All Forum Posts by: Diogo Candido

Hi @Pedro Correia and @Tiago Neto, you should check the forum "Property Investment in Portugal" right here on BiggerPockets!
You have Portuguese and foreign people there that invest in Portugal, personally I'm a mortgage broker (intermediário de crédito) here and work with a lot of foreigners and people like you guys. On that forum you'll find my friend Luís Ferreira, Portuguese, lived and worked in Norway for a few years, during that time invested here and last year moved back. Now he's a real estate agent passionate about helping people like you have the opportunity to do the same.

Check it out and thank me later! :)
Abraço

@Ryan Morris first of all sorry for the late reply, I don't know why I never came back to this thread until now because @Mark C. identified me, so thank you Mark!

I'm located in Lisbon but I like Porto, there are good fundamentals there. The cost per unit will vary greatly depending on if you are talking about getting one single unit or getting a multifamily property and the type of neighbourhood you want to be in. I would like to add that like @Mark C. said there is no MLS and the price a property sold for is not public, which makes running comps a little bit different since you can only see listed prices and not sold prices.

Not going too in-depth the gist is the rental market is becoming stronger but beware that the prices being practised right now, especially in Lisbon and Porto, are due to lack of supply and are starting to be too high for Portuguese people (couples can afford if both are working but usually they will have 40-50% of income going to rent, if it's one single person they will need to have roommates) and new construction is peaking up so beware on the underwriting. Also, Portugal is a country of buyers, not renters, things might be changing within the younger population but it becomes hard to justify rent if the mortgage instalment would be significantly lower than the rent due to the low-interest rates and "cheap" new construction (the feasibility of these projects was underwritten at the market value of 3-5 years ago, which was lower). 

That being said you can find very interesting deals if you know how and where to look, don't be afraid of putting an offer in even if it's low! I have a friend (investor) that after running his numbers puts in an offer, usually about, 50% below asking price, also I know of an agent that represented a lady buying an apartment in Porto listed for 1.000.000€ for 400.000€, most listed prices are wishes not representations of the market, don't let them fool you!

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Now going into @Mark C., 

If you do your underwriting correct and are able to negotiate the price down, the bank appraisal shouldn't be an issue, even if you have to pay for 2 or 3 of them (met an agent the other day and he told that recently he was selling an apartment here in Lisbon for 250.000€, first appraisal was 180.000€, they ordered a new one, second one came 220.000€, they ordered a third one and that came 250.000€), banks are sitting on cash they need to lend, they are extremely liquid at the moment, the key for appraisals is learning how they do it and helping them (read, do it for them), have someone there (you or the agent), talk with the appraiser, explain what you need, show/give him the comps and how yours differentiates. Keep in mind that although you pay around 250€ per appraisal, the bank hires a company that hires the appraiser and he makes significantly less, they are not going to waste too much time on the report and I understand, for that money, I wouldn't either. 

I don't know the specific cases you are talking about but 50% LTV is more or less guaranteed for a foreigner to get as long as they show some income, so I understand that whoever they spoke with just gave them that (most managers and salespeople within the banks are not used to foreign clients so they don't even know what to ask for in order to give the financial or risk department more assurance), but it's possible to get more, I have a friend from the US that got a loan under personal name for investment (not for his primary residence) at a little bit over 60% LTV without being a resident here. In this case, they need to try and find a mortgage broker or a banker that is familiar with the process, I would go for the mortgage broker so you are not tied to only one bank, besides, the broker only gets paid if the deal closes (so they have an invested interest) and is the bank that pays him/her, not the client.

I like your strategy, were you thinking about keeping the property and just keep "collecting" them or sell it and move on?

I like both https://www.idealista.pt/ and  https://www.imovirtual.com/, but I use them as a starting point, I very rarely contact anyone through it due to the high no-reply/slow-reply rates.

Please take everything I said with a grain of salt, it's my opinion (don't sue me bro!), that being said I'll check this more often, if you need anything just reach out! 

Almost forgot my little plug -> I'm a mortgage broker here in Portugal

Yes, there are 3 or 4 different real estate related meetups in Lisbon that happen once per month, I can message you the registration links if you want. You can find me in all of them :D

Hi @Juan Correia,

Welcome to the community, there's a couple of us from Portugal here as well, I'm from Lisbon and actually lived in Algarve for a few months in the first half of 2019.

Feel free to reach out. Would love to connect!

@Ryan Morris for what I've been seeing it is student rentals (renting by the room) in towns outside of Lisbon and Porto where the properties and labour are cheaper giving you a better ROI (I've seen experienced investors being able to get 20-40% cash on cash), the thing here (Portugal) is that the market is not transparent (i.e it's not public record who owns a property, when did it transaction last and for how much), making knowing how much a property is worth more difficult since you can only run comps on listed prices and not sold prices, and there is no notion of what a cap rate or an NOI is, if you look for listings they will always refer to "yield" which is GI over asking price. Also in those towns it will definitely be harder to get real estate agents and contractors that speak English.

