Frequently Asked Questions

How long does it take to purchase a property in Italy?

Once you have found the property of your dreams ?which could take one day or several years, the process to assume ownership of the property takes about three months from Preliminary Agreement to Final Deed/Closing.

Why have property values in Tuscany and Umbria increased so much over the past few years?

In addition to being one of the top tourist destinations in the world, the demand for restored and unrestored properties in Tuscany and Umbria exceeds the limited supply. In the past five years (1997-2002), property values in Tuscany have more than doubled. In fact in one year alone, property values in southern Tuscany (specifically near Val D?Orca) have increased by 30% while those in Umbria and surrounding regions have increased by 30-50%. As the following graph reflects, the average cost for a restored villa or farmhouse in Tuscany increased from approximately 275,000 euro to 600,000 euro and in Umbria from 200,000 euro to 300,000 euro.

This dramatic increase is a direct result of several critical factors. First and foremost, Tuscan law #64 (B.U.R. 21-4-1995, n. 31) has continued to protect property values in these two regions by restricting new development in agricultural areas outside of city limits. Second, historic properties within these regions, in many cases unoccupied for years, are now in increasing demand as second homes and/or as rental properties to generate income. In fact, properties for renovation have experienced the greatest year over year increase due to the increasing demand:

  • New or completely restored properties rise 7.68 per cent per year
  • Partially restored old or used properties rise by 7.48 per cent per year
  • Properties for renovation (unrestored properties) rise by 8.66 per cent per year
  • The available supply of unrestored properties is fixed in these regions

    What options are available for financing both here in the U.S. and in Italy.

    There are several financing options available for investors. It is possible to apply for and obtain a mortgage through an Italian bank, and Tuscan Hills assists clients with the required documents including:
    ? Land registration certificates;
    ? Information for the notary;
    ? Valuation of property document;
    ? Business plan.

    The process can take several months.

    In addition to the traditional mortgage in Italy, other options include establishing a Line of Credit or Second Mortgage on your U.S. residence through a U.S. bank. Little documentation is required as the value of your home is used as collateral against the loan. The third financing option is to work with your financial advisor to leverage other investments (equities, bonds etc.) to establish a margin account. Tuscan Hills works with the LMR Group at Merrill Lynch and can refer clients to LMR to discuss alternative financing options.

    Why should I invest in Italy rather than in another country or even buying a second home here in the U.S.?

    For investors looking to diversify their portfolio, real estate is one way to do that. Despite the dramatic increase in property values in the U.S., there are certainly opportunities to realize capital appreciation and rental income from U.S-based real estate investments. However, to further diversify one?s portfolio, owning international real estate is an excellent way to potentially hedge against declining U.S. stock markets or U.S. real estate values.

    Italy represents an attractive and safe investment for several reasons. First the Italian economy now ranks as the world's sixth largest economy measured by GDP (which now exceeds $1.2 trillion). Italy remains an economy where the manufacturing sector is very strong. Key industries include automobiles, shipbuilding, chemicals, furniture, clothing and textiles, leather goods and footwear, food processing, ceramic products, components and machinery. 32% of the population works in the industrial sector. The service sector has shown considerable growth and now accounts for 61% of employment, and tourism is a growing economic contributor, both in winter and summer.

    Second, Italy and the U.S. have enjoyed strong and friendly relations. The two are NATO allies and cooperate in the United Nations, in various regional organizations, and bilaterally for peace, prosperity, and defense. Italy and the United States have worked closely on many issues that impact the citizens and economy of the two countries. A survey conducted in the U.S. among leading business groups revealed that Italy enjoys a reputation for innovation and creativity, excellent manufacturing base, superb geographical location and infrastructure, the size of its domestic market, and for its ability to produce high-quality products consistently.

    Third, investment from overseas has grown significantly, particularly from the USA, UK, France, and Germany. In 2002, the U.S. trade to Italy was over $10 Billion while imports from Italy totaled over $24 billion.

