PROFITABILITY
The real estate market in Paraguay is booming and this is only the beginning.
Prices, especially in and around the capital, are still low and any building will mathematically have a high increase in value due to the increase in population and purchasing power.
The building we are selling has many advantages:
-Its exceptional location, given the furnished rental activity, in the Golden Square of San Lorenzo.
-The quality of its construction and all the furniture and accessories (air conditioning, refrigerators, ovens, etc.)
-The certain and obligatory increase in value (very few quality plots of land for sale in this privileged area)
-The enormous potential of real estate in Paraguay and all the tax advantages.
How many years would it take today to build this building identically?
Between the purchase of the land, the municipal and other authorisations, the search for all the right professionals needed for the construction (notary, lawyer, various engineers, architects, contractors and suppliers of materials, etc.) and the actual construction on 4 floors of 57 furnished flats, taking into account the increase in the price of materials and labour.
How long and for how much investment?
The actual return on investment is difficult to calculate because we have frozen the rental prices due to the pandemic.
The last increase was in March 2019. It was of course impossible to increase the rents but when the situation allows it again (soon), we will regularise little by little to obtain a + 20 to 25% spread over 1 and a half or 2 years maximum.
On the other hand, this pandemic has had the advantage of forcing us to retrain.
Six years ago we had 80 to 90% student tenants, today we are at about 50%. This is a security for the future.
Our selling price is $2,300,000
This is lower than the actual construction value.
If you calculate the price per m² of the construction of the flats and annexes only (common room, office, administrator’s flat, kitchen, laundry, etc.), you reach : 2.300.000 $ / 1.900 m² = 1.200 $ / m² (including furniture and air conditioning)
If you calculate on the total built area, the construction price per m² is : 2.300.000 $ / 2.750 m² = 840 $ / m²
We are selling this property only on the basis of its construction, on the real estate value
We offer in addition and free of charge the current profitability and all the administration system perfectly implemented and improved over the years, especially over the last 6 years.
The total rent (given that we have frozen it for 3 years) is 12 to 13.000 $ / month, at full occupancy (which was the case before the pandemic).
Management costs (property taxes, salaries, social charges, electricity for common areas, internet, waste management etc.) are a maximum of $14,000 / year.
This leaves an annual profit (current, before increase) of $ 135 to 140,000.
That is a real profitability of about 6% today.
We don’t want to make an extraordinary but false profitability.
6% profitability, plus the increase in value, is already more than correct.
It will be more (7 or 8%) after an increase in rent.
The advantage is that right from the purchase, the buyer starts to receive the current rent.
They will have the possibility, should they wish, to change the purpose from a furnished rental to a hotel, offices, or sell by flats, etc.
The purchase of this property is a real financial opportunity, especially in the current context of the militarisation of Europe.
Do not hesitate to ask us for further information and especially to come and see the property, you will be won over.
