All Forum Posts by: Mike Lambert

@Marysa Diadelfo I checked the apartment buildings on the market in Sherbrooke and most are more expensice than 8 - 9 times gross revenue!

@Marysa Diadelfo Even though I’m based in Montreal, I mostly invest in real estate internationally because I can make much higher returns than in Montreal or Canada for that matter.

Yet, I’m still looking at investing here since I have investors who want to do just that.

I understand the idea of looking at Sherbrooke as a cheaper alternative to Montreal but Sherbrooke isn’t Montreal and doesn’t have the same appreciation potential.

Most importantly, past performance isn't indicative of future performance. It's not normal for a real estate market in a stable country like Canada to appreciate 20% a year (did prices in Sherbrooke really appreciated that much?). Resident real estate prices depend on the affordability of mortgages, which depend on incomes and wages. As far as I know, those are not increasing by much and certainly by far less than 20%. Commercial real estate values are dependent on CAP rates and therefore NOI, which in turn depends on the rents and the ability of renters to pay for them, which in turns depend again on wages and income.

Therefore, a market with prices growing at 20% is either playing catch up or in a bubble. Regardless, that cannot continue indefinitely and eventually price growth would have to drop substantially to revert to the mean.

Originally posted by @Nathan G.:

@Dean Letfus and @Mike Lambert

It's actually possible for two people to see the same thing and have different opinions about what they are seeing. Please don't turn this into a personal attack and make me moderate. Thanks.

@Nathan Gesner I totally agree. And it is even possible that both @Dean Letfus and I are both right. Real estate prices in New Zealand could be continuing to go up in spite of the fact that the price to rent and price to income ratios seem unsustainably high. This is happening in many markets, including my current home market of Canada.

The difference between us is that he thinks that the "risk" is more to the upside while I think the risk is more to the downside. And, since I am risk averse, I prefer to stay away. By doing so, I realize that I might be missing an opportunity but I'm ok with that.

@Dean Letfus And, to set the record straight, I was a banker covering both Australia and New Zealand, including real estate. I have seen pretty much all types of real estate transactions, from residential commercial so I happen to know that market very well. And I completely agree with you, we should only comment on matters that we know about. I have always held myself to that and will continue to do so. You invest in New Zealand and I respect and welcome your opinion! As the great Dale Carnegie said: "Let's not criticize, complain or condemn". Agreeing to disagree can be a great thing! :)

@Dean Letfus Yes I love positivity and I hope the market continues to go up like you describe and that you and the others investing there continue to do great business there.

On the one hand, a forum like this one gives the opportunity to have a debate which is a great thing and everybody, including myself, who puts anything out here should expect, respect and even welcome diverging opinions. On the other hand, I believe that personal attacks have no place in this forum.

@Dean Letfus

Being an Australian citizen, knowing New Zealand very well and having friends who have invested there, I respectfully totally disagree with Dean's view of the New Zealand market. It's a huge bubble waiting to pop. There is no cash flow to be had. It's not because the market has been going up in the past that it will continue to do so. Assuming that is what US real estate investors wore doing in 2006. New Zealand has one of the worst house price to rent and house price to income ratios in the world. I wouldn't invest there with a ten-foot pole!

As @Hadar Orkibi mentions, this is a capital gains day. House prices cannot go to the sky because incomes to pay rents and mortgages are definitely not going to the sky. Buying just for capital gains is pure speculation. It's an illustration of the greater fool theory, according to which one needs another fool to buy from us at an even higher price than what we paid. This works until it stops working and unsustainable bubbles eventually pop.

Don't believe me, just watch! New Zealanders (and Australians) are massively investing in real estate in the US because it makes little sense to do it in their own country from a financial investment point of view.

@Dan H.

I wrote about Belize in a recent post. It's actually not easier for me to find it that it is for you (by finding it through my profile). If you can't find it, let me know and I'll be happy to find it for you.

@Sofia Sharkey

Some people have commented about LiveAfar not delivering the promised returns on the BiggerPockets forum (they changed names so it might not be that easy to find).

Even if they are/were delivering their promised returns, I think that they are too low considering the areas where they are investing. You can get the same returns they promise by investing in the US so why would you bother. This is because the strategy they're using (buy & hold) isn't the necessarily the best for the market and their investors. It's good for them because they make fees year after year.

@Sofia Sharkey

Your country of origin is a great country and Colombians are awesome people. Investing in Colombia today is a great idea for everyone but it would make even more sense for you indeed.

Of course I'm happy to talk to you about what I'm doing. The easier would probably to have a chat on the phone. Send me a private massage if you want and then I can respond and give you my number if you want to do that.

@Jay Hinrichs I totally agree with you. We can have different opinions! And I totally understand your preference in investing in "stable" developed countries like Canada, European countries or Australia. However, real estate prices in those countries are hyperinflated by the mortgage bubble, which doesn't exist in the countries that you'd qualify as less stable. Indeed, the mortagge market is either very small or non-existent in those countries. Therefore, investing in those countries is much less risky at this stage of the credit cycle in my opinion.

@Nathan Gesner I invest internationally and it's a great idea. While laws and regulations are getting more and more STR unfriendly in the US and Canada, they are actively encouraged in many countries. While I can understand it, I'm not sure why @Jay Hinrichs is scared of owning property outside of North America. We're on BiggerPockets here. Haven't we learned that opportunities are where others are scared and don't take action. All we need to do is get the education and information or work with people who have those and act accordingly. Unlike in North America, many foreign countries have none or very limited mortgage markets and their property prices haven't been inflated by 10 years of 0 or close to 0% interest rate policies from their central banks.

For reasons that I have explained at length in another recent post, I would never invest in Belize! Panama is a great place but the government is only starting to promote tourism actively. STRs are allowed in the whole country, except in Panama City, which would be the most profitable place to do it otherwise.

Portugal is awesome and is by far the better of the three, although, as in many countries, you cannot own on the beach.

I guess that Portugal is off the table for you because it's too far. If you look at North and Central America and the Caribbean only, your best bets are the Dominican Republic and Mexico by far. Costa Rica would be second tier as most places have become overly expensive in many (but not all) places and forget about being right by the beach there.

I buy international real estate with investor and this is my specialty. I'm very knowledgeable about the different areas and options so feel free to reach out if I can help you any further.

@Andres Reales I haven't done that in Colombia yet but I'm working on it as we speak. I already have my local partners and I have already done a lot of research, hence I was able to give all that information.