Guaranteed Rental Schemes

M

Maxie Dunne

Registered User
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16
we are looking at buying a property as an investment in Portugal with a
guaranteed rental of 5% for the first 3 years.
But I'm a bit concerned because when I look at the figures
over say a 3 to five year period they just don't add up.
The rental will cover the interest-only mortgage, but what about
the expenses ie income tax, property tax, accountants fees etc.
If the property appreciates by say 10% pa on paper it looks like
we would make very little (if anything over 5 years)
- Would we just be better off putting the money into a
high interest savings scheme?
Can anyone throw any light on this please?
 
And what about year 4 when there is no one to rent it???

These "guarnteed rentals" are front loaded into the price you pay and fed back toy you over the 3years. There is no way any one any where could guarntee rentals.

You have answered the Q your self, if the rent ( from a tenant or the scheme above ) does not cover you then you are on a loser unless you are gambling on cap app that will cover this.....chancy I would think.
 
Property investments abroad are not intended to be a 3 to 5 year. Probably 8 to 10 years.

Note construction plays a big part in Portugese economy and development will continue at a quick place - only buy in a quality development - one that you would be happy to holiday in yourself long term.

Low quality developments may mean a real pain to sell in time
 
Four letters Maxie, S C A M. It's just begun to come into Croatia now for the benefit of Irish investors (sorry, should say UK and Irish investors), when rental is guaranteed the thing to ask is: okay, how much WITHOUT guaranteed rental! Watch the agents face carefully!
 
Maine said:
Property investments abroad are not intended to be a 3 to 5 year. Probably 8 to 10 years.

Note construction plays a big part in Portugese economy and development will continue at a quick place - only buy in a quality development - one that you would be happy to holiday in yourself long term.

Low quality developments may mean a real pain to sell in time
Click to expand...

Tks for ur reply

I have done some figures over 1o years, even if the apartment
doubled in price over that period we would only make about
10%.
Just wondering if I'm missing something ?
What would a realisatic % of capital appreciation be over 10 years?
We would be allowed 5 weeks usage of the property is this the
main benefit of these schemes?
 
Sounds like despite proving it your self that it is not a sound investment you are still grasping at it, perhaps due to the dream of owning a foriegn property. If you cannot see the main benefit or if you think you are missing something then there is not and you are nt.

A possible 10% on what?? 200-300k over 10 years, frought with risk, hassle, expenses, taxes etc you may not have even thougt of ..for 5 weeks holiday a year! you will likely get bored of after 2/3 years...

No brainer this one.
 
monkeyboy said:
Sounds like despite proving it your self that it is not a sound investment you are still grasping at it, perhaps due to the dream of owning a foriegn property. If you cannot see the main benefit or if you think you are missing something then there is not and you are nt.

A possible 10% on what?? 200-300k over 10 years, frought with risk, hassle, expenses, taxes etc you may not have even thougt of ..for 5 weeks holiday a year! you will likely get bored of after 2/3 years...

No brainer this one.
Click to expand...
 
Tks, I'd say you're spot on,
it's just a pity I didn't look into all this before I handed
over €4000 + €1000 in legal fees, an expensive lesson.

Prospective buyers beware of Guaranteed Rental Schemes,
there's only one winner and it ain't you.


funny you should use the term 'no brainer' that's exactly
how they described this scheme/developement at the property
Expo and in the Sunday Indo when they were promoting it !!!!
 
Maxie Dunne said:
Tks, I'd say you're spot on,
it's just a pity I didn't look into all this before I handed
over €4000 + €1000 in legal fees, an expensive lesson.

Prospective buyers beware of Guaranteed Rental Schemes,
there's only one winner and it ain't you.


funny you should use the term 'no brainer' that's exactly
how they described this scheme/developement at the property
Expo and in the Sunday Indo when they were promoting it !!!!
Click to expand...
Have you paid money?
 
I've asked my solicitor to try but I doubt
if we can get it back, we were told at the time
all monies paid were non-refundable.
- a very expensive mistake
 
What annual expenses should be factored in when estimating the potential real return from a foreign property investment ?
* tax on rental yield
* property maintenence
* management fees
* ???

Also, CGT on exit.
 
Foreign property for tourist rental = bills, rates and services.

Down time, mortgage payments for months of no occupancy.

Initial costs on purchase, legal fees, your trips maybe...

Just think of evrything you pay in your own home and see does it / could it apply...
 
* local council taxes ( based on the value of your property) annual charge
* Fiscal rep annual fee and fee to do tax returns
* local charges for sewerage, water etc
also
* possible penalty on mortgage if you exit before agreed term
could be as high as 5%
* CGT can be quiet high, eg Portugal it's 25%
 
Maxie Dunne said:
we are looking at buying a property as an investment in Portugal with a
guaranteed rental of 5% for the first 3 years.
But I'm a bit concerned because when I look at the figures
over say a 3 to five year period they just don't add up.
The rental will cover the interest-only mortgage, but what about
the expenses ie income tax, property tax, accountants fees etc.
If the property appreciates by say 10% pa on paper it looks like
we would make very little (if anything over 5 years)
- Would we just be better off putting the money into a
high interest savings scheme?
Can anyone throw any light on this please?
Click to expand...



There has been much talk on guarnteed rental schemes. Find out exactly where the rental guranteed is coming from. SOmeone has commented on gurantede rentals being front loaded i.e. they hike the price up by 10% and pay it you back in rental for 2 years for example. This can be the case but depends. If there are tour operators in place this is a good sign, a reliable source of the guarnteed rent. If you are not happy with the guarantee get this as a discount off the property. Get an idea of other developments in the area. What are they offering? In asnwer to placing money into high interest savings account, its up to you find a good development and there shoudl be no comparison.
 
Maxie Dunne said:
Tks, I'd say you're spot on,
it's just a pity I didn't look into all this before I handed
over €4000 + €1000 in legal fees, an expensive lesson.

Prospective buyers beware of Guaranteed Rental Schemes,
there's only one winner and it ain't you.


funny you should use the term 'no brainer' that's exactly
how they described this scheme/developement at the property
Expo and in the Sunday Indo when they were promoting it !!!!
Click to expand...



Just commented on this without reading all of the threads. Have you got your money back? i expect not?
 
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