Investors who bemoan that fact that they didn’t get in on real estate investments in the United States in the past should look overseas today in areas where they can get in on the ground floor now, according to Ronan McMahon, a seasoned real estate investor and advisor and the editor of “Real Estate Trend Alert.”
“There are always huge opportunities out there, an advisor just has to help his client do his due diligence and have trusted resources on the ground,” McMahon said in an interview. McMahon is the author of “The Profit Principle: An Insider’s Guide to Doubling Your Money in Real Estate Overseas,” “Real Estate that Will Make You Rich, And You Can Get It for Free,” and “Ronan McMahon’s Big Book of Profitable Real Estate Investing: The Simple Secrets of Making a Fortune in Rel Estate.”
There are areas of the world where an investor can make the same return on a $250,000 real estate investment that they could make on a $1 million investment real estate investment in a place like San Francisco, Ronan said.
“The pandemic was a huge game changer,” McMahon said. “People are now looking for places where they can integrate their work with a beautiful place to live. And people are now more aware that life is short, and they want options.”
Financial advisors need to guide clients to the good investments in areas that will be attractive for decades to come, he said. These investments can translate into beautiful places to live and work, as well as into long-term and short-term rentals that will generate returns.
When the rest of the market is bouncing around, overseas real estate provides a consistent, positive risk-reward, even for a small individual investor, but the process of selecting prime real estate in an area that is set to grow can be daunting.
With the proper resources on the ground, advisors and their clients can hone in on lucrative property in “hot spot” locations, such as Cabos San Lucas in Mexico, Lagos in Portugal, or Montenegro. People drive demand in these places, as tourists, second home buyers and renters. Real estate developers build real estate projects to meet that demand, which then pulls in even more people, Ronan said.
Investors should not settle for second or third choice in any given market but seek out the best-in-class projects. This means looking for projects with the best amenities, and well-designed homes that will appeal to the target market. “Cookie cutter or pedestrian options will not typically deliver the strongest returns on investment,” he said.
Investors also need to do their due diligence on the developer of any property they are thinking of buying. “An investment in what looks like the right neighborhood in the right city might still not stack up unless you’re buying from the right developer. Savvy investors will only do business with developers who have a long track record of delivering quality real estate,” Ronan said.
It can be difficult for investors or advisors to find a good property at the right price on their own. “More often than not they will be best served by letting someone else do the legwork,” he said. A savvy investor should have a network the includes real estate brokers and consultants, lawyers, and rental management companies who can make judgments about specific properties.
Arranging the right financing varies by country, Ronan said. In some countries an investor can borrow a higher percentage of the purchase price from banks, while elsewhere the developer can provide the financing.
“There are always opportunities somewhere in the world. For instance, even in 2008, when times were so awful, there was still a phenomenal opportunity for investments in Brazil, and there are similar opportunities today,” he said.