All Forum Posts by: Mike Lambert

@Pedro C.

It depends on the value of the property but for the typical basic property it’d be something like say $2,000 set-up fee and say $550 yearly maintenance fee.

Hi Kathie, the general rule is that no lender will land you cross-border. And if they were, there’s no chance they would do it in Nicaragua, given the risks involved. Syndications won’t work there.

You’d need private investors with a huge risk appetite but even someone like me who’s invested internationally for years wouldn’t touch that country with a 10-foot pole. It’s basically bankrupt and there’s no respect for the rule of law. Assuming you find somebody who has the risk appetite, you’d need to pay them a huge return to compensate for the risk. Given your own comment about the profitability of the deals, I’m not sure how you could pay that.

So I guess your best bet is love money from your loved ones so might want to support you. Or maybe some Nicaragua lovers.

Hi @Asif Ali Kabiruddin Rajani

Being a non-resident, I only invest in short-term rentals because, given my current situation, it's the only strategy that's profitable enough and not too risky. Problem is that European countries like Portugal and Spain are following (or preceding) the negative STR regulations that you find in more and more places in North America. Even areas that we deemed safe aren't anymore. You really need to buy the right kind of property in the right place.

I'm not sure what you mean by type of broker. I find properties myself or use personal connections. Because real estate agents aren't going to play buyer agents for foreigners that maybe are going to buy, unless you're high net worth and looking for expensive properties. Moreover, in Spain for example, anybody and their mother can be a real estate agent as the profession isn't regulated. As a result, many do it more as a hobby and aren't really helpful. And you'd also need where to invest because, even if you take a "homogenous" market like the Costa del Sol, most agents will only cover their little city.

@Erwin Groenendijk, you are correct but Americans should be able to credit their taxes paid in Spain against their equivalent US taxes courtesy of the treaty for the avoidance of double taxation between the two countries.

@Shiloh Lundahl

Yes and what you're doing makes total sense, including the fun part of it. I think we pretty much agree on anything but we're commenting from different points of view.

If I'm not mistaken, your retreats are focused on US investing while I'm focusing on international investing. Mind you, I'm Canadian so the US is international for me and I,m having discussions with a cousin from Europe about investing in the US together so maybe.

Hi @Seth Sundberg if I were you I would try to avoid the capital mistake (no pun intended) that would-be international investors make. Many US investors pay cash for properties overseas because they have the money (like-kind properties are often much cheaper) and they can get a higher return than with most mortgaged US property if they buy the right property at the right price. Many would-be buyers/investors don't have the cash or would like to take advantage of leverage. Before wasting time looking for properties or spending a lot of time on projects, they should make sure they can get the financing because a) financing might not be available, b) they might not qualify or c) the cost of debt might be prohibitively right.

Another mistake investors make is believe that they can apply a US strategy or financing model overseas. The US multifamily model is pretty much limited to the US and Canada.

Based on the little that you mentioned, I'm not sure how you could find such financing. What would work would be using a US lender if you have US collateral to give but that would likely defeat the purpose and you probably don't need me to tell you that.

Finally, there is a lot of inaccurate information around about investing overseas. My best advice is to make sure you talk to people who know what they're talking about to corroborate crucial info.

Clearly, you have figured that much out already since you ask in the forum. Good luck!

@Shiloh Lundahl of course we don't mind you participating into the conversation and get your insights. It's not "our" conversation and I personally love your insights, whether I agree with them or not.

You know I think you've created your own mix of lifestyle/investment purchase. It works for you but one of the most important factors is that you find willing investors to participate and not everybody can do that.

I personally wouldn't invest that way either because I believe that, by trying to mix lifestyle and investment, you neither get a the best lifestyle property nor the best investment. I rather buy one of each and keep them separate.

If I want to own in Costa Rica for lifestyle purposes, I'd want to have my own property. This way, I can do what I want with it, decorate it the way I want, use it when I want and sell it when I want. None of your investors can singlehandedly exert any control on the asset they've invested in. If I mainly want to vacation in Costa Rica and stay in a nice place, I rather make more money by investing elsewhere and rent a different villa every year, which is much more exciting from a lifestyle point of view, as I'll have variety. For me, the only interest in going to the same place over and over is to own the place. Of course, this is just my opinion but I bet I'm not alone..

