I´ve been hearing reports of buyers ´doubling their money´ within a couple of years by buying property in and around Marbella. How can this be true when prices are rising at 20% per year?
Some clients decide to reserve units, and then re-sell the properties prior to completion. So, in simple terms, a client can ´buy´ a property for €250,000 (approx £165,000) secure payment terms of 30% on signing the purchase contract, followed by the balance of 70% on completion, say in 2 years time. So the client pays €75,000 (30%), and sits back, waiting for the market to rise at its historical level of 20%. When the time approaches to complete the purchase, the client is ´sitting on´ a property worth €410,000 (assuming 20% growth p.a.). It is possible to then sell the property to a second buyer for the market value at that time. The ´new´ buyer simply pays back to our client the monies that have already been paid and arranges to pay the 70% balance directly to the developer. Crucially, the ´new´ buyer will also pay to our client the profit on the purchase price of the property, in this case €160,000. Even with projected growth of 10% per annum, this could still generate gross profit
