Hostel for Sale in Rio de Janeiro, Brazil
We are selling a Hostel Business located in Rio de Janeiro-Brazil. The Hostel is located in Rio de Janeiro party district which is called LAPA. (do a Google search for Lapa) The Hostel has been up and running for 3 years and is well established. The interesting thing about this business is that between 28th December until the last day of February (carnival) each year the profits earned PAY for the entire years bills. Including Rent, Electricity, Water, Gas, Telephone, Internet, Cable, Staff and so on. The remaining 9 months are pure profit.
The reason the 2 owners are selling for so cheap is quite easy. One of the owners is British and has already moved to Sao Paulo to be near his Brazilian wife’s family. The other owner is Australian and has just had a baby and wishes to return to Australia for a few years.
The owners of the building are the same 2 guys who are selling the Hostel business and are happy to just receive rent. On the ground floor there is an Irish Pub, the Pub caters mainly to foreigner and rich Brazilians. The owners of the Hostel building also own the building that the Irish Pub rents.
Description of the building
The outside of the building has a historical face and appears only to have 2 floors with high ceilings, the face is light yellow and white in colour. Changing of the colour of the building must be approved by the historical department of the Town Hall, currently the building has a 100% property tax exemption (tax is normally $R6000 per year) as it is a historical building with its face restored to its original state.
The 1st floor is 116sqm in total size. When you walk in the front door you 1st enter a common area (about 16sqm) where you make a decision if to continue to walk into the Irish Pub or walk to the hostels reception desk , then go upstairs to the hostel.
The 2nd floor is about 144sqm in total size consisting of 2 air conditioned dormitory rooms, 2 bathrooms, 1 laundry, 1 storage room and the favorite part of the hostel which is the balcony. The balcony is under constructing at the moment and soon will have a new kitchen, 4, chandeliers a large ($2500USD) handmade gold frame mirror. (and many more things)
The 3rd floor is about 100sqm in total size consisting of 2 very large air conditioned dormitory rooms, 3 bathrooms, and a table in the hallway which offers free internet access via our Dell computer.
The Attic is a common area just like the reception as there is equipment installed there that belongs to the Irish Pub (the Irish Pubs Large A/ C units) There is also the hostels 500 liter gas hot water boiler ($R10,000 worth) . Mechanical air ventilation filtering system (required by Law) and 2 (two) 1000 liter backup water tanks.
There is a 16,000 liter concrete backup water tank built under the concrete floor of the Irish Pub. Which falls under common use. Additionally in the Attic as mentioned above there is 2 (two) 1000 liter back up water tanks.
In the Bar there is a fire room which falls under the common area, where there is located 2 (two) 20,000 liter per hour professionally installed Fire Pumps which feed from the 16,000 liter concrete backup water tank to a series 100mm red fire tubes that lead to all 3 floors of the building (cost R$30,000 - fire hoses are also located on each floor) There is also a black 10,000 liter water pump that feeds water under high pressure to the showers.
THE FIRE INSTALATION HAS BEEN APPROVED BY THE FIRE AUTHORITIES (IT TOOK 1 YEAR TO APPROVE)
The complete building is the standard 110V, but we have installed a 220V power points on each floor for tourists with 220V appliances. (The building has been completely re-wired)
The complete building feeds hot water via a new 80mm copper tubing gravity fed from the 3rd floor down to the bar (22mm copper tubing branches off to showers and water outlets)
Cold water via a new 80mm plastic tubing gravity fed from the 3rd floor down to the bar (22mm plastic tubing branches off to showers and water outlets)
New 100mm sewage exit tubing with the correct 25mm per meter fall.
The complete system was installed professionally by an Australian plumber. Good local plumbers are hard to come by, it was just as easy to have an Australian come over and install the project in half the time.
All new copper gas tubing has been installed throughout the building (for the hot water boilers) THE SYSTEM HAS BEEN APPROVED BY THE GAS AUTHORITIES
Licenses and Permits
The Hostel has ALL licenses and Permit that are required to legally operate.(It took 2 years to receive the Hostel license)
It is a simple but time consuming process to obtain a sign, especially on a Historical building as you need to follow many legal guidelines and there is a requirement to have an architect to draw plans of the face of the building with the sign on it. (we have all these plans approved and fees paid, but we haven’t got around to making a sign)
The planning department has approved all our plans.
I mention this because many business bribe government officials to get a Licenses to trade, but before you legally get a license to trade you need all approvals first such as Town Hall planning approvals, fire approvals, gas approvals, approvals for your ventilation and air conditioning and so on. People simply pay for the Final approval and not all the other approvals as they can only be issued by the director of that department alone (it costs too much to bribe every department, so people just bribe the guy at the end) SO YOU NEVER NEED WORRY ABOUTANY GOVERNMENT OFFICALS COMING TO BLACKMAIL YOU FOR MORE MONEY BECAUSE EVERYTHING IS LEGIT.
WE HAVE ALL THE CORRECT DOCUMENTS , LEGALLY OBTAINED
This cost us about $R20,000 with legal fees and taxes.
The hostel has 4 large dorm rooms which can sleep 54 people.
One room with 8 beds.
Two rooms with 14 beds with bathroom in the room.
One room with 10 standard dorm beds and 4 double dorm beds (we have the only double dorm beds in Rio de Janeiro)
Due to a written agreement between the hostel and the Irish Pub all bills are split in half so the hostel bills only come up to around $R1200 per month.
Most of our staff are tourism students, so they receive $R500 per month for 6 hours work per day, 5 days a week. The cleaner receives $R500 per month for 8 hours work per day, and 4 hours work on Saturday but she is a normal employee so there is an additional $R500 in Brazilian taxes. (social security + transport and stuff like that)
Total monthly staff costs are close to: $R4000
5% monthly on Turn over.
Tax is also calculated every 3 months on gross turnover.
I can talk in more detail about this at a later stage.
Permanent Residency is easily obtained when a person invests $50,000 USD in a Brazilian business (I think a new law was pasted on 13/02/2009 where an investor must now invest 150,000 Brazilian reais into a business to receive this type of visa, but I am not sure if the Law has come into effect.)
Market value for the space that the hostel occupies is 7000 Brazilian Reais per month.
(9 year renting contact)
Renting real estate in Brazilian is difficult, because when you let someone in your building and they choose not to pay rent, it takes years to get the people out.
So there are about 3 options for giving a guarantee/deposit to the owner of the building.
1/ Three months rent acting as deposit (no building owner will except this on a long term renting contract)
2/ Certificate from Insurance company guaranteeing that the rent will be paid by the
Insurance Company if you fail to pay rent.
3/ Have a piece of real estate
4/ The most popular method is, place about 150,000 Brazilian reais in a bank account in your name, which collects interest. If you don’t pay rent, a Judge and only a Judge can order payment be made from this bank account. If your don’t have 150,000 Brazilian reais to start with we could sign a contract where you add an agreed amount of money to this account per month.(since the owner of the building is selling the Hostel business he can give you flexibility to resolve this issue)
300,000 reais for 100% ownership, OF THE BUSINESS
if you don’t want the whole business we have some people with limited funds who are interested in buying 50% of the hostel.