Profitable equity investment. We consider profit on real examples
Equity investments allow you to solve the problem of small entry and diversify risks with the same investments. But let’s look at this investment option using specific examples and calculate what kind of profitability you can count on. To do this, consider two projects located in France and Germany.
Wyndham Halcyon Retreat
Project: five-star golf & spa complex Wyndham Halcyon Retreat, which is being built on an area of 1 million square meters. Co- ownership: from €17,230 Full ownership: from €224,000 Profitability: 6–8% per annum in euros Buyback: yes Period of obtaining guaranteed profitability: from 6 to 11 years at the choice of the investor Acquired Property: A stake in an apartment in a golf and spa facility managed by hotel operator Wyndham Hotels & Resorts. It is possible to purchase apartments in full ownership.
To purchase apartments, a company is registered, in the charter of which 13 shares are prescribed. The company owns specific real estate. When buying a share, the investor becomes an equal co-owner of this property. You can buy one or several shares, up to the purchase of the entire company.
Two contracts are concluded with the investor – for the purchase of a share (shares) and management. The agreement with the management company, which provides a guaranteed return per year, also spelled out the responsibility of the parties and the conditions for exiting the project.
The resort is designed primarily for local tourists and British golf fans (there is an airport in the neighboring town that accepts low-cost airlines from the UK).
Wyndham Halcyon Retreat Golf & Spa
Consider an investment of around €50,000 for better comparison with the examples above. By the way, here we are talking about a long-term lease, with the only difference being that the management company assumes obligations for profitability and resale of your share after a certain number of years.
The minimum entry into the project is €17,230. This is the cost of one share in a studio apartment. Three shares will cost you €51,690. Let’s calculate the income from this amount.
Investors who purchase apartments (or shares) in this project in 2020 receive 5% cashback or €2,584.50 within two weeks of purchase. From the next year and for five years, the investor is obliged to pay 6% per annum net, or, with this investment, €3,101.00 per year. In just five years, you will receive €15,505.00. Payments are quarterly.
The investor then has two options (!!). Exit the project, having received back the invested funds and a bonus of up to 25%, or keep the stake for another five years, and then the yield will be already 8%.
If you decide to sell your stake in 2026, you will get your investment back and receive a 25% bonus, or €64,612.50. This amount is in addition to the €18,089.50 income already paid to you (€2,584.50 cashback and €15,505.00 return over five years).
Expenditure – administrative fee – €120 per year for a faction or €360 per year for three factions (€1,800 for five years).
The calculations are as follows: 64,612.50 + 18,089.50 – 1,800.00 – 51,690.00 = €29,212.00. In other words, you will earn 56.50% of income in six years, or 9.42% per annum.
In 2026, you do not sell your share, but continue to own it for another five years – already on the condition of receiving 8% per annum. After the end of the fixed income period, you are offered a buyback at the purchase price plus a bonus of up to 50%. That is, for the period from 2026 to 2031 you will receive €4,135.20 × 5 = €20,676.00. And sell your shares for €77,535 (€51,690 + 50%).
Total calculation: 77,535.00 + 18,089.50 (income for the first five years and cashback) + 20,676.00 (income for the next five years) – 3,600.00 (administrative expenses for ten years) – 51,690.00 = €61,010.00 or 118% or 11.80% per annum.
You can sell the share ahead of time on your own or by contacting your management company. About the desire to withdraw from the project, as well as continue to own a share, it is necessary to warn the management company in advance – one year in advance.
Co-ownership in this project allows owners to relax on the territory of the complex for up to four weeks free of charge. But! Weekly rest will not affect profitability. But every subsequent seven days will cost you 2% yield. That is, in a scheme with 6% per annum, having rested at a golf resort for one month, you will not earn anything in a particular year. The only thing you will need to pay for during your vacation is utilities. If you own one share, the fee will be around €10 per day.
Pros and cons of this type of investment
Pros: low entry (only € 17,230), reasonable and passive return for the investor, the possibility of exiting the project in five or ten years. Possibility to use your own apartment.
Cons: your profitability and the success of the project as a whole depends on the management company. The success of the project presupposes the free movement of people within at least one country.
Investment in redevelopment in Germany
Project: real estate in Germany (24 objects) for renovation and resale Minimum investment: from €3,000 Yield: 6–10% in euros per year, depending on the amount Payments: quarterly Savings program: from €50 per month Buyback: yes Yield period: five years Acquired object: bonds of a company engaged in the redevelopment of residential buildings, mainly architectural monuments
The Vivat Group of German companies, together with the design and construction company GGH AG, is engaged in the purchase of old buildings in Germany, their renovation and resale. There are currently 24 such objects in the company’s portfolio. Three sources are used to finance projects: a bank loan covering about half of the required funds, own money and investors’ funds. To attract them, the company issues and issues fixed-income bonds. This is an important difference from crowdfunding or REIT investment trusts.
The minimum investment is €3,000 (one-time investment) or €50 per month under the accumulative program. The investor purchases the company’s bonds and receives a fixed income.
Projects in the company’s portfolio
1 One-time investment
By investing €10,000, you get 6% per annum, or €600 per year (€150 per quarter). By investing €50,000 – 8% per annum, or €4,000 per year (€1,000 per quarter).
According to the emission rules, the return of invested funds is made in January 2025. Money comes to your account without tax deductions.
You can conclude any number of contracts, but within the framework of the issue that is allowed for the company by the local regulator for financial transactions. The minimum entry amount is €3,000.
2 Savings programs
This is a scheme popular with Europeans – it allows you to secure savings for your future pension with small monthly contributions. I myself use this program and I can say that the monthly payments did not affect my standard of living in any way. The main thing is to decide to start building your future on your own, without relying on the state.
For example, you decide to invest €100 per month for ten years. The amount of the contract for ten years will be €12,000 (100 × 12 × 10), during which time interest will accrue – €4,829.39. This amount is generated from the annual income, which in turn is calculated from the accumulated funds, i.e. €1,200 in the first year, €2,400 in the second, etc.). From the accrued interest, we deduct the corresponding tax in Germany (about which you will be issued a document to present to the tax office of your country) in the amount of €1,273.36.
In ten years, you will have accumulated €15,556.03. You can reinvest this money or take it away – as you wish.
Pros and cons of this type of investment
Pros: the ability to enter with a small one-time amount and even through monthly payments. The scheme is good for creating a personal savings fund for the retirement or study of children. High yield. Absolutely passive income for the investor.
Cons: The risks associated with the fact that your income will depend on the correct investment strategy of this company. In other words, on what projects they will choose and how they will be implemented. You own bonds, not real estate.