You Buy, Grow, then Sell..

now its time to pay the capital gains tax.

Deloitte tells you how you pay in each country.

Doug

Wonder what your rental yield might be like?

Check out hotel prices.

Focusing on the relationship between rental returns and risk, the GPG found that most of Europe’s ‘high yielding’ countries are in the East; with apartments in four Eastern European capitals earning above 10% rental returns: namely Chisinau, Moldova (14.13%); Warsaw, Poland (13.28%); Sofia, Bulgaria (10.56%); and Bratislava, Slovakia (10.06%). The analyst observed that high corruption and political risks may be driving up rents relative to price, but also highlighted factors like the recent arrival of the market economy, high interest rates and relatively undeveloped mortgage markets.

High taxation has had a major impact on returns in both Western and Eastern Europe ( Poland and Moldova have high tax regimes for rental income). High rental income returns can still be earned in Amsterdam and Paris (8.25% in both), Munich (7.80%) and Brussels (7.53%), however.

GPG recently warned that rental returns of around 4% or below are a danger signal, with several European capitals offering rental income yields around or below this level (with Madrid’s rental returns now at only 3.15%).

***

From a forum...

...as a long term property investor I am firmly of the opinion that Egypt and in particular the Red Sea, will be the next Dubai. The Egyptian government are investing billions in the development of tourism and are rapidly making changes which will encourage inward investment. Already for property investors there are no purchase taxes, no inheritance tax and no capital gains tax. The government are also freeing up the airways to allow more budget airlines to fly direct to the key resort areas.

I have recently invested in a new resort area known as Sahl Hasheesh near to Hurghada on the Red Sea. It is still possible to buy a front line beach apartment off plan for as little as 50k sterling with the real possibility of a 15-20% return on investment for those seeking to buy to let. It is also a great place to own property; just five hours from the UK, 365 day of sunshine every year and zero rainfall (the first thing they built was a desalination plant!). Average daily temperatures are above 25 degrees in the middle of the day and the sea is constantly above 20 degrees.

The trend is your friend..

MoveChannel 2007 Hotspots

or from the highly respected Urban Land Institute

People will pay for a view

Doug

Bigger Picture Snapshot

There is a way bigger picture here. I hope you see it.

17 months ago I had 20K debt. Negative net worth.

I met my muse. Focused. Made a plan.

Went after it, and after getting a positive net worth, and debt freedom, I still have no money, but have found someone after several brush offs, that is willing to help me make my plan work.

Just do it!


Le 14/02/07 4:29, « Doug Delaney » a écrit :

Fernando,

I received your email, as I was leaving for work yesterday morning, stating you had secured a 3 day window to put a deposit down on the property. I was grateful. I logged on to http://www.xe.com/ucc/, noted that 4,052EUR = 6,165.48 CAD, not 4500CDN. OK I thought, still a good deal, I can do it. I took off my lunch hour to gather the cash, but didn't have the account #'s in Europe to xfer it. So I came home with it.



This was kind of poor timing for me, as I have to contribute to my Registered Retirement Savings Plan before the tax deadline of March 1st, but as I appreciated your effort, I thought I might as well pinch and get a good deal while it's here. Then I got home and looked at the particulars, and found all the inconsistencies and decided that considering the whole picture, this wouldn't work for me. I phoned my brother in law who was interested in the whole transaction to tell him the news and he said that he had a better deal closer to home anyways. I committed to him.



Then tonight, I get home and have this last email from you drawing a completely different picture than the one I went to sleep with.



Considering that the deal with my B-I-L is over a better time frame, and allows me to make my RRSP contribution with no stress, and not have to come up with additional moneys, or incur monthly payments long into the future, I choose to stick to the commitment I gave my B-I-L.



You are intelligent and hard working, and I very much value the time you spent on my file, but considering the way our dialog went down, I am not having second thoughts. I wish to compensate you for your effort on my behalf and offer to put 200EUR in the account of your choice (next week, as I am working in a inconvenient location till the middle of next week.).



