All Forum Posts by: Ruben Wollerich

Hello!

We are a Dutch team located in Medellín, Colombia. We sublease 4 properties with a total of 35 rooms. We have great margins (60% gross profit per house) but are looking to establish a better real estate deal for us. We increase cash flows by 220%. It's rare to get higher than 6-7% cash flow returns on residential properties here in Medellín. 

We are looking into setting up a fund to raise capital to buy, remodel, furnish and decorate a house. This helps us to get the ideal house, cash out with the diff. between raised funds and expenses (15 - 25 %) and offer 10 - 15% cash flow returns to investors. 

Basically the idea is to sell shares of a holding that acquires the property. We won't have shares and will operate the property with our brand that has shown very high occupancy rates over the past years. 

Is this the right line of thinking? Any feedback to our proposal or something we're missing. 

Hi all! We currently operate a student housing brand with four houses in which we long-term lease properties, furnish, decorate and divide more rooms, and rent it out to students. Our margins are (when 100% occupancy) 35-40% to lease, 25% other costs and the rest profit to pay costs outside of business units. We are reconsidering this model to gain more equity/cash at the opening of the houses.

The idea is to set up a fund or entity to sell shares and fund the acquisition, remodeling, and furnishing of the project with. The shareholders will get dividends out of the cashflow that we generate which is a 10 - 14% return. 

Since we operate in residential properties (which is legal for student housing in Colombia), we are able to sell the shares for more than the cost of setting up the project (property, furnishing, remodeling etc.). We see this as our cash out of the project. So say the project costs 200k USD, the share sale gets raises 250k USD, we plan to use 50k for our new projects, while still being able to deliver a high return on the 250k invested capital by the investors. 

My question is how common this is. Is this something investors would agree with? Do other projects work like this too? ANd if not, is there another way for us to cash out?