Investors , lets put our knowledge to the test and see who triumphs

[mickthepropertyguru]

Rules of the Test
1) You have €55K to invest in any region, any country ( Land , off plan, resale). You can use as little or as much of the 50K as you want.
2) You are allowed a mortgage if you want (typical 70% ) i.e. you can use the 50K as a 30% deposit and get a mortgage for extra 70% if you wish (fixed mortgage @ 4.9 %)
3) you are allowed more than one investment or multiple units. Split 50K any way you want.
4) You have to sell in 5 years
5) Prove in short concise points why you feel your future potential investment will be the best financially (Figures ans stats) and what you think your Total return will be over 5 years (Appreciation & Rental).
6) Buying costs should be taken into account in your chosen region.
7) Also lets say CGT in the country you reside in is 20% as a constant for everybody. Lets presume there is dual taxation laws.
8) Agents fee of 7% when selling
So who feels he/she has the best investment ? Lets see.
(I appreciate this exercise may take some time in calculating but it will be interesting to see who feels they will have the highest return on their investment)
NB: A final total profit return figure should be calculated after all tax and costs are deducted.
I will provide example asap (going to take me a while)
Would anybody like to change alter some of the above criteria before we start ??

 

[ChristopherE]

Well done.

Well done, Mick. I'll look forward to following this and the 'deals' entered. I'll leave this to you pros... In truth, most real investments are formulaic with no emotion involved. If it weren't for emotion, investing, I believe, would be far simpler.

Good luck and I hope you get some takers.

 

[Investy]

And capital growth predictions will be based upon what exactly?

I argued 1 year ago with a fund manager from New Star that I did not want to put money into funds that invested in UK or US property. He thought I was talking gibberish. Thankfully I stuck to my guns as we now see property in the US has fallen by up to 50% (saw this in California).

RENT YIELDS - most people over estimate the rental season. I did not invest in Bulgaria 4 years ago as I was sure the rent season was too short. Sure enough I now read many posts from people who 'invested' and are now struggling to get 2 months rent, and once all thier costs are deducted the investment is poor indeed.

Ss, how do we calculate capital growth and rent yield?

 

[mickthepropertyguru]

And capital growth predictions will be based upon what exactly?

I argued 1 year ago with a fund manager from New Star that I did not want to put money into funds that invested in UK or US property. He thought I was talking gibberish. Thankfully I stuck to my guns as we now see property in the US has fallen by up to 50% (saw this in California).

RENT YIELDS - most people over estimate the rental season. I did not invest in Bulgaria 4 years ago as I was sure the rent season was too short. Sure enough I now read many posts from people who 'invested' and are now struggling to get 2 months rent, and once all thier costs are deducted the investment is poor indeed.

Ss, how do we calculate capital growth and rent yield?

Ya i think the problem in Sunny beach isn't so much the season but oversupply.But i guess oversupply is inevitable everywhere sooner or later.

Well this is always going to be hard as its a prediction but its up to you to prove what ever capital appreciation you put down by facts and stats. A feeling in your water, just because you think it is, is no good here
Why do you think it will preform well. Is your off plan really great value so when its build it will reach the value of resales around it, whats happening in the area in the future to give it another boost : Fun Park, Industrial center, Commercial center, Hotel, golf course,Business center, maybe a high speed rail network etc that would boost appreciation as well as rental.

As for rentals well: long term , short term, is there a under supply of properties, tourism on the increase, Business and Convention rentals like cannes etc...
If this is what you think to be the best investment bar none then you should know why and be able to prove it beyond doubt ! Agreed it not easy at all but i think its would be no harm to start putting down figures and seeing after all costs taken out how much is left.

In the end many people may put down 25%, 20%, 20%, 15% 15% as the appreciation for first 5 years but proving why it will go like that may be the hard part.
But there is such a diversity of investors that there may be some interesting answers. Who ever can prove their argument beyond doubt.........again its far from easy but investments should be mathematical calculation !
Nobody may post a reply but i will soon in a few days when i have my facts straight but at least it will provide some transparency in the world of investing and arguments why some peoples gain may be inaccurate. Maybe we can come to conclusion that by investing in xxxxx region you can expect to gain between X and Y money or maybe not but we will see.
Maybe through fact finding we will see that a certain region has limited ed gains to be made. Maybe you will see a better investment than your first idea. If you are proven wrong then it is a great learning curve.

