International Investing - Emerging Markets Land Purchases

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International Investing - Emerging Markets Land Purchases

Alex M.
New York, NY · Member since 2017 · 144 posts · 75 votes

Hi Everyone,

Im a new investor but am very interested by finding emerging market 'hidden gems' -- think lots around up-and-coming Colombian beaches kind of thing., or land with phenomenal views, or country land that will soon be connected to the closest city by a new tunnel/ highway, etc. I just recently returned from Colombia and met some interesting brokers with some savvy investing ideas.  My dream would be to be sourcing these types of deals and helping connect investors in the USA to these opportunities abroad.

My background is in emerging markets political risk analysis and finance; 5 years on wall street, an MBA, and a year in strategy consulting-- nothing real estate related but I am good with numbers, macroeconomics, and have a good idea for opportunity. I have been to 70 countries or so, and really love seeing how places evolve, and coming up with ideas for how to create cool spaces -- mainly for short-term rentals, retreats, ecotourism, etc.

Any advice for you experts out there?  I am thinking of how to create a Brand around myself for being someone who can bring great deals to the table.  

I know this is kind of a wacky idea for a new investor, but it really is what I am passionate about, and would love to get some ideas as to how I may become the person people think about when they are looking for Alternative real estate assets.

Any thoughts would be very much appreciated.

Thanks!

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Mike LambertPro Member
Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
8y

Hi Noah,

I can share a bit of my experience with you since I'm doing something kind of similar and I have a vaguely similar background, banking in emerging markets (in particular but not exclusively Latin America), which included emerging markets risk analysis.

While I could invest in land because a) it is very speculative, b) it doesn't produce any cash flows, c) you cannot borrow against it and d) this is not were the money is.

Instead, I buy condos well below market value to rent them short term in countries like Mexico, Panama, Colombia, Brazil, Spain, Portugal or Greece. I'm also looking at getting in property development. Like you mention, I follow the path of progress but the areas I invest in are proven.

I'm using money from investors but it's not easy. My best advice for you would be to build a solid network of interested investors. Indeed, I've had fantastic deals but most investors won't look at them because it's overseas and they don't know the market. So you have to find the right investors. The other side of the medal is that not many people do this so you have little competition.

Another challenge is the return on investment. Since the risk is higher than in the US (with the exception of European countries), US investors will probably not invest unless the return is significantly higher than what they could get at home. But then, if you show them a significantly high return, they often will think that it's too good to be true and correlate it with horror stories they've heard of from other people living in those countries.

Finally, it's paramount to have good contacts on the ground and that's not easy to find. In these countries, finding people with good stories is easy but finding reliable people is another one.

Hopefully I'm not discouraging you because it's not my purpose. If this is a passion for you, its not impossible. Just make sure you do things properly.

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  • Elizabeth Wilson
    Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes
    8y

    @Alex M. - I love the idea and enthusiasm!  

    I’m sure you have already done this but have you evaluated the marketplace to see who the current players are?  Are there American individuals or institutions already investing in these areas?  How did they get connect?  Can non-locals own property?  Can it be protected in court? Etc.

    I find this subject fascinating. I posed a question a couple of days ago in the forums asking who was doing any international REI and didn't get a response. Hope you get one here!

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    Hi Noah,

    I can share a bit of my experience with you since I'm doing something kind of similar and I have a vaguely similar background, banking in emerging markets (in particular but not exclusively Latin America), which included emerging markets risk analysis.

    While I could invest in land because a) it is very speculative, b) it doesn't produce any cash flows, c) you cannot borrow against it and d) this is not were the money is.

    Instead, I buy condos well below market value to rent them short term in countries like Mexico, Panama, Colombia, Brazil, Spain, Portugal or Greece. I'm also looking at getting in property development. Like you mention, I follow the path of progress but the areas I invest in are proven.

    I'm using money from investors but it's not easy. My best advice for you would be to build a solid network of interested investors. Indeed, I've had fantastic deals but most investors won't look at them because it's overseas and they don't know the market. So you have to find the right investors. The other side of the medal is that not many people do this so you have little competition.

    Another challenge is the return on investment. Since the risk is higher than in the US (with the exception of European countries), US investors will probably not invest unless the return is significantly higher than what they could get at home. But then, if you show them a significantly high return, they often will think that it's too good to be true and correlate it with horror stories they've heard of from other people living in those countries.

    Finally, it's paramount to have good contacts on the ground and that's not easy to find. In these countries, finding people with good stories is easy but finding reliable people is another one.

    Hopefully I'm not discouraging you because it's not my purpose. If this is a passion for you, its not impossible. Just make sure you do things properly.

    1Reply
  • Alex M.
    OP
    New York, NY · Member since 2017 · 144 posts · 75 votes
    8y

    Thank you guys.  Appreciate it--- Agree with all your points Mike

    0Reply
  • Alex M.
    OP
    New York, NY · Member since 2017 · 144 posts · 75 votes
    8y

    Mike-- would love to hear about how you manage these properties short-term in these various countries.. And why you think it makes sense to expand into so many countries vs. build a concentration in one other country let's say.  I love it but interested in hearing your thinking.

    0Reply
  • Martin L.
    Rental Property Investor · Las Vegas · Member since 2018 · 87 posts · 87 votes
    8y
    Noah, I can suggest what I’ve seen in some emerging markets. Essentially the realtors have partnered with a local management company as well as a bank. They offer a guaranteed ROI and management services over an extended period of time. Sometimes they have owner days. For instance, buy the property for 100k. Sign contract for 15 or 20 year management. Guaranteed ROI of 9% the first five years and then 85/15 split after. 10 owner days a month so they can also enjoy their investment. Personally I’ve only just started looking into this, and there are a huge variety of terms between companies, so I don’t have all the details yet. It looks decent as I’m more interested in potential long term appreciation of these emerging market properties, rather than just cash flow.
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