All Forum Posts by: Mike Lambert

@NA Hoss

It makes total sense to invest outside of the US when rates are high and opportunities are few. Being from Canada, I'm doing the same but I'm targeting short-term rentals as they are much more profitable and justify the hassle and risk of going overseas.

A low interest rate doesn't make a good deal in and of itself. Even if your gross rental yield is (much) above the average, I'm not sure how high your cash flow is after expenses and mortgage payments, even with a 3 - 4.5% interest rate. But it seems to be working for you so that's the most important and I guess it doesn't necessarily have to be impressive.

Mind you, my main issue would be capital appreciation or the lack thereof. Portugal as a whole has had huge capital appreciation over the last few years but that was mainly a catch up from the Global Financial Crisis and it was led by foreigners, notably through the Golden Visa, that's now been abolished. Also, it's been concentrated in places like Lisbon, Porto and the Algarve, where the rental yields aren't the highest. Prices are still going up but demand is now dropping substantially because, without the foreigners' money pouring in, it's likely not sustainable and demand is dropping strongly at the moment. Most of tney in Portuguese real estate has been made selling or renting short-term premium properties to foreigners.

So my main issue would be getting any long term sustainable capital appreciation, as a little bit f cash flow doesn't make anyone healthy. After all, the average Portuguese is not wealthy and especially not the average renter and there's already an affordability issue in the country. So they might one day reinstate rent controls. The fact that you haven't had issues with tenants doesn't mean the risk isn't there. I don't know how long you've invested there but there are plenty of investors who invest in US war zones and don't have issues with tenants. It doesn't mean there's no risk.

Mind you, I'm sure you get plenty of capital appreciation from your west coast properties so maybe that's not your priority.

In any case, kudos to you for making the effort to go overseas to find what you can't get in your state and also take the risks that go with long-term rentals! 

@NA Hoss

Incredible long term rental yields? Where? The average gross rental yield in Q4 23 was 5.65% so the CAP rate was way below that. So, renting long term isn't very profitable and it is risky, with tenant favorable laws. You can't apply the North American multifamily investing model there, as you can't refinance like you do in the US or Canada. Short-term rentals would be the way to go but you won't get a license in the most popular areas.

@Junior Jaquet Hernandez

I'm not sure what you what kind of long term you mean (renting by the year to the local population or by the month to visitors for example). In any case, I wouldn't because it's riskier and potentially much less profitable than short-term rentals. The problem with those anywhere in the Caribbean is the sargassum risk. I can get better returns elsewhere without having to take that risk, which for me is a deal breaker.

@Andrew Syrios

Regarding government abuse, I'd look first at whether the law discriminates against foreign investors and then how the law has been applied over a significant period of time, not necessarily just because the head of state changed recently.

Regarding crime, isn't it the same as in the US. Also, beware about national statistics. For example, the murder rate in Bogota, Colombia's metropolis, is lower than that of Indianapolis. Similarly, the murder rate in large parts of Mexico is lower than that of my home country Canada, which itself is significantly lower than in the US. Who'd have thought that?

I guess it always comes to doing our homework, doesn't it?

 You're welcome. The two main websites for Mexican properties are Vivanuncios and Inmuebles24. Beware that there could be fake listings.

@Andrew Syrios you brought a great point, which I only briefly touched on in my reply as the explanation for which I'd have issues investing in Asia. So thank you for mentioning it and sharing your thoughts.

Strong property rights are indeed essential but they're wishful thinking if you can't have a profitable investment in the first place and I'm not sure how you could get any decent return by investing in El Salvador.

I've heard great things about how the new president has tackled crime. Does that mean that property rights are safeguarded and that foreign investors are treated equally? While there could be a connection, I'm not so sure that there is one.

In any case, it could be worth investigating. It'd be interesting to follow your journey if you decide to invest there!

@Mateo Monsalve

This is a difficult question to answer because we don't know what your objectives are. So, the best I can do is tell you where I find interesting options that fit with my objectives. I'm an investor and I'm looking for the best possible risk-adjusted returns so you and other readers might have the same objectives.

I'm only interested in STRs for maximum profitability and because the other strategies generally aren't worth it. So I'm looking for the combination of affordable properties (cheap could be misinterpreted) and (mass) tourism. Thankfully, and it's no coïncidence, the places where I end up investing are great for lifestyle.

My pricing criteria eliminates Canada, Northern Europe and Oceania.

My tourism criteria eliminates Africa.

I eliminate Asia, including and up to the Middle East because, in most countries, foreign owners are treated second-class and that has serious implications from a risk point of view. As mentioned by @Bruce Lynn, Thailand is a great example. It'a cheap for a reason (although a lot of the stuff promoted to foreign investors looks cheap but is in fact expensive). Japan is an exception but, aside from exceptional cases, it's the last place where I'd invest since, unlike in the rest of the world, properties depreciate over time until they get destroyed.

