Property Letter 1

Posted by admin in Property Letters | April 28th 2002
PL1

17th April. 2002.

From Guy and Vicky. Property proposals.

We
have spoken to you about our plan to investigate investing in income
properties in Southern Europe. I won’t go into too much detail now, but
would like to know if you want to be kept on the mailing list.

The plan:  To see if we can buy medium income property in any
of three growth areas in Europe and achieve a positive cash flow and
capital growth. We are looking for two bedroom apartments for holiday
lets, (or in the case specifically of Nice, student accommodation.)
Probably new property developments in good areas, close to summer sea
and winter golf, for maximum occupancy. Target budget being 50 to 80
000 sterling per unit. Furnished.

We have had
correspondence with various agents in all three areas, and have masses
of promotional and other material to study. We have set up appointments
with the agents to view properties, with lawyers to get advice on tax
and property laws, and bankers to discover all we can about exchange
control, and mortgages etc.


We hope to generate sufficient interest to initially buy 8 to 10
properties, if the figures look good enough. We intend to employ
someone (an experienced administrator, trusted, and known to most of
us, has already expressed interest), to manage and administer the
properties, and control the bookings and marketing. (Vicky and I do not
intend to spend more than a few months a year there.) We believe there
is potential for the project to grow rapidly when results are proven.

Although
we hope as a group to be able to buy 8 or more properties, we feel that
each participant should either own one or more units themselves, or
share one with family or friends, so that we have individual ownership
of each unit. (If the scheme does not come up to your expectations, you
can sell your property and get out at any time, and probably make money
on it.) We do not propose joint ownership, or shares in property. Only
shares in savings and economies of scale, costs and time, management
and admin. We have yet to decide how to set up the management company,
and for that we will rely on professional advice. Much will depend on
the laws (tax, inheritance, capital gains, etc.) pertaining to the
country that we settle on. Vicky and I will wish to claim back our
“discovery” expenses when the project gets off the ground.

The Areas:

The Cote de Azur
is on the coast of France stretching from St Tropez, through Cannes,
Antibes, Nice and Monaco, to Menton on the Italian border. Vicky and I
have very good French friends in Menton, and know the area well from
several previous visits. Opportunities seem to exist there, and to
quote from an article in the property section of a recent Financial
Mail, “If you really want to get out of Rands and into property, go to
Euroland. French property, for instance, is going at bargain prices.”

French
people traditionally are not great owners of property, preferring to
rent, and the Government are trying to develop much needed
accommodation. There is a “leaseback” scheme where purchasers of rental
property are guaranteed a minimum net return of 6% by the Government,
if they commit to Govt. for nine years. In addition capital growth is
estimated at 12% to 15% per annum in France. (We do not plan to opt for
the Govt. leaseback scheme – it is only illustrative). The holiday
accommodation market may be as buoyant and more interesting. We will
see.

The Costa del Sol is the area either
side of Malaga and Marbella, on the Southern coast of Spain. There have
been so many world class golf courses built there in recent years that
it has also become known as the Costa del Golf. Summer beaches and
winter golf mean occupancies of 80% plus. Positive cash flow, we are
assured, should be achieved from the moment of transfer, and capital

growth in Spain is at 14%, and 18% – 20 % on the Costa del Sol.

The Algarve
is the Southern coast of Portugal and is similar to the Costa del Sol,
and only a few hours away by car. Faro is the main City. Booming
tourism. Year round sun. Massive golf infrastructure. The potential
seems similar to that in Spain.

Our Programme.(Subject to change)

23rd April – to London.

26th April – 5th May – Milan (family, and consultation).

6th May – 15th
May – Menton, with a full program of meetings and searching for and
investigating properties and opportunities on the Cote de Azur and
surrounds.

16th May – 21st
 May – Back to Milan for more consultation with family, and
another interested partner who will be in Milan then for discussions.
Brainstorming.

22nd May – 5th June – Malaga – for a week in Spain, and a week in Portugal.

6th June – 8th June – Back to Milan for (hopefully final) consultations.

9th June – 20th June – London. Whatever is required to do to arrive at conclusion. Further travel if necessary.

21st June – Cape Town.

We
will be on our roving phone throughout the trip (“net one” our service
provider permitting)     00 263 (0)11 202 193.

Our e-mail – watsies@mweb.co.za – will be our mobile address. We will dial up most days.

I will from time to time send a progress report to those of you who are interested – Especially figures as they come clear.

Lao’s phone numbers in London are always a contact point if all else fails:

   Home : 44 207 371 5242

   Cell : 44 778 606 0932

Please
let me know if you are interested in what we are trying to do. Also, if
you have friends or family who may be interested, please let them
know.   I am not sure it will be a good idea to go for many
more than our target of 8 – 10 (possibly 12) properties until we see
results.  But I do hope we get at least that many to get us going
in the first wave, and to justify putting our own management in place
from the start. Also to get us better terms to go in on – price,
mortgages, rates, shared legal costs, etc. etc.

PLEASE LET ME KNOW WHAT YOU THINK. URGENT.

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