Is this a good idea?

[lena green]

A friend of mine, I won’t tell you where just yet, has an enormous tract of land. Planning permission has been granted for many properties but they only take up 15% of the total area of land. So he’s left with acre after acre of empty land.

The land is beautiful, there’s no doubt about that and a golf course has been considered. Actually, that wouldn’t take much re-modelling of the land, as the land is a natural course anyway, it just wants 18 holes punching in it and the grass cutting! But the fact remains, even with a golf course on the land, there’s still acres left empty and a few lakes and woods.

His idea is to give plots of land away.
Yes you read that right.

The area where the land lies is a heavy tourist area not far from town and the beach and accommodation in the area is scarce. Needless to say, tourism is high on his list.

Here’s his idea, he’d welcome your thoughts.

The land is genuinely free, he will give the rights to it immediately a client agrees to do business with him.

And the business is……………..

If he puts the golf course there, the client puts a luxury log cabin on the land at his/her own expense.

The cabin would then be sold and ownership shared by up to 8 golfing owners, each having 6 weeks access. Each golfer would pay for his share of ownership, which would amount to more than what the client paid for the log cabin originally.

The client and my colleague then share the profits. By the way, the golfing is free to cabin buyers. (At this stage the cabin buying client just had his/her money back).

Most golfers don’t play for six weeks at a time, so their deal would be that when the cabins not occupied, its rented back to the company for a low rent and then rented back out thro the company for a high rent, which again, the client has a share of.

Those ‘low’ rentals paid to cabin owners would one day mean the cabin comes free to the golfer.

The golfer is contracted not to rent out his property privately but can play golf free forever instead.

Clients profits are very evident, profit on the sales of cabins, profit on the rentals. And all he/she has to do is put the cabin (s) on the land. Money back as soon as they are sold.

Will this work or won`t it, what do you think?

 

[oregon woodsmoke]

Just how do you put cabins on property that has been refused planning permission permits?

 

[lena green]

Planning problems

Hi Woodsmoke, if your plot has been refused planning permission, you would need to look at what can be allowed without planning permission.

For instance most things on 'wheels' are parked there and based on this,laws change. look at Park Homes, Static Homes, camper caravans and the like also things on 'stlts' that can be moved are not considered by most councils as permanent homes,therefore planning not required. However, one must take into consideration the environmental impact. Sewage, electricity, car parking and roads.

If joned to the national electric grid and sewerage systems, you may need planning so think about Solar Energy and independant sewarage systems, I can help you on both.

You may also want to go back to your council to determine why your planning was knocked back, too many homes maybe, usual problem.

 

[Lysos]

Doesn't make sense. The cabins are to be sold for the same price as the 'client' paid to have them built - so no profit there.If everyone is having "free" golf how are you going to pay for the running of the golf course ?.

If there was money to be made, your friend would build the golf course (assuming he got p.p.) & build cabins himself.

 

[jessicatam]

It doesn't sound like it would work to me, if you're 'paying' your golfers, then trying to rent the properties back out - what if you have properties standing empty for a while?

 

[lena green]

Hi Lysos/Jess,

In answer to your questions, here`s how the numbers crunch.

Investor pays 100k Sterling for the cabin. Its then sold with free golf for 160k divide by 8 separate shares @ 20k apiece, so there`s the profit of 60k. 100k goes back to the investor straight way. 60k split 50/50

Cabins then rented from Golfer/shareholder at token rent, say 100 a week, remember he has no golfing fees to pay and many courses would charge more than the 20k paid, just for club membership.(without a log cabin thrown in).

The cabin passes to the company to rent out at 1000 a week (when not occupied by the golfer,) high season and 500 a week low season. Rental incomes shared between investor and site owner.

Maintenance of the site comes from two sources, rental incomes as aforementioned and green fees from none resident golfers and as the whole site is deemed 'touristic' there would be lots of other facilities producing cash. All the Villas and apartments on the site have to be rented out under the terms of the 'touristic' license, so income is assured.