If I'm an investor, I think the returns you're able to achieve in Costa Rica are higher than normal because you focus on these large properties and, as @Martin D. mentioned, prices in that country are too high and returns too low. So, if your investors absolutely want to invest in Costa Rica and maybe be able to tell others that they're (part-)owner in a beautiful Costa Rican property, it might make sense for them to invest alongside you.

However, as an investor, all that matters to me are figures and there and I don't have to own properties in Costa Rica. Like Martin mentioned, I can buy my own property in other foreign countries  and make significantly higher returns (which, incidentally, is what I've been doing).

So with the same amount of money that I could invest in a shared villa, I do more profitable investments, make more money and then buy my own property in Costa Rica with the extra money I'll have made and it can be a pure lifestyle purchase.

This being said, if you put together a group of like-minded people who can put some money aside, decide to purchase a property together, don't really care about the return and love Costa Rica (otherwise you could do the same somewhere else), I agree that what you do can be a lot of fun!

@Martin D., there are a lot of places where you'd make like a bandit if you invested before the pandemic boom. I know people who've invested in Bali too but I'm staying away given the property ownership situation. Not worth the risk in my opinion. Money always go where it's treated best. I'll never invest in a country in which I'm treated differently just because I'm a foreigner. Think about what would happen if you ever have to face a lawsuit in such country against a local. Your chances of winning are close to zero.

@Martin D.

Good for you for selling out of Tulum on time. I guess you saw the writing on the wall. I started in the Riviera Maya too but I'm mostly out, with the exception of Playa del Carmen, although I wouldn't invest more then. I turned y attention to the Pacific and selected inland cities like Merida and Guadalajara. All STRs I wouldn't MTR in Mexico.

@Andrew Steffens

@Andrew SteffensWith the new normal when it comes to US interest rates, it might be more profitable to buy a property by paying cash (you're unlikely to get a mortgage in that specific country than buying something in the US with a 7% mortgage. Of course, aside from the profitability issue, you'll still need to have the cash but the price of the property there might be less than your downpayment in the US.

Foreigners can own property in Costa Rica. There might be some exceptions when it comes to oceanfront land, where you might only be able to lease but that's the exception rather than the rule. I'm not sure where you got your info from but this is an illustration of the fact that there's a huge amount of misinformation when it comes to investing overseas, here and elsewhere so be careful who you listen to. I was listening today to one of the most authoritative STR podcasts of a few months ago and the Brazilian guest mentioned that his parents, still living in Brazil, were paying 11% interest a month on their mortgage (and it wasn't a mistake, he repeated it several times). Now, I know the Brazilian market so I know that, if anything, it's 11% a year. Had I not known, common sense would have told me that 11% a month is impossible and makes no sense. Yet, both the guest and the host, considered experts, had no problem believing that.

Cuba: foreigners can'y own property there, even if they wanted.

Venezuela: the last place in the world I would invest but there's a ray of hope with the upcoming elections. Argentina: Can Millei save the country? That's the question. I wouldn't bet on either at this stage but if you like a gamble...

@Martin D., it's always difficult to answer questions of such general nature. All these metrics are different within the US so, as you can imagine, they're different between different countries and within a given country, depending on location. Also, there is the issue of the legal ST rental regulations, which can be an advantage compared with the US or not. Also, it depends how good of a deal you get and how good an operator (or the one you work with) are.

Assuming you buy the "right" property in the "right" place overseas, you'd typically have a higher unlevered ROI overseas because a) a like-kind property would be cheaper and b) the (high) season could be longer and therefore the revenue higher.

The US used to have the advantage of the financing (availability + interest rate). As interest rates in the US has skyrocketed and financing has become more available to Americans in certain locations overseas, that advantage isn't what it used to be, depending on what countries you're interested in.

So here's how I'd go about it if I were you:

1. You're looking at a mix between a lifestyle and an investment purchase. Only you know which locations will fit with the lifestyle part of your objectives so you'd select the places that work for you first.

2. Then, you'd use the data on Airman or similar services to determine whether the metrics fit with your personal investment/return objectives. It'd make little sense for me to share my metrics given that they vary, don't constitute a statistically representative sample and also my knowledge and relationships allow me to get deals that you might not be able to get/find.

Hope this is helpful.