5 Tips for Buying Rental Property in Yerevan, Armenia
Below are five tips to help you understand the market of rental apartments in Yerevan, Armenia, and to avoid mistakes commonly made by buyers.
Choose the Right LocationThe location of your apartment will naturally depend on your objectives and priorities. If you are looking for investment or rental property then your search should be focused on the Center of Yerevan, namely buildings within the "circle" formed by Moskovyan, Khanjyan, Khorenatsi and Saryan streets. There is always a demand for properties in this area, particularly during the high tourist season from April to October. Many owners prefer to rent out the apartment on a daily basis to tourists and other visitors during the high season and rent it out on the long-term basis for the remainder of the year (November to March). It is generally recommended to avoid the so-called "Glendale Hills" area on Argishti Street despite its good location near the Republic Square. If you are buying an apartment to live there yourself you may also consider Arabkir and Davtashen districts. Nork-Marash in a nice area but there are very few apartment buildings there.
Choose the Right BuildingThe majority of apartments in Yerevan were built between the 1960s and 80s in low-cost, concrete-paneled buildings. At present these buildings are generally in bad condition and it is better to avoid them. This leaves potential buyers with two options: the so-called "Stalinkas" built in 1930-50s and new buildings raised after Armenia's economic recovery in the 2000s. "Stalinkas" are generally cheaper but because of their age, lack of elevators and poor maintenance of common areas they are not always attractive to buyers.
New buildings also differ a lot in quality. All developers do not have the same reputation, and similar apartments in neighboring buildings can have very different prices. While apartments in "good" buildings may be sold out before the construction is over, "bad" buildings have many empty apartments even 10-15 years after the construction is over. It is therefore wise to consult with a local professional who is aware of the history of the building. Many developers went bankrupt and this affected not only the quality of the construction but also created legal issues. If the construction is not over yet you should be especially careful with documents and you also should expect delays as it is very rare for developers to finish the construction on time.
Choose the Right ApartmentApartments on the ground (first) floor and the last floor are generally sold at a discount. Ground floor apartments are avoided for reasons of security, lack of privacy, noise, humidity coming from the basement, while apartments on the last floor (in older buildings) are less demanded because of potential leaks from the roof and stronger sun heat in summer. If the building does not have an elevator (or the elevator is frequently out of order) accessing the apartment on the last floor can be particularly difficult. Many old buildings have superstructures in the form of one or two extra-floors. It is better to avoid investing in such structures. Apartments facing north generally lack natural light. Apartments with large windows facing south can create the opposite problem.
Beware of Unscrupulous Agents/BrokersThe services of real estate agents in Armenia are generally limited to bringing together the seller and the buyer. Normally they do not have exclusive rights to a property, and one property can be listed by dozens of agents who will indicate different prices.
In Armenia it is common for the agents to charge 2% to the seller and 2% to the buyer, bringing the amount of the commission to 4% of the value of the deal.
Agents are not licensed by the government or any professional association. They are not bound by any code of ethics, not bonded, and if anything goes wrong with the sale they will not take any responsibility.
Use an Escrow AccountEscrow accounts are offered by many local banks but they are still not very common in Armenia, and many sellers are suspicious of them because of low level of awareness. Nonetheless, it is important that you use an escrow account or an equivalent tool and avoid the common practice of carrying bags with cash to the notary's office and handing them over to the seller there. First, this practice creates security problems. Second, the seller may want to take the money to the bank to make sure the notes are not fake (the percentage of fake notes in circulation in Armenia is relatively high). But more importantly, your title still has to be registered at the Registry (the Cadastre) and it is not prudent to pay the seller before your ownership rights are duly registered.
The drawbacks of using an escrow account are the additional bank charges in the range of 0.1-0.3% of the money deposited and the costs of converting the money into local currency. The law in Armenia requires all real property transactions to be done in local currency (Armenian drams) while prices are generally quoted in US dollars. This means that you will have to convert your US dollars (or any other currency you have) into Armenian drams to put them into the escrow account. However, the seller will want to be paid in US dollars and will probably want that you bear the costs of converting drams back into dollars. The seller may also be uncomfortable waiting for a week while your ownership rights are being registered. This problem can be solved by paying extra-fees for Cadastre's fast-track service that will make it possible to register your ownership rights in one business day. However, this can bring the total cost of registering the transaction to about USD 500.