General idea
Construction of solid, European quality, single storey, holiday
homes in the most economic way to secure a high selling turnover
(quick Return on Investment), fast construction and a maximum
profitability for the investor(s).
The plot
The suggested plot is located in the municipality of Casabermeja,
22 km from Malaga and adjacent to the National park, Montes de
Malaga. The actual size of the plot is 67 Fanegas (1 Fanega is
approximately 6000 m2 or the space needed to plant 250 (?) olive
trees). The actual size will be determined by the topographical
study and is likely to be more than 402.000 m2 (67 x 6000).
The escritura is in the name of the owner who lives in Madrid.
Our contacts (Angel and Joaquin) paid a deposit in January 2002
with an option to buy the land for a fixed price. The latest payment
term for them is due in December 2002. The escritura will directly
be in the future buyers name. Don Piso in Benalmadena (Salvador)
is representing Angel and Joaquin.
Water and electricity runs up to the plot and the construction
of a tarmacked road is in process.
The terrain is easily accessible, 30 minutes to the airport and
beaches and 1 hour to Granada and the Sierra Nevada. Highway Malaga
- Antequera 4 km from plot.
Selling price for this land is 541.000 Euro, regardless of the
actual plot size.
Casabermeja
area: 66'40 km²
altitude above sea level: 547 metres
average annual rainfall: 590 l/m² (Benalmadena 610 l/m²
)
average annual temperature: 15'9 ºc
population census 1994: 3.185
Investment opportunities for the suggested plot
The actual situation is as follows:
The plot is listed as "rustic". In the Casabermeja
area this means minimum size plots of 20.000 m2 with a maximum
building capacity of 200 m2 per plot. Angel and Joaquin are in
process of making a topographical plan and will seek permission
from the municipality of Casabermeja to transfer the land in plots
of 5000 or 3000 m2 with a maximum building capacity of 300 m2.
Clients might decide to build one main house and a smaller guesthouse
on their plot for instance as long as the total number of sq.
meters is not exceeding 300.
Total plot size 402.000 m2
Max number of plots Green zone Probable number of plots
Plots 20.000 m2 20 20% 16
Plots 5000 m2 80 20% 64
Plots 3000 m2 134 20% 107
For the above table I still use the 402.000 m2 (67 Fanegas). The
actual number of sq. meters is likely to be higher.
Green zone: 20 %, to be on the safe side. Casabermeja Municipality
will decide.
According to Joaquin, who is very well placed in Casabermeja,
the approval to reduce the plot sizes is likely to be given. As
mentioned, water and electricity are already available up to the
plot's border.
As soon as the land is bought, the Casabermeja municipality should
be requested to split the escritura in the total number of plots
with building permission for a house and a swimming pool. Swimming
pool can be offered as option to our clients but it saves us and
them a lot of hassle if their title deeds are complete. (selling
argument, of course). On the other hand people might decide to
construct a swimming pool themselves later (without any profit
for the investor).
Infrastructure on the plot
After the sale is agreed upon the new owner will start putting
in roads, electricity and water points up to the plots as proposed
in the topographical plan. Discussion point is: to put in telephone
lines in the same time. Future owners of the individual plots
can choose to have or not have a connection.
Sewage: depends on the municipality of Casabermeja. Onsite wastewater
disposal systems (septic tanks) (one general or individual per
plot) or other storage facilities might be an low cost option.
All ground work can be done by a company called SAMU (sp). SAMU
will provide a quotation according to the topographical plan.
Special deals might be made with the company currently working
on the roads. Because the machinery is already in place, they
might make a special offer.
SAMU might also be interested to do the breaking ground work
for the individual plots (leveling, cellar etc).
Think: Streetlights, fences, security, postboxes, garbage, community
office, community water points for green zones.
Check: water and electricity supply sufficient for the number
of houses to be constructed. Water well (at least for community
use)
Green zones
Although the plot sizes remain big and there is enough greenery
around, Casabermeja will probably designate parts of the plan
partial as green zones. Green zones will remain rustic or have
to be planted with low-maintenance trees (olive-).
Construction
We are looking for a:
Good quality construction according to European standards. Guaranteeing
an above average quality, will increase the sales turnover. Northern
European clients are likely to pay a bit more if the construction
is sound. Part of the homes will probably be used as a holiday
home and should be low maintenance ……Price difference
between average and good on a 100 m2 house is not enormous. Savings
will and can be made on fittings, tiling, wholesale discounts
etc.
Fast construction to keep the investment period as short as possible.
I propose 2 - 3 different model homes. Models can be deposited
at the municipality of Casabermeja for approval. Sales will increase,
prospective buyers prefer to have their home ready within 6 months
instead of waiting for 2 years. As soon as the buying decision
is made, building should start as soon as possible. Another advantage
is that, after the initial deposit upon signing the contract,
the rest of the selling price is due within a short period, this
leads to increase of cash flow and minimal interest loss.
Low cost construction for a quick sales turnover and maximum
profit.
Construction possibilities:
- Traditional. Brick and mortar. Disadvantages are a long construction
period and a greater expense. Advantage might be that the houses
can be build according to the individual clients' wishes although
this option is less attractive to the investors point of view.
