Why I Stopped Flipping Houses and Bought an Island in Panama

To say that my business partner and I have flipped a lot of houses would be an understatement. Between the two of us we've owned over 125 single family homes and handled over 200 real estate transactions, all in a matter of a few short years in the real estate business.

Given that information, you might assume you would now find us leading seminars or hosting our very own series on a popular home improvement network.

Nope.

Instead we bought an island in Panama and got the heck out of Dodge. Because those very same seminars and how-to books were churning out a massive herd of people who were obsessed with the idea of striking it rich on real estate. As a result, the margins were getting thinner and thinner as the market was being flooded with amateurs.

If a bunch of newbies could suddenly get access to all the tools and know-how to make a decent living in the real estate business, then we needed to find a better opportunity. And one with more unique and interesting challenges.

So we packed up our families and headed south to Central America, where we still live today and where we've built a successful business discovering and developing real estate in remote areas of the Latin tropics.

We've also done extensive research on Latin real estate markets and what it takes to profit from real estate here. Our findings are available in our ebook Pay Dirt where we offer advice to other investors all over the world who've found themselves in our same boat.

What ultimately led us to the decision to trade the American Dream for something a little further south? Well, a lot of things. But here are the 5 biggest reasons.

The market in Latin America isn't nearly as saturated (with other developers, that is).

Those home improvement networks, websites, and seminars I mentioned? Yeah, they're great and all. But together they had produced an enormous pool of amateur real estate investors that we now had to compete with.

House flippers were no longer a novelty. Anybody with good credit, cheap labor, and enough episodes of "Flip This/That House" on DVR could do what we did. And they were. It made it that much harder to differentiate yourself and stay ahead of the competition.

Not to mention, this all happened during one of the worst downturns in the history of the U.S. real estate market.

With an uneven playing field, it's much easier for those with some know-how to score incredible deals.

The very things that made the U.S. market inhospitable to serious real estate investors are the same factors that gave my partner and I an unbelievable advantage when we began developing property in Latin America.

For instance, there's no MLS here. Does that make it difficult to find properties for sale? Sure. Does it make it more difficult for amateurs to get lucky and beat us to the punch on some bargain real estate? You bet.

Every bit of land we've bought and sold in the tropics we've had to work hard for. There was no searching the internet, setting up showings, and closing quickly in an air conditioned office building.

It's been more work than your average investor would want to take on, and that's a good thing. Because we've learned a ton.

We've identified the five market stages all emerging areas in Latin America go through on their way to becoming established expat communities. And we've learned what needs to be done at each of those phases in order to make a profit on a real estate investment.

We've also learned there's such a thing as the "gringo price" on...well, anything really...but specifically undeveloped property. And we've learned how to avoid paying it.

We still face challenges, but they're the really cool kind.

Although it sounds like we've really got a handle on how things work down here (and we like to think we do), there are still plenty of hurdles to overcome. For example, when we first stumbled upon the sight of one of our recent developments, Playa Burica, you could only get to it by driving on the beach when the tide was low. Any other time, you'd need a boat.

We've also gone out scouting property on horseback or even on foot. Because that was the only way to navigate the terrain. Talk about an uneven playing field.

That's not to say that you have to be a risk-taking daredevil of a pioneer to invest in Central American real estate. You don't. There are plenty of options for investing that don't require you to paddle to a remote island in a kayak.

You'll just need to partner with someone with our same level of experience who knows the pitfalls associated with investing in emerging tropical markets and has a proven track record of success.

A lot of it boils down to our preferring quality over quantity.

Not only does focusing the majority of our efforts on larger-scale developments (instead of a bunch of small projects) make sense from an investment return standpoint, it just feels better.

On the practical big picture side, yeah, we're handling much larger parcels of raw land that we develop and then break into more manageable chunks to sell to end users who can then build second homes or boutique hotels or sport fishing lodges. That's more profitable than buying and selling house after house after house and netting a profit of a few grand.

But on the abstract side, this stuff is just fun. Park spent the other weekend planting hibiscus as big as your head to help mark the property lines on our island development. That beats the heck out of picking out backsplash tiles and toilets for yet another kitchen and bath you've had to gut.

At the end of the day, the tropical lifestyle trumps everything we knew about living in North America.

I know that, at least to me, what I do for a living is only a small part of who I am and what's important to me. That business stuff is just a means to an end, and when the work day is over I want to come home to a place I love and just enjoy spending time with my family.

Down here I can do that better than I ever dreamed of in the U.S. It's so freeing. Being able to see a direct correlation between my business efforts and the amount I earn, enjoying a cost of living that's a fraction of what I used to spend in the States (and for what my family agrees is a much better quality of life), and having the free time to travel and pursue my hobbies and soak in the local culture. I wouldn't trade this experience for anything.

Don't let what almost happened to me happen to you.

Before you get sucked up too far into the mechanism that is the American Dream, do yourself a favor. Explore your options in the Latin American real estate market.  But consider yourself warned. Doing so could throw a large wrench in the works of your current 5-year plan. You can thank me later.