Prerequisites
- ✓Identified deal or pipeline of deals
- ✓Tax counsel in deal jurisdiction + investor's home jurisdiction
- ✓Decision: single-property SPV or fund vehicle
TL;DR
Single-property SPV is typical for direct deals; multi-deal vehicle for fund-style investing. Choose jurisdiction based on (1) deal location, (2) investor base, (3) tax efficiency. Standard: SPV holds property, sub-SL operates services, top-co consolidates investor capital. Setup cost €5k–€25k depending on jurisdiction.
Step-by-step
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1. Decide single-deal vs multi-deal SPV
Single-property: simpler, cleaner exit, easier investor reporting. Multi-property: fund-style, better diversification, harder governance. Most institutional capital prefers single-deal SPVs because exit timing isn't tied to fund vintage.
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2. Pick jurisdiction
Deal location: usually mandatory (property must be held in country). Investor consolidation: tax-efficient holding company in EU (Luxembourg, Netherlands, Cyprus), Asia (Singapore), or Americas (Delaware).
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3. Form the entity
Standard registered company in deal jurisdiction. Spain SL, Portugal SCI, UK Ltd, Germany GmbH, Indian Pvt Ltd, US LLC. Cost €1k–€10k depending on jurisdiction.
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4. Set up bank account
Often the longest step. EU jurisdictions 4–8 weeks. India 6–12 weeks. KYC documentation is heavy for cross-border investors.
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5. Capitalize the entity
Equity contribution from investors. Typical: senior debt + equity, with equity flowing through SPV. Document via subscription agreement.
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6. Execute property acquisition / lease
SPV signs the deed or master lease. SPV assumes operating obligations. Operating company (separate) handles tenant relationships.
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7. Maintain governance + reporting
Annual filings, audit (jurisdiction-dependent), investor distributions, K-1s / equivalent. Budget €2k–€8k/year ongoing depending on jurisdiction.
Common issues + fixes
×Tax inefficiency from incorrect jurisdiction selection
→Engage tax counsel before forming. Common mistake: US LLC holding EU property triggers FATCA + foreign-entity reporting. Sometimes a Luxembourg or Netherlands holding company saves 5–15% in eventual exit tax.
×Bank account delays blocking deal close
→Start the bank account application at LOI signing, not at close. Cross-border deals routinely lose 4–8 weeks on KYC.
×Governance complexity in multi-investor SPV
→Use a Limited Partnership Agreement (or jurisdiction equivalent) with clearly defined GP/LP roles, voting thresholds, distribution waterfall. Skipping this creates dispute risk.
Frequently Asked Questions
Do I need an SPV for a single coliving investment?
Recommended. SPV ring-fences the deal (limited liability), simplifies tax reporting, makes exit cleaner. Direct ownership creates personal liability + tax complications.
What's the typical SPV setup cost?
€5k–€25k all-in: incorporation + legal counsel + bank account + tax structuring. Lower for simple jurisdictions (UK, Spain), higher for complex (Luxembourg, Singapore).
How long does SPV setup take?
4–12 weeks. Bank account setup is typically the longest step. Cross-border with foreign-investor consolidation can extend to 16+ weeks.