Hi, just joined the forum. It’s great. This is my 1st post.
Read the forum but could not find a suitable thread so starting a new one.
Here’s what i want to know:
Before moving forward with GV application, I would like some advice from the community on property purchase, since it is one of the major decisions for GV process.
Here’s what my concerns are:
- Residential property 280k renovation category:
I’ve been told by some that residential properties/apartments are usually overpriced and would end up losing a lot of money after 5 yrs. The upside I see with residential is that they can be ready in 4 to 6 months. And then you have a tangible asset for rental income as compared to a sale deed with hotel aparts.
- Hotel buy back 280k:
My concern with hotel aparts is that although they offer guaranteed rental yield & guaranteed buy back after 5 years or so. Is the rental yield/buy back real or is it just a marketing gimmick? Any success stories?
I am ok even if the property value is breakeven after 5 yrs. I take it as a cost for GV but do not want the asset to lose value after a long holding period.
Opinions requested. Should I go for hotel buyback in a touristic area or residential building in a remote town?
Your comments will be very helpful,
there are several threads already on the individual topics you list. as for comparing between the two, only you really decide the cost benefit reward for your situation and preferences.
As far as I know, and I’m happy to be corrected if wrong, no buy back has been exercised or honored to date. It’s a marketing gimmick in my opinion.
I don’t believe there is any way to make a sound real estate GV investment short of buying a property that needs renovations and planning those yourself or buying something at the 400k+ non-renovation level.
I intend to buy a freehold apartment that has optional property management with guaranteed returns paid up front. I have no doubts I’m overpaying, but even if it ends up with 0 value at the end (which it won’t), it’s still the cheapest entry. It’s also one of the few guaranteed return projects that isn’t in a touristic building, meaning I could live there if I so chose.
With the up front returns, it ends up €220k (before fees etc).
Are you saying that 280k property costs 220k after rental paid in advance (5 yrs rental) and all purchase fees paid?
No. As noted in my parenthetical, this excludes all fees.
The purchase price of the apartment is 280k. The developer offers an (optional) 5 year management agreement where they guarantee about Euro 70k paid over 5 years, or about Euro 60k paid up front on signing of the deed. In theory I could decline the management and rent it out myself, which is unlike Mercan, etc.
So prior to all fees that come with purchasing this property, it will cost me about 220k. Of course with fees it’ll end up a good bit higher, but 60k less (up front, at least) than a property that does not have such a guarantee paid up front.
For someone like me, who wants to minimize my initial cash outlay more than maximize my return on investment, it hits the sweet spot.
And the fact there’s no strings attached–meaning at the end of the 5 years I could continue to rent it out (short or long term), live in it, let friends stay in it, etc–rather than being subject to touristic regulations adds value, both personally and, I think, when it comes time to sell. I’ll never recoup the full 220k (let alone the 220k + the additional expenses), but I’m confident I can get a good bit of it back, making the cost of admission for my family of 4 more than reasonable.