First post (so hi all!) . Iāve previously applied for Bulgarian program and likely will switch to the Portugal program given the changes in law over in BG at the moment, total bummer if they cancel the plan and donāt leave it open to those that have already applied (which it looks like to be the case), this is the danger of the locked up investments in my view, not an insignificant risk.
Here is my thoughts on the investment and would appreciate anyoneās comments or what youāve done or feedback on my thoughts below.
New GV rules ā¦ Iām late to the game (waste 2 years on Bulgaria), Lisbon residential would have been great and we would have used the property but that isnāt possible now ā¦ anyway ā¦
Open-ended funds. While it seems like many have succeeded with liquid ETFs tracking the index. This is perfect for me (given Iām changing out of a failed program) I really value liquidity BUT Iām nervous that while this is passing application at the moment, there is risk a few years down the track that SEF view this as non-compliant and the program no longer exists when this becomes an issue or I have to change which could be ugly on compliance. Iāve concluded the potential risk after investing a few years in the program is just too great.
Closed ended funds. I just donāt like the long period to liquidity, Iām still considering it but the current group of funds seem to squeeze an additional 2-3 years past when Iād expect to get PR/Citizenship. It is hard to work out who is investment grade and who isnāt, Iām on the fence for this option and I donāt like much being locked up for close to 8-10 years (especially) if the program changes or something happens or even if Iām successful in 6 years, Iād like my money back immediately , plus annoyingly the money will come back in dribs and drabs as they sell assets and sometimes they can get caught with assets that canāt sell. Is there a fund that has early redemption without massive penalty ?
Residential property / interior (discounted) areas via project āinvestmentā advisors. Too hard to judge what fair value is and the marketing/investment advisor seems to be getting huge cuts and then we are taking a risk on the project actually being successful, feels a bit like an overt money generator for them and massive conflicts. No idea what fair value is or what the exit bid is when we want to sell. Ugly option in my view.
Lisbon commercial property. This is where my current thinking is. A low worry/management assets (car park, storage units, office floor or store front) with long term tenant, Iām guessing 4-6% yield less some outsourced management costs. If a good asset should be fairly liquid if I want to sell, yield is fairly consistent (and fairly decent), no tourist/utilisation risks on rental (but single tenant risk), seems like one of the best options ? Anyone done this, or looked at it ?
Lastly a few notes / comments / questions ā¦
Has anyone done the full 5 years (or know anyone ) who has received PR or Citizenship ? Lots of info on how many GV granted but nothing offical on PR/Citizenship success ?
Iām looking at using a small/mid sized local law firm and expect to pay ~4,000 euro for my application and then ~1,500-2,000 per dependant and about the same for each 2 year renewal/ PR/Citizenship (ex government costs). Iām not that price sensitive but hate paying more than market. Total of about 15k in legals for family of 4 to get thePR/citizenship, is this about right?
Iād also use a property buyers agent /manager if Iām going with the commercial RE option. That seems to be the required two forms to assist me. Iām not sure what the value of the investment / marketing agencies (la vida / GCS / Henley) etc add ? Has anyone done what Iām planning or anyone used the marketing āinvestmentā agencies and been happy / not happy with that decision ?
Required time in Lisbon, we have a property in another Schengen country, so we spend about >1 month in Schengen each year. We can flying Ito Lisbon from our non EU home country but more likely weād fly into our local country and then do a domestic flight or even drive. How have you (or will you) prove youāve been in Portugal vs. the rest of Schengen given no passport stamps or government arrival record ? I wouldnāt do anything dodgy (not worth the risk) but if you fly into and out of Lisbon but spend all your time in a different Schengen this could show 1 month in country even if we are in another country, how have you documented your time explicitly in country.
How is pre-approval time going at the moment ? Anyone recently been approved in 2022 ?
any general tips or tricks youāve found ?
Thanks and good luck to all, exciting program and lots of learning to do, wish Iād done this 2 years ago and not Bulgaria.
Well, James, you certainly have done quite an extensive analysis of your options, which is a very good thing - you donāt want to start again in pursuit of a potentially flawed golden visa. Sorry to hear that Bulgaria did not work for you - it was one of countries I was considering.
I wonāt attempt to address all of your questions or concerns (they are quite numerous and I donāt have good answers to many), but I will share with you few thoughts and experiences.
RE: Lisbon Commercial Property
Just as with any real estate investment in any country, knowledge of the local market is critical! I almost got stuck with a tiny apartment that would not have served my needs, either for personal or commercial use, until a friend in Lisbon was able to evaluate it. Locating a suitable commercial property will require you to be on-site, working together with your RE agent and/or attorney, or have a very trusted confidant in your stead. That alone can be a very daunting task. Knowledge of landlord-tenant laws, managing the property remotely, etc. can be a challenge, and at a minimum you might consider installing a management team to help with such tasks. Additionally, you should ensure that your property is in a right location and good demand. During my last visit to Portugal in September '21, I saw many office buildings āchained upā and businesses closed. What the post-COVID economy would look like is still very hard to predict. After considering all these issues, I abandoned the idea of a commercial unit.
This is why the majority of GV investors who opt for real estate option either pursue residential units or managed properties in hotels.
RE: Time in Lisbon
My understanding from my lawyer is that you would need to show proof of stay in Portugal over at least a week each year. Keep the lodging and other receipts if you cannot provide passport stamps.
RE: Pre-approval
Unfortunately, it is somewhat sporadic. Some investors are approved in record two months, but lately the timeframe has āstretchedā to about 4 to 5 months. The reasons are numerous, including the latest change of government, though some aspects have improved such as better scheduling of biometrics which is now linked to pre-approvals. You might want to plan for almost a year of processing, hence much patience will be required.