Doug



Hey Doug,
I was under the impression that you misunderstood me. Well Floriales is a great opportunity to come to the World of big investor. Take your time man! If you think you not ready. I will be happy to work in your project. This is not about me. Is about you and your projects. I will be happy to help you to create a big property Portfolio. Think about it!!!



Best Regards,
Fernando

put $5k on credit card

to make up $6k needed right away for deposit on mortgage.

Then read the financials..then sent this email...

Just got a chance to look at your email.

Things aren't adding up.

It's not a leaseback without the VAT refund, for one thing.

Guaranteed rental income : 5.60% has become 5.14%

The amount I have to come up with is not $4500 CDN but over $6000 CDN(4052Euro), and thats only the deposit. I would have to come up with that much again to close the mortgage. The lease is not 9(as I asked for) or 11 years, but 14.

And all that to incur a negative monthly cash flow.

This deal is not for me Fernando.
Thank you for your time.

Doug


Then received this...

Dear Doug,

Thank you for your feedback. Please see below some clarifying points:

The leaseback program reimburses the VAT for all new properties. If the original buyer decides to sell, he/she needs to reimburse back the government for this discount (pro-rata out of 18 years).

The original total VAT for this property was 8,270€ and we estimated that your reimbursement would then be of 6,891,67€. We will try to arrange to have the owner pay you directly this amount to avoid delays from the government or apply the discount to the total price. The VAT reimbursement amount needs be verified by the notary— which is why we did not included it in our financial projection. (Note: our financial projection is always made to be as conservative as possible.)

The rental income calculated at 5,6% is achieved as follows: With a VAT refund of 6891,67€ and not including the furniture (whose value is €3 500), the total investment comes to €78 408. With a net return of €4448 per year, this comes to a total net return of 5,67%. Including furniture, it comes to 5,4%-- still one of the highest achieving returns the leaseback market has to offer.

Please note this rental income has a contractual yearly increase based on the cost of construction. This property has seen a total of 5% increase on the rental income and a property value total increase of 48% in the past five years.

In our interest to help you achieve your goals, we are offering you a 100% financing to lower as much as possible your outlay however we cannot finance on the cost of the notary. We were under the understanding and perhaps this was a mistake on my side, that you had available 4500CD immediately but that later you will have more to put down in 2 months time. Did I misunderstood how much you wanted to put down in total?

To make an adquisition in France and in any of the countries we work with, it will not be possible for us to present you a program that only requires a 4500CD total investment. But as you said that you have High income and also the possibility to save at least 2,000 cnd per month. I made this possible for you. Please remember that you a buying a property that is worth €88800 with a 100% mortgage. In this case: yes, every year you have to put down some money from your pocket towards the payment of this property. This will gives you high returns.

The original length of the lease agreement was of 9 years. There have been 5 years passed already. The original contract requires an immediate roll over into a second period which in your case this is the optimal solution. Please note that banks in France and in most markets will have a hard time lending as high as 100% if they don’t have some reasurance on the loan payments. Having a 14 year lease in your case is crucial and indispensable as you are not able to invest a higher down payment.

In the end, my advice was based on your needs and requirement but also on the possibilities. Based on the capital available for investment, your financial situation and desire to leverage as much as possible your capital, Floriades seemed to me the best match. 100% financing are not easily available and are easier to acquire when the property is already built. I want to talk to you on the phone to explain this and answer any questions that you may have. Please understand that is capital high appreciation program in long term. I am here to help you on your project. Don’t be afraid to ask or talk about this program.

Please let me know if you have any other questions about this proposal and its financial implications. I want to talk to you on the phone XXXXX

Studio €88,800.00
VAT € 6,891,67
Total € 81,908.33( after VAT reimbursement)
Furniture € 3,500.00

It's so divergent from than what was sent (that i didn't post because its a large spreadsheet) that I choose not to pursue this. Putting the $6k in my RRSP.

Doug

Marie, Kirin, Nikolay, Chris...

all blew me off or drifted away after they got my "..low cash, good credit, good income.." email.

Then Fernando appeared...

