one of my part time living residences. It may sound aspirational but I would love to have 2-3 residences in my/my family's favorite locations to spend our retirement years in.. Appreciate any input.
- 4yMike LambertPro MemberInvestor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
It is possible to get financing there but not easy. And, even if it works, you'll still have to put down a significant amount of cash. Don't expect the same kind of conditions as in the US.
Your plan makes sense provided you buy the right kind of property in the right place. In that case, you could get a great cash flow return whether you get financing or not. Getting a capital appreciation or avoiding a capital loss is another story there but that shouldn't be a concern to you since you're planning to keep and use the property in the future. In the meantime, you could pay yourself back through the cash flow hopefully.
@Gina Russoniello Tiwari Did you happen to invest in IT?
I'm living here now, got married to an Italian woman we are considering if we should purchase in an area with high cash flow, or just go to the US Market. If we do IT, we're thinking Florence since it can appreciate and has high cash flow.
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