Investing in Albufeira, Portugal.

M

mrs_doyle

Guest
Hi,

I am in my early (closer to mid ) 20's.
I know that any mortgage offered to me would not get me very far in this country, and so I am considering taking a mortgage of 100k and spending it in Albufeira, Portugal.

My plan would be to purchase an apartment, off plan or already developed, from between 50-80k, to do it up, and to sell it after no more then 6-8 months, making a profit of no less then 10k.

When I say 'do it up', I intend to fully furnish the apartment, and also, if possible, I would like to make the best use of the living space provided.

A friend recently turned a 1 bed apartment into a 2 bed by reducing the living area (which was really big and spacious) and putting up a dividing wall, making a whole new room - which they then used as an extra bedroom.

My Dad is a carpenter and my brother is an electrician, so labour would be cheap, if not free.
I also have a friend whose parents own a couple of properties in Albufeira, and would hopefully be willing to point me in the right direction with regard to obtaining cheap supplies, etc.

So... what I am asking is, has anyone here done something similar?

Have I overlooked an aspect that is glaringly obvious to anyone with a bit of experience?
 
you'll lose your first time buyers status in Ireland when you go to buy here.
 
cuchulainn said:
you'll lose your first time buyers status in Ireland when you go to buy here.
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I know, and that does concern me.
I discussed it with my BF, and the plan was for me to purchase now, abroad, and when we want to buy at home he can purchase under his name.
He already has a substantial deposit tucked away, and will be able to avail of a 1st buyer benefit.

Also, I can add to the deposit with any profit I have made.

We have already decided that our first home will not be a 4 bed semi in D4. We are happy for our first home to be a 2 bed apartment (or something similar) somewhere near whitehall, Santry, Glasnevin - and to work from there.
He should be aproved for a mortgage that would cover such a property. (Hopefully)
 
hi if you are buying off plan , by the time it is finished , you could possibly be around 15 to 20,000 euros better off anyway, with prices rising as they are, and if you sell before completion, it is tax free aswell. but make sure it is a reputable builder, or if they dissappear, you will lose your money [ deposit ]
 
Hi - My understanding of the situation is that if one person of a couple already owns a property (it doesn't matter where it is - Ireland or abroad) that couple no longer have first-time buyer status on a PPR in Ireland. Perhaps someone else will confirm? It's not a great deal of money if, as you state, you and BF are thinking of buying an apartment but it does need to be factored in as it will reduce your profit from the Portuguese property.

Another few points I would make is.........these projects are a great deal of work, especially for the inexperienced punter and you cannot rely on gain until you have sold and banked the Portuguese profit. In Portugal expect an additional 10-15% transaction costs. Find out before you buy what the transaction costs are likely to be when you sell it on.

There is no reason at all why you shouldn't do it and all venture and experience is good. You have free skilled labour, can get advice from friends there etc. However be aware of the amount of commitment, time involved and possibility of the profit not being as high as you hope PLUS the loss of FTB advantages.
 
As you have potentially free labour available to you, have you considered buying a very run down property in the Whitehall/Santry area? With a bit of luck, you should be able to buy an ex-corporation two bed for under the stamp duty level of €317,500, which after renovation should give you an uplift in value of more than the €10,000 projected profit from the Portugal project - and you will have somewhere to live and keep both of your FTB privileges intact.

e.g: [broken link removed]
 
Where are you going to get a €100,000 mortgage to buy a property abroad for €50,000 - €80,000???

AFAIK banks in Portugal lend a maximum of 70% of the property value subject to fairly strict criteria.....

Sarah

www.rea.ie
 
I would avoid your proposed scenario if I were in your position -- leave the very speculative stuff to people who can afford to take a hit. You are hoping to make 10k in a few months -- believe me, 10k can disappear in ten seconds on a project, and oftern another 10 with it!

If you really want to "put everything on red" and go for a quick gamble, go to Gorton in East Manchester and buy a 2-bed redbrick for 70 or 75k stg --- Try Mellors or possibly Sanderson-James (I would trust mellors More). There are new townhouses being built in Gorton at an asking price of 120k, so a well done-up older property has the potential to make 100k in about a year I reckon. It has to be well done though, not a paint and paper job. Look out for the following problems when buying old stock in this area.

1. Roof. Has to be good, check that it is felted and has good slates. If no felt, it will need replacing, about 6k locally, could be more than half your profit.

2. Dampness. Not a major problem, but costs money. If you get damp treated, make sure you have a cert for the new buyers. Ideally buy one with the damp treated and certified.

3. The right area. Buy near to the new development near the bowling green, just off the Hyde Road. Stay away from council flats etc. Pick a good residential area -- one with loads of skips on the road is a good sign. Also a lot of cars in the evening and less during the day, means most people working. Avoid roads with few cars at all times, probably a high level of DSS tenancies.

What you are doing sounds like a dangerous move, given your circumstances. Look closer to home; you can put your car and tools on the ferry and be in Manchester in a few hours, and labour is reasonable locally. You pay CGT at the Irish rate only also.

I´m not advising you to do as I say -- I wouldn´t have it on my conscience given your position, but it sounds a lot better bet than what you are proposing. Good luck with whatever you do.
 


I think you will struggle to lend in Portugal, but all depends obviously on how much deposit you have and your income etc. If it was me i would look a whole lot cheaper, and furtehr afield than Portugal.
 

I completely agree - especially if you have family to do work. far safer bet and you should do better
 


How does 'tax free' work? Tax free in Portugal? Does Ireland have a Double Tax Agreement (DTA) with Portugal that covers this type of 'flipping' scenario?
 
i'm not 100% sure, maybe someone can confirm, but i think there is a tax being introduced in this country in relation 2 people obtaining property abroed. this may be something else to consider
 
bunny said:
i'm not 100% sure, maybe someone can confirm, but i think there is a tax being introduced in this country in relation 2 people obtaining property abroed. this may be something else to consider
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As far as I know this is a rumour being put out by Irish Estate agents to try to scare buyers back to a diminishimg market here. They usually do this kind of spinning through their contacts in the Irish newspapers (it does work to some extent too), but it wouldn't be beyond the bounds of possibility for them to spin it on AAM as well!
 
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