This site by the way, is already underway and properties will be marketed off plan before the years end.
So to simplyfy things:
Invester puts in 100k receives 130k on sale of 8 shares followed by ongoing income from rentals. Less costs.
Shareholder receives 6 week ownership and a small income from rentals which would undoubtedly cover flights + receives free golf.

On 'doing it himself'........ no doubt as profits roll in from other aspects of the site, he would turn in that direction. The site is so vast, literally hundreds of golfing cabins could be placed upon it. Based on this fact, this idea has a limited life with the owner ceasing the offer say after 25 had been sold. In effect, it gets him off to a flying start at no cost to himself and 25 investors get a cracking deal.

 

[wesrae]

Cost of building Golf Course

"Actually, that wouldn’t take much re-modelling of the land, as the land is a natural course anyway, it just wants 18 holes punching in it and the grass cutting!"

Aside from other valid comments raised in response to your question, I have to add that the cost of building a golf course is incredibly high. It really is not as simple as punching the holes in and cutting the grass, if you want to create a desirable course the cost will run into the millions.

You need all the associated facilities (clubhouse, changing rooms, car parks) to be constructed which alone is not cheap. After that, installing irrigation, drainage, pathways, water features, bunkers over a full size course is a momoth task!

Really thats only a start, but I think you would need to take another look at the figures. I'm sure if you are determined enough there is a solution out there, whether its a golf course or otherwise.

 

[Lysos]

The figures really don't bear scrutiny. As wesrae has pointed out it costs a lot to build a golf course and the necessary infrastructure. You say that golfers wouldn't want all their 6 week share; not all at once, they wouldn't, so the 'owners' would get to gether and draw up a timetable, spreading their weeks over the year. So, no spare weeks to rent out, no rental income. Golf courses cost a lot to maintain, which is why most clubs need a core of members paying annual fees; they couldn't exist on casual green fees. There wouldn't be much spare capacity for casual golfers anyway. Let's assume first tee time 07:00 & last tee time 16:00 (in summer, shorter time frame in winter) allowing only fourballs. Max throughput is 216 golfers per day. Apart from that most golfers prefer serviced accommodation (i.e. hotels) and to play a variety of courses when on holiday. That is why Belek in Turkey wins hands down for me.

This idea is simply a non starter, and I suspect your friend is not a golfer.

 

[lena green]

Hi Lysos/Wesrae

Thanks for your negative outlook. Please don`t be offended its welcome, in fact its what I thrive on. Lets have a look at costs of the course first.

He has been quoted 120k Sterling a hole owing to site not difficult to remodel...2,160,000 million, with a 13 year payback including all running costs for that time. Sounds horrendous ! However, the whole site falls under the touristic rules. Which is, 'if the planned property owners sign an agreement for 6 months letting over 5 years', 'then there is a grant for the course' in other words, the course will cost nothing.The bank will lend the money to build it knowing the Govt. will pay them back. This is arranged thro` the EU.
Let me clarify which properties I am refering to here, lets not get confused over log cabins. There are 150 villas/apartments here with council options for more.
Total income at 2750 a metre over approx 60,000 metres = 165 million income !! deduct 1000a metre for build costs or 60 million and the the course and running costs become a mere splash in the ocean. So I think we can rule out course costs as prohibitive and clubhouses and everything else associated.

Now, the golfers, to be quite frank, 'who cares who plays' with 100 million profits to date its got built in occupancy as the golf is practically free. When other golfers hear of this, they may well consider not paying 3000 (sharing) a week for local hotels in the high season or paying 4000 a metre on the nearest site for a luxury villa with sky high maintenance costs.

.............and if it is fully occupied with golfers, as I said earlier, the build is limitied to just 25 units. There is room on this land for 1025 units which if built would cause a problem with room only for 200 a day knocking their balls about. So, he limits the build to 200 units. 175 for him and 25 for the investors.

No, he`s not a golfer, just a very astute land owner who also sees a great future in ten top of the range Crown Green Bowling greens.

I don`t think you see the enormity of this concept as compared to the miniscule opportunity offered in terms of profit for all concerned in the early stages, maybe I should have explained differently but thanx anyway, comments much appreciated.

