Real Estate Investing

[Outlander]

Why are there no specific forum categories for this important niche?

There's so much to discuss that it could even be subdivided by geographic region.

Does anyone in the forum actively deal in real estate as an investment vehicle? Where would you buy a property today (for AirBnB rental)?

 

[Silvio]

Totally agree.

AirBnb I probably wouldn't do as it's a big hassle and it's not just real estate, more like actively managing the property etc

 

[Outlander]

Totally agree.

AirBnb I probably wouldn't do as it's a big hassle and it's not just real estate, more like actively managing the property etc

There are companies specializing in managing it for you. And you still get to use the property anytime you want, unlike when you have a regular tenant.

But there are so many possibilities. Buying and flipping, buying and restoring, guaranteed rental programs, etc. Not really sure why this isn't actively discussed.

 

[Silvio]

There are companies specializing in managing it for you. And you still get to use the property anytime you want, unlike when you have a regular tenant.

But there are so many possibilities. Buying and flipping, buying and restoring, guaranteed rental programs, etc. Not really sure why this isn't actively discussed.

Yes there are many, the question is do you trust them and how well they will do their job considering they have 100+ other apartments in addition to yours...

 

[Ricardo]

Why are there no specific forum categories for this important niche?

There's so much to discuss that it could even be subdivided by geographic region.

Does anyone in the forum actively deal in real estate as an investment vehicle? Where would you buy a property today (for AirBnB rental)?

I am interested, could you tell me some companies that specialize in this service, like which regions do you find interesting to buy some?

 

[CaptK]

Definitely a section required. Property is my bread and butter and also a full proof asset especially in the residential, vulnerable housing, elderly and care sectors.
The short term lending and property development industry although very strong always could use more money. Bridging and development loans as well as JV partnerships are great for wealth enhancement and preservation.

Structures have got to be right so it would be nice to discuss with others to see what structures they use and share tips.

 

[Outlander]

Definitely a section required. Property is my bread and butter and also a full proof asset especially in the residential, vulnerable housing, elderly and care sectors.
The short term lending and property development industry although very strong always could use more money. Bridging and development loans as well as JV partnerships are great for wealth enhancement and preservation.

Structures have got to be right so it would be nice to discuss with others to see what structures they use and share tips.

First step would be to get an official word from @Admin about this suggestion.

 

[ziof3ster77]

I'm interested too.

I'm a property investor in UK. This king to split the business in Investment/development and have some idea:

Investment (serviced apartments)

1- company to rent furniture
2- company to collect rent and manage
3- company for maintenance (contractors and cleaners)
4- company to rent tools (for maintenance)

I definetely need a software, developed in house (holding company in an IP Friendly country), that need to "sell" the license to each of the above company.

This way should overtake the Section24 and minimize the tax exposure for the Investment side. Not sure how to sink all the funds into the holding company and extract them efficiently to carry on investing.

Development
(thinking to sell couple of old properties per year)

Need idea to minimize the CGT, possibly with a Project Management company that:

1. adds a management % to the improvment jobs (to be paid to an external contractor)
2. adds a management % for sourcing material etc
3. use a licensed software to manage everything (the software would be in house built, and an holding company in a friendly IP country should sell to the PM company).

Sure I missed something, but overall that's the big pic.

Any comment/idea? Or do you know anyone can help in setup something legal/robust and sustainable to build the business?

Best,
Z

 

[CaptK]

I'm interested too.

I'm a property investor in UK. This king to split the business in Investment/development and have some idea:

Investment (serviced apartments)

1- company to rent furniture
2- company to collect rent and manage
3- company for maintenance (contractors and cleaners)
4- company to rent tools (for maintenance)

I definetely need a software, developed in house (holding company in an IP Friendly country), that need to "sell" the license to each of the above company.

This way should overtake the Section24 and minimize the tax exposure for the Investment side. Not sure how to sink all the funds into the holding company and extract them efficiently to carry on investing.

