I’ve been investigating a project from Quantum Capital that’s 350k (for commercial property) that pays 87k back after the first year (5% first five years, all at once). It sounds great and is in a good location–but what’s the upshot for them? Why turn a quarter of the investment back when that’s the value I’m providing them? I’m a little wary to invest without understanding, especially since they don’t have a long track record, but it does seem like a good investment.
Also if anyone has any experience with Quantum Capital please share as I searched and couldn’t find any topics on them.
It’s a common scheme. Most of these things involve some capital purchase, then some nominal interest payment for N years and (sometimes) a buyback.
It is not uncommon to “rebate” the interest payments. Effectively it’s a discount to get you in the door for a lower up front amount while still technically meeting the capital requirement - gaming the system as it were. You see this on other GV property deals, it’s nothing new.
Forget the mechanics. You’re back to, is what you’re buying worth 350 in the first place? Is there an income stream and is it reliable? Is the lease that they claim to have actually any good? There are reports of deals where the seller has some “independent” party take a lease on a property at some great rate… that expires next year; it’s just there for color and nothing actually changes hands.
Bernie Madoff seemed to present a good investment premise too.
What is your path to verify any of it? That’s what you need to consider.
Hi @robp I am aware of one of the Quantum projects and its a good project involving restoration of old unused properties which have a lot of history, however its based on what you expect in return.
If its a high rate of interest, that’s fine. But this comes with higher risks and the risk is your capital.
If you are looking at capital preservation, check the strength of the buy back agreement and if they will entertain a specific buyback agreement.
I’m looking at the 280k Quantum property in Evora, same deal with the “rebate.” But my concern is how to determine whether the rebate will quality as PFIC income, because Quantum doesn’t silo each of their projects in SPVs so I don’t know how cash-rich the entire operation is. Not sure if this is something to be concerned about in this case?
I have just joined the community. I am considering to invest in one of Quantum Capital GV projects. In particular, the EUR 350,000 Blue Palace Hotel in Lisbon. I would appreciate your feedback or assessment if you had invested with them. Thanks.
I’m not an active poster in this forum, but thought I’d share my experience with Quantum. I’ve invested in the Evora Convento do Carmo with Quantum and thus far have a positive experience with them. Responsive, transparent etc. Obviousy, it’s early days in the construction, and like most, the management of the construction activities and delivery of the hotel is the key for this investment to succeed. So time will tell.
On the other hand, when people ask about the returns etc, I was one of the early investors on this specific investor that had the higher return of 5%, all paid in Year 1. I also assume this will be taxed, however will look for ways to get taxed less. Having said that, for me it was best to at least get my return upfront (and potentially pay more taxes) then risk issues with company and investment in the future and see no returns. The 5% was also attractive enough to get me over the line.
My last point, is that like MOST if not ALL GV investments, they are more likely overpriced for local market conditions. First, not all of these would be available to traditional real estate investors, they are made specifically for GV purposes, and have rules about value of renovation etc. So if I was to buy a hotel room at $280k to get a GV, if I was not interested in a GV, I could probably get the same unit (from an old investor) or a similar one for a lot lot less in local market. That’s my view. I’ve done some research in other potential investments in the Algarve and came to this conclusion. However, if you think this way, you could be missing the point of a GV investment. It serves a purpose, and in my mind, it is a win-win-win deal. Portugal gets its historic towns renovated with foreign investment, a company like Quantum / Mercan etc get healthy profits and low risk with all-cash investments (their job is to manage the construction activities and ensure there is a profitable hotel in a few years time) and the investors get the Golden Visa for them and their families! Even if you paid an extra EUR100,000 on real estate that you could find locally for a much lower priced, you got a GV for you and your family, so what’s the price of that?
That’s how I see things. As long as the investment gives you the GV and what’re going after, the next step is to lower the risk of losing your money. For me, upfront returns already reduce the loss if it does happen (there is always a risk). If the company does well, then you’re laughing. It’s all relative to what you’re looking to achieve.
I do question the value to renovate properties and if they are overinflated. I’ve looked at options to buy regular real estate and manage the renovation by myself, but it was funny how you could find an apartment for EUR100k and then the cost to renovate was EUR180k. It all MAGICALLY ads up to 280k. So the renovation is either overcapitalized, or overpriced, or BOTH! The fact that the GV sets the rules, it is easy for the renovations to work out to be higher than reality if you were doing it yourself.
That’s how I see companies get their risks lowered and can also return money to investors via guaranteed returns, or buybacks. They basically return your money back to you, because they didn’t need to use it all in the renovation.
I may be wrong, but that’s my 2c.
Having said that, Quantum has been good to-date. I like them. Let’s see how things progress in the future with construction activities.