Portugal GV Fund Comparison?

Residencies & citizenships Portugal Golden Visa đŸ‡”đŸ‡č
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496

I think Greytech is news to the crowd. I really wasn’t impressed with the costs and structure and marketing of the original Iberis fund and had a long chat with them about it. Maybe they did better with this one? You could hope.

I see Iberis Greytech in the CMVM list, but not a Greytech II. Not sure how I personally feel about those choices, but it is nice to see folks at least trying something other than real estate - it was getting kinda old, and for the country as a whole the cash needs to be going into other job-making businesses as well if it’s really going to succeed.

497

I guess no one’s mentioned any subscription fee to me for BC and I’ve seen it in no document I’ve been presented with.

498

5%. But net payout this year was 5.1%, so


Here is the stuff they sent me quoted:

Here goes the list:
Setup fee: 5% (fundraisers, agents)
Yearly Management fee: 1%
Performance Fee: 10% (On net appreciation profit)
Yes there is a minimum investment amount:
The exact minimum amount to invest in our fund will be 7 units at 7.500€, so 52.500€.
(7 * 7.500 € (P.U. value) = 52.500 €)
7.500€ is the fixed participation unit price for the subscription period.

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499

I, too, wasn’t impressed with their Portugal yield fund fees.
From what Iberis told me, Greytech II just got approved ( CMVM Greytech II ). So, it is brand new. From their presentation, set up fee of 3%, management fee 0.5% and a carried Interest of 25% on total fund investor returns with catch up; all-contributions-plus-preferred return-back-first model. Hurdle rate/ preferred return is 8% IRR. The fund won’t use leverage. They also confirmed that they will provide PFIC Annual Information Statement.

I do feel that they still don’t market this fund to GV investors enough. I think they are more well-known to the Portuguese market, and that’s fine by me. Compare to, say, Nest fund, they seem to do marketing well, but we were turned off by their style and the fund itself, and felt more confident with Iberis.

500

Truly.
But give me the forumla the ends in cough up 350K.

501

Only you can know that.

502

At this point, I’m back to square zero. I haven’t found a fund that I want to invest in. I also don’t know whether it is worth spending $$ on the due diligence firms that offer advice. They themselves require due diligence!

If anyone wants to list the funds that they invested in or plan to invest in and the reasons why, it would be most appreciated. I would also love to know whether you had a lawyer look at the MR.

I have lawyer friends in the US willing to help me read through all the contracts. It is hard to see some of the problems.

Mercan seems safe, but given the last year hit that hotels took, even a firm of that size and reputation may be in trouble. If anyone has information on their overall finances, that would be appreciated. They also come with hassles, like taxes on the interest.

In sum, this is what I have learned: real estate is tangible, but you will likely buy an overpriced place and pay a lot in taxes and sweat. Maybe some of the funds are OK, but it is difficult to know which ones, if any, are OK. The D7 is great if you plan to move there now. Opening an LLC is a good idea if you have an idea and the capital. Getting a job somewhere in the EU is more paperwork, but it is safe.

I am thinking about pulling out altogether now. But if you can list funds you think you would go with, please do. We could also do a joint call, as many people might not feel comfortable mentioning problems in writing. (That said, there is some degree of protection provided by these forums in that any company that takes legal action will likely suffer from reduced enrollment.)

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503

GreyTech II and BlueCrow on my final list. Doing due diligence.

504

Can someone explain the difference between Class A and other PUs? I don’t really need voting rights, but are there other disadvantages? It is possible to purchase Class A at a lower price, and often there are no minimums. Some funds require Class A if you want to purchase less than 250K or 350K.

So, far, I have seen a number of established firms on the list. I will add year established as a metric for a Fund in the first spreadsheet. Someone who is really ambitious might want to combine the spreadsheets into one.

505

There isn’t a standard definition; it’s all in the MRs of that fund based on the goals of whoever set up that fund.

