This is how you make real money with real estate abroad
Yesterday, Kathleen Peddicord presented
the development phases through which a real estate market moves abroad
as you find your way onto the world’s radar.
As she explained, each phase attracts different types of buyers and different types of end users and presents different levels of opportunity for the potential real estate investor.
Enter a new market in Phase 1 and you’ll be way ahead of the curve. You are buying at ground zero price.
You are also taking a risk. Not all markets become global hot spots.
Puerto Vallarta and Manzanillo in Mexico, for example, enjoyed strong growth after appearing in blockbuster movies. However, while Puerto Vallarta became an international destination, Manzanillo faded after an initial surge of interest.
In the case of Puerto Vallarta, the movie behind the furor was “The Night of the Iguana”, starring Richard Burton and Ava Gardner. Burton brought his wife, Elizabeth Taylor, to the venue with him… and paparazzi from around the world followed him to chronicle the ensuing drama.
Overnight, the former fishing village was transformed into a jet-setter’s dream destination.
Today, Puerto Vallarta is a full-fledged tourist city and one of the most established tourist and expat destinations in the world.
It was Bo Derek who illuminated Manzanillo. The entire world drooled over this city’s long stretch of beach when they saw Bo running across it in a barely there bathing suit.
In this case, however, the hum did not hold. Development did not take hold as it did in Puerto Vallarta. In the case of Manzanillo, the pioneers turned out to be the only ones.
That is the risk of entering a real estate market in Phase 1 or even Phase 2.
Of course, risk can pay off big if you’re investing for the long term. If you had bought the $10,000 beachfront lot on the island of Ambergris Caye, Belize, that Kathleen recommended about 30 years ago (and reminded us of yesterday), you’d have a bit of sand that’s currently worth $500,000.
Today, the real estate market on Ambergris Caye qualifies as Phase 5.
The sweet spot for the global real estate investor is Phase 3/Phase 4.
Invest in a market at this stage of development, and you’ll be avoiding the level of risk of a Phase 1/Phase 2 investment… but still buying early enough to position yourself for great upside potential.
What Phase 3/Phase 4 markets have our attention right now?
Here are four:
#1: Fortaleza, Brazil
This market has enjoyed local attention for years. It is a favorite destination among the growing Brazilian middle class.
Historically, international attention has been minimal. However, new air routes are now being opened to improve access to Fortaleza airport from Europe and North America. Increases in the number of foreign tourists to the area will continue.
#2: The Dominican Republic
There are also some stagnant markets in this country, meaning places that have spent a long time stuck between Phase 2 and Phase 3. Prices have gone up, but the location hasn’t enjoyed the benefits that usually come from Phase 3 (enhanced services). and infrastructure, for example).
Las Terrenas It has been a promising market for some time. This is still a great option for a place to live or retire in the Caribbean, but I see other places on this island as better options for the investor looking for a short-term advantage.
The economic growth that this country continues to enjoy is translating into a thriving market for short-term commercial rentals in the capital, Santo Domingo. Prices are low and financing is available.
I see this as an opportunity that will continue for years to come. Specifically, the game involves buying a high-quality pre-construction apartment with the aim of renting it out to visiting businessmen.
My recommended beach game in the Dominican Republic today is the Punta Cana resort area. I see this as the next Cancun. Right now, the Punta Cana region is part of Phase 3 and part of Phase 4. Some areas are highly developed for international expats and high-end tourists, while others still attract the backpacker crowd. You can find great opportunities targeted at these two end users. Just understand what you’re buying.
#3: Abruzzo, Italy
Historically the focus on Italy He has been to Tuscany and Umbria.
Abruzzo offers the same sun, beach and countryside… without the brand cities like Pisa and Florence. That reality creates an opportunity to buy the best of Italy at extremely undervalued prices.
In fact, I could classify abruzzo as more Phase 2 transitions to Phase 3 rather than a market firmly in Phase 3. And the question is whether Abruzzo will ever attract enough interest among non-Italians to see real growth in property values.
However, a country house under the Abruzzan sun for less than 100,000 euros can be a tempting idea.
#4: Portugal
In Portugalareas located in Lisbon and the Algarve They have seen high appreciation rates in recent years. Those areas today fall into late Phase 4 and Phase 5.
However, in other parts of this country they are moving from Phase 3 to Phase 4 and are ready for investment right now. You just have to know where to look.
In the Chiado region of Lisbon, for example, prices per square meter can match or exceed those of the best neighborhoods in other major European cities such as Rome and Barcelona.
However, beyond this area, you can still find great opportunities. Check out Restelo or Ajuda.
In the Algarve, look beyond Lagos and Carvoeiro, which have been enjoying the attention of foreign investors in recent years, to Tavira and further east.
dear simon