Dear Doug, Good morning!
I am writing to you on behalf of Imoinvest in Paris. My name is Fernando XXXXX and I would like to introduce myself as your new contact here. You have contacted us for more information on property in France. In order to send you the right information I need to know more on your search. What is more important for you on this property? Is it for pure investment or personal use? What kind of budget? Do you need Finance? And also to inform you that at the moment most of the French banks are happy to finance up to 80%net of the property value to our clients. Which is an excellent opportunity to buy that dream holiday home in France. Please contact me with more details on your search. Find attached our brochure. Check our website and email me your questions. Thank you and have a very nice day!

I responded...

Hail and well met Fernando,

You have a great attitude, and I hope you can earn some of my money. Here's my situation, I have great credit, high income, but low savings. The low savings is being repaired as we speak. I am interested in leasebacks with an out after 9 years, Berlin, or the Baltics. Places where the rents still cover more than 5% yield. I should have a good down payment saved by late summer, but if you come across something before then that requires low money down, I am interested. This is not a one time deal. All the money I can save in the next 5 years till I retire will got to RE investing in foreign properties. I look forward to working with you, Fernando.

Doug

He said..

Hey Doug, Thank you for the email.
How much down payment do you have to invest today?

Fernando

I said.. $5K CDN

He said...

Dear Doug, Good Afternoon.
Follow to your email find below the description on Leaseback program:

First we have leaseback programs in different locations in France, so you can invest in Paris or other areas with lots of advantages.

Leaseback:
It is a Program in which you buy a property in France (all over the country) and then lease it back to a management company. This is a very safe and pure investment program. It is only for clients who is looking to get high capital appreciation in long term.
Advantages:
*Vat Refund of 19.60%( sometimes advanced by the developer) otherwise you get this money back into to your account 6 months after completion of the construction.
*Freehold property( its yours from day one) you can resale it at anytime. But you have to be aware of the advantages for keeping it for 20years. If you are looking to resale that in a short term(5years) this program may not be good for you.
*Fully Furnished
*Fully managed (hassle free ownership)
*Guaranteed rental income(3%-7% of the net price)
*Tax Free rental income
*Government approved and supported program
*Holiday occupancy on selected program
*No capital gain tax after the term
Lease duration:
9 years, 11years or more depends on the program. But please don’t get confused here, to benefit of the tax advantages provide by the French administration you should keep it for 20 years. But you are free to decide when to resale. And if you do that before the end of term you have to pay part of that tax back.
Finance: Non residents can get up to 80% of the net Price of the property or 70% of the gross. They must put down payment of the difference on that in order to get the mortgage. Plus closing costs( the vat advanced by the developer can not be used as down payment. This money is paid by the developer on your behalf).

This is my idea for you:

WARM SUNSHINE ON YOUR FACE

FLORIALES
France, Mediterranean Coast, Narbonne

Studio

30m² to 30m²

€88,800 to €88,800
Studio

32m² to 32m²

€95,800 to €95,800

Guaranteed Buy to Let - Leaseback

GUARANTEED RENTAL INCOME UP TO: 5.60%

Remarkable location in an ancient Roman town with a thriving sea port. Situated on the Canal de la Robine, Narbonne represents the beauty and charm of the Languedoc region. Westward exists the great medieval walled city of Carcassone and the towns, ports and villages of Port la Robine, Castelnaudary, Homps and Trebes. East lies the picturesque port of Agde and gateway to the Etang de Thau nature reserve. Narbonne beach hoists the "Pavillon Bleu" an award guaranteeing the cleanliness of the water, the beach and the port.

This is a very rare opportunity to invest in an exclusive resale apartment within a 3-star tourist residence. The residence is equipped to meet the demands of the modern tourist, including business clients, vacationers and large groups for family holidays or excursions. The residence also offers a bar and a restaurant with a spacious lounge area for tenants. This development benefits from calm settings, warm and friendly atmosphere, whilst near all amenities.

