Property Market Rate Exit Strategies

[michaelsmith]

Apart from trust (or I would just go with Mercan), my 2nd biggest priority is a market-like exit strategy as I think a EUR 280k property would be worth EUR 400k after 8 years due to inflation/capital-appreciation (it also went from nothing to making a dividend so there’s more certainty)

This rules out the “guaranteed buyback” properties (most of them).

The investment case:
If I bought a EUR 280k property now, I’d expect a 2-8% capital appreciation compounded over say 8 years, at 5% that would be worth EUR 413k by that time. Let’s assume 10% of that is lost in the sale (agent fees, taxes, etc.)

Normally I’d think a 1-5% investment would be expected too. I consider the “free week” a 1% return on the investment. Though if you can get a good dividend, it’s a good sign the property will sell high given the return.

Exit Strategy Types
The exit options probably also depend on if you bought a share in an entire property (aka Hotel Pool) or you own the individual unit (Freehold)

It seems “Freehold” you’re more likely to have legal rights to sell it yourself (thus can get a market rate), thus even if the property developer still has influence, it is less. One property indicated they’d make offers to you when you want to exit at around market rate, I guess you can test this rate by finding your own offer via an agent.

I’m also happy with “Hotel Pools” if the developer can sell all the units in the future and hopefully gets a reasonable return. Rossio Palace is pretty upfront in that they’ll keep 50% of the appreciation on sale, seems like a fair deal and gives them good incentive to run the property well over the 8 years.

[Tosh (JHL)]

The value of your property could go down or up. As with any investment. Housing has traditionally been a safe-ish bet but demographics, incomes, interest rates, location, supply, consumer confidence and numerous other factors are all in play.

[spam (ab)]

Agreed I wouldnt bank on any gain. Interest rates will remain at more normal levels and QT has to continue. Assets will be pushed down. Add in that when you exit any uplift from others following you down the ‘invest for residence’ route will have stopped and I suspect a loss is likely. As for buying hotel rooms, that has a dreadful track record.