 

[Lysos]

The eu paying for a golf course to be built !?!. That's a new one on me. You are right, Lena, I don't see the enormity of this concept. I'm asuming your figures are in Euros, so don't know where you get golfers paying 3,000 eurs per week to share a room. A week in a single room in an all inclusive 5 star hotel, 4 rounds of golf on superb courses, chauffeur driven limousine transfers, in Belek, including flights, @ £730. If your friend is astute as you claim, tell him to forget the golf and go with the crown green bowling.

 

[lena green]

Morning Lysos,

The currency is in Euros. The 'enormity' is 300 properties to build (+ the 200 cabins) not to mention supermarket, conference centre, new lakes, golf course, shops, and all related touristic aspects, could end up as another Disneyland or Waterpark in fact anything that attracts tourism will be considered as its all 'grantable' and yes, that includes the golf course.

If you came here with a couple of mates now, you could be paying around 300 euros a night in fact I just checked the Hilton out and its 208 sterling a night x 7 = 1456 x three mates 4368 sterling per week for three not sharing, then your golf at 40-80 euros a game x 7 games plus beer/food call it 100 a game or 700 euros......... would you rather pay that or have your own log cabin and free golf. Split ownership between four golfers at 6k each total 25k now seems very viable eh?

...........and the Crown Green is a goer !! by the way, we have over 35 golf courses here over a 100km stretch and no one is doing what my colleague is considering.

By the way as an aside, your gas bill just went up today by 23% ours here is around 50 euros a year and electric around 300, thats the beauty of endless sunshine, course we don`t use much of either as we're out playing golf most days and eating out in cheapo restaurants. I wonder why there isn`t a mass exodus from the UK when things get as bad as this.
We have an alternative option for those who are finding life miserable, invest in two log cabins and have a home and income and retire playing free golf forever !!

We`re on the Algarve..........

 

[DOG]

If the cabins are to be marketed off plan, why the need for an investor ? to buy the cabin for £100,000 and then sell it on to shareholders ? Surely your friend would simply buy the cabin once the 8 share holders are in place and he could keep the £60,000 for himself!
Once 2 were sold he would have £120,000 profit which is more than enough to continue with this process without selling off plan !

If I was an investor looking into this I would assume your friend either has a financial problem or he thinks the risk is to high for him to put up the £100,000 himself!

Sorry as an investor I’m OUT.

 

[lena green]

Hi Dog,

Thanx for this, I see your reasoning, but lets view it another way.
25 units is the limit now on offer. What's easier to find 200 shareholders or 25 investors?(maybe less on multiple purchases)
It will be a lot faster for him to build two himself as show cabins so investors can see what they are getting, then sell another 25 on the strength of that.The site is then up and running and in full swing very quickly with another 175 units to go, all his.
He can sit back and let them sell themselves.
Money problems? don`t think so as with full planning permission and a recent Company valuation of 18 million, he`s in clover.
As an investor, I`m sure you appreciate the free land is the security on the investment as a plot on this site, right on the edge of a golf course with 300 properties to be built over the next three years, will be worth a bob ot two in due course.

 

[mickthepropertyguru]

Apart form the log cabins, have many of the villas/apartments been sold yet ?

 

[DOG]

Still not convinced. He wants quick sales but then expects the 25 investors to wait for 200 shareholders to appear ! He could build the 2 cabins as you said and then use them as show cabins. If the deal is so good for the share holder then he shouldn’t have to wait long before he finds his first 16 investors.

If the Golf course was built first the clients should come rolling in!

However I don’t think I would spend £20,000 on an 8th share of a log cabin with a limited life. Log cabins are a depreciating asset just like a caravan. After a period of time you have a share of nothing (possibly the land) but that may still be in the ownership of the investor?
Who will meet the ongoing running costs? What if a shareholder did not pay his share in the event the rental did not cover the costs. (NO GUARENTEES ON RENTAL PLEASE)

Who is supplying the log cabins at £100,000 each ? It is easy to say the land is free but you have to pay £100,000 for a log cabin. I can give you a free porsche but you have to buy the key ring for £60,000!

