Obtaining residency in a foreign country can be one of the most valuable benefits of buying real estate abroad.
We write frequently about obtaining residency through property purchase, and the examples of good programs are almost always in Latin America.
But now it’s Europe’s turn… specifically, Portugal. Portugal has launched its Golden Visa program targeting the foreign investor and property buyer.
For the average buyer with no family connections in Europe, it’s an excellent option for residency in the region…
Though it’s not the only best-in-class residency program available from Portugal. It’s also possible to establish residency in Portugal (which amounts to residency in the entire Schengen region) by showing income of as little as US$1,200 per month.
Here’s Why Portugal’s Golden Visa Program Is So Valuable
First and foremost, Portugal is a great place to live, so residency in the country is naturally attractive. The Portuguese have the best beaches in Europe, and this country boasts moderate weather and an abundance of sunshine.
Also, Portuguese real estate is a bargain buy at this time, as the country still has not come back from the last recession and property crash.
To top it off, the U.S. dollar is strong against the euro, making properties significantly less costly for dollar-buyers.
Finally, when you become a resident of Portugal, you have access to all 26 European countries in the Schengen area. Signed in 1985, the Schengen Agreement pre-dates the European Union and creates a “borderless” zone to allow visa-free travel among the signatory countries. Originally, the agreement included the 10 members of the European Economic Community and became EU law in 1999.
When you obtain a visa under this program, you are eligible for permanent residency after five years and for Portuguese citizenship after six years. As an additional benefit, a Golden Visa allows you to include family members.
You have 10 options for obtaining an investor visa in Portugal under the Golden Visa program. These vary from million-euro bank transfers and the creation of 10 jobs to investing in artistic or cultural activities.
My beat is real estate, so it’s the country’s options to obtain residency by investing in property that are most interesting to me.
Let’s walk through each of the five alternatives:
1. Transfer a million euros to Portugal…
This is not a property purchase, per se. The reason I mention this option is that the million-euro transfer is unrestricted, with no caveats on how you can spend it. This option can be good for someone who wants to buy one or more properties, perhaps invest some money, and save some for future living expenses.
2. Spend 500,000 euros on any property…
You can buy a property of any type, anywhere, that costs 500k euros (US$535,000 at the exchange rate as of this writing).
3. Spend 400,000 euros on any property in a low-density or depressed area…
If you buy in a low-density population area (i.e. in the countryside) or an economically depressed area, then the minimum unrestricted investment above is 20% less, or 400,000 euros (US$428,000).
4. Spend 350,000 euros on an older property or one in a “rehabilitation” zone…
This threshold is new, and it applies in two cases:
- Properties over 30 years old, or…
- Properties in areas that the government has targeted for rehabilitation or gentrification. I’ll have more on this later…
5. Spend 280,000 euros on an older property or one in a “rehabilitation” zone in a low-density or depressed area…
This 350k-euro threshold above is lower if you buy in a low-density population area or an economically depressed area. In these cases, the minimum is 20% less, or 280,000 euros (US$299,600).
Rehabilitation costs are included toward your minimum with this visa. So your 350k euros (or 280k euros) can be the sum of the purchase price and the cost of fixing the property up.
The qualifying property can be jointly owned, provided the applicant contributed the minimum investment. Also, the property can be owned by a one-person structure, such as an LLC.
The visa that holds my interest is the 350k-/280k-euro minimum investment, because I see opportunity there.
To qualify, you can buy a property that’s more than 30 years old or you can buy in a designated urban rehabilitation area (called an área de reabilitação urbana, or ARU).
Either way, you’re probably adding value to a place that needs some work. (At least that’s the idea… not every 30-year-old home will need work.) And if you’re adding value through restoration, you stand to make a nice gain.
But in a rehabilitation area (ARU) you’ll do even better, because not only are you adding value to your property, but the government is also incentivizing your neighborhood’s rehabilitation.
This multiplies the power of your visa investment.
What surprised me is that even the popular Algarve coast has designated ARUs in places like Faro’s historic district. Follow this link to have a look at Portugal’s ARUs. My favorite ARU for investment is here, overlooking the marina in Faro’s historic center.
If you want to open the door to Europe, this is your chance.
Granted, the investment threshold in Europe is a lot higher than you can get away with in Latin America. An investment of 280k euros is still a lot of money.
However, if you have your sights set on Europe—and you want a chance to profit while obtaining residency—then the Golden Visa program amounts to an extraordinary opportunity.
Don’t have 280,000 euros to invest? You can still qualify for residency in Portugal.
Not only does Portugal offer Europe’s best invest-for-residency programs… but it offers what I believe is the Continent’s best residency visa option based on provable income.
In Latin America, programs that allow you to establish residency by showing a guaranteed amount of income typically target retirees and are known, generally, as “pensionado” visas.
Portugal, though, makes its guaranteed-income program available to anyone of any age. Your income does not have to be from a pension. It can come from any verifiable and reliable source.
And the best part is you don’t need much of it.
Anyone of any age can qualify for Portugal’s income-for-residency program by showing at least two times the Portuguese minimum wage in guaranteed monthly income. Right now, that works out to but US$1,200 per month.
Lief Simon
