Investing in real estate is always a challenging but extremely exciting path to success. At RocaInvest, we always enjoy and benefit from feedback from our clients. Each case is unique, each client who comes to us has its own story, its own expectations and searches, its own experiences.
The other day we met Marina who kindly agreed to tell her own story of how she came to work with us and how she went all the way to investing in income property in Portugal.
This case is universal: the approach described in it will be useful for those who are only planning to invest in income-producing real estate, thinking about the possible risks, and for those who have already decided, but do not know where to start your journey.
Investing in real estate in Portugal: the beginning of a new life
You’ve seen the old ad: “Marina Sergeevna is a lonely woman and trusts no one,” – a classic of the “divorce” genre? When I was 15 years old, I never imagined that I could find myself in her shoes. I mean single, trusting no one, and investing with varying success in dubious companies. I’m 36, have no family, still have a young, sick mom on my hands, still reeling from my dad’s funeral.
There are many of us. Seemingly well-groomed, successful, some never married, many divorced and raising (often ungrateful) offspring on their own. And we all started working very early.
I can’t boast of a lazy and well-off childhood. My sister and I were good at school, read books, tried to sew, re-stitched old things, and knitted. When we grew up we took part in tutoring and wrote tests to order: like any girl, we wanted fancy clothes and good makeup, but it was a shame to ask our parents for money.
Soon I received financial education, began working at an Investment Fund, gambled carefully on the stock exchanges, and saving for a rainy day. She kept all her savings in Cyprus, a very popular offshore jurisdiction among the Russians.
Women invest more cautiously than men. In 2011, analyzing the “strange dancing” of the EU around the Mediterranean countries, I had to urgently withdraw and dilute my savings. I withdrew and did the right thing: in 2013, many lost a significant part of their savings, not being able to get a deposit back.
Then I was able to anticipate the Cypriot events where our countrymen lost their savings. Within a few years, I not only saved but increased my savings. When the storm calmed down, I took my money to Cyprus again, but a year ago the global pandemic and the impending redistribution of property (later publications by Klaus Schwab confirmed my fears) forced me to look for other investment options. Perhaps in the real sector, in commercial real estate. Fear, the banal fear of losing everything made me move. And doctors who urged my mom to change the climate.
First thoughts about moving to Portugal
Investing in real estate haste is not acceptable. If someone yells: “Run, let’s hurry up and invest, the offer is super, 100% guarantee” – pass by. This rule applies to stocks and investments in the real sector. You are forced to take impulsive actions, not to think, to forget about caution. Can’t control your emotions, nip greed and desire for instant enrichment in the bud – you lose capital.
I make my decision after a calm analysis. Financial planning is like meditation for me. A blanket, a cup of fragrant tea, my cat purr-fly by my side and… lazy watching the financial statements (which I run through the program FinExpert, not wasting time calculating the financial indicators), economic reports, and stock reports. The extraneous thoughts gradually go away, the problem gradually becomes voluminous, it can be viewed as a ball, gradually rotating. It’s not easy, that’s my method, and it works.
The challenge this time had boundary values. The real estate investment should be in the southern or southwestern part of the European region. Russia, unfortunately, is not suitable, as well as Thailand, Vietnam. Nor do I consider Tunisia, Turkey or Egypt, although I like to go there for holidays. It is too hot, humid, dry there for my mother (insects, traditions, cuisine – needles extraction). More or less in a climate suitable Cyprus (it just can be crossed out), Greece (also past, attempts to rob the country will continue), Italy, Montenegro, Portugal…
If it were not for mother, I would choose Tenerife, I would lie with a notebook under a palm tree, drink paradise fruit juice, and I would invest money in Russian production, thanks to very reliable variants. The Atlantic Ocean and Mediterranean islands are good for recreation, but because of the pandemic, the flow of tourists decreased. What to do there, what to live on?
