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A Buyer's Guide to Mount Cinnamon

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					                 A Buyer’s Guide to Mount Cinnamon
                                Version 2.6. Oct 12th, 2007

        Welcome to the Mount Cinnamon Beach Resort and Residences

   I. The Opportunity

The Mount Cinnamon Beach Resort and Residences is a unique collection of
artistically furnished resort homes located directly on the world famous Grand Anse
Beach in beautiful Grenada. This resort property is blessed with perfect views of the
azure blue Caribbean Sea, soft white sand beaches and the lush tropical green
mountains of “the spice isle.” Located on a gentle hill above the beach to take full
advantage of the trade winds, these homes capture the very essence of the West
Indies.

A dream brought to life by the legendary developer Peter de Savary, whose vision
before has created legends such as The St. James Clubs, worldwide; Skibo Castle,
Scotland; The Abaco Club on Winding Bay, Bahamas; Bovey Castle, England;
Cherokee Plantation, South Carolina; and The Carnegie Abbey Club, Newport, Rhode
Island; just to name a few. This is a rare opportunity to enjoy the pristine beauty of
this unspoilt island, home to some of the warmest and friendliest people on earth.
Every detail at Mount Cinnamon has been hand picked by Mr. de Savary and will be
delivered to the owners and guests, who will enjoy vacations, holidays, and special
occasions in the ambiance of “tropical chic.”

Each residence will be privately owned, professionally serviced and managed by the
resort staff; and offered for vacation rental accompanied by the legendary friendly and
personal service seen at all de Savary properties. Owners will enjoy the benefits of
the fully managed property and profit from the revenue generated by the resort rental
program. There are no limits to owner’s use of the property during the year, thereby
assuring that the holiday home is readily available for family or friends. Title is
freehold (held fee simple) for Villas or Share of Freehold title for apartments, and will
stay in the owner’s possession and control in perpetuity.




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Resort amenities are of the highest standard of luxury, and include:

    • Beach Cabana, with water toys, lounges, umbrellas, bathrooms, shower, and
      bar;
    • Fitness Center, with state of the art Cybex equipment and free weights;
    • Pool, with natural stone waterfall and shaded lounge areas and bar;
    • Savvy’s Restaurant, a very chic decor, Mediterranean style food and
      breathtaking views;
    • Spa, with two full service treatment rooms and additional in-room service
      available;
    • Competition Tennis Court;
    • SCUBA and snorkelling daily;
    • Airport transfers, Villa pre-arrival provisioning, Owner’s private storage.
    • Myriad additional activities are available on sea, in the mountains and around
      the beautiful coast of Grenada

Additional amenities offered to our owners and guests will be access to the Royal Port
Louis Yacht Club, which is being built as part of the Port Louis master plan. This will
be the Caribbean home to many world famous mega-yachts and the southern
Caribbean’s yachting epicentre. Carriacou, the sister island to Grenada, and the
Grenadine Islands are only a short sail to the north, and are considered to be one of
the world’s top boat cruising regions. Grenada and Port Louis will host a robust
annual calendar of yachting events and sport fishing tournaments that will draw
numbers of affluent sporting visitors to the island year round.

   II. The Mount Cinnamon Sales Launch Program

The opportunity to own a Villa at Mount Cinnamon is an invitation to become one of
a privileged few who will secure a private resort home in Grenada now, at the very
beginning of Grenada’s tourism expansion, and begin a family tradition of vacations
and holidays in this island paradise. Mount Cinnamon consists of only twenty-one
(21) one, two and three bedroom fully furnished residences. Subject to availability,
owners can choose from the very spacious single level residences in the Hacienda, or
from the hillside Villas which are detached and semi detached homes on two floor
levels. Prices at Mount Cinnamon range from (USD) $475,000 to $995,000 and our
current price lists are available upon request. Purchasers are encouraged to place
refundable 10% deposits during their due diligence period in order to reserve a
particular residence.


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   III. Purchasing Real Estate at Mount Cinnamon as a “non-Grenada citizen”

We understand that most owners at Mount Cinnamon will be making their first
investment in Grenada. We also appreciate the fact that this process can be stressful
for some buyers. For these reasons, we have assembled the resources required to
assist our buyers in understanding the process to their satisfaction. This portion of our
Buyer’s Guide will present the information in the form of frequently asked questions.
As a result of intensive negotiations with the government of Grenada, we are pleased
to announce great reductions in tax for the non-Grenadian.

