All Forum Posts by: Vassilios Kovanis

Welcome to bigger pockets, the largest market place to sell bridges.

I hope some BP readers realize that a huge part of frequent posters on this forum are not genuine deal makers, but phonies with no track record only in the business to sell mentorship programs, seminars, books and bad investments to gullible newbies.

Do you really think real successful deal makers waste their time posting thousands of times on a forum essentially catering to first time investors?

Do you think successful RE entrepreneurs need to chase small time investors money, mentor newbies and write books about their winning strategies in an already over competitive / saturated market?

Real estate is plain simple and there is absolutely nothing you can’t learn reading

Good luck

I have been studying global markets and investing internationally for RE companies for 10 years and know the french market quite well. 

The take away about France is as follow:

pros

- relative market stability

- stable currency (euro)

cons

- highest taxes to gdp in the world (capital gain taxes, transfer tax, income tax etc)

- extremely complex / opaque tax system and aggressive tax authorities 

- widespread corruption around high profile transactions and construction permits

- 3 months transaction close due to high regulation burden

- local authorities have first look right to purchase the property you have under contract. The deal must be reviewed by the city to be allowed to move forward

- currently highly overvalued market by all metrics, price to income etc

- low appreciation and returns compared to emerging EU member states and US

(most RE companies offer annual returns around 10% (minus high taxes) for high risk speculative investments)

- extreme anti landlord legislation

Basically, if you love France and want a secondary residence sure go ahead, but otherwise, given the number of attractive alternatives available at the moment, i don't see any valid reason to invest in France unless you are french and unable to invest elsewhere. Even for french tax payers, much better opportunities exist a couple of hours outside of France in the eurozone..

Why would someone living in a fiscal paradise (HK) invest in the most tax hellish country (FR) on earth is beyond my understanding. When it comes to investing it is important to not involve emotions and look at the facts 

I look at the global markets on a daily basis and would invest all day in HK rather than France for the years to come

I have been investing internationally for RE companies for 10 years across Europe and the US

My take away about France is as follow:

pros

- relative market stability for the past 20 years

- stable currency (€)

cons

- highest taxes to GDP in the world (capital gain taxes, transfer tax, income tax etc)

- extremely complex / opaque tax system

- widespread corruption around high profile transactions and construction permits 

- 3 months transaction close due to high regulation burden 

- local authorities have first look right to purchase the property you have under contract. The deal must be reviewed by the city to be allowed to move forward

- highly overvalued market by all metrics, price to income etc 

- low appreciation and returns compared to emerging EU member states and US

(most RE companies offer ridiculous returns around 10% (minus high taxes) for high risk speculative investments)

- extreme anti landlord legislation 

Basically, given the number of alternatives available at the moment, i don't see any valid reason to invest in France unless you are french and unable to invest elsewhere. Even for french tax payers, much better opportunities exist couples of hours outside of France in the eurozone...

Completion guarantee secured by bonds are 99% off the time a requirement for LPs and lenders in the US, but the end buyer is not covered directly

In Europe developers must often deliver a completion guarantee to the buyer if the property is pre sold as payments are made in installments along the construction process. Usually 95% is paid during the construction and the remaining 5% at delivery. The advantage of this system is that it discourages speculative over development, reduces capital costs for the developer and free capital for more projects.  Usually a minimum of 60% must be pre-sold for the project to break ground, so very little leverage is used and the developer only commits about 3-5% of the equity 

I advise anyone interested interested in investing in Tulum to read this (long) article. There is definitely money to be made there but you better watch where and with who you invest because the rule of law seems kind of lose in the region

I scout the market nationally for commercial acquisitions and my observation is that at the moment the market is perfectly priced. Sure you can buy cash flow and even ride some modest appreciation in rust belt cities but these are not opportunities; returns only exists because these places are dying cities with poverty rates through the roof and largely negative demographics. 12% cash on cash for C properties in detroit are very unimpressive risk adjusted returns. If the economy tanks post covid in 2021 these cities could really suffer and trap the equity of many investors

I'm considering putting together a couple of commercial syndications deals in the next months and have a couple questions

Is it customary for NNN / fully stabilized deals to have a waterfall structure and what kind of fees are typically levied?

Since NNN deals are flat and passive is it common for the sponsor to take a promote? I can surely see an acquisition / disposition and maybe an asset management fee on these deals, but without value add component and active role in turning around the property a waterfall structure seems a bit over the top to me.

Thanks for the input; i looked up recapitalizations and that's exactly it.

I just read that lenders generally do not like recaps which might be a limiting factor 

While i agree that management fees charged to small owners are outrageous, if you have to self manage your property to turn a profit it is likely not the best investment. An investment should be profitable hands off otherwise it is a business, and in this case you should make significantly more per hour self managing your portfolio than what you make per hour at your day to day job. 

Since rentals are a generally a low margin / growth investment, self managing is a reasonable option for retirees or people with modest income who want to save some bucks, but i hardly see the benefit for someone running a successful business or having a high paying job. The majority of active businesses have way better margins than that