Rio de Janeiro Properties Real Estate Investment Fund
The Rio Properties Real Estate Investment Fund is a privately managed fund focused on the purchase and immediate resale of special circumstance and distressed properties within the Rio de Janeiro metropolitan area; primarily Zona Sul (Leblon, Ipanema, Copacabana and Botafogo).
The fund uses five strategies that provide low risk opportunities and the ability for a quick turnaround. We do not take a long-term buy and hold approach but rather seek to mitigate risks by entering properties at 25 to 50% below market value and releasing them within 2 to 6 months with a small percentage of deals taking 8 to 12 months.
The fund aims to consistently provide investors an annual return of 20%.
Our strategies are as follows:
Strategy 1 - The Bailout: This is our preferred method as we seek to assist homeowners on the verge of foreclosure. This strategy is only applicable to homes that are fully paid for which is the case with most properties in Rio de Janeiro. Let's say the value of the home is R$800.000 and the owner is in debt R$300.000 for back taxes and condo association fees. We offer to pay off the debt and provide R$100.000 in capital for living expenses. We then become a joint owner of the home at which time we sell the property at or below market value. Once the property is sold, our initial investment is returned plus a fee of 15% of the selling price for a net profit of R$120.000 or 30%. The process takes 3 to 6 months to complete for an annualized potential gain of 60%.
Strategy 2 - Bailout Purchase: In some cases, the sales price of the home we helped bailout using strategy 1 may represent an opportunity for further upside potential so we will purchase the property for our short-term portfolio. In most of these cases we will renovate the property and attempt to resale it for an additional profit of 30 to 50%.
Strategy 3 - Inventario: These are real-estate properties where the owner has passed away and a judicial process must take place in order for the heirs to officially receive the property. In most cases the heirs want to immediately sell the property and/or need the capital to fund the inventario process so a contract is created between us the buyer and them the seller where we take over the apartment for only 50% of the agreed upon value. The process can take a few months to a few years although we look for anticipated time frames of 2 to 8 months during which we can renovate and/or rent the property for added income. Upon completion of the inventario process, the remaining 50% will be due. Once paid, we immediately put the property on the market. Because banks will not finance an inventario, cash is required therefore the market will be tighter thus we are able to negotiate a price anywhere from 25 to 35% below market. In some cases we are able to sell the property prior to paying the remaining 50% thus minimizing our total investment to only 50% of the purchase price.
Strategy 4 - Foreclosure: Every week there are foreclosure auctions occurring on distressed properties throughout the Rio de Janeiro area. While we rarely use this strategy because of the highly competitive nature of the auctions and the time it takes to remove current tenants, there are times where hidden gems are found that represent a potential for a 50% to 100% return within 6 to 8 months. We tend to look for auctions near holiday periods such as the end of the year when many investors take an early vacation. Fewer bidders = a good chance to scoop up a property at a very good price.
Strategy 5 - Standard Purchase: Through our extensive connections with building managers, property owners and doormen, we are alerted of owners who must sell quickly for whatever reason or are thinking about selling but have not yet put their property on the market. While these deals may represent lower percentage gains of 10 to 20%, they are deals in which we can complete within 1 or 3 months. Unlike the 4 strategies above, there is no "red tape" to deal with on a standard purchase.
About the fund manager: Anthony's experience with investments, sales as well as marketing began in 1995 when he created the award-winning web site Wall Street Online. It was the world's first web-based service to provide individuals with internet access to a diverse multitude of stock market investment advice. It quickly became a success and within a year was purchased by a small educational firm for active stock market day traders. Anthony remained on as a Vice President of that firm where for 15 years he was responsible in establishing them a dominant position as being one of the most respected web sites for active stock market traders growing them from just a few hundred clients to over 85,000. In recent years Anthony has turned his attention to Rio de Janeiro property rentals as well as participating in Rio's Real Estate market where he has bought and sold his own properties for substantial profits. Anthony's extensive finance & business experience, organizational skills, networking skills and attention to detail have allowed him and his clients to succeed in the Rio de Janeiro real estate market.