All Forum Posts by: Mike Lambert

@Basit Siddiqi

@Joaquin Camarasa

@Bruce Lynn

A few observations/opinions on the topics discussed from a resident of the 51th state of the US (Canada - LOL) and investing in Spain:

1. I think most successful investors would tell you that, while you need to take tax into account in your decisions, you shouldn't make a decision based on that alone. Also, don't forget that, if you pay taxes, it means you're making a profit.

2. Like most countries, Spain will tax you on your worldwide income if you're a resident, as does the US in most countries (so maybe it's not a bad thing that Canada isn't the 51st state - LOL again). Yes, Spain has a wealth tax but it's above €2 million taxable income and the rate is low so it's not going to kill you.

3. Along with Eritrea, the US is the sole country in the world that taxes its citizens on their worldwide income based on residency and citizenship. So, if you're a US citizen and you move to Spain, you'll have to pay taxes in both countries. Thankfully, you'll be able to get deductions based on the bilateral treaty for the avoidance of double taxation but that means that you'll always pay the maximum of the tax rates between the two countries for each category and some items might not be deductible.

4. Yes, Spain is one of the countries in which banks will lend to non-residents (they generally don't) but Spanish banks are much more conservative than US banks so it's more difficult to qualify, especially if you don't earn W2 income. Also, banks normally only lend for holiday homes, not for rental properties but a holiday home can mostly be a short-term rental or become one later.

5. This last bank limitation isn't a bad thing in my opinion because the long-term rental yields are low and what are you going to do if a tenant doesn't pay? Go to court in Spain as a foreign owner? I invest almost exclusively internationally but I would generally never invest in long-term rentals, unless the rentability is very high, which it almost never is.

6. The withholding tax (on gross income) a problem if you:

a) The wealth creation part of that real estate investing is capital appreciation, not cash flow. So, yes, you'll get a lower percentage of the cash flow (which isn't that high anyway for long-term rentals like pretty much anywhere in the world, including the US) but you'll get appreciation and loan amortization.

b) You successfully invest in STRs and make enough money that you don't care that much about the higher taxes.

To conclusion, as a foreigner investing in Spain, with a few exceptions of specialized niches, I focus on areas that have (high) capital appreciation and short-term rental potential.

Hope this helps.

@Ella Volney

Typically, you can only find a lender in the country where the property is located and, if you're not a resident there, it will be more difficult if not impossible, depending on the country.

When it comes to investors, they need to be open to the idea and then you need to have opportunities that fit within their right risk/return profile. Not easy, especially given where you're investing and, if you can't do that, love money might be the solution.

Hi Angelo, I do but Europe is huge and very differentiated you need to understand the current local laws and regulations and appraise the risk of them changing (getting worse). Choosing the right location is the most important, as well as understanding its risk/return profile and decide if you're ok with it. Have a plan B if you're in an area in which ST rentals could get banned.

@Kumar R.

There is undeniably more red tape bureaucracy to deal with in Latin America than in the US. That's an inconvenience but there are many advantages, as you'd have probably figured out. So the question is how to get the advantages without the inconveniences? You let other people deal with the inconveniences. This is another application of the "Who Not How" book. If you couldn't find the right people, it made sense for you to give up indeed.

@Anne-Michelle Wand You're welcome. There's no question that Panama is a country that has done extremely well for itself. It's implemented smart policies and is very welcoming to foreigners, to say the least. It's a great place to live and/or retire for the right kind of people. That doesn't necessarily translate in high real estate investment returns but you can make some money investing in real estate there (like it seems you do) and so it makes perfect sense that you do that since you live there.

Those like me who don't live in Panama are likely purely looking at figures and comparing risk-adjusted returns with other countries where they can invest. We might consider the lifestyle aspect if it's a place where we want to go back regularly.

Speaking of Mexican cartels, I've been going to Mexico for more than 20 years, know a huge number of people who invest and work in real estate across the country and I've never heard about cartels taking over properties. I would always take comments like "I have friends who say..." and probably heard from someone else with the necessary pinch of salt. The rules in Mexico when it comes to cartels are pretty simple: 1) you don't go in the (well-known) areas that they kind of control and 2) you don't deal with them or with things like drugs in which they are heavily involved. If you plan to respect these rules, cartels shouldn't be a concern. If you don't, getting your property taken over might end up being the least of your worries, if you see what I mean.

@Yannick Vez

Pre-construction properties are sold everywhere, including in the US. In countries like the Dominican Republic, they can be the best deals if you select the right ones.

I'm not sure what kind of videos you're looking for. You "just" need to understand the risks and rewards and decide if that works for you.

@Anne-Michelle Wand I was replying to your question from a personal point of view and was in no way suggesting that you should switch investing in Panama for Mexico. To each their one indeed.

On another note, I'm surprised about your comment about the cartels, especially since you lived in Mexico and I don't see the connection with real estate investing. I don't deal with drugs and neither do the many investors and other people I know who live or spend time there, whether locals or foreigners. As a result, none of us has had anything to do with them and I don't remember ever having a discussion with anyone about the cartels when in Mexico. But I know many people who haven't invested over the last few years because of the cartels and who bitterly regret it given what the market has done there.

As to the government, I'm not sure what your issue is and when you lived there. Since 2018, Mexico has had its most leftist government in decades and yet it's been very friendly to foreign investors. Don't you love a country in which even the left (so basically everybody in total) supports and welcomes foreign investors? Moreover, Mexico recently has had one of the world's best economic performances, with an unemployment rate well below that of the US.

@Keaton Wright

Giving quality and sometimes very detailed answers in the forum takes us quite a bit of time (and therefore money) for which we're not remunerated. Like for most others, this is part of the contribution bucket of my life and, by answering in the forum, I can help multiple readers at the same time.

Unfortunately, that limits the time I have to give free advice through other channels but I've done it multiple times when I could. Especially if responding to your questions doesn't take much of my time, feel free to send me a DM and I'll gladly reply without asking you for anything, which I'd have done even if you hadn't asked for free advice.

This being said, I feel the need to warn you against wanting free advice or free anything else, especially when investing in a foreign country. While the usual saying "you get what you pay for" obviously applies, I'm flabbergasted that people are ready to invest hundreds of thousands of dollars in a foreign country but have an issue paying a likely small amount in relation to that to make sure they don't end up making a bad investment.

Hope this helps!

Hi Anne-Michelle, I guess neither of us (and nobody for that matter) know what's going to happen in the next 10 - 20 years. I don't live in Panama but I know people who invest there and I've visited to form my own opinion. There are opportunities indeed but it really depends on what people are looking for, as it always does. Personally, I was looking for a second market in Central America, being mostly active in Mexico but I decided to keep my focus on Mexico within the region and clearly that was the right decision to make.

@Sam Tan I'm not sure what you mean by "having success". There are no laws, rules or regulations preventing any foreigner, American or otherwise, to buy property in CDMX or Mexico for that matter.

If, by having success, you mean getting a profitable investment, I'm sure many American and other investors got that over the last few years (I personally haven't since I've focused my efforts on Mexico's beach markets, which are far better in my opinion. The thing is prices have increased and I don't know how much is left in the tank short term, besides the fact that capital gains are speculative in nature, like everywhere else. The best strategy in Mexico is holding short-term rentals and it's often even better than in the US because of the high cash flows and the almost guaranteed lack of regulations, which is a huge problem in the Us another developed countries. There's only one exception to that last point and that's CDMX, which has started implementing regulations because foreign investors renting short-term have pushed rents too high for the local population, which has turned against those investors. Not the best climate to invest IMHO.