SOS I just started this Real State adventure

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SOS I just started this Real State adventure

Jorge Castro
New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes

Hi, my name is Jorge Castro. I live in Guadalajara, Mexico, 45 years old, married for 17 years with 3 beautiful daughters. During the last 18 years, I have been working as the CEO of my family business. At the end 2003 my father invested (bought) a company, the moment we closed the deal, I became the CEO of it. This challenge became my passion for the following years, I really enjoyed the challenge and 18 years later we are still in business.

I consider myself capable of many things and I love the idea of wealth creation, but I turn back, and my reality looks different, or at least, different to what I would have expected 18 years ago. I have not been able to materialize any created wealth for me and I am starting to get anxious about this situation, and somehow excited and relief, since I came across a way to start materializing wealth.

Some years (maybe 10 or more) my wife read "Rich Dad, Poor Dad" and she started explaining the idea that Kiyosaki talks about, I got excited and started to do some numbers and just could not find how to do this. Here in Mexico, rents are about 0.4% - 0.6% monthly and mortgage loans, are about 8%-12%. For me that book was written in a different reality, so I discarded that idea, thinking to build wealth with my wage and eventually be able to buy my home... never happened.

Some 18 months ago, I came across a webpage in Mexico "ViveDeLasRentas.com" (live from your rents). This webpage is built around Kiyosaki's idea, so it got my attention, since they (Luis, Eduardo, and Pablo) claim to have found the solution on how to apply "Rich Dad, Poor Dad" technique to the Mexican reality. Long story short, I started a 90-day program with them, after a lot of doubts and internal conversations, here I am. It was because of them I knew about Bigger Pockets and now I am writing this post.

I am excited about this new adventure; I am sure this is something I can enjoy and develop some skills to materialize my wealth creation potential for me and my family. I will be around!

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Melanie Dupuis
Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
4y

Welcome @Jorge Castro!! We have recenty started investing in Mexico (Tulum).

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  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    Hi Jorge,

    Good luck for your real estate journey. Love Guadalajara by the way. Great city. Awesome people. I'm probably gonna visit again at the beginning of next year.

    As you have figured out by yourself, the buy & hold model doesn't work rental properties in Mexico, in big part because of the high interest rates. Mind you, if interest rates were ever to return to a normal level in the US or Canada (something like around 6%), the property market would inevitably tank as it did in 2007-8 as the CAP rates are generally currently below that interest rate level.

    Short-term rentals work great in Mexico because of much lower property prices, operational costs and taxes, potentially higher income and no (danger of) unfavourable short-term regulations.

    BiggerPockets is awesome but it's mostly US-centric and you cannot copy/paste everything when investing in another country. You have to find out what works there.

    1Reply
  • Melanie Dupuis
    Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
    4y

    Welcome @Jorge Castro!! We have recenty started investing in Mexico (Tulum).

    1Reply
  • Jorge Castro
    OP
    New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes
    4y

    Thanks for your reply @Mike Lambert, definitely many of the ideas I heard on this webpage do not apply to the Mexican reality. I am exploring is to "buy and hold" and making some remodeling trying to build as many rooms as possible, so I can go with short-term rents, and/ or Airbnb. I am looking for a good opportunity to do this and I am also working on a property of my own, that I have in a "traditional" renting scheme, and change it to an intensive renting model.

    0Reply
  • Jorge Castro
    OP
    New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes
    4y

    Hi @Melanie Dupuis, as far as I know, Tulum is a hot spot right now to invest. Are you doing it on your own or through somebody running an investment fund down there? There are these guys at "vive de las rentas" developing different investment opportunities in different spots in Mexico and also Spain and US, check them out!

    0Reply
  • Melanie Dupuis
    Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
    4y

    We purchased it on our own through our entities @Jorge Castro

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Jorge Castro

    I checked that ViveDeLasRentas.com website and I'm not exactly impressed. Mind you, it's great if you discovered BiggerPockets thanks to them.

    The issues I have identified by just having a quick look:

    1. It looks that their main purpose is to sell condos and they're using the educational part merely to that end but maybe that's not the case;

    2. They pretend every single of their projects give the exact same ROI of 9.3%! They could have at least used different figures for each project to make it look more realistic.

    3. They seem to pretend that the ROI is guaranteed? By whom? Is that in the legal documentation when you buy? The only developer in Mexico I know who really legally offered a guarantee hasn't honoured that guarantee and he wasn't able to pay it anyway. A guarantee only has value if the issuer of the guarantee is good for it.