Who will find the 200 investors? what if they don’t appear ? Seems spending £100,000 on a log cabin and then relying on someone else to bring investors is very risky. What if one of the 8 share holders wants to sell ? who will find the new buyer ?

He could take the £2.5 million raised for the 25 log cabins and uses that to finance the golf course, or the other properties he is wanting to build and not bother about finding shareholders.

Sorry to be a skeptic but how often do you see a deal that will bring you a £30,000 return, an income, and free golf on the Algarve and all this with no effort other than to part with £100,000

It all sounds to risky. He should stick to selling his 8th shares first. This may prove the concept will work. I wish him Good luck finding people to part with £20,000 for an 8th share of a wooden building.
I could use £20,000 as a deposit on a regular property that I end up owning 100% in time, or selling and take the profit.

Sorry still don’t see it working!

 

[lena green]

Hi Dog

Thanx for this, before we fill the lake full of concrete and open a Rollerina! I’d like to address each of your much appreciated comments on this subject as this is the whole reason I put this page up, i.e. to find the problems and granted, you have brought out a few queries that need further scrutiny.

I have brought your last mail in full onto the screen and my replies are below in caps (`scuse)

Q. Still not convinced. He wants quick sales but then expects the 25 investors to wait for 200 shareholders to appear !

A. CORRECT, COULD BE ACCUSED OF PASSING THE BUCK BUT HE`S MAKING MONEY FOR YOU IS`NT HE.

Q. He could build the 2 cabins as you said and then use them as show cabins. If the deal is so good for the share holder then he shouldn’t have to wait long before he finds his first 16 investors.

A. GRANTED BUT, THE INVESTOR IS A SHORT CUT IS`NT HE?

Q. If the Golf course was built first the clients should come rolling in!

A. AGREED BUT THAT COULD BE 18 MONTHS AWAY TO COMPLETION

Q. However I don’t think I would spend £20,000 on an 8th share of a log cabin with a limited life.

B. WHOOAAA A ‘LIMITED LIFE’, DON`T THINK HUF HOUSE WOULD’NT TAKE KINDLY TO YOU SAYING THAT, NOT THAT THESE ARE HUF HOMES BUT THEY ARE 6” PINE TIGHT GRAIN TIMBER AND WOOD HAS BEEN AROUND A LONG TIME. MOST OF THE TUDOR HOUSES, YORK, AND STRATFORD ETC HAVE MAJOR WOOD CONTENT AND HAVE BEEN AROUND FOR CENTURIES. THEY WILL CERTAINLY SERVE A GOLFERS LIFETIME, THEIR KIDS AND THEIR KIDS LLIVES.

Q. Log cabins are a depreciating asset just like a caravan.

A. WHO SAYS THAT? AS YOU SAY, THE LAND IS STILL THERE AND THE CABIN IS LIKELY TO BE THERE TO THE NEXT MILLENNIUM AS IS THE FREE GOLF AND THAT’S THE ATTRACTION.

Q. After a period of time you have a share of nothing (possibly the land) but that may still be in the ownership of the investor?

A. THE LAND PASSES TO THE 8 SHAREHOLDERS IMMEDIATELY THEY PAY.

Q. Who will meet the ongoing running costs?

A. I ASSUME YOU ARE REFERING TO THE CABIN AND NOT THE GOLF COURSE? ANSWER, THEY OWN IT, THEY LOOK AFTER IT. THRO THE SITE OWNER.

Q. What if a shareholder did not pay his share in the event the rental did not cover the costs. (NO GUARENTEES ON RENTAL PLEASE)

A. I HAVE ACTUALLY BEEN INVOLVED IN A SITUATION LIKE THIS BEFORE. THE RENTALS ARE NOT GUARANTEED, THE SHAREHOLDER IS CONTRACTED TO PAY AN ANNUAL FEE TO HIS GROUP FOR MAINTENANCE OF HIS CABIN. (SAY 200 POUNDS A YEAR X 8 WOULD COVER INCIDENTALS AND WHEN THERE IS AN EXCESS OF FUNDS, THEY IMPROVE THE PREMISES. IF A SHAREHOLDER WON`T PAY FOR WHATEVER REASONS, A SMALL CLAIM COURT WILL (OR THREAT OF) SORT HIM OUT. OR A BAN ON HIM USING THE PROPERTY WITH RENTALS CONFISCATED.