- Pre-fab from Belgium: Relatively expensive because of transport,
inappropriate architecture and no or little possibility to change
according to individual wishes.
Advantages: fast construction by professionals.
- Pre-fab from Spain. The moulds for the segments are made locally.
The advantages of pre-fab from Spain are the following:
Investor can design his own model houses according to local architectural
standards.
A relative lower cost compared with the prefab from Belgium, rough
indication: around 13.000.000 inclusive of ground work etc for
a 110 m2 house.
Construction period 3 months (inclusive of excavation and flattening
of plot).
Easy access to local constructor/builder/manufacturer.
Disadvantage: models are going to be made to order, we cannot
expect that the first house will be perfect and it is difficult
to allocate building time
- Wood. There are several representatives in Spain from house
made in Finland and the Czech (sp) republic. Advantages: lowest
cost of all constructions and shortest construction period. Choice
of a few models, not necessary to manufacture moulds. Furthermore
there are no architect fees and the 3 selling models can be deposited
at the municipality of Casabermeja for approval.
Disadvantage might be that future clients see a wooden house as
a cheap alternative. An option might be the construction of a
wooden frame and lining on the outside with bricks.
Wooden house can be painted in any color. Models can be ordered
according to the investors wishes. Even new models can be designed
given the criteria set by the investors.
The sample models and prices are without the ground breaking work,
excavations (if necessary) and concrete platform or as a cheaper
solution, concrete pillars.
This sample model is provide by a Holgin, Czech company. I have
contacted more suppliers to determine the right model, quality/price,
payment options and delivery and construction time.
- Multi Element from Norway. Design your own model, Scandinavian
Standard. Extremely quick to build (6-8 hours for the frame. Price
around 80.000 per m2. This price includes: house, transport, construction,
finishing inside and outside electric cabling and plumbing. Finishing
is standard done in wood but brick can be put against the outside
walls. Flooring according to the clients choice, wood or tiles.
Check on possibilities to buy heavy material (roof etc) in spain
to reduce transport costs.
Traditional brick - mortar Prefab Belgium Prefab Spain Wood Multi
element
Costs + ++ +++ ++++ +++++
Building time + ++ +++ ++++ +++++
Individuality +++++ +++ ++++ ++++ +++++
Fit in landscape +++++ ++ +++++ ++ ++++
Free design +++++ ++ +++++ ++++ +++++
Legal work + +++ +++ +++ +++
Company- trust ++ ++++ ++ ++++ +++++
The more ++ the better (according to our criteria)
Concluding as far as the construction types are concerned, my
preference goes to the Multi element system Spain because of the
advantages mentioned above. Individuality can be made by giving
the houses different colors. Second Choice wooden houses.
Third choice would be the concrete pre fab homes made in Spain,
although more research and cost calculation should be done.
Additional sales
Besides the standard 3 model homes we are offering with standard
finishing clients can opt, for instance for a swimming pool (3
models), air-conditioning, marble, garden shed, guesthouse, BBQ
stand, garage, satellite dish installation, fittings and furniture.
Although I think we shouldn't make the list too long there is
a good possibility to produce extra income and, additionally,
gives the clients a possibility to make their future home more
individual.
Separate contracts should be negotiated with different suppliers
for extra items.
Sales pitch
Very reasonably priced
Ready within a few months
Good accessibility
Plot next to a national park
30 minutes to the beach, 1 hour to the Sierra Nevada
big 5000 m2 plot
quality material
bank guarantee to protect owner
rental services to be offered
security
Actual Sales
Don Piso Benalmadena is keen to have the exclusive sales right
for the project. Don Piso, as a company, is one of the biggest
real estate groups in Spain. Together with the constructor, advertising
material should be produced. Commission rates will be negotiated.
Don Piso will make a sales proposal.
Selling prices have to be calculated taking into consideration,
plot, house, additional sales, legal paperwork etc but ideally
would be around 18.000.000. Different plots, different prices.
Paperwork Angel, Joaquin?????????????????????
Finance
Construction itself might be financed by a bank or money can
be borrowed from a bank against low interest if we offer the clients
an 80% mortgage. An other possibility is to sell homes from paper
until the cash flow is sufficient to start constructing.
It is a matter of calculating which method is the most profitable.
Bank guarantee to be given by BBVA or other bank?
Excel Sheet
All figures are rough and have to be checked with the constructor,
lawyer and the supplier of the homes. Selling prices per plot
and per type of house are to be discussed as well. Additional
sales as mentioned above are not taken into consideration.
We are looking at the moment at 3 different scenarios
plots cost selling net/plot total project Euro
16 16,170,000 18,000,000 1,830,000 29,280,000 176,386
64 12,416,250 18,000,000 5,583,750 357,360,000 2,152,771
107 12,124,801 18,000,000 5,875,199 628,646,250 3,787,026
For details see the actual XLS sheet.
Ideally would be an invested capital of 80.000.000 pesetas, start
sales and finance the rest with the deposits from clients.
Return on investment in this case:
plots total project ROI Euro
16 29,280,000 36.6% 176,386
64 357,360,000 446% 2,152,771
107 628,646,250 786% 3,787,026
This report is just a collection of thoughts. More research is,
of course, needed on different details.