    Fourth, Italy remains one of the world?s most popular tourist destinations. In 2000, Italy ranked fourth (behind France, the U.S. and Spain) in international tourist destinations with over 40 million arrivals. Italy has a well-established tourism system that includes over 33,500 hotels and more than 30,000 registered private homes and agritourism accommodations. The majority of these accommodations (83%) are located in Northern and Central Italy. Foreign travelers also include over 40% of the overnight stays in Italy at over 131 million. Of those foreign travelers, approximately 70% frequent hotels, and nearly 30% (38 million) of the total number of overnight stays are in other accommodations including private villas and farmhouses.

    How much are property taxes in Italy?

    Property taxes in Italy are quite low ? generally .4% to .7% of the declared value of the property.

    If I decided to restore a house in Italy, is it difficult to obtain the necessary planning permits?

    We work to obtain many of the required planning permits before selling the property to investors. These properties are considered ?restoration-ready? and all of the Italian paperwork has been sorted out, consents granted, plans drawn up, and builders in waiting ready to move on site. This process often requires several months and up to a year for some of the more difficult permitting requests. Laws governing restorations in Tuscany, however, are quite rigorous and in most cases limit even the slightest changes to the structures? original footprint. It is important to work closely with a geometra (a combination of an architect, engineer, and surveyor) who understands the local requirements and knows all the ?right people? in the ?right places? to get the paperwork submitted properly and processed as quickly as possible.

    How much does it cost to restore a property in Italy, and how long will it take?

    Costs to restore a house in Italy vary considerably across the regions and even within the regions. There are many, many factors to consider before determining the restoration costs or how long the restoration will take. Because we perform many of the pre-restoration activities prior to selling a property to an investor, we are able to more accurately project costs and timeframes. We prepare a technical report for each client that sets out all the plans and specifications, a timetable for the building company, and a detailed budget.

    A full property restoration can range in price from $125 to $175 per sq. ft. and take from 12 to 16 months to complete.
    Project management costs are included in the three phases of the purchase and restoration process. The first phase includes pre-purchase assessment of the property?s integrity, including title search; overseeing the purchase process, including preparation of notarized contracts and documents; and providing English translations of all documents and correspondence. Phase one costs are approximately 2% of the property value. Phase two includes architectural design, material specifications and sourcing and securing planning permits and other official approvals as required. Phase two costs are approximately 6% of the total construction costs. Phase three includes construction project management for both interior and exterior of the building and landscape design and oversight of implementation. Phase three costs are approximately 9% of the total construction costs

    How often do I need to visit my property during the restoration process?

    You are certainly encouraged to visit the property as frequently as you can to experience the quality of the workmanship first hand. However, there are only two or three milestones during the restoration process where we strongly encourage you to visit the property. Through our ?virtual? site meetings, monthly progress and financial reports, and bi-weekly email photos from the site, you can monitor your restoration right from your own home or office in the U.S.

    What resources are available here in the U.S. to help me through the restoration process?

    Tuscan Hills staff will work with you each step of the way during your restoration project. Our strategic partnerships with Tuscany Now Real Estate and Studio Tecnico Vigni in San Gimignano, Italy provide clients the best of both worlds ? on-site project management in Tuscany to oversee the restoration and a knowledgeable consultant state-side to work with you in person. Through several other strategic partnerships here in the U.S., Tuscan Hills also can provide direct support in bathroom design and material selection through Princeton Stone and Tile, interior wall finishes and color selection through H Design, and the complete line of home furnishings and antiques through Mori Interiors, Caporali, Mobili Paganelli, Pieracci Seggiolificio, and Busatti, to name just a few.

    How much does to cost to maintain a property once it has been restored?

    Costs to maintain a property vary depending on whether or not it is available to rent. The following chart estimates maintenance costs for a 3 bedroom property in Tuscany. These costs amount to approximately 18-20% of annual net rental income.

    If I decide to rent my property while I am not there, how much rental income can I expect to receive?

    Properties rented through Tuscany Now, Ltd can enjoy a gross return on their investment of 6% to 11% per year depending on the size and location of the property. The following chart reflects an estimated rental income on properties in Tuscany and Umbria.