    4. An ROI of 9.3%, even if true, isn't that special in Mexico. I know of plenty of people doing that with vacation rentals and they needn't go through any program. In other words, what they're doing looks like nothing special. There's nothing disruptive in what they're doing, contrary to what they claim. All they do is selling rental units and, clearly, if you buy enough of those units, you can live off the rents as you can anywhere else in the world. Mind you, if their program helps you make money by investing in a way that you wouldn't have thought about if it wasn't for them, whatever money you paid them might be worth it.

    5. Again assuming that that ROI would be correct, the small print says that it only applies to the first few buyers. So basically they could sell the first few units cheaper to justify that ROI but all the other units would have a much lower ROI because they're more expensive. It makes me think of all the developers in Tulum who sell expensive large condos and calculate the ROI on a studio in the same development because they know that studios have a much higher ROI than large and expensive units.

    Now I wrote all this under the reservations that I don't know them. And, obviously you've been working with them and you know them better than me. Did you invest with them and get the results they're claiming? If you did and got great results, you can forget about what I wrote.

    0Reply
  • Nick Peters
    Specialist · New York City, NY · Member since 2019 · 399 posts · 168 votes
    4y

    @Jorge Castro

    Welcome to BiggerPockets! You came to the right place to learn more about real estate and connect with other motivated investors. BP is full of great content, so I strongly recommend you to have a look at the following resources:

    1. Start by reading the Ultimate Real Estate Investing Guide: https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/introduction

    2. Then check out other online guides available here: https://www.biggerpockets.com/guides

    3. Have a look at BP's blog where new articles are published every day: https://www.biggerpockets.com/blog

    4. If you wish to network or ask specific questions about your local market, join your local real estate forum and discuss with investors from your area: https://www.biggerpockets.com/forums/86-local-real-estate-networking

    5. Or you can directly meet with them by registering to real estate events around you: https://www.biggerpockets.com/forums/521-events-and-happenings

    6. BP has various tools and calculators available to help you analyze your deals (rental, flips, wholesale, etc.), feel free to use them: https://www.biggerpockets.com/investment-calculators

    7. If you can't find what you're looking for, try the BiggerPockets' FilePlace: https://www.biggerpockets.com/files It contains hundreds of files such as ebooks, checklists, and spreadsheets for real estate investors.

    Please let me know if I can help, and best of luck!

    1Reply
  • Jorge Castro
    OP
    New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes
    4y

    Wow, @Mike Lambert ! thanks for your reply!! I find it very interesting you took the time to look after these guys and you wrote an e-mail questioning them, which I really appreciate a lot!! Thanks for that.

    I had my issues, and I may still be in a defensive attitude towards their investment "opportunities" but since you are in a mood to discuss this further, let me share my thoughts...

    1. I do think, that one of their motivations to start "vive de las rentas" as a community is to build credibility and reach potential investors, but I do think they really have this honest objective to teach others how to create wealth through real estate investment. The main scheme they promote is co-living, as a passive income cash flow generator. Airbnb is also an option, but for them is not that passive, as a co-living scheme.

    2. I think they have built a business model that allows them to generate a higher ROI than the 9-10% they offer, but the differential is for them. The "attractive" claim is that you will invest in a project under development, but you will receive your cash flow from month one, no matter if the property you are investing in is not ready to generate rents and they guarantee 10% of ROI during the first year, arguing that after that year, the ROI will improve.

    3. For the guaranteed part, I am not sure how they do this. I would expect to have this written in the investment contract, but I have not seen any contract yet. They also "guarantee" this ROI for the people that buy during the first two days after they launch a project. They invite the community to a zoom presentation where they have all their selling system in place… Today they launched a product, their first investment in the USA, they will invest in San Antonio Texas, I think the project is made of 12 duplex homes, they will add a room to each of those houses to increase the rent, here you can see the link to that presentation Vive de las rentas - Vive de las Rentas USA: Lanzamiento Friends & Family | Facebook.