The Alien Landholding Licence (purchase tax for non-Grenadian) is normally 10% of
the purchase price. The Property Transfer Tax (seller’s tax normally paid by a non-
Grenadian) is 15% of the selling price.

At Mount Cinnamon we have secured a tax concession from the government that
limits this Property Transfer Tax to 2.5%, paid by the seller; and paid by the new
Buyer. This is a very important and advantageous aspect of investing in a Residence
at Mount Cinnamon.

For a non Grenadian buying property or land in Grenada, the following attractive tax
reductions have been agreed with the government:

   • Alien (non Grenadian) land holding tax on the purchase:       Usually 10%,
            reduced to a maximum of 5% - or nil if placed in rental pool!
   • Alien (non Grenadian) land holding tax on sale:               Usually 15%,
            reduced to 2.5%
   • Stamp duty                                      1%

What are the buying costs apart from the purchase price, and what are the
taxes?
     (For this answer we will assume that the buyer is not a citizen of Grenada.)
   • Property Transfer Tax: 0% of the Purchase Price*
     *Reduced to zero if included in the Rental Program, otherwise 5%
   • Government Stamp Duty: 1% of the Purchase Price
   • Legal Fees:
        o $7,500 for purchases up to $750,000**


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           o $12,500 for purchases greater than $750,000**
       **Represents a substantial discount from the Grenada Bar Association rate schedule of
       2%.
  • Alien Landholder’s License Fee: $750
What is the Reservation Process for a Residence at Mount Cinnamon?
Buyers may place a fully refundable deposit of 10% of the Purchase Price to hold a
specific residence for purchase. This deposit will be held by either in the developer’s
separate deposit account or the buyer’s attorney in Grenada, according to the terms of
the Reservation Agreement. There are no conditions placed upon the refund, which
can be requested at any time and without giving reason. The deposit will hold the
residence for a limited period of time in order for the buyer to perform due diligence
and conduct a site visit. At the conclusion of this time period, the buyer will enter
into a binding contract or exit the sales process with the refund. Deposits are taken as
US$ currency, and refunded as the same. The seller is not responsible for wire
transfer fees, currency conversion or interest on the deposit while held.
What happens next in the sales process?
Buyers at Mount Cinnamon are required to secure legal representation in the process.
The choice of attorneys is up to the Buyer, however we recommend the services of Mr
G. Arche Joseph who is familiar with our sales contract through the representation of
previous buyers. The sales contract will be sent to Mr Joseph, who will advise the
Buyer as to the specific terms and conditions under Grenada law. This is a very
straightforward process and can easily be accomplished via long distance using
telephone and email.
What is required?
Buyers apply to the government of Grenada for an Alien Landholder’s License, which
requires the applicant to submit the following information which you should gather
before your visit, or at the time of making a reservation:
       1   Banker’s reference letter
       2   Two (2) Character references
       3   Police Record references from country of origin (Please note this can take up to 3
           months, and should be applied for at the point of making a reservation)*
       4   Three (3) Alien Land-Holding application forms (assisted by Buyer’s attorney)
       5   An employment letter or Statement of Employment (if employed)
       6   A copy of the page with your photograph and details about you in your passport