Q. Who is supplying the log cabins at £100,000 each ?

A. SITEOWNER

Q. It is easy to say the land is free but you have to pay £100,000 for a log cabin. I can give you a free porsche but you have to buy the key ring for £60,000!

A. I TAKE YOUR POINT. SITE OWNER HAS BOUGHT AND PAID FOR THE LAND WHICH HAS A VALUE, I WOULD SUSPECT THERE IS PROFIT FOR HIM IN THE 100K CHARGE TO THE INVESTOR BUT IF THE INVESTOR CARES TO HAVE IT PROFESSIONALY VALUED ON COMPLETION, IT WILL BE WELL WORTH 100K. THESE UNITS ARE NOT GARDEN SHEDS.


Q. Who will find the 200 investors?

A. I ASSUME YOU ARE REFERING TO THE 200 SHAREHOLDERS HERE, WELL, THE INVESTORS HAVE AN INTEREST IN SELLING THEIR PROPERTY BUT LOCAL ESTATE AGENTS WOULD BE INVOLVED, EXHIBITIONS, ‘PLACE IN THE SUN' ETC, BULLETIN BOARDS SUCH AS THIS, PETER PARFAIT MIGHT LEND A HAND AND IAN MAITLAND. THE SITE WILL BE A BUSY SITE WHEN FINISHED, OCCASIONAL GOLFERS WILL BE ENCOURAGED TO COME LOOK AT OUR ’DUCKPOND', IN FACT THEY PLAY AROUND IT. LOCAL ADVERTING IN NEWSPAPERS AND THE RELEVANT NEWSPAPERS AND MAGS IN THE UK, THEN OF COURSE THERE`S ME !!

Q. what if they don’t appear ?

A. ANY FAITH IN THE EXPRESSION ‘BUILD IT AND THEY WILL COME’ THE UNITS WOULD STILL BE RENTED OUT AS HOLIDAY HOMES TO OUR MILLIONS OF TOURISTS WHO COME HERE EACH YEAR…..AND OR GOLFERS.

Q Seems spending £100,000 on a log cabin and then relying on someone else to bring investors is very risky.

A. THE SITE OWNER WOULD EXPECT THE INVESTOR TO SPREAD THE WORD AMONGST HIS OWN FRIENDS THAT THESE PROP WERE AVIALBLE, NOT THAT HE`S ASKING HIM TO DO ALL THE SELLING HE’S NOT BUT IT HELPS IF HE CONTIBUTES HIS BIT. THE SITEPWNER IS KNOWN TO MANY OF THE LOCAL ESTATE AGENTS AND AS YOU READ ABOVE A SALES PROGRAMME IS PLANNED.

Q. What if one of the 8 share holders wants to sell ? who will find the new buyer

A .THE SELLING OF THE SHAREHOLDINGS WILL BE AN ONGOING PROGRAMME. IT WILL BE OFFERED TO THE REMAINING SEVEN FIRST WHERE, IF THEY ARE CONTENT, IT WOULD BE SNAPPED UP. 3500 EACH

Q. He could take the £2.5 million raised for the 25 log cabins and uses that to finance the golf course,

A. NO NEED TO DO THAT, THE BANK IS HERE

Q. or the other properties he is wanting to build and not bother about finding shareholders.

A. IF THIS PROGRAME IS TO SUCCEED, IT WIL BE ONE OF THE MOST ONGOING PROGRAMMES ON THE ALGARVE. NOT GOING THRO WITH IT OR MOVING THE GOALPOSTS IS NOT AN OPTION


Q. Sorry to be a skeptic but how often do you see a deal that will bring you a £30,000 return, an income, and free golf on the Algarve and all this with no effort other than to part with £100,000

A. SIMPLE ANSWER, ‘IF IT SOUNDS TO GOOD TO BE TRUE, IT PROBABLY IS`NT TRUE. IN THIS CASE IT IS.

EVERY DAY I READ OF INVESTORS WHO PUT DOWN THEIR DOSH HAVING DONE THEIR DD ONLY TO FIND IN A YEAR THE COMPANY IS NON-EXISTANT.