    4 / 5. I am not sure if what they are proposing is disruptive or not since I am new to this environment. What is true, is that they present the information in such a way that has made me turn my head into real estate and understand that there is a way to make this possible in my environment. Before I consider investing in their projects, I am looking forward to making my own investment to build experience, gain confidence and learn the way to do it, so I can repeat the process… So, I guess, that only because my thoughts for real state changed, I will give these guys the benefit of the doubt…

    Thanks again Mike for sharing your thoughts with me, this is awesome! I read your profile, I see you are interested in expanding your international portfolio, if I can be of any help, count on me! I am eager to learn and generate value for others while I can learn in the process!

    1Reply
  • Jorge Castro
    OP
    New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes
    4y

    @Nick Peters thanks a lot for your information, that post is great!! 

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Jorge Castro

    You're welcome. If I want to help you, I need to know what we're talking about. :-)

    I don't know what their intentions are. The only thing I can see is how they show up. So let me play the skeptical role again.

    1. If they are so certain that the ROI will be higher than the guaranteed 10% after the 1st year, why are they not guaranteeing for a longer period? It wouldn't be negative to them in any way and it would help better selling the project. So, the only possible rationale reason as to why they don't do it is because they know that there's no guarantee they're gonna make the 10%. If they're wrong, they can pay the shortfall out of their profit from the deal the first year. But if they're wrong several years in a row, these profits won't be large enough hence the guarantee scheme can work for 1 year only.

    2. They do a presentation, get everyone excited and then pressure the attendees to make a quick decision while they're still excited by putting a deadline on that guarantee. That's creating false scarcity, which is very salesy, especially when it comes to finding investors. In my humble opinion, somebody who's really looking at the interest of his buyers/investors wouldn't do that. I would never do that. I've always given all the time to my investors to ask questions and make a decision and I've never pressured anybody them to do anything. Anybody working with buyers/investors have to make a decision: will interests will they look after first: their buyers/investors' or theirs?

    3. What they want to do in the US isn't disruptive at all. This is a classic that's very talked about a lot on BiggerPockets: adding bedrooms and find the best use for any property. Kudos them for doing it though, as it is an intelligent strategy indeed.

    4. I'm not sure what's going to happen with co-living post-Covid. If anything, haven't we learned from Covid that we want/need our own space and that we don't wan't to be crammed with "strangers" in case anything similar happens again?

    And yes, you have no obligation to invest with them if you don't like it and you can still apply what you've learned if it makes sense. So, all that you are doing seems very positive given what I understand of your situation, irrespective of my comments.

    0Reply
  • Jorge Castro
    OP
    New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes
    4y

    You read my feelings, exactly that is something I do not like of what they do, this sales strategy is used in different products and typically the experience is not pleasant. They use it a lot, my feeling is that they started on their own, and they found a way to do it, now they are looking for OPM to keep growing. If you ask me, the main interest they look after is their own, but I wouldn't say that is something bad, I think that at the end, your ow interest is the one that make things move. If by pursuing your own interest you can impact in a positive way to others, you will get to your goals easier and faster, don't you think? So, for these cases, I try to have a clear mind and get the best out of it.

    You are right, they are not inventing the wheel, and they say so, what they are doing, is just spreading information, educating people, gaining credibility and once they have prepared the land, they use it in their advantage and if they do not harm others, it should be ok. My feeling is that they are growing fast, and eventually they could get greedier and bad things could happen.

    I started to look for other sources of information, so I came to bp. I see that this is sort of their inspiration to do what they do, so I am more confident in going after this path. What I like better on bp, is that there is no selling, is more about building community and being a source of information and networking. I am excited! I am sure, soon I will be doing my first investment.

    Thanks for the chat, Mike, it has been a pleasure! let's keep in touch, who knows, maybe in the future we can do something together! Thanks again for your time!

    0Reply
  • Jorge Castro
    OP
    New to Real Estate · Guadalajara, Mexico · Member since 2021 · 14 posts · 4 votes
    4y

    @Mike Lambert I forgot to metion in my last reply, I am not sure if you will get notified, so now I mentioning you, sorry for that...

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Jorge Castro

    You are absolutely correct. There's nothing wrong that they pursue their own interests if it aligns with the interests of their clients. It should be all about creating win-wins. However, given their tactics, anybody dealing with them should take care of their own interests and win because they can't necessarily count on them to do that.

    And yes, absolutely, doing deals together is always more interesting and fun!

    0Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    4y

    Welcome! You need to be skeptical of everyone trying to part you from your money. Great insight so far, but that is just one deal... Plenty of opportunity elsewhere.

    0Reply
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