Hi I'm new to the real estate investments world. I would like to invest in a real estate deal in Greece kind of PE acquisition of purchasing a building in Athens The company (the GP) has invested about 20% of the value of the property, the rest on the money is raised from private investors (LP's) According to the outline of the deal, I, as an investor, hold a "share" in a Greek company that owns the property > the SPV company.
I have few questions Is this type of transaction structure acceptable? Am I considered an owner of the property? What should I watch out for? What are my main risks (in terms of transaction structure)? What's up with the bankrupt SPV company?
Handyman 路 Pittsburgh, PA 路 Member since 2018 路 5k+ posts 路 13k+ votes
6y
This sounds very much like the first stages of the 50% scams of yesteryear. Until an apartment building was more than 50% done, Greek tax laws didn't require property taxes to be paid on the building, the "akinito," just the land. So contractors would pour the concrete and leave off on the brickwork, windows, and finish in these places. Foreign investors bought in during the initial stages, only to be presented with the new buy-in tax requirements, should the building go forward. The skeleton would sit for years until the foreign investors gave up trying to get their lawsuits settled in the impossible Greek court system. The contractor ended up with full title to the skeleton at a pittance of the cost of building it, and only then sold the condo units to local buyers and finished it.
I'm not saying that's what it is but I would count my fingers after shaking hands with any Greek and I would not go ahead with this deal unless I had blood kin in Greece checking up on this personally.
Full disclosure: I am Greek and lived in Greece from 2000-2007.
Specialist 路 Riverside, CA 路 Member since 2015 路 6k+ posts 路 3k+ votes
6y
@David Mos do you know anything about Greek real estate? Do you know if you'll have to file a Greek tax return? What type of property is it, what is the plan to pay funds back to you? There are a lot of unanswered questions here, if you are in the USA this sounds like a very convoluted investment.
Handyman 路 Pittsburgh, PA 路 Member since 2018 路 5k+ posts 路 13k+ votes
6y
This sounds very much like the first stages of the 50% scams of yesteryear. Until an apartment building was more than 50% done, Greek tax laws didn't require property taxes to be paid on the building, the "akinito," just the land. So contractors would pour the concrete and leave off on the brickwork, windows, and finish in these places. Foreign investors bought in during the initial stages, only to be presented with the new buy-in tax requirements, should the building go forward. The skeleton would sit for years until the foreign investors gave up trying to get their lawsuits settled in the impossible Greek court system. The contractor ended up with full title to the skeleton at a pittance of the cost of building it, and only then sold the condo units to local buyers and finished it.
I'm not saying that's what it is but I would count my fingers after shaking hands with any Greek and I would not go ahead with this deal unless I had blood kin in Greece checking up on this personally.
Full disclosure: I am Greek and lived in Greece from 2000-2007.
First of all thanks for your replies! I will try to answer your intentional questions so you could advise me better. What I know about the Greek real estate > things that I read on Google and economic websites. I'm not a US citizen, I do know that Greece have a good tax convention with my country.
GP Background:
American privately-owned group of affiliated companies which acquire, develop, manage, and improve commercial and residential real estate. They have Long-standing relationship with a veteran real estate group in Greece which Know the Greek market for its ignorance.
Property: it's a building In Athens Skeleton, a building that has undergone a fire.
Yield: There are two strategies 1) Buy the property and wait as prices rise then sell (real estate prices in Greece are on the rise) return money on sale
2)refinance from the bank to renovate and operate. Return money after renovation and operation (every quarter)