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Destination & Buyer Guides |
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Investment types
High Capital Growth
This refers to investments in which through building restoration, land speculation, financed construction, or buying off-plans in their early stages, among others, may bring the investor a valuation on their investment beyond traditional growth rates.
Low Entrance
This concept was coined in Spain, where a very low entrance deposit was needed in order to purchase a property, but usually followed by staged payments until completion.
100% Finance
Relates to a property in which a bank, associated with the developer, provides the entire property financing, including legal and taxes fees.
Small Investments
Property investment with low prices, like parking spots, or percentages of biggers investments like shares on property funds.
Buy to Sell/Turn
Many investors are utilising the ‘Buy to Turn’ strategy where the property is bought and then sold within a relatively short period of time. Ordinarily, the property would be acquired at the ‘off-plan’ stage. The prices of properties acquired at the off-plan stage are usually at least 20-30% below prices of comparable properties that are completed.
Investors are able to re-assign the contract (effectively selling the property on) at any time prior to construction. Obviously, the nearer to completion the property is, the higher the sale price that can be achieved. Therefore, you as an investor can acquire the property by paying a small deposit (often only 20%) with no further stage payments and re-sell the property prior to completion for approximately 20-30% more than the purchase price.
Discounted Off-Plan
Usually, investments where developers need to lure investors in a not very attractive property, like a building needing restoration and carried by a construction company.
Land Deals
Developing in Spain is still one of the most secure and lucrative investments available. However, this type of deal is usually only available to companies or individuals with substantial amounts of capital to invest. The minimum level of investment required from an investor (or syndicate of investors) is about £250,000. Pre-construction developments can be acquired from as low as £500,000 up to hundreds of millions, depending on the investors’ requirements. Once the land has been sourced (with full planning permission in place) the following steps are carried out:
- Economic Study carried out
- Building finance requested
- Land (with project) Purchased
- Project Plans Finalised
- Artists’ Impressions Created
- Floor Plans Created
- Commencement of Sales
- Building finance obtained (once 70% of the properties are sold)
- Building licence purchased from the town hall
- Building work commences (1 month later)
High Rental Yield
Property with above average rental returns.
Leaseback
Leaseback, or French leaseback, property is a type of property investment popular in Europe. After purchasing the property, the owner leases the property back to a property management company who will rent the property at an agreed guaranteed rental. Typically the initial lease is for 9 to 11 years. The net rental yields are usually in the range 4 to 6% per annum (based on the purchase price).
Leaseback property has been popular in France for many years and there are significant tax advantages. The French Government encourages the development of leaseback schemes in tourist areas to alleviate shortages in rental accommodation. The French Government will rebate the local tax, called TVA, when the property is purchased. Currently the TVA rate is 19.6%. In France, a leaseback property has to remain in the leaseback scheme for a period of 20 years.
The leaseback concept has spread to other European countries including Spain and Switzerland.
The types of property available are studios, apartments and villas. They are situated in ski areas, beach resorts or golf courses.
Guaranteed Rental Income
Relates to a property which, upon completion, will start paying the owner a guaranteed specified rent for a specific period of time, between 2 and 10 years, established in a contract between the developer and the buyer.
Some developers command a higher price for a property with guaranteed rent, in order to cover themselves in case the property can’t be rented.
Other developers prefer to outsource the property rental to a management company, thus offering that company services to the buyer.
Buy to Let
The overseas ‘Buy to Let’ market in many countries (including Spain, Italy and Brazil) is booming. Many investors are now recognising the benefits of acquiring overseas rental properties.
There are many advantages of using the Buy to Let strategy;
- The investor establishes & continuously develops a property portfolio.
- 80% ‘Loan to Value’ mortgages are often available, secured on the property
- Subsequent equity releases are also available, releasing further funds, completely tax-free
- Excellent rental yields can be achieved in the right locations
- The investor benefits from the excellent rates of capital growth
- Furnishing packages can be arranged, enhancing the attractiveness of the property to potential tenants
- The property can be let on a ‘short term let’ or a ‘long term let’ basis.
- Guaranteed rental schemes can sometimes be arranged
- The investor is also able to utilise the property for their own use (holidays etc.), when they choose.
We have many developments that are ideal for Buy to Let purposes, contact us for further details.
Serviced Developments
Property that can be rented to short or long term tenants with in-building cleaning and maintenance.
Managed Developments
Apartments completely managed by a company regarding rental, maintenance, cleaning, etc.
Hotel Rooms
These fully managed property are rooms in hotels, usually luxury ones, that can be used by the owner and/or being rented by the hotel management. Sometimes it comes with a guaranteed rental contract.
Holiday Rental
Property aimed at the holiday maker rental market.
Land for Development
Land with construction plans approved by local authorities, or suitable for construction.
Renovation projects
Property in need of renovation, which will be performed by the new owner.
Portfolios
Collection of property being sold as a whole.
Project Finance
Investors participate in the financing of a complex, where the exit strategy is negociated with the constructor.
Property Funds
Funds administrated my a management company or law firm, can be linked or not to a specific property.
Syndicated Deals
This investment is recommended for members wishing to purchase commercial property for a retirement income after the property mortgage is paid.
Joining a syndicate reduces the initial deposit.
Using a SIPP to gain tax relief on earned income.
Retaining the property in a tax free environment for 10 to 18 years.
Increasing your pension income once the mortgage is paid off.
Whole Developments
Investments related to a complete development regarding land and construction. |
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