I eliminate the Caribbean because of the sargassum.

What do I have left over? The two areas where I invest, unsurprisingly.

1. Latin America

There are several countries that would work but Mexico beats all of them hands down. Tourism, remote workers, digital nomads, snowbirds, retirees, near shoring induced economic boom, growing middle class, massive population (growth) and geographical location. No other country in the region can compete. There's no contest, although some other countries could work as well in specific niches. This is why a lot, if not most of my 1,250+ post replies in the forum to date are about Mexico, as many investors seem to agree. Beware of the Caribbean side though (see above).

2. Southern Europe

Southern Europe is what Mexico is to Northern Europeans, with the nuance that Southern Europe is full-fledged developed so it's mora a mix between Florida and Mexico with a weather more akin to California. Again, you can't beat the location inside the huge European market.

Of course, that's what's available to you but you need to either know what you're doing or have access to the necessary people and resources, in case that isn't obvious.

Hope this helps!

@Bryce Jamison Thanks for mentioning that. Just listened to it. What's mentioned is very basic and potentially a tad misleading in that investing in Mexico/internationally is very different than in the US. I've been investing internationally and in Mexico (the topic) and shared my experience by responding to hundreds of posts on the topic so interested investors might find what they're looking for here.

The great thing about the podcast is that I have been vilified several times for suggesting that investing in Mexico is a good idea so, now that it's in the podcast, I guess it's not so crazy anymore. So it's great that they did it, even if it's only for a few minutes.

Like they suggested, people should know what they're doing though. While prices are often cheap compared to the US, they've gone up a lot over the last few years and I see hordes of Johnny come latelys who are overpaying.

Personally, Mazatlan isn't my favorite place in Mexico (it's cheap for a reason). Roma in Mexico City is an awesome area for lifestyle but there's but STRs are going to be regulated there and possibly banned and LTRs are not a profitable alternative. Again, investors should know what they're doing, as mentioned in the podcast.

@Michael Weis

A few things here:

1. David Green's recipe works for out of state, not international. Trying to apply US recipes to Mexico generally won't work.

2. I'm not sure why you reached out to Sotheby's. Their properties aren't the best for investment (unless you're a high net worth individual) and they generally focus on lifestyle properties if I'm not mistaken.

3. I don't know what market you looked at (although I think I guessed) so it's difficult to comment on the competitive situation. Generally speaking, the Mexican market is way less saturated than the US market but there are exceptions and a 3 BR+ property won't save you there.

4. When you mentioned studios and 1 BR properties taking in upwards of $500k per year, I imagine you're talking pesos, not dollars.

5. I imagine that, in every market, there are listing with 85%+ occupancy. They're the best listings. With no experience out of your area and in STRs, I'm not sure that's the kind of occupancy you should be targeting.

I'm not sure there's a right agent. Working with an agent in Mexico is not the same as in the US. Most have only access to limited inventory, they don't have the same fiduciary duty and you have to make sure you don't get taken advantage of. I've never used an agent to buy properties there. I invest in developments nowadays but, even when I was purchasing properties, I did so directly from the sellers so I only dealt with agents on the sell side.

If I was in your situation, I would find the properties and then contact the listing agents. This way, you wouldn't depend on solely one agent to find properties and you wouldn't be overly dependent on advice that might be biased.

Hope this helps

@Mateo Monsalve

I'm not sure what you mean by "Is it safe?" There are risks involved, as in the US and Canada and as with any other investment. It'll depend on your objectives. Also, not diversifying overseas and having all your assets and income at the mercy of a single government is utterly (financially irresponsible). Haven't we learned anything with the measures taken during the pandemic? The high net worth individuals (aka the smart money) have and are investing overseas en masse. However, you need to know what you're doing or work with people who do. If you don't, the risks could be (significantly) higher.

I've been investing overseas with investors since 2017 before it was as fashionble as it is today and shared my experience in the forums by replying to hundreds of posts on the topic so feel free to check those out. I've never had any issues or concerns about security but I know what I'm doing.

As to the timing, like with most investments, yesterday is generally the best moment and today the second best. In this case, the advantage of investing in the US or Canada was the ability to leverage through borrowing at artificially low interest rates. This is gone, likely forever so that advantage is gone too.

@Chris Seveney If you invest certain countries like in Mexico, the properties you'll invest in will most likely be will be traded in USD so no currency risk there. As to some other countries, diversifying by investing in other currencies reduces your risk and many currency has lost value against the USD, as interest rates rose. If they were to reverse, the USD could tank and you could end up with a nice currency gain, on top of your real estate income and appreciation.

So, getting back to the timing, the USD has rarely given you that much buying power to buy overseas. Not sure how long that's going to last.