In fact, all these problems are solvable. The main thing is to overcome your inner fear: “What a move! I don’t know the language, I don’t know the laws, I don’t have any friends…” Leaving home means leaving your sister, your job, your friends, your acquaintances. It is like jumping from a tower into the water. In addition, one move equals two fires, and my mother should not worry at all.
I will start, as usual, with the collection of primary information. We will not sell the apartment in Russia, we will rent it (my sister will look after it). Already easier, the difficulties of a global movement is not threatened, there is a loophole “if anything, we’ll live and come back”
While I was thinking about it, my mother’s health problems began. The doctor, who had become a family friend in the meantime, had mentioned in conversation a Rehabilitation Center where he would be interested in working. This is it! I will buy a small hotel and open a rehabilitation center. There will be psychologists, massage therapists, communication with animals (horses), special food and a lot of heat. I will put an electric heating system, a fireplace in the lobby, buy warm plaids and cozy chairs. For people deprived of warmth and compassion in their lives, this is exactly what is needed.
The main areas of work can be formed by choosing the best of a yoga center, a salon, an ethnic settlement, and a sanatorium.
A grant and tax incentives can be obtained for the project. Automatically solve the problem with housing, and specialists at the beginning will be invited from Russia. If anything, you can always go in a pure hotel business or even coliving, but it all depends on the object.
Then the country where it is worth opening such a center in Portugal. Spain has an influx of migrants, some stunted residents (judging by the structure of the chest, prone to lung disease). Montenegro is a country for the holidays, with a lot of tourists, an oversupply of real estate, and inflated prices.
But it’s not that simple
The decision is made, the details are left: find the right space, seal the deal, start the renovations, do the advertising, invite the experts… Oh my God, how am I going to handle this!
I need to know all about Portuguese law-Google Translator is my guide, and I can go to the library for a “Immigrant’s Guide”. I should have started learning the language earlier, tomorrow I’ll invite the tutor home – it’ll be more fun for my mom, and I’ll listen to the lessons in the car.
A separate issue is our documents, citizenship, or business visa. A nice bonus: you can get a residence permit in Portugal if you invest in real estate from 0.5 million euros. In general, there is a website, there is a consular center, and intermediaries. In principle, there is nothing difficult. If only there was money, the rest will be done by specially trained people.
The biggest problem is choosing a site. I can look at websites, go to a real estate agency, ask around (maybe someone who bought something in Portugal). It seems that everything is clear. But, as is usually the case, simple and smooth things do not happen.
All the attractive sites were obscenely expensive. The fallback option, a farm or winery, was not considered at the time. Who knows what condition everything is in and whether it would get a permit to change the profile.
It turned out that most Russian-language real estate sites are middlemen. I saw the same property on different sites, with different prices. And then I have sites where the photo is the same, but the description, address, and price are different. With such clear signs of fraud, it is risky to go there.
Most amusing to me were the commercial real estate ads like “2-bedroom hotel with park and golf course views,” which, judging by the photo, were behind a fence. Or a “hotel with a pool” where there was an excavation instead. Under the hotel, sellers present a multi-bedroom apartment (not the entire hotel) in the resort area or a room in the hotel (36 sq.m. does not stretch to a full-fledged commercial property).
The seemingly serious firms I applied to were also dragging their feet on answering. I needed a facility, full legal support, and verification of anything and everything down to “the 10th knee.” This included fines, arrests, relative claims, priors, and mysterious accidents. It’s not at all smiling to lay out all your savings for a modern hotel (with plumbing, electricity, and sewerage) and actually get a historical ruin.
I had to adjust the plan. Resolved. I take a vacation, buy an individual tour to Portugal, the services of a personal guide-interpreter. I’ll drive around the country, look at local businesses. Maybe I want to buy a golf club instead of a hotel. And in fact, I’ll get some serious guys who specialize in “international law.
Dream come true in a slightly different way
I became the owner of a hotel and equestrian center. Not right away, of course. When I arrived in Portugal I was disappointed.
– Where am I going, maybe it would be better to replay and stop at Montenegro?
