Vladimir's case: the long road to investment and life in Portugal

Vladimir’s case: the long road to investment and life in Portugal

The quiet and cozy cafe in the center of Krasnodar was not chosen by chance for the conversation. It is the hometown of the hero of our story, Vladimir R., and a good half of his life was spent in a nearby business center. All this is all in the past now, but the symbolism of the place makes for a sincere conversation.

Vladimir talks about his life slowly and thoughtfully. After each sentence, he looks out the window significantly, as if he were nostalgic about the last stage of his life. According to him, he has never regretted his choice and would never want to go back. But it’s not clear what’s going on in his soul… After all, it would be incredibly difficult for anyone to break away from the place he’s been stuck in. Even if the future is more promising, the past will always remain in his soul.

The story of Vladimir’s life is very similar to the fate of many businessmen who rose in the mid-90s. At that time he founded a small logistics company focused on freight and passenger transportation. There were ups and downs, we had to take risks and pay for mistakes. But by 2019, Vladimir’s firm had more than ten tilt trucks and several vans. It also owned a large facility in an industrial area in Krasnodar and several warehouses for rent.

путь к инвестициям и жизни в Португалии
Vladimir's case: the long road to investment and life in Portugal 12

“So what’s next?”

“And so what then?” – that question was permanently imprinted on Vladimir’s memory. His business partner uttered the phrase with a special intonation, a sneer, and a chuckle. After that, he left for another field. Then, for the first time in his life, Vladimir got scared. Not even for himself, but the future of his family.

The problems began in the first half of 2020 when a pandemic struck the world. The closure of international borders dealt an irreparable blow to the logistics industry of the entire country. The crisis caused an imbalance in cargo flows, and the situation was changing too quickly. It was necessary to keep track of changing demand and promptly readjust because of the shutdown of production facilities. Retail outlets began to close en masse, the dollar exchange rate went up, purchasing power fell, and uncertainty was widespread.

Even now, analyzing from the outside at the time, Vladimir understands that he made some mistakes. But up to now, he does not understand how he could have acted otherwise. So he holds the opinion that everything was supposed to happen that way.

The fact is that the bulk of the business was built on freight traffic between Europe and southern Russia. The closure of the borders led to the termination of contracts with several major customers, and re-profiling the category of cargo under the pandemic proved impossible. The heavy haulers stood down, warehouses were left empty, and workers were out of work.

Only contracts for passenger traffic and domestic flights remained. But these sectors were additional for Vladimir’s firm and were on the verge of break-even

«И что дальше?»
Vladimir's case: the long road to investment and life in Portugal 13

First thoughts on the new life

When the analysis of cases yielded disappointing results, it was clear that we had to act drastically.

At that time, there were two possible ways out of the situation. The first was to focus on domestic flights and wait for the international borders to open. It’s hard enough to change a system that has been in place for years. Besides, no one knows how long we would have to wait to win another tender. It was possible, of course, to switch to subcontracting, but this is less profitable.

But there was also a second way, a change of business, a radically new direction. This was the option Vladimir was more and more inclined to pursue. A break from the endless hustle and bustle for Vladimir was to think about possible passive income. Sitting at home by the window, he dreamed of a different life, where he could spend more time with his family and where there would be no eternal worries and concerns. At some point, Vladimir thought about what was keeping him from realizing his dream. And there were no good arguments … It was the beginning of a change.

Vladimir realized that he wanted to escape from the eternal problems and the omnipresent hustle and bustle. He wanted his income to be stable and preferably passive, and his work to be enjoyable. For some reason, I immediately thought that this is not possible in Russia (I remembered Krasnodar and, of course, Moscow vanity, the despondency of small towns, and Russian features of business). Even then, Vladimir began to think about moving to another country and investing in foreign real estate.

So the decision was made. In the middle of last year, Vladimir instructed his lawyer to take all the necessary procedures to reorganize the business with the closure of the main divisions. Only the domestic cargo business remained, and the contracts were in effect until the end of the year. Lease agreements for machinery and real estate were terminated, and the majority of vehicles were put up for sale.

Первые мысли о новой жизни
Vladimir's case: the long road to investment and life in Portugal 14

Wall after wall

There is more time to look for objects for investment in real estate. The world pandemic made a significant contribution to the European real estate market. And Vladimir did not even consider the others at the time. Having studied many financial reports, and talked with industry experts, Vladimir came to a disappointing conclusion. The key indicators have dropped significantly: rental rates have fallen, and the number of vacant retail spaces has increased by 20%. The vacancy rate in the hotels reached a record 70%. And this is without a decrease in prices for real estate.

The situation was particularly bad in Britain, Italy, and Spain. It then seemed to Vladimir that the time for changing the business was not quite right. But the procedure was underway, and there was no desire to retreat.

