Strategies for Professional Investors
There are many ways for professional investors to invest in Bahia, below we have listed a brief outline of commonly employed strategies favoured by our institutional investors. The choice of strategy is often highly personal, however at Brazil Bahia Property we like to think we can offer you advice on all aspects of the process, and tailor a strategy according to your needs. Our extensive range of local contacts and impartial advice will be invaluable in locating you investment property and helping you to complete profitability forecasts. In addition, we can help with all aspects of due dilligence process.
Please feel free to contact us for further information.
Please click on the following links or scroll down for more information:
• Buy Land – Do Nothing
• Buy Land and Develop
• Buy Land, Enhance Value, Then Sell
• Subdivision of Land
• Joint Ventures with Developers
• Multi-Faceted Strategies
Buy Land – Do Nothing
Many professional investors choose to purchase land purely for potential capital appreciation, rather than choosing the development route. By acquiring land in strategic positions and by purchasing at the right point on the development cycle, returns can be spectacular. The added benefit is that the work involved can be considerably less. Although Brazil Bahia Property will guide you through the ins and outs of the whole process, some investors prefer simplicity.
Integral to the strategic purchase of land is location. Many investors choose land often based upon prospects for future development, for example a golf course or major hotel is being built in the vicinity.
With the help of local contacts throughout Bahia, we can guide you as to where the hot spots for development are.
Buy Land and Develop
For cash rich investors this is often the most popular choice. By buying the land, funding development and then marketing the end product, the investor gets the maximum potential for profitability, without giving away a slice of the cake. Clearly this is a large undertaking, but by choosing Brazil Bahia Property we can make this process as painless as possible and guide you through all stages from start to finish. We are happy to market any final developments.
Buy Land, Enhance Value, Then Sell
Rather than just buying land to sit on, another route chosen by many is the option to improve the land in one of many ways. For example, this could involve adding infrastructure, such as water and electricity.
In addition, through local knowledge and contacts, it is possible to lobby to make alterations to the particular zoning of a piece of land. For example increasing the percentage of the land you can build on, or building density.
There are other possibilities too, such as engaging an architect to draw up plans for development. Once this is completed and all stages of the approval process have been reached, the value of the land will be significantly enhanced. Other options include submitting plans for an entirely new development.
Through adding value to land, as well as any natural property appreciation through strategic purchase, it is possible to make substantial gains in relatively short periods. At Brazil Bahia Property we will help you identify land as well as talk you through all options for value enhancement. We will also lend you our local knowledge to make a truly informed decision.
We also offer investors an exit strategy, as our vast customer database and constantly updated website goes out to the Brazilian and international property audiences, as well as professional investors globally. We also market extensively. Therefore when you do come to sell, we are ideally placed to bring in other investors to provide you with an exit strategy. Many professional investors like to purchase land with a full set of plans, permissions and development outlines, leaving them to concentrate on construction and marketing of the end-builds.
Subdivision of Land
A common strategy employed by professional investors, is buying land, potentially improving it and selling it off as a series of divided sub-plots. The logic of this is a simple one relating to scale, the smaller the land, the higher the cost per square metre.
Therefore it is common place to purchase land, split it into sub-plots and sell them off to individual investors. Strategies employed are again multi-faceted. For example you could choose to sell the land unimproved, i.e. the purchaser will have to send off for building permissions and engage architects. However, it is much more common for investors to buy land, install the complete infrastructure, and then to sell it on with building permission and full approval in place.
Brazil Bahia Properties can guide you through all stages of sub-division. We are happy to identify land for you and to provide a full cash flow statement of potential returns, once the sub-plots are sold off, including the point of breakeven. We will also market sub-divided properties for you if you wish us to do so, both in Brazil and internationally to foreign investors. We will advise you on all strategic issues relating to revenue maximisation of the project.
Joint Ventures with Developers
Many land investors choose to engage in land swap ventures with developers. Once the investor acquires the land, it is then swapped with the developer for a pre-specified percentage of the end constructions. The developer would be contractually bound to deliver the final developments at a fixed date and with pre-specified building specifications.
Legally, the investor who purchases the land remains the lands owner until the swap has been correctly fulfilled by both sides and if the developer goes bankrupt during construction, any work already completed would remain the property of the landowner.
The investor benefits as there are no funds to outlay for development, but still gets a share of the final spoils, without becoming embroiled in the development process. Some investors prefer to make the joint venture cash related. For example, instead of receiving a certain percentage of the final completed properties, the investor could opt to receive a pre-negotiated percentage of gross revenue for the completed project.
Brazil Bahia Property is happy to put investors in touch with developers keen to take part in joint ventures. We can also discuss all aspects of strategy as well as locating you a plot of land ideal for development and marketing the sub-plots.
The choice of which strategy to pursue is often a difficult choice to make, hence it is becoming increasingly common for multi-faceted strategies. For example a large plot of land could be split and used for a variety of purposes. Some could be sold off in small plots to redeem acquisition costs, some could be sold off in joint ventures and the rest could be sold to other potential developers.
If we feel a multi-faceted strategy is in your interests we will recommend the best strategy for you to pursue.
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