05 July 2018
We have signed the earnest money agreement for our 2nd opportunity, great news that we at Brickstarter wanted to announce to you.
If last week we announced the sale of our first opportunity (Penthouse in Bolsería), this week we are announcing the signing of the earnest money contract for our second opportunity (Plaza Cisneros), whose sale is planned before the end of July, although this is not guaranteed.
This brings us double joy. On the one hand, the closing of the sale of the first opportunity and the signing of the earnest money agreement for the second (the result for each investor depends on each transaction and is not guaranteed), and on the other, a first demonstration of how our model works, which does not guarantee future results.
Let's summarize the transactions:
In November 2017, we closed the transaction for the Penthouse in Bolsería. A property that was acquired from a bank for €202,000. Taking into account taxes, expenses, renovation, and furniture, the total cost of the transaction was €239,705.
After the completion of the works, we managed (on January 3, 2018) to put the property into operation.
With the renovation completed and the property brought up to standard, a capital gain was generated (which does not guarantee future results), but it was still far from our initial sales target of €288,000. For that, the most important thing was still missing: demonstrating the property's capacity to generate a return. That is, turning it into an asset that, in addition to its intrinsic value, would have an extra valuation for its capacity to generate rental income.
To that end, we proceeded to operate it as a tourist rental home through platforms such as Airbnb, Booking, Homeaway, etc.
With our second opportunity, everything began in January 2018, when we acquired an apartment in Plaza Cisneros for €188,000. Taking into account the expenses we mentioned earlier, the total cost of the transaction was €229,395.
Once the property was acquired and the home was prepared for conversion into a tourist rental, we proceeded to operate it. This is how the added value of the transaction was generated; the result for each investor depends on each transaction and is not guaranteed.
This transaction therefore fits the business model we apply: creating operating real estate assets, with the aim of selling them later.
Since we began marketing the properties, we have received interest from investors in acquiring them.
In the case of the Penthouse in Bolsería, a home was offered with an estimated gross return close to 10% (estimated sale price of €288,000 and with confirmed annual bookings of almost €30,000 on that date; historical data, which does not guarantee future results). It is an estimated gross return, not guaranteed, that depends on costs, occupancy, and purchase price.
After weeks of negotiation, the sale was finally completed at a price slightly higher than that set in the business plan (€290,000), 6 months after the property went into operation (historical data; does not guarantee future results).
Regarding the apartment in Cisneros, an earnest money agreement for the apartment was signed for a value of €265,000, with confirmed annual bookings of €28,000 on that date (historical data; does not guarantee future results); the anticipated return is not guaranteed until the sale is formalized. The final sale is planned for the end of July, which would close the process in about 6 months, with no guarantee as to timing.
In this way, our investors have benefited from the return of the properties while they were in tourist rental operation and may benefit, where applicable, from the capital gain arising from their sale, the amount and timing of which are not guaranteed.
When talking about returns, we often ignore one of the most important variables: time. It is not the same to obtain an estimated result in 12 months as in 6 months; both are estimates and are not guaranteed.
This is where the proposition of Brickstarter lies: investing in assets below market price for their renovation and subsequent transformation into a productive unit (tourist apartments), with the aim that the property appreciates in value and can be sold, with no guarantee that this will happen or of any timeframe.
We seek to create value through renovation and putting the property into operation, and we hope that the buyer values the fact that the property is sold as an operating property. They are acquiring an operating, furnished property, with future bookings and professional management.
We are not magicians; we achieve all this by implementing our specific business model. A professional model based on the use of multiple tools, with proprietary algorithms and Big Data technology.
With this, we obtain very complex information which, when correctly interpreted, provides us with the tourist opportunities that we offer our investors with an estimated return in line with our analysis criteria, with no guarantee of results.
With the proprietary algorithms we have designed, we create a business plan for each home, and we also adjust tourist rental rates according to demand. In this way we monitor each home and inform our investors of its progress.
If you would like more information or are interested in making an investment, you can contact Brickstarter.
Past or estimated returns do not guarantee future returns. Investing involves a risk of total or partial loss of the invested capital.
Soon you will receive an email to confirm your Brickstarter account.
We hope to see you soon!