Stable Switzerland and Luxembourg were considered, but no worthy offer at a price Vladimir could afford. Austria had quite good prospects, but here the high threshold for entering the market also stopped me.

It was possible to enter the Netherlands, Denmark, and Norway. Even a hotel complex in Oslo, consisting of 50 rooms and an indoor pool at a bargain price, was offered. However, moving from warm Krasnodar to cold lands was not particularly appealing. Investing in a large technology park in Denmark or a data center in Finland seemed like a good idea. But it was all wrong.

There were many options in Europe, from commercial real estate to comfortable hotels. But each of them presented different problems of a legal or personal nature.

In the end, it was decided to stop in Germany. Warned by the strong economy of the state and the steady growth of real estate values. In addition, the country is a strongly developed market rental space. A database of proposals was assembled, and various inquiries were sent to the relevant authorities. A thorough study of the information did not give any results. There were no prospects for citizenship, it would not be possible to take lucrative loans, and the threshold of full entry into the market exceeded the available funds. Although, of course, it would be possible to invest in the construction of a small facility, but with low prospects.

The search continued, and time flowed inexorably.

Стена за стеной
Vladimir's case: the long road to investment and life in Portugal 15

Intermediate result of the search

From Vladimir’s conversation, you can sense that he has an excellent understanding of the world economy, real estate market trends, and the laws of various countries. Largely thanks to this, he was able to avoid making rash decisions. But the search stretched out for three long months.

The next turning point was the decision to use the services of investment funds and agencies. The idea had been floating around for a long time, but the decision to go with an intermediary company came as an epiphany.

On the one hand, it greatly simplifies the search for investment objects. But on the other hand, certain risks arise. And Vladimir can certainly be categorized as a risky person. Otherwise, he would not have been able to build a successful business in the Russian realities, and we would not be talking to him now.

At that stage, Vladimir paid particular attention to international construction and investment companies. Of course, the main criteria were reliability, a long presence on the market, and feedback from real clients. Our hero paid a lot of attention to the objects of investment because he planned to make them the main source of income. And preferably – passive.

Vladimir was already acquainted with the activities of the company RocaInvest but did not pay attention. The fact was that Germany was still the main focus. Appetite was whetted by news from that country about the rapid economic recovery after the first wave of the pandemic. Portugal was not even considered at that time.

Промежуточный результат поисков
Vladimir's case: the long road to investment and life in Portugal 16

The strategy is formed

So, we have a clear plan of action. It is necessary to find a property abroad, perhaps with the help of an intermediary investment company. It should be commercial real estate or development with a high level of profitability. Ideally, Vladimir counted on 6-7% per annum for ready-made objects or up to 15% for those under construction.

Most of the offers under consideration were real estate with below-average liquidity and higher risks. Its value started at 1 million euros. Accordingly, co-investment or credit was required.

By the way, at that time were also considered residential properties with the possibility of their future lease. But they were not Vladimir’s priority, that is why he had more stringent requirements for the – good location, several apartments in one or neighboring houses, high liquidity, and available budget.

For example, in Germany, commercial real estate provides more space for business activities. But with residential properties, it is more difficult to obtain a residence permit. This, too, played its part. Be that as it may, the strategy was fully formed. It only remained to find the right option.

Стратегия сформирована
Vladimir's case: the long road to investment and life in Portugal 17

New Challenges

Up to a certain point, everything was going well. Even a few times it almost came to a contract. But gradually the pitfalls began to emerge. The main one was liquidity. Commercial premises at an affordable price were most often in the western parts of Germany, in small towns. The condition of the objects often left much to be desired. Accordingly, it was necessary to invest tens or hundreds of thousands of euros additionally. And no one gave a full guarantee of the safety of such investments.

With residential properties, too, not everything was smooth. Prices in Munich, Frankfurt, and Hamburg exceeded 7,000 euros per square meter. For Vladimir, these were unaffordable sums.

“Why Germany?” – Vladimir asked himself one day. A steady rise in real estate prices? Yes, but only for profitable real estate, and, for example, in cities with a population drain, prices are plummeting. High demand for rental housing? Yes, but only in and around the major cities, where the initial cost is too high. Prospects? Yes, but will have to overpay for the high entry threshold to the real estate market.

Construction and investment agencies that Vladimir went to could not offer a single worthwhile offer for investment in income-producing real estate in Germany. It was necessary to look for a fallback option. This, oddly enough, was an investment in Portugal.

Quite an attractive country with a well-developed tourism industry. It has for the past year shown steady growth in property prices, especially in new buildings. And according to many leading experts, this trend will continue shortly. Vladimir speaks warmly about this country and talks passionately about its economy, sincerely wondering why he missed it before.

