All Forum Posts by: Tiago Faria

Alverca here! :) Lisbon would probably be ideal

Dear community,

How would you go about promoting a rural tourism hotel with 10 rooms in the contryside of Portugal? It includes restaurant, bar, events room, etc, and is currently yielding at 7% (but has potential for much more).

I've been struggling to find the right avenues to sell it. Most agencies (local or even international like Sotheby's) are avoiding it with the excuse of "being far from the capital Lisbon", that is currently booming.

Looking for suggestions/ideas on how to tackle this. Any different strategies that you know of? Any contacts? Any niche agencies specialized in large rural properties?

Thanks a million!

Hi BP Community,

We are selling our property in the country side of Portugal (Constância, 1 hour away from Lisbon), and would love to ask you guys if you know anyone or any investment fund that is looking at acquiring these types of properties overseas.

It is a rural tourism property with great history, currently used as a 10 bed boutique hotel.

Below some additional details:

• Location: Quinta de Santa Bárbara 2250-092 Constância, PORTUGAL
• Size: 38,410 m2 (413,441 sq ft) of land, and 3,200 m2 (34,444 sq ft) built area
• Condition: working hotel with 8.9 rating in Booking.com
• Number of bedrooms: 10 (project to increase capacity to 21 rooms)
• Restaurant, bar, swimming pool, tennis court, small gym, space for events with 200 people capacity
• Price: €1,950,000 ($2,261,970 at today's exchange rate)

It is surrounded by famous historical landmarks (such as "Fátima", or "Convento de Cristo"), and it has an historical background. 

With origins in the 15th century, it belonged to D. Francisco de Sampayo e Mello, a friend of Luís Vaz de Camões (most famous Portuguese poet). In the 18th century it was adapted to a Convent by Jesuit priests, who lived there until 1759. 

My family bought it in the 1970s, and adapted it to a rural tourism hotel, keeping its original traits.

As stated, the property is currently being explored as a 10 bedroom hotel by my parents + 3 employees, with an annual return of 7%.

Nonetheless, the potential is much higher, considering that the restaurant is only open 2 days a week, the bar is not fully being used, and the space for events is completely unexplored. Adding to this, there is a project to expand the hotel capacity to 21 rooms.

Fully explored and professionally maintained, we believe the property would yield at 12% per year.

You can have a look at the pictures in booking.com.

Looking forward to hearing your opinions and suggestions! 

Any help finding potential buyers would be extremely appreciated (plus, of course, you would have a free stay at our gorgeous hotel when you visit Portugal! :) )

Thank you very much.

@Antoine Martel lease term was signed with a management company, not the end tenant. The management company will pay me a fixed rent every single month, and then will sub-let to tenants with a markup.

@Bryan O. If I want to break the contract, I have to give 120 day notice and compensate the company for any repair costs made up until that moment. Again, it's in the interest of the management company to be good and keep attracting great tenants, as they'll have to pay me constantly every month. 

Regarding rents, indeed if market rents go up the management keeps all the upside (that's the downside of this passive/low risk model).

In terms of rental income tax, I can shelter with insurance costs and property taxes. 

Thanks @Sanjay Raj! It is really a relief that the first step is done. Now to the next one!

@Bryan O. thanks for your feedback!

Actually, the deal is interesting because there are actually no managing expenses. The property management company that I made a 10 year contract with is responsible for everything (vacancies, maintenance, repairs, etc).

I get the $300 every month, and they sub-let to students at higher rents and are responsible for everything (and its in their interest to keep the property nice and tidy). 

As I said, the only potential costs are structural damages (such as infiltrations, etc), which are unlikely in the near future (as the property was now fully refurbed), and will be covered by insurance.

It is quite a cool concept, especially for overseas investors IMO. What do you think?

Hey Diogo,

If you are investing in Lisbon and surroundings, prices have really rocketed. With tons of cash investors coming from overseas, both Lisbon and Porto have become speculative markets (best now for flipping, and not for buy-and-hold).

If you are interested in accessible and good cap rate markets, you should consider investing in smaller cities such as Bragança and in Covilhã, where you can buy multi unit buildings at low cost.

Happy to connect!

Abraço

BP mastermind,

I wanted to share the story of my very first deal. It's not the best deal ever, but I had to start somewhere after 6 months learning the theory (a lot thanks to BiggerPockets's mantra of taking action and learning by doing).

As a background, I'm Portuguese and am living and working in Ireland for the past 6 years. Working in the tech industry, I was able to save enough money (initially planned to buy a home for myself, but after reading Rich Dad Poor Dad the goal obviously changed) for my first investment.

After analyzing the potential markets to invest (Ireland, UK, and Portugal), I came to the conclusion that Portugal was the best choice. Not only because I had the connections and market knowledge, but also because it's a much cheaper market.

So I went ahead and connected with a local investor through online search (unfortunately there are not many Portuguese in BiggerPockets). He was investing in a little town called Covilhã, and told me all about the region. It is one of the best regions to invest in buy-and-hold due to it's low acquisition costs and relatively high rents (large University and housing shortage). 

After weeks working on the relationship, we agreed that he would wholesale me some deals. Adding to this, he was working with a property management company that leases properties for long term, and then rents out to students. This was the perfect combination for someone investing from abroad.

So the first deal was a newly refurbished 2 studio apartment building, right next to the local University. I bought it all cash, and below you'll see the details:

List Price: $60,000

Purchase Price: $51,500

Wholesale fee: $4,000

Closing costs: $1,083

Gross Rent/Month: $300

Lease term: 10 years

CoC Return: 6.4%

Again, not the most attractive numbers, but the tradeoff is that the property management company will deal with tenants and maintenance, and I'll have constant flow of cash for the next 10 years. The only risk is if the company goes bankrupt (which in case I would then start self-managing), and the only costs I'll have to cover are potential structural damages (which would most likely be covered by insurance).

Another plus side of having invested all cash, is that I will have potential access to lines of credit both for home equity (up to 70% of home equity), AND for future guaranteed rents (up to 60% of total 10 year rent roll).

Already planning on the next property using the same strategy, but this time with traditional financing (looking for 100% mortgage). Will update you guys soon!

Looking forward to hearing your thoughts, and if you ever structured deals in a similar way.

Cheers!

Hi there!

I'm about to begin my real estate investing journey back in my home country Portugal, and am super excited to share with you guys.

Through a local wholesaler, I've found a company that pays me a monthly lease for 10 years, and then rents out my property to college students. This is guaranteed income every single month (no worries about vacancies), and the company manages everything related to the property (maintenance, fixing, finding tenants, etc). The only costs that I will have to cover are potential future structural damages.

Despite the discount, the monthly lease still guarantees me a cap rate of 7% on my investment. The city where I'm buying has very attractive rents (large University), and still has plenty of deals.

The only risk associated with the deal is if the company goes bankrupt, which is highly unlikely as they are growing exponentially and looking to scale to new cities in Portugal. For this reason, they are looking for more investors interested in this kind of passive investing.

If you are interested in knowing more about it, please feel free to contact me and I can introduce you to my contact. 

(Note: They agreed to pay me a commission for every successful lead).

Thank you!