This is an excellent opportunity to invest in an income earning apartment in an extremely popular destination. The Languedoc-Roussillon region enjoys the best climate in France with summer temperatures averaging 30ºC. This area is emerging as one of the most enticing parts of France with its remote villages and little-travelled byways affording a window onto a vanishing European rural culture.

THE FINE PRINT

NEW PROGRAM REVIEW
• LMP / LMNP- Hotel Residence.
• PROGRAM NAME: Residence de La Floriale
• Address: Residence de la Floriale - 10 quai d'Alsace - Narbonne 11100.
• Location: Remarkable location in an ancient Roman town with a thriving sea port. Situated on the Canal de la Robine, Narbonne represents the beauty and charm of the Languedoc region. Westward exists the great medieval walled city of Carcassone and the towns, ports and villages of Port la Robine, Castelnaudary, Homps and Trebes. East lies the picturesque port of Agde and gateway to the Etang de Thau nature reserve. Narbonne beach hoists the "Pavillon Bleu" an award guaranteeing the cleanliness of the water, the beach and the port.

We can try to get you Up to 100% Finance. You can invest now!!! To buy this property you will need around 4,500 cnd dollar. Please email me your questions. Thank you and have nice day!
Regards, Fernando

I replied " Make it so"

Only 5% of humans will pull the trigger.

Doug

The Wheel of Life

Boom and Bust

I show this Merrill Lynch guide not so you will actively manage your portfolio, although I wish you would, but rather it's here because it illustrates the ebb and flow of our economies. We are nearing the end of boom and entering slowdown. Money supply is being tightened up. Watch to see if European Common Market or Bank of England raise thier interest rates again.


Doug

The Property Ladder

is taught as the basis of wealth at some universities. It should be taught by all parents.

buy - earn capital gains - sell - use new found equity to buy more expensive place - earn more capital gains on the more valuable property.

or

20% of $100,000 = $20,000 down payment earns 5% per year capital gains on the $100,000

Sell property after 4 years for $120,000 and remove your original $20,000 plus the $20,000 capital gains and now you have $40,000 which is 20% of $200,000

Rinse and repeat

Where is the weakness?

Dear Doug,

Many thanks for your enquiry on our latest development in Dubai. I have attached details and you can also see full information on our website www.shooba.com

I am not sure whether you are aware of the market in Dubai so I will follow this e-mail up with some background information for you.

This is our newest investment opportunity, that we have been given pre release for just 2 weeks.

We have been given the first residential development on Academic City to be released.
We have a floor of Studio and 1 bedroom apartments in a brand new off plan development in Academic City, it is the first building to be released of 6 in total and each building will go up in price.
The price we are able to offer you is 795 aed per ft2 please note that in 2 weeks this project will be launched on the Dubai market at 895 aed per ft2. So whether you decide to keep the property or let us flip it for you, you will make a genuine profit immediately. The project comes with a guaranteed rental income of 10% for 3 years.
The payment plan is 30% deposit and 70% on completion. At which point you can get finance from First Gulf Bank.

Academic city is a fantastic place to invest; Knowledge village which currently houses 4 universities is re-locating to Academic City which will host a further 16 universities and colleges! So the area as you can tell will be focused on education. Already they have some of the best professors and tutors in the world from world famous universities such as Harvard, Oxford and Cambridge re-locating to Dubai. The area will attract pupils from all over the world and largely from wealthy families in the Middle East and Asia.


We see this as a brilliant investment for several reasons including

- perfect for Tutors and students
- Will always be rented out – do to proximity to Academic city, Dubai land and Healthcare City
- Pre-release you will make an immediate profit
- Guaranteed 10% rental income for 3 years
- Just 15 minutes from the city, and sheikh Zayed Road
- Just 10 minutes from the international airport and Dubailand (which is projected to be requiring 1 million employees)
- Next door to Healthcare City
- The finishes will be very high (like The greens)
- Price includes parking


We will reserve these apartments on a first come first served basis and expect them to sell out extremely quickly, this is a superb opportunity to get in right at the very beginning.

Please feel free to contact me to discuss further, I am always available on my mobile XXXXXXXXX,

Kind regards