Home Insights & Advice Portugal Golden Visa 350K euro real estate option: How not to lose money

Portugal Golden Visa 350K euro real estate option: How not to lose money

by John Saunders
18th Sep 21 11:19 am

Since the launch of Portugal Golden Visa program, real estate investment has been the most popular option. Portuguese Foreigners and Borders Services (SEF) statistics is an obvious indicator of this popularity. According to their statistics, 9,321 residence permits have been issued in return for real estate acquisition as of August 2021. The total number is 9,939.

With the rising popularity of real estate acquisition, another form of investment has come into effect: Urban Rehabilitation Real Estate Investment. Introduced by the Portuguese government in 2015, this method lowers the €500,000 real estate investment threshold to €350,000 under some conditions.

What Is urban rehabilitation real estate investment

This method entails acquisition of real estate which is either older than 30 years or is located in an urban rehabilitation area. As the name suggests, with this option, the Portuguese government is trying to promote urban rehabilitation. The good part is you as an investor get a residence permit in return!

Here comes the bonus: You’re required to invest €350,000 in total, including the property price and renovation costs. Sounds too good to be true? Let’s take a closer look.

Rewards that come with 350K euro real estate option

The most obvious reward of this method is that you get a Portuguese residence permit in return for a low investment, compared to other investment options. Let’s quickly summarise what Portugal Golden Visa will provide for you and your family members:

  • The right to live and work in Portugal,
  • Visa free travel within the Schengen Area,
  • Eligibility to apply for Portuguese citizenship at the end of five years.

With the traditional real estate investment option, you need to invest a minimum of €500,000. The capital transfer method asks you to transfer a minimum of €1 million. The low investment requirement of urban rehabilitation real estate investment makes it a big catch.

As previously mentioned, €350,000 covers both the property price and the renovation costs. Below is a sample calculation:

The property price €290,000 + Renovation Costs €60,000 = €350,000.

Voila! Your investment qualifies you for a Portugal Golden Visa.

This method is also available for an investment in multiple properties. Here is what it means:

You want to buy two properties of €130,000 and €170,000 respectively, to be renovated at a total cost of €50,000. This total investment of €350,000 will qualify you a Portugal Golden Visa, too. Note that this only applies if both properties are located in an urban rehabilitation area, or if they are at least 30 years old.

Risks that come with 350K euro real estate option

Already sold out on the idea? Well, investing €350,000 in return for residency in Portugal is a perfect plan. But still, it’s useful to be aware of some possible challenges.

Remember that the property must be 30 years old or located in an urban rehabilitation area (ARU). ARU territories are areas with degradation. This is a deterrent for some investors as the location might not be appealing.

Another challenge of this option might be to carry out the rehabilitation works, such as getting licenses and hiring engineers. If you don’t have the time, this might be a problem for you.

How to minimise the risks involved in 350K euro real estate option

The good news is there are solutions to avoid the possible risks that you might face during the process.

Work with professionals

One of them is to hire a developer to do all operations on behalf of you. As they’ll take care of everything, this will save you time and effort. Plus, everything will be managed in a good manner.

Search turn-key solutions

The other one is a turn-key solution. Thankfully, many real estate developers in Portugal offer turn-key solutions. This means you can choose from the properties that have already been licensed and renovated in the designated areas. If you go for a turn-key property, make sure to check if it qualifies for Golden Visa.

Look for end-to-end services

Some turn-key solution packages also include property management. This means you can rely on the developer to rent out your property on a short-term basis. You’ll get the rental income through a fixed annual guarantee or in a revenue share model. Still, make sure you do your own comparison and check if the rental amounts aren’t already reflected on the inflated sales prices.

Check out the buy-back option

Some developers offer a buy-back option. This means that you get a rental guarantee for a certain number of years (usually five). After this period, you can sell your property to the developer at the initial sale price.

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