At a time when everyone seems to be chasing the next hot spot for property investment, where should you invest, why, and how will you get the best returns on your money? All is revealed here…

Romania is increasingly earning the accolades as one of the best property investments in the world. PriceWaterhouseCoopers ranked Romania as the most profitable property investment in Europe in January 2006. They estimated a 414% return on investment over the next decade, which works out at approximately 17.8% annually, a considerable return.

Coliers International, one of the worlds largest real estate consultants rated Romania as the second most lucrative investment in the world in July 2006. Given its rapidly expanding economy, booming tourism, impressive foreign investment, and its EU membership from 1 January 2007, Romania clearly possesses the attributes to be a thriving property investment for the astute investor.

Whilst the ingredients for a lucrative investment are there, how exactly, do you maximize your profitability from am investment in Romania? Here are 5 top tips to achieve a commanding return on your money and possibly exceed the promising forecasts from PriceWaterhouseCoopers and Channel 4:

1. Leave the capital and go for a secondary city. Bucharest is a sound investment and the large majority of experienced foreign investors concentrate the bulk of their investments in the capital. However prices in the capital have risen exponentially over the last three years, with most property doubling in price. Prices will continue to rise, but at a slower pace than that of many secondary cities in Romania. Hence a large number of the countrys biggest developers and investors are moving gradually to other major cities in Romania, such as Cluj, Constanta, Timisoara, Iasi, and other locations. These are areas of strong growth and whilst the rental yields will generally be lower than in Bucharest, the capital growth can be substantially higher.

2. Buy off-plan very early in the development process Most development projects take 12-18 months to complete. If you buy very early in the development process you will benefit from one or two price rises during the propertys construction. The developers usually raise their prices to align with the soaring market prices and to allow for the increasing material and labour costs. If you buy at the beginning the development you can see an official 15-25% price increase during the construction phase.

3. Leverage your money using banks money Mortgages for foreigners are still difficult to come by and fairly expensive. There are 4-5 banks that offer mortgages to foreigners and the interest rates range between 6-10%. If you get a rate of 6.5%, which is comparable to the rates in the UK, there are still considerable bank arrangement fees, up to 3% of the property value. Even at these costs it is still very lucrative to leverage your investment with bank financing in Romania. However, if you can raise finance against a property in the UK or even better, in Europe where rates are lower, your investment will be even more profitable.