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Costs are split down the middle and, with three grown-up children each, the villa is well-used all year round.
John who lives in Prestwich, says: “We sometimes go out on our own and sometimes with David and his wife. David and I enjoy a round of golf and our wives like to do a spot of shopping.”
At home, John runs a hotel in the Lake District while David carries on a building contract business in Manchester.
They decided to buy abroad because they wanted somewhere they could visit as frequently as possible. They had all holidayed in Portugal in the past and liked the country. They wanted somewhere on a golf course and somewhere they could enjoy for most of the year.
They looked around and settled on the Parque da Floresta resort, north of Sagres in the Algarve. After buying off-plan for around £325,000, the couples had a short wait before they could start to make use of the villa, but happily the building work all went to plan and they have been enjoying the property for around five years.
“Some apartments and villas were already built by the time we bought ours so we could see the workmanship and how the finished properties would look,” adds John.
At first, the couples drove to East Midlands airport to take advantage of scheduled flights, which meant they could enjoy long weekends away, but in the past couple of years similar flights have started from both Manchester and Liverpool.
They have also taken the option of having the resort’s property management team look after the villa for them. This means that every so often a bill arrives for service charges etc which the two brothers simply split between them.
“We have a good relationship, so this is working well for us,” says John. “It might not be perfect for every family and some people might even prefer a formal agreement over who owns what, but we’re happy as we are.”
Parque da Floresta, on the borders of the Costa Vicentina Nature Reserve, has a golf academy, spa and plenty of other sports facilities. The Vigia group are currently offering two-, three- and four-bedroom golf-village houses with access to five communal swimming pools, each with private garden and priced from around £261,000, and three-, four- and five-bedroom villas, each with a private pool and garden, start from around £450,000.
People can also take other routes to secure an overseas property with a deal which suits them:
Buy/Fly-to-let
Buy-to-let started life in the UK as people bought and rented out second properties to get income plus capital appreciation when they came to sell.
As house prices rose in the UK, many people started to look abroad for property which they could rent out to holidaymakers or locals and the fly-to-let concept was introduced.
If you are thinking of taking this route, then make sure you thoroughly research your market. Calculate extra costs, such as local taxes, maintenance fees and community charges.
Be realistic about the amount of rent you will get – it might not be enough to cover a mortgage for example. And if your destination is served by a low-cost carrier, then great – but make sure there is a ‘back-up plan’ such as good rail access in case the airline stops flying to that particular destination.
When it comes to finance, few UK and foreign banks offer standard buy-to-let mortgages for overseas property because they will not take the rental income into account. You should plan to find a 20-30 per cent deposit which will give you some choice in how you finance the balance.
Overseas auctions
Auctions are becoming more popular with overseas buyers, for example in Spain at the moment due to its sluggish market.
The advantages of buying at an auction can be that you may get a property at below market value, you avoid chains and make a speedy purchase.
Property clubs
Many investors buy off-plan to take advantage of discounts and hopefully maximise capital gain when they come to sell. You could also look for property investor clubs which specialise in the off-plan management of properties, such as Inside Track which buys in bulk in the UK and overseas and negotiates discounts on behalf of members.
Property clubs often offer services such as seminars and workshops to help people understand how the market works.
Syndicates
Some companies, such as Manchester-based Assetz, specialise in syndicated ownership with the company buying in bulk from developers and then selling on to individuals.
However, syndication can also work at a more local level, with people clubbing together to buy a property – following the example of the Smiths. Some banks and building societies will offer mortgages to syndicates with up to four owners.
Fractionals
Under fractional ownership, people buy a percentage of a property, perhaps a sixth or an eighth, including a portion of the freehold and then have set amounts of time to use the property. Buyers benefit from capital growth on sale.
Fractional ownership can help open the market to people who may otherwise not be able to afford to buy and is also used as a way of enjoying holidays in luxury properties.
The Manchester Building Society offers fractional ownership mortgages to investors to help them get a foot on the overseas property ladder.
Under the deal, four unconnected buyers can combine resources and collectively own a property. Cheshire-based Spanish Quarters offering a range of properties across Andalucia under fractional schemes, for example, apartments in Mijas on the Costa del Sol.
Room deals
The market for condo/hotel developments is expected to increase globally in the next few years with the growth of international tourism and the rising trend of buyers who are looking for property investment products rather than simply buying a holiday home.
With a condo/hotel investment, investors buy a hotel room and gain from capital growth and the rental income, which is often guaranteed.
The idea is that you buy the room or suite outright but the hotel chain managing the building takes day-to-day charge of it for you, including filling it with guests and paying you a cut of the proceeds. There’s no need to furnish or maintain a suite – the hotel will do that. Profits from rooms vary depending on the hotel and the rates charged. A 60/40 split in favour of the hotel is fairly common. Buyers usually also have to give back around 3-5 per cent of the rental profit annually in case of repairs.
The Italianate-style Hollywood Grande on Hollywood Beach near Miami is an example of a room deal and is selling at £325,000 for completed rooms although off-plan rooms may soon be available for around half that price.
Leaseback
Common in France, leaseback means that you buy a property – but then lease it back to the developer for several years and gain rental income for the duration.
Under leaseback partnership, the purchaser of a freehold property within a residence becomes a shareholder in the overall development.
For example, MGM is currently offering 38 one-, two- three- and four-bedroom apartments off-plan at Le Padisha, a new four-star residence in Courchevel and due for completion in December next year and with prices starting at around £660,000 for a two-bedroom apartment. The apartments are being offered under a 20-year leaseback scheme.
The owner will receive an annual income which is a share of the total profit from rentals earned by the whole development and the owner can occupy his or her apartment for an unlimited number of weeks – with the value deducted from the annual payment.
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