506

I am questioning the notion that funds are the cheapest way to go (or the least hassle). I bought the logic that there are no taxes, less bureaucracy, less need to worry about a property, less management, etc, etc. But here is the reality after trying to buy a fund:

  1. Due diligence. Many of the funds offered to Golden Visa investors that I looked into give one at least some reason for pause. An extreme amount of due diligence is necessary before investing. I have spent maybe 100 hours looking into funds, talking to past investors, talking to fund managers, watching webinars, talking to lawyers, trying to find other investors here and on LinkedIn, etc. When the allegations come from Party A about Party B, in my mind at least, it raises questions about both Party A AND Party B if Party A is a vested interest in you. Probably some of what I have heard is gossip or diversion tactics, probably some of it is real. The total amount of time I have spent on this is probably at least as much as it would take to just buy a property, manage the property, and file taxes every year.

  2. Cost. Sure funds are lower cost (usually 3%-5 entrance, 0.5%-2% management) than real estate, but not that much. Management fees are not the only cost. There is some chance that you will make money off of them and some chance that you will lose some money. There is also a non-zero chance that you will lose ALL of your money. In the real estate option, there is virtually no chance that you will lose all of your money unless someone does something tricky with the property title.

So, lets look at a simplified decision analysis model here. Let’s assume that the investment is 350,000 and that is what you get back at the end of 5 years after management fees and entrance fees. Highly hypothetical, but let’s just go with that for the sake of argument. Let’s also assume that you are paying something close to market price on your real estate asset and that it doesn’t appreciate in value over 5 years.

This is how expected value calculations work:

Expected value = (1-probability of losing all your money)*value of investment after 5 years

If the chance of losing all of your money is 3%-5%, then the cost of investing is roughly the cost of a real estate investment after costs and depending on management and entrance fees. Anything higher than that, and real estate is favored. Anything lower than that, and a fund is favored. So, the question is: what do you think that the chances are that you will lose all of your money?

Of course, the whole point of investing in a fund is that it can produce returns, and hopefully that is what happens. This exercise requires a lot of assumptions. But there it is, naked and bare. To me, the value of a golden visa is <350,000 EU because I have other options for EU citizenship.

Under any circumstances, the other options (e.g. retirement visa, investing in an LLC) are always favored if they are options for you and things you would do anyway.

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507

I fully agree that there is definitely a decent amount of risk in both options. The question for me is where is the risk greater. Although I have always had (and still maintain) doubts on which route is better, I still lean towards the fund option (assuming I can find one that makes me somewhat comfortable, which is a big “if”).

Basic reason is that I can limit my costs to exactly EUR 350k in capital, plus some reasonable expenses. Hopefully I get that back after somewhere between six and ten years, and if there’s a return, I consider that a bonus. Again, the key is whether I can find a fund that I have enough confidence in to invest. I think I have found a couple, but still not 100% sure. Unfortunately, you can diligence the hell out of these things, and you’re still not going to know. And even if you got comfortable on the diligence, and it all looked good, it’s still an investment with all the risks, etc. This is definitely not like investing in US listed mutual funds with broker analysis, Morningstar ratings, etc.

As for real estate, there’s no way I’m finding a decent piece of real estate for EUR 350k. Anything I find for that price is probably worth less than EUR 300k (possibly way less than that) with a nice little premium added to appeal to the GV investors. So maybe I scour hard (which is going to take a hell of a long time, and very, very difficult to do from abroad) and find something for around EUR 400k (just as a hypothetical). Then there is a good chance that you’ll have to pour more into refurbishment, furnishings, etc. (another EUR 50k perhaps?). And then there are the notary costs, taxes, management fees, upkeep, etc., etc., etc. And then what if there are structural problems down the road requiring more? Yes, it’s a tangible asset, and is indeed unlikely to lose all of its value, but it could also be a money pit, and you’ll never be able to fully recoup your investment. All in all, I am very, very skeptical of the ability of a foreigner to successfully invest in real estate unless he/she is on the ground and knows the market well.

I absolutely, 100% agree that if there are other options (D7, or if you have another way of getting EU citizenship), then I would NOT pursue the GV. Unfortunately for me, I may not have other options for personal reasons.

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508

I really appreciate the conversation by both William and Peter on these topics. I have no other options for EU citizenship, and so the GV is it for me. So given that, my current thought process is as follows.