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Once the Buyer has applied for the License, and is satisfied with his or her due
diligence, the actual sales contract is signed by both parties. At this point the deposit
becomes a non-refundable sales contract deposit and the agreement to purchase is
assigned a closing date. In some cases this may be contingent upon approval and
issuance of the License, however the application approval process typically takes only
30-45 days.
How can I take title to my Mount Cinnamon Residence?
Most forms of title vesting are permitted in Grenada, including trusts, partnerships,
companies, etc.
When can I take possession of my Mount Cinnamon Villa?
Mount Cinnamon Residences are complete and ready for occupancy by their owners
immediately upon closing. It is not permitted to take early occupancy.
Do I pay annual Property Tax in Grenada?
Yes, but at an extremely attractive rate: 0.15%
What happens when I am ready to sell my Mount Cinnamon Residence?
As an owner, your Residence is your own private property and you have the right to
sell it at your own discretion. There are no limitations or conditions placed on the
transaction and you have the right to list the property for sale with any real estate
professional of your choosing. Depending on when this occurs, our sales office will
be happy to assist you in listing the property for sale and finding a new owner.
The Property Transfer Tax normally paid by a non-Grenada citizen as the seller of a
home is 15% of the selling price. At Mount Cinnamon we have secured a tax
concession from the government that limits this Property Transfer Tax to 2.5%, paid by
the seller; and 2.5% paid by the new Buyer. This is a very important and
advantageous aspect of investing in a Residence at Mount Cinnamon.
Do I pay Capital Gains on my profit when I resell my Mount Cinnamon
Residence?
No, there are no capital gains taxes in Grenada.
What are the annual charges associated with ownership at Mount Cinnamon?
Mount Cinnamon is a fully managed resort property. Owner’s pay their pro rata share
of fixed annual expenses, including: building insurance, landscaping, maintenance,
common area expenses and staff payroll. These fixed annual expenses have been
estimated for the first year of operation. At the completion of our first year, the
estimates will be reconciled with the actual expenses and a new annual budget will be
prepared. Owners are responsible to pay these estimated annual charges in advance
of each operating year and will receive a credit for any over estimate and are


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responsible if there is a shortfall. This budget is available for review by prospective
owners at Mount Cinnamon.


Is my Mount Cinnamon Residence insured?
Yes, as part of the fixed annual expenses (sometimes referred to as annual dues) each
residence has an insurance policy equivalent to a homeowner’s policy. The standard
policies do include hurricane coverage, and our attractive rates are the result of a
group policy discount.


Are there any other charges or costs for ownership at Mount Cinnamon?
The only additional costs for ownership are the typical recurring expenses associated
with utilities, such as: telephone and internet, electricity, cable television, water and
sewer. We have provided estimates of these in our annual budget under the heading
“Variable Expenses.” The convenience of our management program means that our
owners will not have to waste any of their time collecting and paying these utility
bills; or risk loss of service due to miscommunications and delays as is often the case
with absentee ownership. These bills will be paid for our owners and conveniently
summarized and re-billed to the owners at cost plus a10% administration fee.
What role does the Grenada government play in protecting my investment?
The government of Grenada is a Parliamentary style of democracy, with much of the
law and governance derived from UK law. This government is expending a great deal
of effort to encourage foreign investment in ‘touristic’ real estate and business. The
laws of Grenada protect foreign investments.
Will local banks in Grenada finance my Residence at Mount Cinnamon?
Yes, there are quite a few banks in Grenada and all of them are interested in writing
mortgages for this property. Buyers at Mount Cinnamon have been approved by both
Republic Bank and Scotia Bank (see last page for contact details).
Republic Bank has been very proactive and helpful to buyers with a variety of
financial circumstances, and has provided the following information as a guide:


-For non-residents who want to purchase a vacation home or second property in
Grenada, the following lending criteria would apply:
   • Loan financing for up to 70% of Sale Price
   • Term of up to 20 years with no penalty for effecting lumpsum or early
     repayment
   • Current Interest rate of 8% per annum for the time being

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   • Debt servicing of 35% for self-employed individuals, 40% for fixed income
     individuals
The following are required for loan assessment:
   • Satisfactory credit bureau report
   • Two references one of which must be satisfactory Bankers’ reference including
     years of association
   • Statements of Assets/liabilities & Income/Expenditure (samples attached – also
     available in soft copy) and supporting evidence (eg. copies of Bank
     Statements/ Instruments, etc.)
   • For self employed persons – 3 years financial statements to verify income
   • For fixed income persons – Job letter verifying salary, allowances, length of
     service
   • Tax Returns for the last two years
   • Two items of Picture Identification (current passport, Driver’s license, national
     ID etc)
   • Confirmation from Attorney of Alien Land-Holding License status
   • Valuation report on property by member of the Bank’s Panel of Valuers
   • Sale Agreement (provided once your 10% deposit has been recieved)


