Annually cash dividend or guaranteed buy-back

Hi everyone, I’m new here. I’m looking into two 280k euro hotel projects towards GV. One has a guaranteed buy-back at 280k euro after 6 years. Another has less than 4% cash dividend guaranteed for first 5 years ( but a 28% taxes will be deducted), and estimated around 4-5% later. Any suggestion?

What’s the exit plan for the dividend option?

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I think after 12 years, if 70% + investors agreed, then the whole project can be sold. But the price is unknown.

I had the same dilemma, and I chose the dividend option. However, it’s been 6 months now after the the time when I was supposed to have received the dividend, and no money yet. It has something to do with taxes, the attorney says. If I were to invest now, I wouldn’t have invested in anything.

The decision really depends on your own personal situation and risk profile.

The guaranteed buy-back is nice to get your original investment back in a set time but you lose the opportunity cost of investing your funds in something that will generate a return.

The challenge with the dividend option you noted is getting 70% of the investors to agree to a sale. That would need 70% of those investors to have their citizenship in hand. That requires passing the A2 language test which may or may not be an issue for those 70% of people. Also, some countries don’t allow dual citizenship so some investors may intend to keep renewing their GV status indefinitely. So for this option you should look at if there is a mandatory sale period and assume that’s going to be the trigger when you’ll get to cash out and measure the divided until that time.