 

[oregon woodsmoke]

For investment, I would use it as a down payment on a 3 bed 2 bath middle class house in Bend Oregon. Rents would be about $1200 a month.

Bend has 2 ski mountians, over 30 golf course, and year round outdoor activities and fun activities geared towards the tourists. Political stability, clear ownership of property, no corruption, low crime, good hospitals, easy airport access.

The baby boomers are starting to retire and active baby boomers want to retire in Bend.

Prices here have always run in cycles. We are tettering on the edge right now, might go down a bit, maybe not, but prices will surely be in a good up-cycle in 5 years time.

There are destination resort enclaves with luxury homes and private designer (Arnold Palmer, etc) golf courses, but prices are in the millions, so your 55k euro would not even make a dent in the down payment. Are those expensive mansion good for luxury vacation rentals? I have no idea; they are seriously out of my price range.

For a non-investment, that is enough money to pay cash for my snowbird home in Uruguay. I expect absolutely no appreciation at all, but I do expect to get a lot of use and enjoyment out of it.

 

[michaelbush]

What we are offering?

An opportunity for you the investor to buy an un-renovated riad, which we will project mange to renovate and sell to the open market in 12- 14 months time, returning you a fantastic profit.

A typical purchase example is as follows:

Costs (Euros)
Purchase Price of Riad 100,000

Commission to local Immobilier - (Approx 5%) 5000
Legals - this will be max amount for deed cleansing - (Maximum 10%) 10,000
Notary and Tax (approx. 6%) 6,000

Total costs to Purchase 121,000

Estimated Refurbishment Costs 80,000

Costs to purchase including Refurbishment 201,000

Costs (Euros)
Estimated Resale Price 300,000
Less 10% fees for project management and sales commission 30,000
Expected Profit 69,000

Tax Payable (Approx 20%) 13,800

Expected Profit (after tax) 55,200

Finance cost for one year – estimated on draw down facility 8000

Profit after finance 47,200

Amount profit on return to capital outlay of euros55,000 86%

------------------------------------------------------------------------------------
Market Summary and Taxes

 Annual Capital Growth of + 15% to even + 30% in some locations (Source: Homes Overseas)
 Emerging and booming property market with prices 50% lower than most European resorts
 No rental tax for 3 - 5 years
 Rental yields of up to 20% per annum
 Year-round rental market
 Capital Gains Tax between 0% and 20%: In the first 5 years = 20% of profits over 60,000 MAD with a total exemption below; Between 5 and 10 years = 10%; After 10 years = 0%.
 0% inheritance tax to family members upon transfer of the property
 No annual property tax for first 5 years
 Double tax treaty ensuring that investors do not suffer Capital Gains tax in two countries

 

[michaelbush]

The above is an example of what can be achieved in the Moroccan market. The riad can be kept of course for rental, and capital gains tax is nil after 10 years. However you could sell and do another riad in the same way,each year, thus converting your original investment to a paid for riad with rental income, and further capital growth at the end of a 5 year period.
This investment is probabl the best possible investment in this market.

 

[mickthepropertyguru]

Excelent example

What we are offering?

An opportunity for you the investor to buy an un-renovated riad, which we will project mange to renovate and sell to the open market in 12- 14 months time, returning you a fantastic profit.