That being said don't let it discourage you, you might be able to form a very good team there and there is a lot of opportunities where you can get very good returns in other areas, inclusively greater Lisbon, greater Porto and Algarve where it will be much easier to find English speaking professionals, plus interest rates are really low, to give you an idea I've recently done a mortgage for primary residence, 85% LTV, at 1.2% flat interest rate for 30 years.

At the end it will depend on your profile as an investor and what you are looking for in terms of being turnkey or how much renovation/construction work you are willing to undertake and how management intensive you want it to be.

Hope this answers your question, feel free to ask any other questions, as always, I will try to answer as best as I can!

@Marco Teixeira I completely agree! Since your post I met a couple more owner-operators with a portfolio of senior living properties willing to partner up on projects. I sent you a message.

@Riaan Knoetze I'm working on one right now, let's see if it closes. I have had a little difficulty understanding the legal limits of Owner Financing here and don't quite understand it yet, how much interest can you charge, etc... different attorneys have given me different answers, I need to speak with @Diogo Capela about this. I don't know if this helps but Rent to Own/Lease Option Agreement seems to be a lot more common and well known.

Greetings @Catherine Underwood,

I personally love the area and actually lived in Algarve the first half of this year, I can tell there is a real shortage of long term rentals there, as soon as they hit the market they are gone because most owners have the properties on short term rental, or at least they have it part of the year making 1 year leases hard to find.

I wouldn't be against buying something and have the seller manage it and getting a guaranteed return, obviously they know the property and the business inside out, but I would have to understand why they are selling. Are they selling because they think this as much as they are ever going to get for the property, want to cash out and let someone else take the hit or are they just turning into property managers and want to diversify or invest into something else? Do your own due diligence and be aware that the market is not transparent and that the barrier of entrance to be a real estate agent is absolutely 0, leading to potential misinformation and speculation.

That being said I come back to the beginning, I love the area and it's seeing a lot of growth. If you need any help let me know, I'm a mortgage broker here in Portugal and find myself working primarily with foreigners.

If you have any other questions or specific things you want to know feel free to ask, I'll answer to the best of my abilities!

Greetings @Ryan Morris,

I'm Portuguese, leave and work here in Lisbon. I can't tell you anything about the Italian market but the Portuguese one is going strong, the most expensive areas (centre Lisbon and Porto) seem to be softening up a bit, especially due to the STR restrictions, if you have a property inside a "short term rental restriction area" you can no longer sell it based on the income it is generating on Airbnb because the license will expire when the title changes. I wouldn't call it a generalized bubble but a couple pimples.

That being said it will differ greatly depending on what type of property and location you want to buy. The generalized advice would be to get your tax id and bank account open first, get a pre-approval on a mortgage to know how much you can qualify for and under what conditions. Then go look at properties, please be aware that there is absolutely no barrier of entrance to become a real estate agent here, therefore you have a lot that don't know what they are doing or talking about, avoid those.

Forgot to present myself, I work with foreign investors and investment groups here in Portugal, helping them with the process from A to Z but specialize in financing as a mortgage broker.

Hope to have helped somewhat, feel free to ask any other questions, I will try to answer as best as I can!

@Marielle Walter We'll have 10 micro-units on this one, cash on cash is going to be a little bit over 16% on the conservative side, depending on the area and type of property there's different property management companies I would recommend but we will be managing this ourselves. I'll shoot you a message so we can talk better!

@Marco Teixeira I'm looking into it as well, the main two issues I'm trying to solve are that not only you have to find the property but be conscious about to which city hall that area belongs, that makes a huge difference in time frames if you want to license it as senior living, the other thing is scale, it's more management intensive (staff 24/7, doctor visits, nurses, food, etc...) therefore if you don't have enough beds it might not make sense, you'll end up having to charge too much per person for you just to break even, that being said there is definitely a HUGE demand for it. For what I've seen the trick is to stay out of major metropolitan areas (prices are cheaper and city halls more easy to work with) but close enough by highway to the city (30-50min) so it makes sense for the family to visit. Would love to crack this, if you're interested let's meet up and discuss this further!

@Marielle Walter, I'm actually working on a project using that strategy in Oeiras, Lisbon, we are converting a large single-family house into micro studios for students and a small hostel. It's in the renovation/construction phase, I actually walked the property today with @Luís Ferreira.

We are also looking into multi-family in Lisbon and greater Lisbon areas right now @Angelo Costa, but the way the market is in this area it's been a little tricky to find something where the numbers make sense, have you found any deals?

Let me know if you're around and let's meet up!