Development
(thinking to sell couple of old properties per year)

Need idea to minimize the CGT, possibly with a Project Management company that:

1. adds a management % to the improvment jobs (to be paid to an external contractor)
2. adds a management % for sourcing material etc
3. use a licensed software to manage everything (the software would be in house built, and an holding company in a friendly IP country should sell to the PM company).

Sure I missed something, but overall that's the big pic.

Any comment/idea? Or do you know anyone can help in setup something legal/robust and sustainable to build the business?

Best,
Z

Your first part is sound, I would suggest holding the IP of the software in a jurisdiction like Marshall Islands.

The second part can be approached in many different ways.
Do you own the properties
Where are your funds for development
There are some ways you can mitigate CGT
Do you buy and flip
Do the old properties have a development angle to increase value.

Would be interested in any stock you have for sale. Im sure we could work out a way to mitigate CGT.

 

[ziof3ster77]

Your first part is sound, I would suggest holding the IP of the software in a jurisdiction like Marshall Islands.

I'm not familiar with various jurisdiction for IP holding. I've heard Cyprus has a 2.5% taxation for IP derived income. Is MI more competitive in some way? Any resource I can use to explore this area?

Do you own the properties

Yes I do, all in my personal name
Planning to keep some properties in my name for investment (around 10) and sell the older ones. I buy 1 or 2 properties per year, and done so for the last 10 years. Didn't sell anything yet as I want build a robust dev/inv structure.

o the old properties have a development angle to increase value.

Yes, doubled in value.

Would be interested in any stock you have for sale. Im sure we could work out a way to mitigate CGT.

Nothing to sell at the moment, just exploring how to get the most of of them once it's the right time.

Best,
Z

 

[CaptK]

MI is basically a floating company that holds the IP. The structure in MI allows you to hold the IP there fully protected. 0% Tax.

Definitely need to work out a strategy to mitigate CGT but still allow you to maximise dev/ins and exit into a friendly structure.

The earlier you start the plan the better, the government is going to want to claw back all the money they have given out. CGT, VAT, Income Tax, NI, Duty, Inheritance and anything else they can, they will.
Take advantage of the downturn in the economy as this will be the basis for all your strategies and a full proof explanation if it came to it.

 

[ziof3ster77]

Thanks a lot @CaptK for the explanation around MI, understand is more tax advantageous than Cyprus.
I expect in this case the holding company to sell the software/license to the one in UK at a price that minimize the net profit of the UK company.

So for example:

1. Company A produces a software, and holds the IP in MI
2. Company B (rental furniture business) buys the software from Company A. I suppose the CAIA (Capital Annual Investment Allawance) plays a good part in this.

Is this simple structure all is needed for company B to minimize the overall income?

Also, in terms of Company B shares, can these be 20% hold in my name and 80% by company A? In this case the PCS should not be disclosed? (Of course I don't know if the Company A must disclose the IBO (me))?

Once I have a clearer idea around this "mini" structure, I can replicate it for the "management business", "tools rent business", "rent collection platform", etc.

Any clarification or direction to some documents/example online will be much appreciated (or telling me the idea is completely rubbish...a constructive criticism is much appreciated too)

best,
Z

 

[CaptK]

Thanks a lot @CaptK for the explanation around MI, understand is more tax advantageous than Cyprus.
I expect in this case the holding company to sell the software/license to the one in UK at a price that minimize the net profit of the UK company.

So for example:

1. Company A produces a software, and holds the IP in MI
2. Company B (rental furniture business) buys the software from Company A. I suppose the CAIA (Capital Annual Investment Allawance) plays a good part in this.

Is this simple structure all is needed for company B to minimize the overall income?

Also, in terms of Company B shares, can these be 20% hold in my name and 80% by company A? In this case the PCS should not be disclosed? (Of course I don't know if the Company A must disclose the IBO (me))?

Once I have a clearer idea around this "mini" structure, I can replicate it for the "management business", "tools rent business", "rent collection platform", etc.

