Investments in June, July and August. My future second home – a project build apartment in São Paulo, Brazil.

Investments in June, July and August. My future second home – a project build apartment in São Paulo, Brazil.

I finally closed the deal on my future second home!

As your may know, I have been looking at real estate in Brazil for several years. This year, after about 6 months in Brazil I finally signed the contract for what will be my future second home in Brazil. I am living on a budget and therefore always looking for ways to get as much as possible out of the money I have. For most people, the rent or the mortgage is the biggest expense every month. I am a strong believer in owning your own home. Once your mortgage is paid out, you may find that your biggest cost is no longer housing. I always wanted a second home abroad. Maybe somewhere in the sunny, south of Europe. The only problem with that is that the prices are just to high for me in the bigger cities. I would not even get a broken down studio apartment with by budget. I would need to finance some of the amount. I promised myself, after I got out of debt some years back, that I would never go into any kind of debt again. So there goes my dream of a sunny second central home in one of the European capitals. Here in Brazil on the other hand, there are options. I could buy something pretty awesome in the center of the biggest city in Brazil, without the need to finance. I especially like Sâo Paulo for its size and what it has to offer as a city. Whatever you want do see, do, listen to or eat, there are usually many options in the megacity of São Paulo. 

I have been searching for a good location for a while. A good location in São Paulo is tricky. Just because it is central, does not mean it is a good location. If you want to keep your view of the wonderful skyline, you need to make sure that there is no empty land plot in front of your windows, as it is very likely it will be sold for constructing a skyscraper. In the lower areas of the city, you see parking spaces and roads turned into lakes, when the strong tropical showers come. Sometimes the water reach several meters over the street level. All the rain quickly ends up in the lower parts of town. You need to know what parts are safer to live in. Prices vary a lot, even in the center. One location can be wonderful, while another, just a ten minute walk away, can be horrible. The center of São Paulo is like that. You need to know what and where to avoid. 

Besides the good and central location, there has been other thing on my wish list. There is no beach in São Paulo, something Brazil is otherwise famous for. The closest beach is about a one hour drive away. So I wanted access to a nice pool. I also wanted a number of indoor and outdoor recreation areas, private to the residents of the building. I love having small picnics and sitting outside in the evening with a glass of wine or a cold beer, so these areas would be perfect for that. I also wanted a place to entertain guests, to work online and to have meetings. I have been using the free Google Startup co-working until now for these activities. To keep the price and the monthly administration fee low, I have been looking at micro apartments, like studios and one-bedroom apartments in new buildings, thereby minimizing the chance of big maintenance costs in the near future. These wonderful new apartments does not come super cheap, though. The solution for me became a project build for a brand new building that will be ready in, hopefully, less than three years. This project checks all my boxes and is within my budget. 

The 19 floor building will be constructed on the last piece of available land on the historic square, Largo do Arouche. The land plot used to be a parking lot. 
Reforms of the Largo do Arouche square passed the first phase in 2019 and it has already lifted the area significantly. There is usually a police squad on horseback present during the day and a lively bar and restaurant scene. The area has a lot of variety in gastronomy, entertainment and music. I believe, that in the long run it is an upcoming area. The below picture is from the reform proposal. This is Brazil though, so the project may be late or end up looking different. However, I already like the square the way it is today. 

I got an one bedroom apartment with two windows facing the square. This secures my good view forever, as nothing will never be constructed on this historic square. The common areas will include rooftop pool, rooftop gym, another rooftop terrace, collective laundry room, big co-working area with internet and a gourmet party room for having private parties, overlooking the skyline, at the very top. Ground level will have a playground for kids, playground for pets, and a small private garden. The building will have a 24-hour reception with security guard. I chose to pay everything up front, giving me a pretty good discount on the price. It is possible to pay in packages during the construction, but then all the payments will have a construction tax (INCC) on top, adjusted for inflation every month. The value of the Brazilian BRL currency could also surge during the next three years making the apartment a lot more expensive than originally. The BRL is historically low at the moment, but can swings 10, 20 or even 30 procent in a short time, compared to the EUR.

The final
price was 45.078 EUR including all taxes, commision, bank fees, lawyer, and currency exchange fees. The monthly maintenance fee will be 42 EUR including water. Electricity is the only utility bill and will be about 15 EUR. Brazilian property tax will most likely be zero due to the low price, but of course I have to pay the Danish property tax. This means that my price for housing in Brazil will be lowered 8-10 times in a few years, then if I would have rented a similar apartment in São Paulo. 

Below are a few pictures from the project. The building will look exactly like on the computer generated images, down to the colors, materials, chairs and equipment at the gym. 

Time to completion and handover of the key

This was a long rant about something that has nothing to do with crowdlending. However, I think you all deserve a proper explanation of why I pulled a big amount out of crowdlending and invested elsewhere. I spend a lot of time in Brazil, so it makes a lot of sense for me to enter the real estate market there. This is mostly an investment in optimizing my environment while I am here and save money on rent as well. Who knows, in the long run there could be some good capital gains if I decide to sell at some point. Some investors speculate exactly in capital gains short term, with this type of projects. There is of also the opportunity to rent out, short or long term, and make the apartment cash flow. That is imo a better strategy than going for short or long term capital gains. 