  • I have a self-imposed timeline due to a dependent graduating school in the spring.
  • I have stock I’m hoping will be more valuable in the spring.
  • Real-estate is really hard (impossible) to buy when you can’t travel.
  • The rule changes for real-estate for the GV are going to be implemented soon. They may be phased in; no one knows.
  • If the real estate rules let me and I manage to travel there to look at things in person, I will buy in Porto in the spring. I want a house in Porto long term anyway so it’s not an investment it’s a place to live.
  • I expect to not buy real-estate due to the rule changes, so I am assuming I will have to go with the investment route.
  • I’ve looked at a LOT of real-estate online that would satisfy the new rules, and it’s a very poor prospect. First, I don’t want to live in the boonies, and second, even if I was, very little that is 30-years old is worth it. You’re looking at 500k, not 350. e500k buys a rural mansion with a fragile market.

If, for some reason, the rules changes don’t go through or are phased in, the RE option is still a good one. But, if they slam in the changes, RE will be a horrible option. You’ll have some mansion in the sticks, and you will have to be very patient when the time comes to sell it.

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509

I do not know your nationality, and whether you would be eligible, but if you will be moving there to live, have you considered a D7 visa? I did not know about this myself until someone on this forum kindly informed me about it. In short, if you are eligible to apply, you can obtain residence in Portugal by demonstrating very modest means of living, and then eventually receive citizenship in the same time frame as with the GV. That is, no need to spend EUR 350k (or more).

I would do this myself, but I will not be able to live in Portugal for probably many years, which is why I will pursue the GV.

In any event, you may want to check this out if you haven’t already.

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510

Thanks, yeah I’m not able to move there now, nor am I planning to live there more than a few months a year for the next 10 years or so. Sadly, the D7 won’t work.

511

Apologies, I misunderstood, and thought from your previous post that you were planning on going there to live now. Well, indeed, I guess it’s the GV route after all!

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512

Has anyone had any experience (good or bad) with Bison Bank? Feel free to PM me if preferable.

Thanks!

513

for better or for worse (I honestly don’t know), they’ve been in the news a fair amount recently:

https://jornaleconomico.sapo.pt/en/news/bison-bank-advises-%24-750-million-bond-issue-665235

https://jornaleconomico.sapo.pt/en/news/bison-bank-enters-the-shenzhen-stock-exchange-digital-platform-and-strengthens-its-position-in-ma-627022

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514

Many thanks!!

515

About a month ago, I had a half hour VC with Nuno at Bison Bank about depositing my GV funds. He was very knowledgeable and extremely helpful. I am confident that this is the right choice for me.

I was evaluating several criteria:

  • Do you work with Americans and provide all necessary paperwork? [yes]
  • How difficult and expensive is it to open an account remotely? [not bad; requires 3 items of documentation, certified by a lawyer at $20/item market rate]
  • What are the fees and benefits? [nominal–no fees, no yield. bonus: free, no spread USD:EUR currency exchange! independent confirmation welcome.]
  • What are the restrictions on transferring money inward and outward? [advice: we don’t care but SEF does. keep it simple.]
  • bonus: Do you have any recommendations and referrals to facilitate my success? [yes, 2 lawyers recommended; various other advice given]

I also communicated, or attempted to communicate, with all of the other big name Portuguese banks, as well as several of the internet-lite banks. What I heard was:

[silence]
“we don’t work with Americans”
“we do not allow remote account opening”
“we allow remote account opening only from our affiliate bank in New Jersey”
“we allow remote account opening only from our affiliate bank in Canada”
“your message has been forwarded to the XYZ branch. they’ll get back to you. [ silence ]”
“our monthly fees are [ unreasonable ]”
“you must be a legal resident of Portugal to open an account”
“we are not a full service bank; you can not buy investment funds through us”

To put it mildly, I was dazzled when Nuno at Bison Bank replied to my inquiry with an invitation to a 30 minute VC, radiated helpful and knowledgable professionalism, and advised me of terms that pleasantly exceeded my expectations even prior to the expectation-lowering experience of communicating with the frumpy incumbents.

@william.reichert, PM me for Nuno’s contact info if you like.

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