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BUYING LUXURY PROPERTIES IN TOP LOCATIONS

 

Buying luxury properties in TOP locations

 

Basic information about the investment.

1. Type of investment:

  • Purchase of luxury villas, mansions, penthouses and castles for resale, as "fractional ownership" at 50-60% above their real market price and subsequent management.

2. Forms of investment:

The investment can be in the form of "Cuentas en Participación" or "Debt Investment", depending on the preferences and risk profile of the investor.

  • With "Cuentas en Participación", the investor provides capital to the company in exchange for 50 to 80% from the profit from the successful implementation of the project. This form of investment allows the investor to benefit from the profit generated by the project together with the entrepreneur.
  • In "Debt Investment", the investor provides a loan to the company and receives a fixed annual interest of 18 to 24% , which is agreed in advance. This form provides a stable and predictable return without being tied to the success of the project.

3. Minimum amount of investment:

  • The minimum amount of investment depends on the available investment opportunities at the time of investing the funds. Typically, minimum participation amounts start at €500,000 , with some projects also offering smaller investments through collective participation.

4. Minimum term of the investment:

  • 12 months with the option of exiting the investment through the so-called "substitute party". In this case, the contract is terminated, and the investor receives back the funds paid by him, including a proportional part of the profit or the agreed interest. This part is calculated based on the time during which the funds were used, relative to the total contract period.

5. Minimum guaranteed annual return on investment:

  • 18% guaranteed annual return on the invested amount with full return of capital at the end of the investment period.

How the investment is made: Step by step

1. Search for luxury villas, mansions, penthouses and castles in top locations:

  • We work similar to the world-famous "destination clubs", which buy luxury properties, then resell them at a 50-60% higher price, as "fractional ownership", and manage them on a hotel basis. Our focus is on top destinations such as Dubai, Palma de Mallorca, Paris, Courchevel, Tuscany, the "Platinum Coast" in Barbados and other prestigious locations that are highly valued by wealthy clients and investors.

2. Purchase of the identified luxury properties below their real market price:

  • After identifying the most attractive properties, we buy them at 10-20% below their actual market price.

3. Resale of luxury properties as "Fractional Ownership":

  • We then sell the properties as "fractional ownership" - this means that ownership of the property is divided into eight parts, with each of the eight buyers acquiring 1/8 of the property. This time-proven business model enables us to sell the property at a significantly higher price. For example, if we bought a luxury villa for €1 million, we could sell it for €1,600,000, with each buyer paying €200,000 for their share of the property. This model appeals to buyers who want to own a luxury property but don't have the millions for an outright purchase.

4. Managing the property as part of our Destination Club:

  • Once all shares of the property are sold, it becomes part of our "Destination Club" and we begin to manage it on a hotel basis. This includes maintenance, bookings and providing comfort for all co-owners who can use the property during certain times of the year, as well as organizing part-time rentals when investors are not using their properties. Thus, we guarantee additional profitability for investors.

5. Return of invested capital and profit distribution:

  • After the successful resale of all shares of the property, we return the investors the initial investment and distribute the profit according to their share in the project.

6. Repetition of investment:

  • After each transaction closes, we start the process all over again, looking for new luxury properties to buy and resell. Investors can reinvest their profits into the next project for even higher returns.

This type of investment provides the opportunity for significant profits through the sale of luxury properties while allowing access to exclusive destinations and professional property management.

Frequently Asked Questions (FAQ)

1. What is fractional ownership and how does it apply to luxury real estate investing?

  • "Fractional ownership" is an ownership model where a group of investors buy shares in a luxury property, with each owner entitled to a specified period of use or receiving a proportionate share of the profit on sale. This model applies to luxury properties such as villas, mansions, penthouses and castles because it allows more people to invest in high-standard properties without taking on the full burden of purchase and management.

2. How do we determine at what price to sell luxury properties as fractional ownership?

  • Pricing for the sale of properties as "fractional ownership" is based on so-called "fractional pricing multipliers". They describe the ratio between the price of partial ownership (for example, 1/8 of the property) and the real value of the entire property. To calculate the multiplier, we add up the total value of all the parts that are offered for a property and divide it by the market value of the entire property.

For example, if we are offering a villa for sale, with each 1/8 part worth €200,000 and the whole villa on the market for €1,000,000, then the multiplier would be 1.6 (1,600,000 / 1,000,000). Initially, multiples were in the 2.2–2.6 range, meaning a property worth 1 million sold for 2.2–2.6 million in a part sale. However, over time the multipliers have been reduced to more realistic values of 1.4–1.6 due to more competition in the market. Thus, the sale of parts allows the property to be sold at a price 40-60% above its real market value.

3. What are the main risks with this type of investment?

  • The main risks include changes in the market environment that could reduce the demand for fractional ownership of luxury properties, as well as difficulties in finding buyers for the individual shares of the properties. However, this type of investment is safer than a traditional property purchase because the risk is spread across all unit owners. In addition, the properties that are selected for fractional ownership are usually well valued and strategically located in prestigious locations, which helps to reduce the risk of depreciation.

4. How is the security of my investment guaranteed?

  • The security of your investment is guaranteed through a careful selection of the properties we offer for sale as fractional ownership. They are located in prestigious and sought-after areas, which ensures stability of their value over time.

5. What does return on investment depend on?              

  • The return depends primarily on the form of the investment. Investors who choose to invest in the form of "Cuentas en Participación" can expect a percentage of the profit on a successful investment. For those who choose Debt Investment, the annual return is fixed and is based on a pre-agreed interest rate on the capital borrowed.
  • The return also depends on the size of the investment. Smaller investments offer a lower rate of return and lower interest, while larger amounts increase the rate of profit and interest. The larger the amount invested, the higher the return will be.
  • In addition, the return is also tied to the term of the investment. The longer the investor leaves his funds in the project, the higher the interest and profit he will be able to realize.

6. What happens if you fail to sell the properties?

  • In rare cases, if we are unable to sell the properties at the expected price, we will continue to work to find suitable buyers. If this drags on, we can offer various options for exiting the investment, including selling at a lower price or renting out the properties until market conditions improve.

7. Can I exit the investment before the end of the project?

  • Investments in this type of project are usually fixed-term. However, in some cases we may offer to buy out your share if there is such demand from other investors or partners. The conditions for this are discussed individually on a case-by-case basis.

8. Which form of investment is for you?

  • If you are an investor who is willing to take on higher risk in exchange for the possibility of greater profit, Cuentas en Participación is right for you.
  • If you are an investor who prefers minimal risk with predictable and stable returns, Debt Investment is the best solution for you.
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