A typical purchase example is as follows:

Costs (Euros)
Purchase Price of Riad 100,000

Commission to local Immobilier - (Approx 5%) 5000
Legals - this will be max amount for deed cleansing - (Maximum 10%) 10,000
Notary and Tax (approx. 6%) 6,000

Total costs to Purchase 121,000

Estimated Refurbishment Costs 80,000

Costs to purchase including Refurbishment 201,000

Costs (Euros)
Estimated Resale Price 300,000
Less 10% fees for project management and sales commission 30,000
Expected Profit 69,000

Tax Payable (Approx 20%) 13,800

Expected Profit (after tax) 55,200

Finance cost for one year – estimated on draw down facility 8000

Profit after finance 47,200

Amount profit on return to capital outlay of euros55,000 86%

------------------------------------------------------------------------------------
Market Summary and Taxes

 Annual Capital Growth of + 15% to even + 30% in some locations (Source: Homes Overseas)
 Emerging and booming property market with prices 50% lower than most European resorts
 No rental tax for 3 - 5 years
 Rental yields of up to 20% per annum
 Year-round rental market
 Capital Gains Tax between 0% and 20%: In the first 5 years = 20% of profits over 60,000 MAD with a total exemption below; Between 5 and 10 years = 10%; After 10 years = 0%.
 0% inheritance tax to family members upon transfer of the property
 No annual property tax for first 5 years
 Double tax treaty ensuring that investors do not suffer Capital Gains tax in two countries

Excellent example, thats exactly the criteria i was hoping people would post. Are we talking about a Riad (traditional Moroccan house/ Palace) in a city or more so in beach location or both. I am also interested in the renovation market and feel its an excellent way to stand out. Feel free to PM me any exta details you have. Great post

 

[Investy]

A guy I've known on housepricecrash.co.uk (overseas section),just finished a riad in Morocco (Asilla). Quite impressive - he also gives a link to show the property now up for rental.

I am currently investing in 2 properties abroad;

1) Germany

Block of 20 appartments
Current net yield is 20%
We are refurbing the property which will cost about 100,000 euros as this will drive up the rents (under German law tenants have to pay increased rent for agreed refurbishments).

Capital growth - we anticipate being 100% based on the refurbishment effect. Market capital growth we expect about 5%pa, as the area is right on the Polish border and the demand from Poles wanting to live on the German side is substantial, so much so that currently NO 1 bed appartments remain for sale of rent!


2) Off plan villa in Saidia Morocco.
This is the Kings premier showcase development to the world.
As far as I can tell the development offers a significantly wider range of sports and leisure facilities compared with any development in Spain or Portugal.

£168000 for a detatched 125m2 villa with own pool and built right into one of 3 onsite 18 hole golf courses.
This is a 5* development but some sections are reserved for 3 / 4* properties.
International rental companies manage everything. Properties fitten with Seimens appliances, plasma TVs etc.
The aim has been since inception to try and provide a year round development and specifically not a winter ghost development the like of which pepper Spain, Portugal etc.

The development has its own 7km sandy beach and the Meds largest marina is 70% built. This marina will take the largest luxury yatchs which is a very important factor. Few other developments in the world can make this claim.
This is what sets this development apart, it is not just another slightly inland Spannish development.

The onsite shopping centre will have 500 shops (compared to a couple of dozen with large Spannish developments) and many international brands have signed up including Channel, Armani, Mango and Budha bars. I hate shopping but the point is this is another season extender in that people will come knowing even if the weathers bad they can indulge in a huge shopping experience)

SNOB FACTOR - The Meds largest and most modern marina will certainly attract the in crowd, indeed already people with yatchs in Spain are buying the marina berths here as there is so much more room for the super yatchs.

There is also to be 2 French supermarkets, 11 on site branded hotels (compared to 3 on the biggest Spannish resorts - imagine how many people that will bring to site) and the Olympic standard sports facilites in which over 60 Premiership named footballers have bought property.

The development is 7million m2. The 11 hotels include sofihotels, Iberostar, Barcelo and other well known brands which gives me more confidence as an investor in that they will have researched the market potential and safety aspects.

To extend the season further there will be dozens of top notch spa and treatment centres (again premium Spannish developments feature just a handfull),an onsite hospital (already built),cinemas, bowling alleys, 17 golf club houses, arenas, and at least 20 stand alone restaurants, plus those in the hotels. Also a 2000m2 arts and craft centre, traditional soux, and 1000 seat conference centre.