Any clarification or direction to some documents/example online will be much appreciated (or telling me the idea is completely rubbish...a constructive criticism is much appreciated too)

best,
Z

Exactly!!

The MI company holds the IP and liscences it to any company as SaaS. The fee is entirely upto you.

Therefore when you sell it you retain some residual income.

I wouldn't attach A to anything because it then produces a link. Always keep it separate.

 

[ziof3ster77]

Ok thanks for confirming!!

So let say the MI company is formed, can this

1. have no trace of me as director/UBO?
2. needs to have a local (in MI) bank account, or can be somewhere else? In this case what's best place?
3. as the IP is for a platform that books/manages thing (furniture, tools, apartments), need to run in a preferred place? I read the like of Airbnb/Booking.com/Uber etc runs in Netherland...any reason for that?
4. a UK company needs to be in charge of Operations. How this will be connected to the one in the MI? Or needs an intermediate entity?
5. Most important. How use the funds that end up in the MI company/bank account for other legit (Real Estate) investments?

Best,
Z

 

[ikan]

@ Outlander back to your orginial question

seek Bali South or Bali North East because New International Airport coming soon.
8 to 12 % ROI Netto - Airbnb - 10% tax rental income + managing company for the overall process + - 25% fees.

Bali tourist season is 360 days/year (only 2 months low season).
Airbnb top villas can be booked 350 nights per year

More : you can keep shady or private with Nominees : nominee person or local company is common in Indonesia.

---------------

Turkey - Istanbul Old town can provide 280 - 300 nights of booking per year + New Turkish Citizenship (passport) for 250 K real estae investment.
But can buy 60 sqm flat for 50K or less !

-------------

French Riviera back country appartments / villas can provide 150 - 200 booking nights per year but mostly june to spetember.
Flats in Nice - Cannes can provide +250 nights per year.


What is the goal : Airbnb pay the new property yearly cost and gives you spear time to enjoy - or - must provide real extra income ?

 

[Outlander]

What is the goal : Airbnb pay the new property yearly cost and gives you spear time to enjoy - or - must provide real extra income ?

Goal is mostly cash-flow with the opportunity to enjoy occasionally.

With respect to your suggestions:

1. Bali is great but a bit far away, I'd prefer places on the West (Europe/West Africa/Americas) for ease of access.
2. Istanbul - awesome place, been there a couple of times, but not an ideal place for relaxing
3. French Riviera - awesome, but expensive and heavy local taxes

I'm more inclined to properties on places with a strong cultural background (not a vanilla place like Panama), with exuberant nature, some level of privacy but near downtown. And beach access or beach front.

It's a joint investment - a group of investors from different countries, Americans and non-Americans. I'd be curious to hear any suggestion on how to properly structure it and make it tax efficient.

 

[CaptK]

If you want to a good return on flipping and development deals you cant beat London. The government will always ensure the housing market is robust.
There is already discounted properties on the market and a lot of distressed sales.

You can pick up properties for upto 35% below market, trade them and make a good profit. Normal profit margin against the discount can be 90% then minus "cost's and the 40% tax. If your structure is right your costs can bring the tax ratio to discout to be about 10%.

Typical deal example of a new build property.

100K property, 25% discount = 75K
Sell the property for market value 100K
Finance costs 2% =2k (this can be higher but within reason and can come from an ofshore structure).
Agent fee 1% =1K
Solicitors fee and disbursements 1%=1K

25K
-2
-1
-1
=20k
40% tax = 4K
16K profit.

There also other ways to invest in property and get a guaranteed return of between 5-12% but your money is secured with property. You lend funds to developers and customers looking for short term bridging or development finance.

Short term lending is for a period of of upto 18 months. At typically 10% per annum. The property is used as security upto a market value of 75%. You can even go for a 2nd charge behind the mortgage lender so long as the total amount borrowed does not exceed 75% of the property value.
If the client defaults you take the property and sell it.