Security requirements:
   • Leasehold Mortgage Registered & Stamped to secure approved loan or
     alternatively standby Letter of Credit (acceptable to the Bank)
   • Property protection insurance with Bank’s Interest Noted
   • Mortgage Protection Insurance (Life Insurance) in the name of Borrower
     assigned to the Bank


The following turn-around time has been pledged:-
   • Provided all required information comes to hand
          o Loan assessment & approval                       :      3 working days
            (maximum)
          o Issuance of Letter of Offer                 :    4 hours
   • Upon receipt of Acceptance - Loan disbursement process
          o Issue instructions to the Bank’s Attorney

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o For mortgage preparation                :   4 hours
o Preparation and Execution of Mortgage   :   Maximum 3 weeks
o Disbursement of loan & payment to Vendor    :     3 hours




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Are Concierge Services available to owners?
Mount Cinnamon operates a comprehensive menu of concierge services; from airport
collection to organising family day trips around Grenada or to the neighbouring
islands. We can even make sure that your favourite shopping is in the fridge when
you arrive.
What provisions have been made for property security?
Although Grenada is well known for having a very low crime rate, we provide 24
hour guard attended security to ensure safety for you and your property. Each Villa
has been equipped with a small strongbox for your valuables for an added sense of
security. Our property is gated and properly supervised at all times.
   IV. Understanding the Mount Cinnamon Rental Program
In addition to the enjoyable use of your property for you, your family and friends, you
also have the opportunity of participating in the Mount Cinnamon rental program. If
you choose to place your Villa into the program, it will be automatically considered
available for rent for the entire year. Owners will allow suitable notice to the
management for their own personal use. As per our agreement with the government,
if you choose to participate in the rental pool and your unit is available for rent for
more that 270 days per year, there is also a very attractive reduction in purchase tax.
The rental program will be maintained and marketed at first class levels, thus not only
sustaining but indeed growing the asset value as well as the monthly revenue of the
Residences. Our owners enjoy the benefits of professional management, with all
maintenance, marketing and financial management (i.e. collection and disbursement
of revenue) handled by the management company.
Owners at Mount Cinnamon may occupy their unit for any length of time and there is
no restriction on their use. There is no minimum length of participation in the rental
scheme.
Please refer to the Mount Cinnamon Owner’s Income and Expense Pro Forma:
Attachment A
Explanation of assumptions:

Average Investment Value
This value is an average acquisition cost of each Residence Type and used to calculate
the Return on Investment (ROI) at the bottom of the spreadsheet. Actual prices vary
within Residence Types and may affect the ROI.

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Average Square Footage
This value is used by management to calculate the pro rata share of common area
expenses. Larger Residences pay a greater share and smaller ones pay a smaller
share. There is some variation among individual residences within Residence Type,
but this variation has been ignored.
Approximate Room Rate
This is the Mount Cinnamon Rental Rack Rate by day. Normal rate quotations are
made weekly, as follows:
   • 3 bed villa renting for $6,000 per week
   • 2 bed villa renting for $5,000 per week
   • 1 bed villa renting for $4,000 per week
   • 2 bed apartment (Hacienda Garden Suite) renting for $4,000 per week
   • 1 bed apartment (Hacienda) renting for $3,500 per week

Estimated Occupancy

For the first year of the Rental Program at Mount Cinnamon, scheduled to begin on
the 1st March 2008 (Easter). We have estimated 50% occupancy throughout the year, or
185 days. We expect this occupancy percentage to grow quickly over the first three
years of operation.

Income

Total income is simply 185 days multiplied by the rack rate. Owner’s Adjusted Gross
is the income after the 60/40 split with Mount Cinnamon management.

Variable Expenses

These expenses are the responsibility of the Owner and are deducted from the
Owner’s Adjusted Gross Income. They include two types of charges:
   • Utility bills that result from normal use and operation: Telephone & Internet,
      Electricity, Television, Water& Sewer;
   • Charges directly related to the Rental Program: Laundry/guest supplies, Travel
      Agent Commissions, Welcome food and beverage, and Maid Service
Owners who elect to not participate in the Rental Program will not incur charges in
the second category. Please also note that Maid Service (housekeeping) is not
included in the Owner’s personal use of the Residence, although this service is
available for a small fee.