No-hasty residents, tour operators-Alphonse souvenir sellers with poor (no) education, wanting to get money from tourists for nothing. A lot of abandoned buildings in the center of any major city, tardiness of hotel staff, dirt on the streets…
I have a pretty good basic education, developed aesthetic taste. But I was offered to buy for 12 million euros a gorgeous in its ugliness hotel with beds with pretensions of Gothic, presenting this horror in a sauce of elegance.
– We have 2 stars, that means nothing. Absolutely no difference from 5 stars! (The toilet and shower for 3 rooms is a trifle).
– Thank you, but… Gentlemen, you don’t have a lot of stuccoes!
Feel fully furnished rooms turned out to be whitewashed walls with a masthead picture, a bed with a bed mattress, and a sofa.
At this point, I was starting to get discouraged. It seemed to me that the whole venture was worthless, and I was already preparing to go home. Literally out of the last strength I continued to contact various real estate agencies and intermediaries. At this point, my luck smiled on me and I contacted the guys from RocaInvest.
This is what came out
I wanted a solid house of stone, not glass. I wanted a forest, a vineyard, and not the same micro-hotels with a crowd of tourists that grew like toadstools. I found a great option – a farm in central Portugal, with a building permit. In fact, it turns out to be cheaper than buying a ready-made, many times resaleable property.
30 km from Lisbon (the nearest town is Alcochete), almost 30 hectares of land, an oak grove and cork tree thickets, next to a national highway and an expressway. Approved project for a hotel, parking, and equestrian center (stables with 36 stalls, 2 riding halls, paddocks). Minus (for me a plus) – 15 km to the beach at the coast. The site itself is located in the valley of the Tagus River, a very beautiful place.
Through RocaInvest did the paperwork and verified the transaction was clean. I know for a fact that the property is not mortgaged and there are no architectural features from past centuries on the property. I returned home, and two months later (due to bureaucratic formalities on the part of Portugal) I signed the documents.
There is no money to build a large facility, we have made changes to the design, leaving a few cabins, the main building, and the equestrian center. There is a possibility to open a farm on the site: our milk, cheese, poultry – would be very helpful (and the plan is to open a store of organic products someday, in Portugal is not tasty “dairy”). This is a long-term prospect. All at once is too large-scale and costly.
Quarantine changed our plans a bit and presented new opportunities. Mom is enthusiastic about the future move, and although I don’t have high expectations of her in terms of help, she is starting to do interior design and recreation arrangements. She discovered acquaintances, tour organizers. Everything is in the pre-arrangement stage, but when we open we are promised to be swamped with vacationers.
The hotel is designed to accommodate 80 people (13 apartments and 14 rooms). That’s 3 tour buses. And that’s a lot. The main building and 4 freestanding lodges (one for my mom and me) are being finished now. The stables are almost ready. Construction is done by a contractor from Russia, helped him a few people from the locals (including the former owner). A good worker from the local requires European pay (actually the average wage in Portugal 800 euros, lower than in Germany and France), but I cheaper to invite the crew from Russia. The quality will be decent (I regularly come and have a “day of rage”).
I can’t tell you the exact euro cent costs (it’s a trade secret), but the full cost part of the reduced construction with heating and interior work, furniture is much less than the finished objects that local merchants tried to sell me. Yes, it’s not cheap, but I can finally relax – enjoy the quiet and wonderful nature.
My goal now: to get a tax preference, a grant. And run the hotel. The first tourists will appear closer to the summer (for now it is only tourists, not people seeking refuge and comfort). A night with 2 meals a day will cost about 150-180 euros. People need to be fed, which means it’s time to think about organizing food deliveries (stores here close early). We need to bring a team of cooks and staff, buy provisions for the horse, buy it, finally… I’m busy, wildly tired, and I’m happy.
The move has been good for Mom. She rolls around Portugal with a local guide, sometimes buying a little something on his advice. Tasting wine, breathing the air, seeing the sights. And I think such a spectacular woman will quickly find common ground with the locals, helping us to become our own in a country whose customs and traditions are sometimes very different from ours.