Cove at Krabi - Financial Details:
Please note these are the absolute 'worst case scenario' figures for the Cove at Krabi, based on the purchase of a villa costing £100,000.00 (which would be villa type 'c'. Please also note the rental guarantee is fixed for the first 55 buyers only, so it will pay not to delay unnecessarily.
Sales price: £100,000.00 sterling (£80k villas sold out already)
Total outlay needed: 50% over the course of year one - £50,000.00
Mortgage amount: £70,000. (Money to pay remaining balance: £50,000.00)
Cashback: £20,000.00 - end of year 1
Rental Return Guarantee: £8,000.00 per year, starting end of year 1 in a lump sum, then quarterly for years 2 to 5.
Mortgage repayments at 6.25% for 10 years: £9,420.00 per year.
Annual gross balance: -£1,420.00
Maintenance may be: £1,200.00 per year (maximum, uncommonly high estimate).
The insurance will be circa: £250.00 per year (maximum, uncommonly high estimate).
Maintenance + insurance= £ 1,450.00
Capital growth: absolute minimum 20% a year - the units are undervalued now (according to a Knight Frank report) by 30% and will be going up by 25% in phase two.
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Total outlay: |
Total income: |
Balance |
Property values (pessimistic): |
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year 1 - £50,000.00 |
year 1 - £28,000.00 |
year 1 - £22,000.00 |
year 1 - £100,000.00 |
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year 2 - £10,870.00 |
year 2 - £8,000.00 |
year 2 - £2,870.00 |
year 2 - £120,000.00 |
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year 3 - £10,870.00 |
year 3 - £8,000.00 |
year 3 - £2,870.00 |
year 3 - £144,000.00 |
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year 4 - £10,870.00 |
year 4 - £8,000.00 |
year 4 - £2,870.00 |
year 4 - £172,800.00 |
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year 5 - £10,870.00 |
year 5 - £8,000.00 |
year 5 - £2,870.00 |
year 5 - £207,360.00 |
- These figures are truly conservative, so investors can 'bank on them' (at least the first 55 buyers can!).
- Discounts are available to investors purchasing multiple units - 5 is the minimum number.
- Also, you can re-assign at any time - cap growth projections are well under what I really believe (best to err on the side of caution), so re-assigning prior to completion should give a reasonable return for people preferring shorter turnarounds.
- The mortgage offer for this project can be accepted either in $USD or $SING. $SING interest rates have changed just once in the last 4 years, with nothing on the horizon to give cause for any future bumps.
- There is negative cashflow of a contractual maximum of £2,870.00 per year (just £239.00 per month) which is assuming the holiday occupancy is very poor (and well below the current average) and also that the insurance and maintenance costs are uncommonly high.
rental returns
Even though capital growth should be the main area of interest, after all - this is what makes us rich, investors will benefit from a healthy income from property rental.
The first 55 buyers will be rewarded with the safety net of a guaranteed rental income of 8%, and this income is not capped, so when the resort's occupancy levels increase, so will the owner's income.
The 8% net return is based on 50% occupancy, in a recent report the national average occupancy for resorts and hotels in Thailand was *72%
* (source: http://www.thaipro.com/thailand_00/296_thailand-property.htm )
The 8% return is a net figure, and so that income can offset the mortgage repayment conveniently.
Price Waterhouse have approved the rental guarantee as being financially viable in any event, and Clifford Chance authored the legally binding contracts for this scheme.
legals
For the villas, foreign investors may purchase via a Thai Limited Company, in order to own the property and land on a freehold basis.
Lawyers are on hand to assist with this process, and any total legal costs exceeding £2000.00 will be met by the developer.
The process is straight forward, and there are several 'tried and tested' excellent local lawyers to choose from, as well as recommended law firms in Bangkok .
Investor forms company > company purchases property > investor owns the company> therefore investor owns property**....
**...There is no capital gains tax upon resale with this method of purchasing the land, which is a strong reason for buying this way. The investor simply sells the company, and the house and land is, of course, an asset of that company.
maintenance
Maintenance should not exceed around £100k per month, depending on the type (size) of villa. This payment covers upkeep of the properties (in line with a 5 star resort), lighting and maintenance of common areas, 24 hour security (gate and guards), gardening and general repairs. A full list of what maintenance does and does not cover can be sent upon request.
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