Each investor (lejardindefleur product) gets a clubcard to use for free the 11 other developments within this one development! Each mini development with in the one Saidia development is distinct, for example one aimed at sports holiday makers, another at families another at stressed executives and so on.

5* service is built in, such as a Concierge to meet all guests and prearrange thier entire stay activities on arrival.

Heli pads and other glitzy features are aslo included.
An onsite amusement park will keep the kids happy as will several swimming lagoons.
1.6 million trees are being planted.


DOWNSIDE - for some the fact this is a Muslim nation is a put off. Note though that many Americans are buying here (particularly Tangiers) as Morocco has a close relationship with the US for example the 2 have a free trade agreement, and Morocco was the first nation on Earth to recognise an independant USA!

All in all its a tollerant place and the King is very pro Western in totaly dominates the nation. Of course there is the odd nutter, but this is not enough to deter holiday makers, afterall Egypt is attracting very high tourist numbers yet is considered more risky.

On YOUTUBE you can find many videos of young Moroccans hanging out in thier BMWs listening to Hip Hop. The beaches show locals in bikinis. This is relaxed Islam.


A brand new airport with 25 hubs is being built (based on an old airport site),which is 25 minutes away by the newly opened AMERICAN BUILT highway.

I expect French people to retire here given its close proximity to France and the fact the French come here in droves as its French speaking. The onsite shops and hospital will underpin the pull from retirees.

NUMBERS - very difficult but a 5* villa on golf, with own pool, 20 MINUTES FROM THE BEACH WITH NO MARINA IN SPAIN COSTS 2.5x as much.
I expect, in fact Im certain rental numbers will match those of Spain - why not, people will pay for the services and experience available.

This means the rent yield based on a low aquisition cost should be pretty robust.

Many more of these mega resorts (but widely spaced from one another) are being built. Morocco is specifically aimed at the middle to upper end markets, indeed new inititatives have just been launched to ensure this outcome. It does not want to be a 'jack of all trades' and is specifically not geared to the low budget tourist market. I think this is a unique move by a nation.

GDP grew 7.9% last year and tourism numbers are already out stripping supply.

French and Belgium (flemmish) companies are relocating a lot of thier business's here in the way the UK outsources to China.


Phew!

 

[mickthepropertyguru]

Thanks investy for all that detail, two great investments that sound very promising.
Germany is definitely on the up and up. There s huge demand for whole apartment blocks at the mo. Morocco is also very high on my list of great investments

 

[Investy]

Mick, where is your favorite target?

I also like the Alhama sports development by Polaris World in Murcia, but it is pricey and a bit inland. Thinking about this one. Rent yield is very low though so Im not sure the investment case can be made. Some Polaris World owners I have heard complain all the charges eat into thier rent meaning they make no rental profit at all!

 

[michaelbush]

Excellent example, thats exactly the criteria i was hoping people would post. Are we talking about a Riad (traditional Moroccan house/ Palace) in a city or more so in beach location or both. I am also interested in the renovation market and feel its an excellent way to stand out. Feel free to PM me any exta details you have. Great post

I can send a full investor report to your e-mail if you like. There are a number of available examples, plus there are many more for reform. Prices vary but all are excellent opportunities and the fact they are managed for you from start to finish makes it the easiest profit you can get.

 

[michaelbush]

Have another look at Spain- there are many opportunities available to buy at a high discount to Bank valuations. There is one available with golf and marina, in Almeria. It is called Velas Blancas. There the offer is for a 100% mortgage, cash back available and the developer pays 450euros per month towrds the mortgage for the first year!! prices around 160000 euros. gain I can e-mail details to anyone interested.

 

[mickthepropertyguru]

Mick, where is your favorite target?

I also like the Alhama sports development by Polaris World in Murcia, but it is pricey and a bit inland. Thinking about this one. Rent yield is very low though so Im not sure the investment case can be made. Some Polaris World owners I have heard complain all the charges eat into thier rent meaning they make no rental profit at all!

Well i'm doing research on Albania, Morocco and would like to look into the Philippines, Cambodia more but there is no Dual Taxation for me there.

