International Investing - Emerging Markets Land Purchases

[Alex M.]

Hi Everyone,

Im a new investor but am very interested by finding emerging market 'hidden gems' -- think lots around up-and-coming Colombian beaches kind of thing., or land with phenomenal views, or country land that will soon be connected to the closest city by a new tunnel/ highway, etc. I just recently returned from Colombia and met some interesting brokers with some savvy investing ideas.  My dream would be to be sourcing these types of deals and helping connect investors in the USA to these opportunities abroad.

My background is in emerging markets political risk analysis and finance; 5 years on wall street, an MBA, and a year in strategy consulting-- nothing real estate related but I am good with numbers, macroeconomics, and have a good idea for opportunity. I have been to 70 countries or so, and really love seeing how places evolve, and coming up with ideas for how to create cool spaces -- mainly for short-term rentals, retreats, ecotourism, etc.

Any advice for you experts out there?  I am thinking of how to create a Brand around myself for being someone who can bring great deals to the table.  

I know this is kind of a wacky idea for a new investor, but it really is what I am passionate about, and would love to get some ideas as to how I may become the person people think about when they are looking for Alternative real estate assets.

Any thoughts would be very much appreciated.

Thanks!

[Mike Lambert]

Hi Noah,

I can share a bit of my experience with you since I'm doing something kind of similar and I have a vaguely similar background, banking in emerging markets (in particular but not exclusively Latin America), which included emerging markets risk analysis.

While I could invest in land because a) it is very speculative, b) it doesn't produce any cash flows, c) you cannot borrow against it and d) this is not were the money is.

Instead, I buy condos well below market value to rent them short term in countries like Mexico, Panama, Colombia, Brazil, Spain, Portugal or Greece. I'm also looking at getting in property development. Like you mention, I follow the path of progress but the areas I invest in are proven.

I'm using money from investors but it's not easy. My best advice for you would be to build a solid network of interested investors. Indeed, I've had fantastic deals but most investors won't look at them because it's overseas and they don't know the market. So you have to find the right investors. The other side of the medal is that not many people do this so you have little competition.

Another challenge is the return on investment. Since the risk is higher than in the US (with the exception of European countries), US investors will probably not invest unless the return is significantly higher than what they could get at home. But then, if you show them a significantly high return, they often will think that it's too good to be true and correlate it with horror stories they've heard of from other people living in those countries.

Finally, it's paramount to have good contacts on the ground and that's not easy to find. In these countries, finding people with good stories is easy but finding reliable people is another one.

Hopefully I'm not discouraging you because it's not my purpose. If this is a passion for you, its not impossible. Just make sure you do things properly.