La Vida Golden Visa vs Mercan Group

Residencies & citizenships Portugal Golden Visa
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Conceptually this type of project is very appealing - The idea of getting a buyback after 5 years is brilliant. Even so, I have not been able to wrap my head around it.
I don’t really see how they are giving 5-10% annual income projections on an incomplete project. Maybe implied interest? But they can get probably get a bank loan at a lower rate. During construction they have no income and with COVID it will struggle for another year. I can’t imagine it makes sense for them to divert their own capital to pay interest to investors on this project. Admittedly I haven’t really studied this in detail so perhaps I am missing an important detail.

I think you are onto something with the tax benefits. However, if the yields end up being only 1-2% a year, then it may be more trouble than it is worth. And with all the expenses you mentioned, you are more likely to have losses than gains. And we know how the IRS likes to treat recurring, passive real estate losses… not so great. Now, if you only mean that you are going to take one capital gains loss at the end of 5 years, then that might work just great.

One other point…who is paying the IMT and registration fees on the real estate when it is resold to Mercan? Is the investor getting tagged with this on both ends?

Smaller hotels in prime locations are going to recover more quickly from COVID. For a large convention hotel, I personally would run like hell.

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Marcan starts paying 3% interest AFTER the hotel is operational, until then it is a 0% loan.

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'zactly, 3% guaranteed to you the investor, once operational. 5-10% income projections - for them. You want to work the timing on that to avoid loaning without income for too long. There’s a ton of upside for mercan - they get whatever cap gains on the property, and a pretty good chunk of the return. They could lose money if everything goes south but that’s a risk they’re willing to take to get “free” capital. There’s limited upside for you. It’s like any other trade - you’re paying for certainty with upside.

WRT bank loans, it’s the same as we’ve discussed for Rock Capital, or other deals. GV investors have their own complications but the money’s far more flexible from their standpoint; don’t have to go keeping the bank happy and reporting every year and whatever, no covenants, etc. EOD it’s something akin to a 3% corporate secured tax-advantaged bond.

I’ve talked to Mercan a fair bit and pawed the numbers. IMO, this whole thing comes off as a pretty fair deal both directions.

IMT is on the buyer, not the seller. I’ve looked at the contracts, they seem straight up. So Mercan is paying the IMT to get it back. I’m sure that’s baked into their calculations as well and part of why they’re only giving you 3% (and 0% on the evora project - the Porto project has an IMT exemption; Evora does not).

In terms of tax treatment, you’ll get straight line depreciation annually, then cap gain or loss at the end on your reduced basis. Further than that requires a longer explanation than I want to type up.

Mercan gives you a little sheet, basically Porto project, you come out such that the 3% pays for IMT and all your legal fees and net-net you come out flat after 5 years. That’s not accounting for taxes on the income but you can work around that using sched-E deductions as I discussed. If you ignore the purely-GV costs and look at it as a standalone “business”, figure you make ~1.5% year.

If you take this a little further… you can buy CME EUR/USD 1-year at the money options… for about 1.8%. So you can use the gains to hedge off your EUR/USD risk entirely - if the currency moves against you, you lose net nothing; if the currency moves in your favor, you keep the “gains”, and re-hedge next year at the new level. I think if you’re clever, you can sell options against your option and cut your basis some more. It’s quite elegant. I need to buff and polish this some and discuss with someone smarter than I. This isn’t for everyone - you have to be comfortable trading futures options. But it removes everything but inflation risk. Which lately concerns me as much as currency risk. But every risk you can remove…

The funds are probably a better bet, if you trust them. They’re likely to keep up with inflation, and you can still play the currency hedge. But, everyone’s perception of risk is different.

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I have received the proposal for the Lapa project from Mercan. From the looks of it, it’s a cheap way of financing the project for developers like Mercan . Giving investors a fixed rate of 3% and zero capital gains. I have yet to finish reading the whole contract but so far it seems like as long as investors are not looking to make any significant returns (Probablyt net 1+%) after 6.5 years , it’s a simple way to get the GV… The fund route may yield a better return but I dont have much information on this and I am not well versed in their economy to confidently invest that way. That being said, probably best to check out if the Lapa site is there! :grimacing:

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Just doing abit of digging around. Has anyone searched Marriott / Rennaisance’s new projects pipline on their official website. I went to both and could not find anything in Porto under Marriott or Rannaisance pipline. Nothing on Lapa or any other projects Mercan mentioned. From what I found it’s all GV related websites that mentioned the Lapa project namely Lavida and Mercan. Nothing mentioned about Lapa on Marriott’s and Rennaisance official site. NO projects in the pipeline for portuagl under the Rennaisance brand. Should I be concerned?

