Hi All
I’m looking at a few opportunities for investment for Golden Visa at EUR280k and found some in Monchique with an existing hotel that will provide return immediately; although there is no guaranteed buyback, it seems that the developer is also the owner of the hotel and would be interested in buying back (so I’m told).
It’s not that far from Algarve beaches but still allows investment in Algarve at the lowest investment value. What I’m not sure is whether I will be able to sell the unit back in the future once the entire process is finalised.
Also looking at MFG Consultants, anyone has any experience with them? Seem to be very responsive and professional, but I haven’t been able to find many reviews and as noted before, some reviews are from their own employees. I would’ve done the same if I was starting a company, but after 10 years I would’ve expected a lot more reviews on key review platforms.
So far in the research I’ve done, I’m starting to think the buybacks are all pretty speculative/unlikely to pan out. No one–not even Mercan–has bought back a property yet. While they may, and while others may, it’s still the wild west as far as that is concerned and whether that business model will work/be sustainable.
The question really is what kind of title do you get. If you have a freehold title, you’ll at least have something to sell if the buyback falls through. Fractional ownership? Not so much.
The problem, of course, is that the price of the units in these golden visa investment properties are significantly inflated, so it’s unlikely you’ll realize the full 280k if you have to sell on your own.
Thanks Glap86! I do also think the “buyback guarantee” seems to good to be true and all things will change if the market is not good or everyone wants to sell at the same time, which is very likely for projects that have no return and buyback guarantee, since everyone would be joining the program at about the same time and therefore exiting at similar times.
Interesting point of view on the type of title and very valid question to be asking all potential investments.
If you look at a lot of these contracts as well, the penalty for not executing the buyback is, for example, a 20% fee.
Let’s say you buy a property at the 280k level and when your buyback is up, it would be worth 175k on the open market. The developer isn’t going to pay you 280k for the 175k property. They’ll pay you the 56k penalty and be done with it.
Not a direct answer to your questions but the devil is in the details with these buybacks, so my focus has drifted from them.
Very good insights thanks for that
Do you have any sources or websites where we could check what similar apartments or even hotel rooms sell for in the regions that I’m exploring?
The same thing happens on the opposite way. Let’s say the 280k property we own will increase its value to 400k in next 6-7 years. Of course, we do not want to sell to the developer at 280k. We would sell it to anyone in the open market at 400k.
So buyback only sounds good to attract buyers. But when looking things in details, it does not work.
I’m in the private equity business and we do sell funds to citizens interested in applying for the GV, hence I can’t say I’m independent. Anyway, I’ve looked at the Monchique hotel plan and they’re selling real estate at €6000/sqm. The prices on the near-by coast are probably around €3000/sqm. You’ll get full ownership and you will be able to rent out the property and get a decent yield (3%-4%). I usually spend my holidays in the area and I do like Salema and Bordeira, but I know nothing about the local real estate market.
Idealista is the number one real estate portal in Portugal. Have in mind that usually, sellers mark up their prices 10%-20% above the market price. It’s actually quite difficult to value a property. The real estate agents have access to real market data through Casafari, ask them.
I looked long and hard at one of the “guaranteed buyback” property routes, and almost went that way. However, my Portuguese lawyers advised me that under Portuguese law, you can’t force a person to purchase real estate. Therefore, the buyback scheme, it seems to me, has a fatal flaw. It works so long as they want to, but in the end you can’t enforce the buyback.
I am currently trying to balance this as well. These hotel-type investments are certainly worse investments than buying a qualifying property outside of a development, but it’s an incredibly easy and mindless way to obtain the GV, versus doing a bit more legwork to find something qualifying but that will require more involvement.
You have a zillion funds to choose from (I sell one of them), but the minimum investment is 500k. The other day I came across a terraced house for sale in a 5* hotel in Carvoeiro (not too far); for nearly 250k you could buy a flat/villa in a very nice hotel. The hotel will manage it and keep 50% of the income (and it will charge you a hefty community cost every month). The net yield is about 2%, but at least you’re buying at €2500/sqm. I didn’t buy it because the hotel is free to increase the community costs it charges you.
I’m not interested in the fund route strictly because I’d rather not lay out that much cash.
What is the resale prospect of something like this though? Especially if GV amounts go up or residency requirements change? Once you dig below the surface on some of these touristic properties, it seems much more risky than it does at first glance (at least at recovering your money). In the end, considering how much you can recover at the end of the 5 years through re-sale, I wonder how much more expensive the 250k donation option is, especially if you compare it to something in the 350k/500k property GV range.
If you want to recover even money at minimum, it seems “safer” (albeit more legwork) to find a 280k/350k reno project.
The problem with renovation is that there’s a lack of construction capacity - prices could be very expensive. A friend of mine bought a plot of land near Cercal to build a 200sqm villa and he received a budget of €1.3m or €6500/sqm. Professional developers in Lisbon are able to build at less than €2000/sqm. I still believe the best option is to buy something in reasonable condition in the SW Algarve and rent it out to the locals - forget about AirBNB, at the moment there’s a legal problem with that.