Has anyone went down this route yet? Guaranteed buy back after a few years and a 3-4% yield every year with a couple of days free stay. Anything to watch out for if investors chose this route?
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i am doing this so I hope it all works out in the end…
From my research so far (I’m not yet invested):
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Not guaranteed buyback Research suggests no buyback is guaranteed. The contracts say they “can” pay a fee to not buy it back, which they presumably would if the market crashed.
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Inflation/Opportunity Cost - e.g. EUR 280k if you bought a normal property like this, and it became worth 5% more every year, you’d sell it for EUR 394k 7 years later, in many “guaranteed buyback” properties they are buying your EUR 394k property for EUR 280k so it’s a 100k+ opportunity lost, of course you often get 14k (2k/year) free hotel stays over 7 years, citizenship, etc. sometimes they pay various taxes for you.
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The 3-4% can’t truly be guaranteed - Properties normally have a break event point, e.g. 50% occupancy, so if they didn’t reach that, they have no money to pay you. And maybe if their occupancy is 90% and they make 20% return and just give you 3-4%. Low occupancy could happen for many reasons, e.g. pandemic, lots of competitors, though given the Airbnb crackdown maybe that’ll reduce Airbnb supply which is good news for hotel occupancy.
Of course the citizenship is also not guaranteed…
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Though at first I didn’t have this intention, I did follow this route.
I bought an apartment which is part of a hotel. It is in Lisbon. It does enjoy a booking.com rating of 8.9 and has just above average occupancy.
- I was granted 4% return guaranty for 5 years - though during Covid I did not receive it
- I was also provided 10 days of free stay
- yet there was no buy back guaranty
Given the last year’s change in GV, the property still could qualify for the GV scheme under the commercial investment route. I am not sure if investment in touristic properties would be still eligible for the scheme should GV continue; in my mind they should. The future of GV is obviously the bigger question here.
In the meanwhile, I switched to variable income method and I plan to earn more than 4%, but we will see.
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Am thinking of investing in this route, my adviser is asking me to open a bank account remotely first and start the process and I can decide if I want to proceed after. The project I am looking at is even offering a refund if rules change and the property isn’t eligible for gv anymore. I guess my concern is that everything seems to depend on whether the developer is trust worthy of not. They can promise you the moon but once the funds are invested, you will be at the mercy of them. For those who are invested, are you happy with it so far?
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Hi John
Of course your concerns are valid and at the end of the day you have to make the final decision and yes the developer could be an issue.
Have you searched the name of the developer here on the website.
I am doing this and so far the developer has done what it said it was going to do.
Thanks
Mathew
I think your advisor is asking you to open a Bank Account, etc. now so that when you make the decision, you can apply within days.
Given the timelines and law changes this seems like good advice.
Regarding trust in developer, if trust was an issue you could just go with Mercan, they seem to have an incredible reputation. I personally am balancing the risk of other developers as I think Mercan’s exit strategy is a bad investment if you get 0% capital gains (e.g. you lose 50% inflation/opportunity) over 8 years.
Some developers seem at least trustworthy (e.g. I’m 99.9% confident they won’t take my money and run or embezzle the money). My biggest concern is many players are 2 years old or less and there’s maybe only 1-2 people using various developers on this forum and they are hard to find.
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I have an experience with a property in Monchique owned by a chain called unlock hotels, try to avoid dealing with them if they happen to be the developers of your property.
Also I wouldn’t recommend this route because the units tend to be overpriced, and the guaranteed buyback is not really guaranteed, they can easily find a way around it, and by the looks of it, the GV program will probably end soon, so 6 or 7 years for now, you won’t have anyone wanting to buy the unit as it won’t be eligible for a GV investment.
Only go for it if it won’t hurt to lose the €280K in exchange for a chance to get the citizenship eventually
You really have to be careful about a lot of these projects too in that what guarantee is there that they will even start the project? I looked at several of them, and I noticed that some had been extant for quite a while - in other words they were sitting around waiting for enough people to buy in so they had capital to start the project. If you are customer 1, and you’re waiting for customer 40, you could be waiting a LONG time… and none of the clocks started until they broke ground. And what guarantee was there that they ever would?
There are a couple where you are buying a unit in an already established building and they are just doing a light refurb on it, just enough to meet basic requirements to get into the 280 range. There at least you own a unit, and it was more structured as “you buy this unit, we agree to refurb and rent it for you”. I think it was Holborn. That was actually fairly reasonable.
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Hello, has anyone had any experience ( good or bad) with the investment in below hotel for GV requirements? https://www.imidaily.com/property/t-hotel-porto-portugal-porto-350k-hotel-investment-opportunity-with-an-upfront-return-of-87500-eur/
Is there anyway we can open an account on our own without going through an advisor? At least I can do that first on my own instead of engaging a lawyer to do it. Any recommendations on banks that would allow you to open one virtually? I am from Singapore
I just opened one (Australian with US Residency) with Atlantico.eu, they seem very foreign focused and speak english. Their process is entirely virtual and very fast (You should have an account open in a week, and then you wire 1,000 to activate it).
Bordr is great for NIF.
I’m in the same boat (I can do a lot of the basic leg work).
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It’s strange. They all don’t accept a singapore passport for bank account openings. You would think that a singapore passport would be good enough for most cases
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thanks for the recommendation. Does this count as a “portuguese bank” for GV purposes? And did you do everything online or do you have a contact you wouldn’t mind sharing?
- “Portugese Bank”
I believe it does, and many reputable sources believe so:
- This forum
- Bordr used Banco Atlantico in 2021 when Bison was slow
- My legal provider didn’t raise any flags when I mentioned them
- All online, direct from their website and app. You video call someone and show them your passport, etc. and they really make you prove the passport is real by moving it around so they can see the security reflections, etc.
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thank you! We’ve kicked off the process with Bison but may open an account here as well! Thank you for the prompt replies and details!