If you want to know more about my project, similar projects, or just more about buying real estate in Brazil I have created the facebook group called BrazProp. Here I will share some of the knowledge I have gathered along the way, updates on my own project, videos from visits to different finished projects, how you can do short term rental 100% hands of, and how you can get a permanent residency in Brazil by investing in real estate. 

Status on my crowdlending investments

I have made an exit from the platform Property Partner. They were paying dividends without problems but they have been suspended from March to September due to Corona. I invested also with the hope of some capital gains and there has not been a lot of that the last couple of years. The investments at Property Partner needs to be long term, but unfortunately I needed some money fast to acquire my new property. As it was very fast and easy to sell, I decided to exit completely and invest in my own property as it will create more personal value for me in the form of a second home and I will have full control over the investment.

Crowdestor started paying out again since June and they are, of course, the main platform I will be sourcing the rebalance from. Don’t get me wrong, I really think Crowdestor has handled the crisis well so far and they have been engaging actively in discussions on the forums. However, they are too big a part of my portfolio and there are more late (defauled?) projects now. It is really hard to get an overview over what is late on the Crowdestor webpage, but there is a fairly good updated list with missing payments here

Some of the fund I have withdrawn from Crowdestor and Housers I have transferred to Bondora Go and Grow. I will use it as a liquid cash buffer in the future. This product is unique when it comes to liquidity and I want a platform like that in my portfolio. They have not changed any behaviour or rules during the crises as far as I know. 

I have been a bit disappointed with all the bad loans and loan originators on Mintos this year. I want to see how Mintos handle the pending payments and defaulted loan originators in the long run, before I put a larger amount with them again. 

As P2P has been rough this year and I have realized that there are not that many really good platforms out there, I have decided to move half of my remaining P2P portfolio into stocks. I don’t want to diversify over so-so platforms anymore, just for the sake of diversification. In some I will be keeping smaller amounts purely for testing, though. 

D
uring the process of buying my new apartment, I could not get the money out of the crowdlending platforms fast enough. So in the process I sold a few stock portfolios. One of those stock portfolios I want to re-establish as fast as possible. The main reason is that on this special account (Aktiesparekonto), I will only pay 17% taxes on my profits from stocks. Normally the tax is 27-42% on earnings from stocks. Income from crowdlending is in Denmark categorized as capital gains and the tax is 36-42%! This account currently has a deposit limit of 13.440 EUR but could be raised next year. I will go for maxing out this account with a couple of wide accumulative ETFs. It just does not make sense not taking advantage of this opportunity to earn almost the same after taxes with a safer asset type. 

Final portfolio will most likely consist of these platforms from the list of my current platforms: 
EstateGuruVIAINVESTPeerberryBondora G&Gand Brickshare.  I may add a few Scandinavian platforms. EstateGuru will most likely be the biggest platform. For the rest of the platforms in my current portfolio, I am still on the fence. But some of them will stay in my portfolio. For now want to see how they handle the long term effects of the crises. I am in the process of diversifying less and moving the funds to the platforms that did not change the rules of the game much during the crises. 

Profits made from each platform during the last three months

Payouts during June

401,55 €

Crowdestor: 135,53  
EstateGuru: 63,98 
Peerberry: 43,34 
VIAINVEST: 41,51 
Mintos: 32,83  
CrowdEstate: 27,28  
Swaper: 22 
Finbee: 13,36  
Property Partner: 8,31 
Robo.cash: 7,31 
Debitum Network: 3,37  
DoFinance: 1,56  
Reinvest24: 0,97  

Payouts during July

519,13 €

Crowdestor: 320,28  
EstateGuru: 73,33  
Swaper48,51 
VIAINVEST35,94 
Mintos12,96  
Finbee12,24  
NEO Finance8,68 
CrowdEstate3,25  
DoFinance: 1,96  
Bondora1  
Reinvest24: 0,07  


 

Payouts during August

414,55 €

Crowdestor: 107,13 € 
CrowdEstate: 98,36 € 
EstateGuru: 84,60 €
Peerberry: 47,86 €
VIAINVEST32,25 €
Finbee: 11,82 € 
Swaper: 8,29 €
Mintos: 7,85 € 
Debitum Network: 5,24 € 
NEO Finance: 4,14 €
Reinvest24: 2,57 
Bondora: 2 € 
DoFinance: 1,68 € 
Robo.cash: 0,76 

My portfolio in the start of September 2020

My crowdlending portfolio currently consist of 19 platforms. 
CrowdestorVIAINVESTMintosPeerberryEstateguruCrowdestateBulkEstateSwaperNEO FinanceEvoestateFinbeeDebitum NetworkRobo.cashIuvo GroupBondora, Housers, Brickshare, Reinvest24, and DoFinance. Be aware that my  portfolio is not diversified the way I want it right now, as I have been pulling funds out over a short time period and the liquidity of the platforms are different.  This will change over time though.

In the pie chart below, you can see my distributions on September 1st 2020.  If you want to see more details about my historic earnings and losses you can do so on the My Crowdlending Portfolio page. 

0
36876 € in my crowdlending portfolio

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