There are JV deals where you put the money in and someone else has the headache of the development and you split the profit. The fund owner dictates the price of the money and ofcourse there are professional fees to ensure the builders are not trying to con you.

 

[ikan]

@Outlander

French Riviera local taxes not that expansive in villages of back country if you target 40 - 50 years old property (flat/villa). Even lower if you find 100 year old Stone Mas.


Bali respond all your needs written above and easy to find approriate "Lawyers" "Proxy" "consultant" to strucure property / group of inverstors. But to remote for you.

Same Region

Thailand : Koh Samui and Koh Tao.
3rd biggest tourist country in the world. Nominees options avialble.

Cambodia South sea shore is getting huge mess with massive chinese investment/developpment.
But will be easiest country in the region to "avoid - escape" tax man.

Europe / Beach
Portugal : Algarve - Around Porto - Down town Lisbon -
Spain : getting nightmare (competition + regulations), but good to look North Spain around Santander and La Corogne big inflow for Tourist Surfers.
Montenegro : is going up strongly (local tax very low, income rental tax max 10% - living cost cheap). Welcome foreign investments.
Can be compared to French Riviera some 40 years ago.
Albania : on the big move. The last Frontier Market of all Meidterranen for Tourism and Porperty investment by the cheap.
You can find beach front land for 50K. But Gov. their is pretty "bad" even if it got a lot better the last 5 years !
France : some Tourist Stations or its neigboorhood villages by the sea on the Atlantic shore or Bretagne/Britany are doing well, even at low season.

All those Europe destinations will offer Peak Season : July - August and or June to september. Rest of the year rentals Airbnb are on the slow motion.
Except The French Riviera ! Lol ! and especially Cannes, Mougins with so many World famous Festivals, or Coporate meetings year long.

Europe : Major Towns - Capital
Im' sure you already know tales about.
Athens in Greece is doing well all year long, and yet not too much restrictive regulations
Paris : the Very Very First Airbnb Market and income. Paris is the biggest place worldwide for Airbnb.

Western Africa
Maroco Of Course : Marrakech (no beach) - Casablanca - Essaouira, and Agadir Tourist station working all year long.
Sorry only exuberant beautiful mountains, landscapes, also getting desert in the very South.
Most locals are really nice people, beautifull country with so many aspects.
Non resident account are possible under some restrictions. One shady bank in Casablanca to do shady/dark banking but can't remember the name.
Low Season : somehow July - August (mostly to hot for some tourists, at least in towns, but OK by the sea)

Tunisia : very big down for years because of ISIS killings. Tourist scared.

Algeria : Huge Potential. Fantastic sea shore, beautifull back countries, very nice people. But for so Many resons International Tourism never take off in this country.

Senegal : Further down South Dakar : big tourist station on the go and devellopment is up. Good big game fishing spot as well.
Also Province of Casamance can offer opportunities or devellopment in total "wilderness" with exuberant nature but some may feel to far out from major towns and trendy restaurants.

I have friends who got broke down several times in tourism or business operations in othhers Western Africa countries, due to "Madness of local Gov" or "Local Officials" or "Corruption" or "Black Magic" or "screwed by their employees/staff" or "sudden hilness".
So I don't give infos for Western Africa Countries. Airbnb rentals may not be that cash flow due to low tourist numbers.
Except : 2 quick tips => Nigeria (yes some will think or say.....) Town of Lagos real estate investment in land or build properties in the very few new District or Suburb for the New Rich locals and Expats looks promising.
Last :
Sao Tomé and Principe : on the go with huge and deep Rebirth of Tourism the last years.
Strong Cultural and History background with lush forests, beaches and more.
To be defined as "Last frontier Market for estate investment" if the go keeps on going.

Sorry guys, i was long.

 

[JustAnotherNomad]

40% of 20k would be 8k...? Or did I miss something?

 

[ikan]

The mess with Airbnb investment in Western Europe : Regulations don't stop flooding in each State, Region, Regency, State Capital, Regency Capital or local Town. (but not for Montenegro and Albania non EU States).