THE COMPANY I AM DEALING WITH THAT OWNS THE SITE WAS FORMED IN `89 AND IS STILL HERE AND HAS TAKEN 20 YEARS TO GET THE RELEVANT PLANNING PERMISSIONS, WOULD YOU STOP NOW ??

I`LL END HERE AND THANK YOU FOR TAKING THE TIME TO RESPOND AND I`M SORRY WE CAN`T INTEREST YOU BUT HAVING SAID THAT I WAS ASKED TO PUT THIS QUESTION ‘ do you think this is a good idea’ TO THE BOARD AND AM DELIGHTED WITH THE HELPING COMMENTS I HAVE RECEIVED ALL OF WHICH GO STRAIGHT BACK TO THE SITE OWNER.

THANX AGAIN FOR YOUR INPUT

LENA

 

[lena green]

Hi Mick TPG

As yet there is no sales programme in force to sell the property you mention, that is due to start after August, however, this is just one aspect of the land where the cabins are planned
duckpond

you should see the rest of it.

 

[Lysos]

The fact that you mentioned Peter Parfait is the nail in this particular coffin for me. Plus, if your friend is so wealthy, astute & has all the pp's in place he wouldn't need you posting here asking for views on viability. There are numerous golf courses in the Algarve struggling to sell their properties. and i still can't find any evidence to back up your claim that the EU will finance a commercial golf club. Perhaps you could quote the relevant directive ?. Guess we'll all be kicking ourselves on missing this opportunity - not.

Dog is absolutely right - if it sounds too good etc. especially in the current (and ongoing) economic scenario.

 

[lena green]

Parfait is only a sales tool isn`t he? along with all other medias. Don`t you like him?

My friend is not wealthy (yet) but will soon be so.

You are right in saying other courses are having dificulties. Ever seen a Portuguese at a property show in the UK. NO, and the reason is they are so laid back, have no sales aggression and just won`t get off their backsides to sell. In fact they don`t know how to sell.
Sad to say the reason is, they just don`t speak good english so they employ the English to do it for them. I don`t want to brand everyone Portuguese here as bad speakers of English, its just 90% of them.

You might find British Estate agents representing them at shows, but you won`t find them there except for Oceanico whom I have the greatest respect, but they are Irish owned.
So, when it comes to getting rid of your stock of properties, one needs to have sales plan and to work that plan. The locals don`t, they have a build plan then rely on passing passive sales.
If you look hard enough on EU Touristic Grants you'll find it.

 

[Lysos]

"Parfait is only a sales tool isn't he ?".

The word 'sales' was superflous. Mr. Parfait ( a pseudonym, I believe) Very upfront writing in Hot Property Alert when the market was rising, drawing naive investors into deals that subsequently cost them dear - very dear !.
E.G. Aramis Investments who despicably raised their profile by 'gifting' an unbuilt Spanish villa to a charity headed by former Arsenal goalkeeper, Bob Wilson. Don't know where the principals are today but the investors were left high & dry, and severely out of pocket. How about Fortuna, selling shares in huge tracts of agricultural land in Spain on vague promises of development potential ?. Over 5 years on not a single completed project and not a penny returned to investors. Let's not forget R2I; numerous projects, no evidence of a return on any of them; lambasted by the regulators in Jersey and facing various legal actions. (See threads on Singing Pig).

.....and this is the kind of person you want associated with this project ?. Well, if you are looking for mugs - yes !.

As for property exhibitions, can't imagine anyone who has done a modicum of research going anywhere near. If all these 'wonderful' developments were really so good investors in the country of origin would snap them up. Can't be long before the likes of Baratts are holding expos in Sofia, 'selling' the British dream to savvy Bulgarian investors !. (Of course, the Bulgarians know all they have to do is come here and get everything for free).