All Forum Posts by: Mike Lambert

@Tip Mallick

You're very welcome and you're correct but have to be careful when talking about "these countries".

For example, I bought multiple properties in Mexico over the years. They all were pre-construction and I wouldn't have it any other way. This is why:

1. Pre-construction are the best deals in that you can buy much cheaper if you buy early enough, which gives you a much higher ROI and give you equity from the get-go. Unlike in Thailand, you get capital gains in Mexico and they can be substantial and quick, depending on the market, specific development, market conditions, ...

2. Pre-construction has been a cornerstone of Mexico's construction industry and economy for decades. It's well organized, tried and tested. American, Canadians and other investors have invested billions of dollars that way for decades and it's only be accelerating over recent years.

3. There's no discrimination against foreign investors in Mexico's law or otherwise. There were fears when the leftist just retired president AMLO came to power a few years back that foreign investors would get hurt but he turned out to be very friendly to us and made Mexico's economy its best ever and one of the best in the world. By the way, the US dollar has crushed most other currencies but it's been itself crushed by the Mexican peso.

4. It's very easy to book a quick flight to Mexico at the taxpayer's expense and go and check on what's going on the ground. Oh and poor you, you might feel compelled to show up at the beach club and have a tequila or two ;).

Also, I understand you're a fellow Canadian. I'm not suggesting that that's what you're doing but I think that us and Americans should be careful not to be condescending about "these" countries, whether we talk about Thailand, Mexico or any other country. Did you see the report on CBC news yesterday about the thousands of empty condos in Canadian cities that were just built and find neither buyers nor renters? What an unmitigated disaster.

Finally, to be fair to Thailand, that construction license situation could happen anywhere and of course it's sad for the buyers/investors involved but I suspect they didn't do proper diligence, in which case they likely have themselves to blame too.

Indeed, the problem is that many people are too lazy too cheap and/or don't have the right knowledge or understanding to do proper due diligence. When people here send me private messages or ask me on a call, one of the many things I'd tell them if they want to buy pre-construction is to check the developer's construction license and that it complies with the zoning rules (and I'll tell them if I know what those are).

You woudn't believe the amount of people that are ready to put a sizeable amount of cash on the table but won't spend the little extras needed to make sure they don't lose it.

@Andrew Bosco

Yes, the rule is that foreigners can't own land, which means that, in a condo building, foreigners can't own groundfloor condos. Also, foreigners can't own more than 49% of an entire building. So foreigners can own a condo but normally, they own a share of the land with it but, in Thailand, foreigners don't. Would anyone who know what they're doing want to own a building and having somebody else own the ground? Do you think promoters of Thai real estate to foreigners explain that to unsuspecting potential buyers?

The above rules show that Thai law discriminates against foreigners. Given that, should you ever be involved in a lawsuit in Thailand against Thai individuals or entities, how likely are you to win, even if you're right?

These are huge risks to take just to get an 8 - 12% ROI and no chance at capital gains in my humble opinion. Moreover, is the 8 - 12% ROI calculation made by the developer. That would be typical and I'd always do my own calculations.

As you mentioned, these rules are similar in most Asian countries and that's one reason enough for investors like me to stay away.

@Andrew Steffens

You're very welcome.

Yes, the financing conditions are often better in the US but that advantage has all but disappeared with the new normal level of US interest rates. Financing overseas has become more available and the differential in conditions is the lowest it's been ever.

Moreover, these days, you can have a higher ROI if you but a property for cash overseas compared to buying a property with a mortgage in the US. Granted, that's of little help if you don't have the cash available but you can use a HELOC on a US property and, even if you don't have access to that, the total price of a Nic property overseas can be less than the downpayment on a US property. Plus, you could buy pre-construction and pay over time.

And agreed, dealing with red tape could be frustrating. However, you have to understand that dealing with foreigners always means red tape and that's the case for foreigners too. Part of it might be cultural but, personally, I don't really mind if I can get myself a profitable deal.

Hi Jake,

A few things here:

1. Being a Portuguese citizen doesn't give you any advantage whatsoever when it comes to buying and/or operating short-term rentals in Portugal.

2. A lot of the popularity of Portugal and its real estate (prices) had to do with the golden visa, that's been abolished.

3. A ban on new ST rentals in the places where they'd be the most profitable (Lisbon, Porto, the Algarve and the coasts) was enacted by the previous government. The new government is revoking these rules but only to transfer the decision to the local authorities. Some towns will maintain the ban for sure. If you find a town where the ban is revoked, you need to understand that it could be reinstated by the town or by the country should the local or central government change (again). I'm not sure there's any end in the country's rental crisis in sight so there's a serious regulatory risk, but that's the case in the US too.

4. When it comes to taxes, it depends on the country. I'm a Canadian tax resident so I wouldn't hazard myself to give you any tax advice. What I can say though is that Portugal will tax your income first either by having the OTA withheld the tax from the money you get or by having you make a local tax return. You'll have to pay tax in the US as well. If there's a treaty for the avoidance of double taxation between the two countries, you should hopefully be able to credit your Portuguese income taxes against your US ones.

Hope this helps.

@Andrew Steffens

I invest internationally and I'd recommend it to anyone provided they know what they're doing or at least have people in their team that do (depending where of course, as you mentioned). There are hordes of Americans who invest overseas. I've met many of them over the the years and I haven't met any of them who regrets it and plenty of them who would recommended (with the caveat that you need to know what you're doing).

