Risk Free Investment in Spain

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Posted and filed under General Articles of Interest, Legal Issues in Spain.

risk-free investment in Spain

We have investors who need a fantastic return and risk-free investment in Spain.

Guaranteed property investment in Spain, unlike anything the market has ever seen before. We can now offer an “Equity Release” solution to people who need it in Spain and you can take advantage.

The corona virus has opened the door to a wonderful investment opportunity all over Spain.

We are presenting this opportunity on behalf of The Funding Factory. 
As with all opportunities, please consult with your independent financial advisor before getting involved in this product.
 

What is being sought?

Investments of a minimum of 50,000 euro for two years or more. Returns are in the range of 5% pa.

Opportunity in Spain.

Inadequate pension provision is not just a Spanish but a Europe wide and worsening phenomenon. Coronavirus only increases the concerns people have about their pension and future cash flow. 

Equity release products, reverse or reversion mortgages are strictly regulated by the bank of Spain. This red tape and a lack of willingness of the banks makes this option difficult. We have found a middle ground; a real estate service, rather than a banking product. Equity release as we know it in the UK or Ireland would be the natural solution to this need.

Progressive Part Purchase too fills the needs and provides investors with eye watering returns. The big winners are the hundreds of thousands of expats in Spain who are desperate for some sort of Equity release. 

Offering to our clients in spain. Funding Factory wants to allow people access cash in their biggest Spanish asset, their home. We want them to continue to live there too. We’ll do this through two types of purchasing arrangement, called partial and stage. 

Stage Purchase

This is a method whereby the investment group buys 30% and in some cases up to a maximum of 45% of the client’s home. The funding factory gives them a lump sum upfront. All fees and costs then accrue an increasing stake in the clients property equating to a 7.5% p.a. rental yield. The return is fixed against the value of the original stake at the start.  Effectively the fund has a property yield and return of 7.5% before costs, and it is guaranteed. 

Partial Purchase

Here the Funding Factory buys 30% (and again up to a maximum of 45%) of the person’s home in Spain. They give them a lump sum less the usual fees and receive a monthly rent equating to approx 6% p.a. yield. Again it is  fixed against the value of the original stake. 

With both ideas the investors recover the stake on the sale of the property.  At the time the home is sold, the investors have the first option and a debt on the assets of the property owner, registered officially in the Spanish Land Registry. If the property has devalued, the investor will still get the original investment plus the rent. 

Organisation & Funding of the Risk-Free Investment in Spain

As we’re offering purchasing arrangements, and not banking products, the Funding Factory is a property investor, and not a Bank of Spain financial institution.  Purchases of qualified property will be financed through an SPV, a Spanish fund, which will access a commercial line of credit.

Small investors

We can accept smaller investors who will invest a minimum of 50,000 euro into Spanish property. The investor will receive a substantial return – Spanish Solutions will manage the property, ensure the arrangement is registered in the land registry etc.  An investor looking for this smaller investment of 50,000 can double his investment in ten years, all guaranteed by the deeds on the value of the property. (Again, please speak to your independent financial advisor who will break down costs, fees and exact returns for you).

This appears to be a win/win investment.   

Large scale investors

There is a second option whereby an investor with a minimum of 1.5 million can buy equity in the Funding Factory. We estimate 6-7,000 clients have unsolicited Equity Release enquiries in this area within the last 2 years. The equity release market in the UK, on the other hand is a 3.4 billion pound industry and growing at a rate of about 7% annually. Why is it not happening in Spain? Now is the time it can happen and we know the formula. 

The seed investor gets 20% of Equity (10% ordinary shares, 10% convertible notes with buyback) for €1.5M valuing the company at c.€7.5M. Of this amount, €500K is to be used for setup to Dec 2020 and €1M for Spanish purchase funding. Only 24 months from operations start, the seed investor gets the initial €1.5M back and then retains 10% equity going forward.  Using the simple Profits X 3 model, end of year 1 valuation is €9.2M, end of year 2 is €23.5M. 

The Funding Factory working with Spanish Solutions aims to complete 1000 arrangements in the first year. This will be followed up by a further 2000 arrangements in year 2.

Combined, this means a line of credit to the tune of 130,000,000 euro is required. The Funding Factory has experience in debt sale which we think will make this possible.   

With a stake of 30% being purchased on Spanish properties with an average value of €150,000 each, the value of each stake will be €45K at inception. The fund will borrow at 2% or below and lend at 6% for Partial Purchase and 7.5% for Stage Purchase.  Profits in year one are projected at 3.06 million in year one rising to 7.38 million in year two. 

Valuations of Funding Factory, Spain

There are many paradigms for company valuation. We however are adopting a simple 3 times annual profits valuation model.   End of Year 1, the  valuation is: €3.06M X 3 = €9.18M. End of Year 2 the company valuation is: €7.83M X 3 = €23.49M The seed investor who invests 1.5 million will have his investment returned in two years plus he will own a 10% share of the business.   

Funding Factory Company Description. Founded in Feb 2020 and headquartered in Alicante, Spain.  

Our mission statement is as follows:
We enable people, mostly expats to free up captive equity in their home in Spain. We built a ‘funding engine’ which leverages wholesale borrowing arrangements through debt sale and securitisation.  This is a privately held company with ownership denominated by shares. We truly are a commercial enterprise with a social conscience. Funding, real estate, social cause capitalism.

If investing at either level – the smaller 50,000 straight up investment or the 1.5 million seed funding is of interest to you, we are arranging investment meet and greets online during the coronavirus lock down. Please email Spanish Solutions if you are interested in finding out more. Tell us your Real Estate experience, the level you may be interested in, your experience in Spain etc and we will introduce you to Lorcan who will give you the presentation.  

We have spoken to the Bank Of Spain only two days ago about what we can and cannot do as a consultancy company allowing our clients to have equity release while charging them a fee plus guaranteed investment amount. This is a secret sauce and please do not be insulted when we refuse to give you the exact details as to how it works.

You will have an optional meeting with Garrigues, Alicante who will tell you everything you need to know. This is totally legal. It is a real estate investment and the property you are investing in at 30 % LTV is the guarantee that you will receive your initial investment plus the substantial return.

We do not know of any other firm in Spain who has ever offered a service like this.  We’re happy to talk to you if investing is a possibility for you.  

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