RE: Tips and Tricks
Probably the best one: get a right lawyer. Check other threads for recommendations.
Also, ensure that all your investments are done through a Portuguese bank as you will be required to submit a bank declaration that prescribed amount of funds have āflownā through a Portuguese financial institution (in our case - Novo Banco).
Depending on your country of origin, the process of collecting and apostilling documents can be a very lengthy process, and so plan accordingly.
On a final note, the biggest credit to Portugal should be made for their honouring of prior requirements (apparently unlike Bulgaria?). The date when you officially pay the application processing fees will dictate the set of rules applicable to your processing requirements. No retroactive rule modifications have been applied. Everyone seems to have a high degree of confidence that all promised benefits will be delivered in five or six years time, including a right to apply for the citizenship.
The law fairly clearly states that the requirement for renewal is that you have maintained the existing investment. So once approved, itās approved. Of course the government could just decide to change the rules on you, but thatās generically true anyway. There are no guarantees here. But you should get legal advice on the matter before dismissing it.
Some of the funds are explicitly flexible on the point. You canāt just go by the term sheet, because the term sheet will generally list the fundās headline term, which by definition has to be longer. Some will want to lock you up the whole time, but at least two I know of plan to divest in tranches specifically to engineer around the unknown-but-flexible timelines of when folks will likely naturalize and want out. You just need to talk to them all. As for the rest of your points on funds, Iāve written about this extensively in the GV Fund Comparison thread and I wonāt rehash myself.
I think liquidity is often overrated versus the cost you pay for it.
Thereās plenty of games here too. One game Iāve heard of is where a landlord will get quasi-real rental contracts to generate a synthetic overly high yield, but once you buy you find thereās some exit clause you didnāt notice and your ātenantsā are gone. You can use a firm like Prime Yield to do a valuation but you still have a bunch of due diligence to do. Your assumption of liquidity might be optimistic depending on the state of the economy at any given point. And now you have this asset to care about. Sure you can pay someone else to do it but then you have extra cost and youāre still on the hook. I think itās a viable option but best is definitely relative, it depends on who you are and what you know and how much effort you want to spend.
Besides, lots of people have done this. Since this basically describes the modus operandi of any number of the fundsā¦
This keeps getting asked. No. The number of people who speak English who would have had the GV long enough to naturalize is small in the first place (ref SEF stats), the union set vs the few members of a not very old discussion board is vanishingly small. There are no SEF stats on actual naturalization because itās handled by the Justice Ministry not SEF and Justice probably just doesnāt care since there is nothing special about naturalizing via GV vs any other path.
Your law firm price seems fine to me.
There are any number of ways to prove your physical footprint - receipts for goods and services requiring physical presence, GPS tracker, etc. You probably want multiple forms of proof of boots-on-ground no matter what.
Everyoneās view and situation is different. For me after the Bulgaria program (perhaps interesting to others), I value compliance with the program pretty highly (BG came after people who had not complied, for example, I saw an article that someone sold their investment 5 days (surely admin error) before the end of the 2 years period and they canceled their citizenship). That said Iām coming around to the open-ended fund, it is certainly the easiest to implement and has been approved may times.
Also In Bulgaria, they turned the CBI program into a major political issue between parties in country and (from what I can see) that is not really the case here, plus they have only done about 98 citizens under the program, itās tiny. Portugal seems fairly stable politically (in regard to the program) and rule of law seems to be much more consistent. I love they honour the conditions from when you apply (as it should be the case).
With the closed end funds, maybe Iām cynical in my old(ish) age (mid forties), I donāt take much value from what people say they might do on terms and I expect them to do what is in their economic interest (continue to earn fees) and do what the label on the tin says which is the longer of those periods. Plus I tend to plan for (not quite black swan events) but lets say grey swan events. I can imagine getting stuck in assets and getting funds back in dribs and drabs, which would just annoy me. In such an event (again) I value knowing exactly what Iām down over not knowing what Iām down (which I think the mark to markets on the closed funds arenāt likely to be that transparent).
@jb4422 while liquidity maybe overrated, for me, I actually value liquidity over returns for something like this, again could be my battle scars but Iād prefer liquidity and clear day to day or month to month valuations and a benchmark over say a 3-5% return. (perhaps Iām alone on this).
My priority is least hassle, liquidity if things go wrong, easy to implement and transparency, so on balance I feel Iāve now convinced myself to go ahead with open-ended funds (plus my lawyer has done a few of these for their clients and had them approved) it can be purchased by the bank we sign up with, so shave 1-2months off the process.
No criticism implied or intended. People simply have preferences. Many would agree with you. I personally think itās somewhat overrated, and mark to market and NAV numbers for public funds and such can lie just the same as they might for private equity - the rules just arenāt all that different, and KPMG or Prime Yield isnāt going to lie for Fund X any more (or less) than for Public Company Y. And what good is knowing how much youāre down if you canāt pull the investment anyway, other than to give you a reason to get upset? But I am probably the minority viewpoint. Iād rather have alpha than beta because I donāt trust beta in this environment, and Iāll take lock-up because I donāt want to have to want it back at all - they can just keep giving me 5-10% and theyāll have to kick me out. To each their own.
I tend to think these things should be viewed in terms of ābest for meā not ābestā. Mercan is a very low risk low return simple investment and that is definitely best for quite a number of people. I know the private equity space so itās a good choice for me. Owning commercial real estate is good for business people, owning residential is good for many but I hate owning houses and want nothing to do with renting them out. For your priorities the open ended funds are a good option.
You seem like a thoughtful sort willing to do the digging, which I applaud. There is a ton of good information here, but itās mostly concentrated in about 5 threads. Look for the 1000Ā±post threads and you will find answers to most all your concerns and questions.
