Our goal is to identify strategic investors who would be interested in financing the construction of the project Felicia Gardens and then establishing a short-term rental business. The marketing and promotion of the villas will be outsourced to a third-party property manager. Based on a ten-year feasibility study conducted by Amazon Investments, the venture is expected to provide a yield ranging from 4.5-7.8% and an IRR of 9%.

The table below summarizes the expected revenues, expenses, taxes and profits of the rental business as a newly established company according to the main and more realistic scenario.

PROJECTED INCOME STATEMENT €
Year 1 4 7 10
Total Revenue (€) 275546 420068 459019 501583
Marketing Expenses 27555 42007 45902 50158
Energy, Fuel and Water 37674 57434 62759 68579
Other Expenses 9170 10647 11287 20312
EBITDA 201148 309980 339072 362534
EBIT 86950 195782 226224 252386
Total Taxation 10869 24473 28278 31548
Net Accounting Profit 76081 171309 197946 220838
Accounting Profit 1.8% 4.1% 4.7% 5.3%
Depreciations 114198 114198 112848 110148
Net increase in Cash 190279 285507 310794 330986
Net Yield (RoI) 4.5% 6.8% 7.4% 7.9%

In our analysis, we also considered two extreme scenarios in order to examine the sensitivity of the project in external crises related with tourism, which will mainly affect the rental business and not the selling prospects of the property. We consider an absolute reduction of the rentals of 10% and 20% respectively.

EARNINGS BEFORE TAX €
Year 1 4 7 10
Scenario 1st (TR) -4200000 270177 329247 360055
Scenario 2nd (TR -10%) -4200000 242437 295566 323251
Scenario 3rd (TR -20%) -4200000 212882 259682 284040
EARNINGS AFTER TAX €
Year 1 4 7 10
Scenario 1st (TR) -4200000 250680 302366 328817
Scenario 2nd (TR -10%) -4200000 226407 272895 296613
Scenario 3rd (TR -20%) -4200000 200546 241497 262303
IRR Earnings before Taxes (EBT) Earnings After Taxes(EAT)
Scenarios 1st 2nd 3rd 1st 2nd 3rd
IRR 9.3% 8.6% 8% 8.8% 8.2% 7.6%