Feedback on AIFOS and Spanish opportunities

[try-one]

Hello,
I received the following offer:
Bahia del Golf, Almerimar, Spain (AIFOS - Tourist/Rental appartments)
Cashback (VAT)
100% Funding
3 Year Rental Guarantee
2 beds 1 bath
Price 250,000 e – 260,000e (£197,500 - £205,000)
Could anyone provide feedback on the cost of this particular development (2 beds y bath in Almerimar/Bahia del Golf).
- Is is clear for you that they are adding the rental guarantee to the price
- I have seen reports of issues with the rental guarantees from Aifos in Marbella; how common is for AIFOS to default on their rental guarantee?
- Any other feedback that could help me with this process/opportunity
Thanks

[Lysos]

I first played golf on that course 7 years ago and I was there last year. The only major change was that instead of dozens of unsold properties and unlet commercial premises there are now hundreds !. The golf course is fine as a 'holiday' course, but presents no real challenges for good golfers, and the beach is poor.

Rental guarantees are invariably factored into the price, so you are just getting your own money back, and when the guarantee runs out you will be left with an empty apartment. Also, the asking prices seem ridiculously high. If you really want to buy in that area go over and look for a resale - there are lots of them !.

[try-one]

Hi Lysos
Couldn't have asked for better feedback; thank you for the specific information! (I will forget about Almerimar!)

They offer me also the following in : Alqueria, Benahavis, Marbella West (also from AIFOS)
The apartments a fully self contained with 2 bedrooms, 2 bathrooms = € 297,000
All apartments have either a balcony or garden
All apartments are fully furnished.
The hotel management company will pay your (interest only) mortgage for 5 years
VAT Cashback

Have you been in the Benahavis area?

Thank you.

[Lysos]

I can't comment specifically, as I don't know the area. However, what I would advise is to visit whatever area you are interested in (under your own steam - NEVER on a subsidised 'inspection' trip offered by the agents/developers).

Forget about the Costas for investment in the curent market. There are an estimated 1 million unsold new builds. If you are interested in buying for your own use, I suggest you look at resales - there are lots of desperate sellers.

[jvmills]

I have lived on the Costa del Sol for around 6 years and AIFOS is something of a swear word down here.

If I were you I would Google their name and see what you find before you invest. Forewarned is forearmed etc..

[Riccal]

Yeah, I have been here 10 years and AIFOS have really done themselves no favours here. They have huge stocks of inventory and they need to get rid.

The advice given to come down and look yourself directly is very accurate. Anybody that lives here knows deals on resales where the seller is distressed and a good scour around the market will put you on to them as well.

Just a word of caution, be careful of cashback/gtee 100% finance deals. These all rely on 70/80% of bank valuation as opposed to purchase price and this was permitted to happen on a sort of wink wink basis by the bank who were only interested in seeing that you werent borrowing the full valuation - no matter how high in comparison to your actual purchase price this figure was.

Having been bitten the banks are no longer so lax and valuation is becoming secondary to purchase price with the purchase figure being the "value" figure in "loan to value".
I have not seen myself a documented cashback in a long time so be careful.

You will also be told that guaranteed rentals have not been factored into the price. Sometimes this figure is in lieu of the actual discount you could get. It aint easy to get enough rental to amortise a mortgage at the moment.

Rick

[try-one]

JVMills, Rick,
Thank you very much for the feedback and information on AIFOS, I looked at the recent reports regarding the company and it doesn't look good.

From your point of view, how long do you expect this crash/downturn to last? There are thousands of vacant properties and tourism is going to be affected as the whole continent is suffering from the crisis/petrol/crunch/etc

Do you expect a 3 - 5 - 10 year downturn before we see things as they were last year?
Thank you

[Riccal]

I think the optimistic money would be on a 2010 upturn. I myself think that we will see the market flatten out over 2010 and the early part of the year provide the last seriously undervalued properties (notwithstanding genuinely distressed sales). Most people who need to be out of the market will have, I believe, got out by then. Those that havent managed it are probably looking at the market being a little better going on and will probably hang on.

The high end of the market here is being touted as still very healthy and the million euro plus villas still moving really well. Possibly they are but they were probably million and a quarter a year ago so I think thats a demographic issue - if ya can afford to buy one then who gives a t... what the world economy is doing so long as you have a classy gaff in Marbella. Mid range stuff is usually bought by the people who need to watch their expenditure a bit so therefore view them as luxuries which can well be done without in a depressed economy.

One of the good indicators in this marketplace (for the future that is, not the present) is the number of larger groups - funds, investment institutions, VCap groups - that are mopping up a lot of the oversupply here. Their long term view on both value and yield are obviously backed up by some fairly detailed empirical research. Sadly they are also bringing average prices down by taking block deals at 50/60% of value (value being what the developer wanted to sell it for) and this process needs further time to have its affect on pricing.

I reckon 2011 will see the market blip up but dont expect the curve to be as steep as it was. Certainly the lenders will have revised practices in place and the central bank here will control lending more effectively and cautiously than previously.

Rick

[Sleepless in Marbella]

I have worked in real estate on the Costa del Sol for the last 8 years and was an agent for Aifos for the first three. They are the biggest gangsters on this coast, and that is amongst some pretty stiff competition.

Every development they built was a minimum of 2 years late, the quality of finish was exceptionally poor, apartments sold as 75m2 turned out to be less than 50m2 bank guarantees were never given, despite being a legal requirement. Developments (including numerous clients of mine) were cancelled 3 years after signing with no explanation and no compensation.

When people complained about any of this, they were ignored or lied to until completion, then bullied into completing and told 'so sue us'. They have a long list of court cases pending from dissatisfied customers. Both the owner and the managing director were arrested two years ago as part of the Malaya corruption scandel for 'allegedly' giving a bribe of €2m to the planners in Marbella in order to get planning permission on their 'Guadalpin Hotel' development. They are both out on €300,000 bail each pending their court case....the wheels of Spanish justice grind very slowly.

Ask any agent who has ever worked on the Costa del Sol about their reputation, if want to see them go apoplectic.

Do yourself a favour and run away from these crooks while you can. I would be very surprised if they are still in business a year from now.