Новые трудности
Vladimir's case: the long road to investment and life in Portugal 18

Here we go

– I found the site, ordered the first consultation, wrote to the representative,” says Vladimir when asked about how my collaboration with the RocaInvest investment project began. I was immediately promised not only the selection of objects for investment but also informational and legal support in terms of immigration documents and minor nuances of the move and residence.

We began long negotiations and the procedure of registration of the primary documents. My lawyer was involved in the contracts and began to deal with the documents. This allowed our hero to fully immerse himself in the pleasant procedure of selecting the property. As Vladimir says, at first there were fears. This is natural because the investment is considerable. But the willful decision was made, and the process was set in motion.

By November 2020 Vladimir had managed to sell the warehouses in Krasnodar and almost all the vehicles that were owned. A 4-bedroom luxury apartment in the heart of Krasnodar on Krasnaya Street was also sold. Accordingly, the funds were allowed to turn around without borrowing.

After a conversation with the staff of RocaInvest, the study of many materials, family advice, conversations with friends and acquaintances, the district of Lisbon was chosen, and the priority was given to Cascais, a small town on the Atlantic Ocean.

At first, we considered commercial real estate, mostly tourist destinations. These were hotels or complexes falling under renovation in the suburbs of Lisbon. However, Vladimir had to abandon the idea because of prices exceeding 10 million euros for a worthy object. It was decided to fully concentrate on residential real estate – apartments, apartments, villas. And there was plenty to go around…

Vladimir's case: the long road to investment and life in Portugal 19

The fulfillment of a cherished dream

Vladimir met the New Year in Krasnodar. There were already several real offers on hand, suitable for economic reasons and approved by the family. A trip to Portugal, negotiations with sellers, and meetings with representatives of RocaInvest were ahead of us. There the documents were signed, and the deposits were left. In general, the procedure was set in motion.

In March 2021, all the transactions were completed. The title officially passed to Vladimir. Three objects were purchased at once. Two of them were small apartments of more than 100 sq. m. They were already with high-quality finishes, and one of them had a large terrace and a garage. All that was left to do was to put in the minimum necessary furniture and we could move in. Both properties were in the center of Cascais, close to the ocean. The location is quite popular with tenants. On average, the cost of renting an apartment in Cascais is 500-1000 euros per month. But one apartment will leave Vladimir for living with his family.

The third object is a villa in a picturesque wooded area on the outskirts of the city. The total area is about 300 square meters. m. It includes 5 bathrooms, a spacious pool, a garage for two cars, and a cozy courtyard with exotic plants. Vladimir has special plans for this villa. In the future, he wants to make a mini-format hotel for 5-10 rooms here. But first, he is going to rent out the entire room, for which he plans to earn 6,000 euros per month.

– Until the last moment there were worries,” says Vladimir. – The total sum of all the deals exceeded a million euros. Imagine how nervous I was when I signed the documents. On the one hand, I was confident in the purity of the deals, but it was impossible to explain my inner emotions. It seemed that my whole life depended on it, though this was how it was.

Of course, the realized dreams differ from the original plans, but not by much. Vladimir now realizes that this is exactly what he had wanted subconsciously all his life. The prospect of passive income appeared, and the opportunity to enjoy life loomed. But for some reason, it seems that Vladimir would not be able to. A man who has been in business in Russia, with its frantic rhythm and demands of constant emotional return, it is hard to stop. But time will tell. Either way, it will be a very different life.
*** Translated with www.DeepL.com/Translator (free version) ***

Воплощение заветной мечты
Vladimir's case: the long road to investment and life in Portugal 20

New Life

“Euphoria” is the word Vladimir uses to describe his current state. Sitting in a coffee shop for the third cup of coffee, he smiles as he recalls the past year. A year full of searches and experiences.

At the end of February, his whole family went to Cascais. Compared to the abnormally cold Krasnodar winter, the Mediterranean and subtropical climate seemed like a fairy tale. Every day they call each other and Vladimir listens for hours to Gothic and Romanesque buildings, museums, and nature.

Very soon Vladimir will join them. In Krasnodar, there are a few things left to do to close the rest of the business and process the documents. At the same time, a residence permit for the whole family is being drawn up in Portugal. The laws of the country provide for a temporary permit for those who invest in real estate. In the future, there is the prospect of obtaining permanent citizenship.

In about a month he will fly to his new home in Portugal. There are quite a lot of plans, the first time he wants to devote himself only to excursions and recreation. First and foremost, Vladimir dreams of seeing a live bullfight, tasting port from Alto-Doro, driving over the Vasco da Gama Bridge, and maybe even doing some extreme water sports. In the future, he plans to visit the Azores and Madeira.

Vladimir already feels a kind of rebirth, which is difficult to describe in words. Old attitudes and habits are a thing of the past. And their place is gradually taken by the new meaning of life.