The club members are organizing and financing a substantial part of a very interesting project – a development of 100 apartments, north of Prague 9. In the village, 10 minutes from the metro station by bus, over 100 apartments will be built on an area of 14.5 thousand meters, with a total living space of almost 7 thousand square meters. These will be starter flats, in medium standard, and will be ready for occupation by the end of 2018. We will look at what investment opportunity has been created here, how it fits into the investor’s portfolio. It may be an inspiration for you too.
Types of investment
There are many investment opportunities, with varying levels of risk, yield and liquidity. Generally, the most profitable is business, companies where something is being created. That’s why we are also dedicated to projects in the club, bringing together investors and those interested in investing. However, the investor’s portfolio also includes classic products, funds, deposits, precious metals… The most famous and popular investment is real estate, although most people invest only in their own home. In this particular case, the two are combined – the business of the company and the property being created. The newly established joint stock company builds and sells apartments, completing the development of the area. Those who want to will be able to buy new flats, not only for their own living, but also as an investment and rent them out.
What kind of involvement for an investor comes into consideration in a project like this?
Of course, the investor can enter as a shareholder in the project. If he invests in the order of several million crowns and gets at least a 10% stake in the company – he is even seen as a subsidiary of the company, which may have tax advantages for him. The advantage of direct entry is maximization of returns, the possibility to be involved in the management of the project, in the executive or control part. The access to information is great, the ability to monitor the project, to influence it. The disadvantage is the full risk and uncertain duration of the investment. It can be prolonged and costs can rise. That’s why more conservative investors choose subordinated loans. Subordinated because the financing bank usually has the first lien on the project and only after that is the investor entitled to settlement. However, the investor in this case knows the likely duration of the project and has contracted a still excellent return. The deposit is then secured by the personal liability of the project partners. If even this is long and uncertain for someone, it is possible to borrow for a shorter period, say 6 months, at a reasonably lower interest rate. Another type of investment can be participation in the sale of flats or their purchase for the purpose of operating rental housing.
Teaser of the project
A description of the project can be found in the teaser, for example including a drawing of the buildings, flats or land. It is common practice to provide general information to interested parties without signing an NDA (non-disclosure agreement). Those who want to know more enter into closer negotiations and learn anything after signing the contract. This is because full information is a good basis for a properly functioning business relationship. It is also important that it is not usually a public offer and you are dealing with specific people with a history, directly.
Can you get involved?
Of course you can! We encourage you to get in touch if you are interested. In this particular project, while the investors have already parsed the equity and the project has kicked off Stage I, there will be a Stage 2 and certainly other projects. Venture Club opens new projects all the time. Interesting opportunities come up at D days, meeting new friends goes at social or educational events. Come along and have a look and get to know each other. Maybe at the next event – see the Calendar of Events.
We look forward to seeing you.
Petr Šedivý, Chairman of the Venture Club Committee