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If you ask, they will tell you that Marriott won’t let them talk about proposed projects. There is another property that just opened under the Hilton brand that they openly discuss as a Mercan project (, I believe it’s the se catedral in Porto. Not the same, but indicative that they are real and that a major hotel chain is working with them. There’s a discussion of it up-chain.

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ok thanks Jeff, will look for threads above.

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Hi Conney, I decided to invest into Mercan. So far the process is pretty seamless. I am currently getting all my papers together for my application. Is there anything specific that you want to know?

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Hi Queenie,

That’s good to know there are actually people that went through with Mercan. I really just wanted to make sure they are legit. Thanks for your message. Appreciate it if could you share any positive or negative experiences working with them throughout the process. Thanks again . Are you also investing in the Lapa project ?

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Hi Sarah,

I love Transferwise and would concur on this.

Has your lawyer indicated this is a possibility? I have not heard anything about this option but it would make things much easier for us.

The delays are unbelievable. By Portuguese law, I believe the entire process is supposed to be 3 months or less but clearly that is not the case. If I had know, I may have taken a different approach.

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Thanks Sarah, very helpful information indeed.

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Hi Conney,
Yes, I invested in the Lapa project. So far the entire experience has been positive so far. The teams are very responsive and helpful.
Currently, I am gathering all my information for submission. But I guess it is because of the holidays that things have slowed down a bit. I mean every part of the process takes a bit of time and with the holiday, things take longer.
I think the only negative thing I have to say is (and not even really a negative), it is that I am not familiar with processes with golden visa, requirements, general process, etc. So it is really a lack of understanding and knowledge and I don’t have anyone around me to ask questions. But it helps that there are forums such as this one, youtube videos and Google constantly suggests related articles that I might be interested in. Definitely a big learning curve!

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Hi Thomas @tkrunning / anyone on this forum aware of anyone who actually has received approval of golden visa based on investment in Mercan’s porto project / any earlier one ? I am referring to the final approval and not the in-principle initial one - the one received post the biometric, etc. How do we establish the company’s claim that their projects are eligible? Thanks

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Hi. I too would be keen to join.
Best

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Hi everyone,
I have started working with La Vida Golden Visa. I have put down a small, initial reservation deposit.
They have been incredibly responsive and have shared a lot of information along the way.
The missing link for me is that I can not find a lot of people who have actually used their services so at this point I am hoping to find someone who has gone through the whole process with them.
I spent time talking to Mercan, Global Citizens Solutions, and La Vida Golden Visa.
The reason that I do not want to use Mercan is that their properties are hotels in porto and I would rather have a property that I could/we want to eventually live in one day.
Global Citizens Solution was not “full package,” which I need at this point, but interesting for people who want to actually choose a property outside of a large development who have time to coordinate with contractors etc.
I would love any advise/connections to real estate lawyers in portugal and the UK (where La Vida is based) to have them look over the contract.
Thank you!

Aylin

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Hi Sarah,

Thank-you for your helpful posts over the past 6+ months!

Prior to signing with Mercan, did you do any diligence on the company and/or the Portuguese lawyers they assign do you? The impression in this forum is that they seem reputable, and they’ve been operating in Canada for years, but if you have any additional information, it would be helpful. I ask because I had two attorney friends look at the financial documents and the power-of-attorney document provided by Mercan. Both were concerned about the power-of-attorney document for two reasons. First, because the attorneys are not part of a large law firm, there is not a well funded institution to pursue in case they act inappropriately and use they >350,000 euros for their own benefit. Second, with the information provided to the attorneys, the attorneys would be well positioned to commit identify theft.
Best,

Rick

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Hello Alyin, may I ask what you mean by Global Citizens Solution was not “full package,”?

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Hi, I’m curious about that as well, as I’ve been looking at them.

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Hi, you say if you make a loss or a gain, but isn’t the idea with Mercan that they buy it back for exactly what you paid? Is that guaranteed or not?

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Can anyone explain a bit about the guaranteed buy back? How is this guarantee backed, and do they guarantee to buy it back from you at the exact price you paid?

How low is the risk investing in the Lapa project with Mercan? If they go bankrupt what would happen to our investments

thanks

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