All Forum Posts by: Erwin Groenendijk

@Maria Murphy It was a normal transaction once we ended at the notary. When we were done at the notary and finished the purchase, we were able to obtain the license and start the works (it was a big commercial old furniture shop where we created 14 tourist apartments). 

It is true that before the purchase we needed to do quite a lot of work to make sure everything was organized with the payments of the debt etc. Most of the work needed to be done by the seller as they were the ones carrying it and it was owned by several family members who were getting into a fight, etc etc. Will not disturb you guys here with all the detailed information, but most of the time we then step in and organize this for them. Typical problem properties that are difficult to sort but once it is sorted usually with good upside potential.

@Maria Murphy yes correct, simply paying the debt in the owner's name to hacienda (tax office)/government first as part of the purchase at the notary and everything left to the seller.

Valencia has worked quite well for us the last years and compared to Barcelona/Madrid the m2 prices are a lot lower. Because of that the total project costs as well. 

@Joaquin Camarasa That's right, it works like any other business where you can deduct all the costs first. 

@Joaquin Camarasa regarding the mortgage as a company, once you get approved by the criteria described above, they will give you around 50 maybe 60% LTV.

This was in Barcelona via a subasta, it was a contact of us that was our intermediary in this process. Not sure if this is the case in all provinces because Catalunya, especially the Barcelona city government, is quite left and making it difficult for investors. 

In the meantime, we have been buying properties with debt from owners and others directly from the bank in Valencia. 

Hi @Joaquin Camarasa, hope everything is fine.

Investing with a vehicle like a Spanish SL (equivalent of an LLC in the US) would be interesting to research as from that moment it doesn't matter if you are a US citizen or living still in the US. You will be able to buy from that company just like any other company in Spain.

Keep in mind that when wanting to do this with a mortgage banks first want to see substance and at least one yearly balance statement. So this requires some upfront planning. Without a mortgage, you are good to go from the beginning. As a company, the first two years when making a profit the company tax is 15% and from the third year onwards this becomes 25%. 

Sounds interesting. We tried to buy some foreclosures from the bank some time ago without success because quite some time the municipality holds the right to be the first buyer and purchase the property for the price you agreed it to buy for. 

NPL sounds like bigger deals so it might work differently. Or is it the same?

What would you call this in Spanish?

NPL as in non performing loans? Would that be contacting banks and requesting lists from them?

So 147.000 total costs with 21.240 gross income would give you ~14,4% yield

And with 11.640 net income ~7,91% yield.

That is a good deal and worth to be repeating 

And what would that be in % compared with the purchase price/total costs of the project?