Bargain Hunting on Portugal’s Silver Coast

“Don’t let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner.”

―Robert De Niro in the film, Heat.

Great advice if you’re a bank robber.

Not so good for relationships.

But for real estate investing…it’s gold.

You should always know your exit strategy before you tie yourself into any deal. An exit strategy is important, whether you’re buying real estate as a pure investment or simply as a home for you to enjoy.

As I wrote recently, my wife and I made the decision to embrace Portugal as our primary home. By that, I mean, it’s no longer just one of a number of places around the world where we base ourselves for part of the year. It’s home.

Portugal’s Silver Coast has become our home base. We’ve had such a positive experience, it has rendered our other plans redundant.

That means less time in our Mexico bases, less time taking in the Irish summer, and more time putting roots down. We want a garden, fruit trees, a proper office space…

As you may know, we already own a two-bed condo here in the Praia D’El Rey Golf and Beach Resort. But it was only ever meant for part-time living. It’s not the full-time home we want now.

And this is where having an exit strategy becomes important…
Even though we love the condo, it’s not cut out for long-term living. We want a larger home. Space for an office, space for visiting friends and family, and as well as private outdoor space.

Having an exit strategy means we’re not tied to the condo. Even though we bought it for personal use, not as an investment, I knew that one day our circumstances might change and we might need to sell.

So, I made sure that when I bought it, not only did the condo meet my personal criteria—close to an international airport, a beach, golf, etc.—but it also offered at least some rental potential and a decent chance of appreciation.

The thing is, the Silver Coast is not like the Algarve. On the Algarve, nearly everything rents. Here, the rental market is weaker, so, to ensure rental income, it’s important to own best-in-class.

With my beachfront condo, that’s what I have. Owning this close to the beach anywhere in Europe is rare. In Portugal, what I have is now almost unheard of. Regulations simply don’t allow condos to be built this close to the beach anymore.

From my living room I can hear the Atlantic waves crashing and feel the sea air on my skin. The condo is about the most rentable real estate you can get in this region. And even though the market as a whole isn’t that strong, because of these special attributes, I can still do really well.

For instance, when I left for Ireland during the summer for 10 weeks or so I made the condo available for rental. During that period, it drew in enough rental income to cover the entire year’s costs, including mortgage of €607 a month. The condo next door has been rented solid from early May right through to November (and it’s currently listing for €495,000).

Right now on the Silver Coast, the golf vacation season is in full swing (so to speak) and it will continue right into the third week of November. I’m hearing that the season is getting even longer, as Scandinavians continue to come in larger numbers to get their golf fix.

My point is, buy well here and you have options, no matter what. You have your exit strategy. I won’t even sell the condo, even though I’d easily get more than I paid. It’s not a burden. And over the summer, the tenants we get in pay for its entire years’ mortgage. The rest of the year it will be a guest house for friends and family who visit.

In the meantime, the house hunt is on…

I had gone sale agreed on a home. It was four minutes’ drive from here. It seemed perfect. A beautiful corner site just outside Praia D’El Rey, with stunning views of the Óbidos Lagoon and next to protected forest.

Bank paperwork was approved. Money in place. I didn’t make my offer until my ducks were all in a row.

I’m a firm believer in not negotiating the conventional way. I set a course that works for me, and the seller can go with that or not.

Part of this strategy is not to send in the engineer for an inspection before the conditional offer is accepted. It gives a bad signal to the seller. Leads them to believe you’re committed to the purchase. By leaving the engineer’s inspection until the end, you leave the door open for additional negotiation if needed.

But low and behold, the engineer found rising damp, and a few other issues that went beyond the cosmetic—beyond anything we were willing to take on even at a lower price. So, we cancelled the offer.

Like De Niro says, always be willing to walk away…

Now, we’re back on the hunt for a home on the Silver Coast. In light of my upcoming travel, we may have to postpone our search until we return to Portugal next spring. (Again, because of our condo, we can stay flexible.) But so many of you have been emailing in about your interest in the Silver Coast, I wanted to share some of the more interesting prospects I found right here in Praia D’El Rey.

In a quiet and private part of Praia, I found a spacious three-bedroom townhouse that puts you within a walk of the beach, golf, and resort facilities. It comes with two double rooms and one spacious en suite. On the upper floor you get a large open plan dining room and lounge, with a fully equipped kitchen, and two balconies.

The condo looks fresh, with little updating needed. And at €229,000 ($265,913) that’s great value.

Remember, bank financing in Portugal is very attractive. Mortgages of 80% are readily available to foreigners, and thanks to interest rates under 1% (often 0.7% or less), you could pay as little as €564 ($655) a month for your €290,000 home.

Of course, depending on your age, you might want a shorter term, but even with a 20-year mortgage, you’re talking about €818 ($950) a month.

Another interesting prospect puts you front line with sea and golf views. It’s a specious (1,259 square foot) two-bedroom apartment, just two minutes’ walk from the beach. It offers a covered terrace, an open plan living/dining room, and comes fully furnished at an asking price of €265,000.

Finally, if you’ve got a bigger budget, this large four-bedroom villa offers good value at €380,000. Again, apply Portuguese bank financing and you’re paying just over €900 a month.

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