I know very little about Polaris. I never been very interested in Leisure resorts as i feel the capital city or city has much as a better exit strategy. Even though Cape Verde got my vote two years ago.

Tried playing golf once in "Parque de Floresta" near Sagres in western Algarve. Not easy, not easy at all!
But incredibly beautiful villas, golf course and landscaped gardens. I can see the big attraction but community fees and maintenance are usually very high.

 

[Investy]

Dont forget inheritance procedures and repatriation of funds.

A freind of mines partner died. They jointly owned a property in Tenerife. The state has confiscated the dead parties portion! It will hopefuly be resolved but it has caused him a lot of expense and stress. I imagine Albania will not be geared up for this at all.

With Morocco my developer went to considerable lengths to pre - resolve this, such that repatriation should be instantaneous.

 

[Investy]

Dickson - if you assist me first, I will then assist you. My late uncle Prince Rudolph left me $300million. If you can help me get this from my account in Nigeria I will give you half.
I believe like you it is good business to deal with total strangers when it comes to millions of dollars.

Peace be on your soul. By the way, when you go to heaven do you think God will welcome you?

 

[mickthepropertyguru]

ya gret point

Dickson - if you assist me first, I will then assist you. My late uncle Prince Rudolph left me $300million. If you can help me get this from my account in Nigeria I will give you half.
I believe like you it is good business to deal with total strangers when it comes to millions of dollars.

Peace be on your soul. By the way, when you go to heaven do you think God will welcome you?

Ya thats a great point one which i did not think on. Thanks Investy

 

[mickthepropertyguru]

Here is an investment that is hard to beat through a company that bought a huge piece of land in Baia Mare in Romania.
Here are some details:

"There will be 103,405 authorised “A Ordinary Shares” (i.e. one share for each square meter of land). Each investor in this second phase investment will purchase shares at a cost of €80 each. The minimum investment is €50,000.

An independent valuation from Colliers International, Romania, valued the land on September 30th 2007 (prior to PUZ being obtained) at €11,588,000 or €112 per square metre.

Based on this valuation, investors acquiring the shares at €80 will have an immediate notional gain of 40% before costs and taxes. This excludes any additional value added by the granting of PUZ.
Investors have an opportunity to make a gross return (before company costs and tax) which will reflect the final sales price of the land subject to a maximum return of €160 on each €80 invested i.e. 100% gross profit. (The €160 cap on return ensures that the promoters will seek the highest possible sales price for the property)."

The primary objective of the project is to get full planning permission for a complex comprising of apartments ans villas and sell the land.

So in two years after all tax deductions CGT etc it looks like a net profit of 70% or over.
I feel this is a great investment because there are no off plan issues, rental issues, furniture packs and risk that goes with saturation of properties when trying to sell. Less hassle all around.
I prefer to get in at the top of the food chain.
I know of a lot of people who got in on the last venture and are getting paid in 3 months from the same procedure in Estonia.
Here there was no cap on the gains and they are getting a return of 180%.
But 70% or more net in two years is still amazing with no hassle at all.

 

[Investy]

I think I know the firm investing in Romainia and have heard nothing bad about them.

I nearly did the Estonia fund but 2 things held me back;

1) It was'nt a liquid asset, you really had to commit to a few years in the vehicle

2) Although the fund was listed on the Jersey stock excahnge I felt thier were'nt enough boudaries in the contracts that would ensure investors money was'nt spirited away. For example, in theory directors could contract services and over pay them and get the service providers to hand back the over payment under the table staight into the directors pockets.

I'm a bit of a worryer you see!

True what you say about it bieng hands off though, without all the usual hassles.

 

[mickthepropertyguru]

My relations (5) invested into the Estonia venture and are getting an amazing return.
But i don't think it would have been on the jersey stock exchange?
More of a smaller company that spread through word of mouth with only a little advertisement if any.
I and my relations have invested into Baia Mare project and its looking excellent. Ya its true that there can be no set time limit but given the option i would go down this road every time. Its is hard to go wrong with land around cities.