As you suggested, there are specific risks that don't exist if you invest domestically and it can mean headaches if you don't know what you're doing (but that's the case in the US too). I don't why it'd be riskier as a whole or downright dangerous. Don't we think investing in the US is risky with high interest rates, historically low affordability and cash flows and high prices inflated by 15 years of artificially free money that's gone for good? Have we forgotten the 2008 global financial crisis that wouldn't happen in foreign countries where properties are bought with cash and the risk of foreclosures is 0? Or, is it smart to have your job, all your real estate, stocks and everything in one single country and at the whim of a single government? Is that (financial) freedom? Haven't we learned from Covid that the freedoms we take for granted can be taken away from us in a heartbeat if we depend on one single country? Isn't diversification a basic principle of building and keeping wealth?

Many of the wealthiest and most successful Americans own a huge amount real estate overseas. In Mexico, a country I know particularly well, it's billions and billions of dollars. Figures I saw even surprised me. Do we think all these people are stupid?

If you buy yourself a vacation rental in the right foreign country, you'd invest much less than you'd have to in Florida to make the same rental income. You'd be surprised, it could be fun and you could be forced to take a tax-deductible trip to your property once in a while. it could be a nice lifestyle + profit combination.

In any case, I think it's great that you made those comments . They are really useful in that they help everyone thinking it through and you allow us to have an interesting and constructive discussion.

@Tip Mallick

I think there is an international forum but not that many people invest internationally here and probably even less in Thailand anyway.

It depends on your objectives (we all have different ones) but didn't you already answer your own question? I invest exclusively overseas as I can get better returns than at home in the right places but I wouldn't touch Thailand with a 10-foot pole, unless it's for lifestyle. The lack of capital gain would already be a huge no no for me but so is the inferior property title (foreigners can't own land in Thailand).

There are so many better ways to make a 10 - 12% ROI, which by the way you're not guaranteed to get (which would be ok if you could get capital gains)! I don't know if you're aware but luxury hotel rooms are often super cheap in that country so I'm not sure how you'd compete and make any decent income. I'd never trust the figures of a promoter and do my own calculations.

@Atlas Blake - You're welcome, Atlas.

In Europe, you have islands mostly in the Mediterranean Sea but also in the Atlantic Ocean. I'm not sure what your definition of an island is but, if I had to guess, I'd think it's related to a tropical vibe, which you generally don't have in Europe. A place in Europe that is on an island will generally not going to be that much different than a place in the same country on the continent in terms of vibe.

Back to the Americas, I mentioned the Caribbean because I was referring to "island". However, you can find the same kind of vibe on the Atlantic and Pacific coasts of Mexico and Central America.

@Atlas Blake I'll add my two cents given that I've been investing for a many years in the region:

1. @John Underwood what you wrote makes total sense but, as you know better than me, finding a great ROI property in the US ain't easy anymore with the new normal when it comes to interest rates. Because of that, you could get a much more profitable investment overseas if you know where to look. But if you find high ROI properties in the US, it's absolutely an option so read you mentioned it.

2. The biggest mistake people make when attempting to invest overseas is trying to apply US strategies overseas. Turnkey generally don't exist and value add generally makes no sense from a business and financing overview.

3. The issue with islands is that it means Caribbean. That means more expensive and less profitable and, personally, I wouldn't invest there because of the sargassum issue but you might care less about it because of the lifestyle component in your case.

4. Costa Rica is expensive and it generally doesn't work from a pure investment point of view, unless you're not very demanding from an ROI point of view. It's a good location for lifestyle buyer but, again, you're part lifestyle so it could work for you.

5. As to buying land and build from scratch, make sure you understand what you're getting into, especially if you don't reside on the ground. Mexico is by far the main market for the whole area and  one of the main agents in Puerto Vallarta, one of the main markets, recently told me that every American he knows who is a pro rehabber in the US who's done a rehab there has hated it and said they'd never do it again.

Hope this helps. It's an exciting adventure but won't be easy so don't get discouraged. Just make sure you understand what you're getting into, which is exactly what you're doing by posting on the forum so kudos to you you're on the right path.

You're welcome. Doing that will eliminate part of the hassle but I assume you're aware that you will likely make much less money than with US LTRs and that the laws are much more tenant friendly than anywhere in the US.

I know Valencia quite well with the perspective of a North American (and European) as I was going to invest in STRs there after the Costa del Sol but, sadly, they've banned STRs there so I had to reconsider. So, if you still want to invest in LTRs there, you could reach out to @Erwin Groenendijk. He's active in the forum so he might be commenting as well.

Finally, I'm not sure that you should worry about dealing with currency fluctuations because you won't have to assuming you're cash flow positive. You'll rent in € and your mortgage payments would be in €. Besides, the € has been fairly stable against the $ over the last few years and that could continue if the FED and the ECB follow similar monetary policies, as the market likely believes.

Hi Brian,

You need to first do your homework to decide where you want to invest (also be clear about does affordable city means to you). There's no agent covering the whole US Atlantic or Pacific coast. Same thing in Spain. Even if you focus on just one of the Spanish "costas" for example, a realtor will generally only cover one city, even though it's part of a larger market. Also, Spanish realtors don't work the same way as Americans do so don't count too much on them. It's best to be clear about what you're looking for and you'll need to do a lot of the work/research by yourself. They're not going to waste their time helping foreigners knowing that many will end up not buying.

I'm happy to refer you to my lawyer once you have found a property but it's better that you choose one in the region and province you're going to invest in as there could be "legal" differences pertaining to you.

On another note, it's important that you realize that strategies that work in the US might not work in Spain and financing is different so you might want to figure out first if that works for you first to make sure you don't waste time and money unnecessarily.

Hope this helps.