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Travel agency commissions can vary greatly, and we are proposing an average of 12%
across all annual rentals, which is a high estimate. The actual costs are shared 60/40
(owner/manager).
Variable expenses can rise and fall with the amount of use of the Residence and the
amount of rental activity.
Fixed Expenses
Sometimes referred to as real estate “Dues”, these charges cover the basic costs of
resort maintenance and management and are the responsibility of all Owners.
Estimated Net Profit
This is the net cash profit, calculated as Owner’s Adjusted Gross Income less Variable
Expenses and less Fixed Expenses.
Estimate ROI
Calculated as the Net Profit divided by the Average Investment Value.

ALL POTENTIAL PURCHASERS MUST BE AWARE OF THE FOLLOWING:
   • The above are forecasts only and are not guarantees of potential income.
   • None of the figures quoted are contractual.
   • Owners occupying units during Christmas, Easter and other prime holiday
      periods will receive a lower ROI due to their unit not being in the rental pool
      during high revenue periods.
   • Rentals will be apportioned on a strict rotation basis.
   • The forecasts are based on current tourism patterns and will be affected, both
      up and down, by local and worldwide tourism trends and market conditions.


   V. Other Investment Topics (presented in FAQ style)
Can I start a business in Grenada, to hold my real estate or for other business
purposes?
Yes, it is quite straightforward to start a company in Grenada or establish a “branch”
of an existing company. Below are some basic facts regarding the tax consequences,
however this guide is not a substitute for professional advice. Grenada has many
qualified accountants and attorneys who can guide you in a proper fashion.




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• An alien owned business can easily be created. The procedures vary
  depending on if the business is a branch of an existing company or if it is
  newly created.

• The forms to incorporate the business are very straightforward, and center
  primarily around the character of the proprietor. Standard Articles of
  Incorporation can be used for most businesses.

• The fee to the Register of Companies will cost approximately US$500.

• The high end cost estimate for professional assistance by Chartered
  Accountants, such as Price, Waterhouse & Cooper, is between US$3-5,000.

• The taxes on the business and its operation are as follows:

      o 0.5% stamp tax on annual gross revenue (turnover);

      o Government Consumption Tax (GCT) is collected by the vendor for
        goods and services and remitted to the Government. These vary by the
        type of sale, but average 5%. Late in 2007, this GCT tax will be
        supplanted by a new Value Added Tax (VAT), estimated to be 15%.

      o Tax on business profit is 30%. For any proprietor paying a salary to
        himself, the first EC$60,000/year is tax exempt. International Accepted
        Accounting Principles apply to the business Profit and Loss statements,
        therefore normal business expenses and reinvestments are considered
        appropriate deductions from gross revenue.

      o Employees hired by the company will incur additional taxes and
        withholding requirements as follows:

                The Employer pays 5% of the salary (above what is paid to the
                 employee directly) to the NIS (National Insurance Scheme). This
                 is a National program that pays benefits to sick and injured
                 workers and includes a retirement fund.

                The Employer collects from the Employee’s salary an additional
                 4% and pays this to the NIS fund.




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                    The Employer is responsible for collecting, reporting and
                     remitting income tax from the salary of Employees earning more
                     than EC$5,000/month. The rate of tax above this amount is 30%.

                    Additional income tax for the National Recovery Levy is 3% over
                     EC$1,000/month.
Once I become an Owner at Mount Cinnamon, can I establish Grenada
residency?
Yes, this is done routinely by non Grenada citizens who own real property in Grenada
and spend a significant amount of time here. A Residency Permit can assist with
Immigration time limits; and for some foreign nationals, such as those from the UK, it
can be used to establish foreign residency for income tax purposes.




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How long can I stay in Grenada simply as a visitor or Owner?
Persons of good standing can routinely be granted six (6) months in Grenada by the
Immigration authorities. The current attitude in Grenada is to encourage visitation,
including extended use of holiday homes.
Please take careful notice of the following disclaimer:
The information contained herein does not form any part of any contract or
agreement between the parties and is presented only as a general guide for
information purposes only. All efforts have been made to ensure that the
information is accurate, however Mount Cinnamon Beach Resort and
Residences can not be responsible for any inaccuracies or misstatements.




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