All Forum Posts by: Mike Lambert

@CJ Witmer

Banks will never finance a property in a foreign country because they don't have the necessary means, knowledge and willingness to go through a foreign legal system to repossess the property should the borrower default on his mortgage.

If you hear or read that somebody got a property financed by a local bank in a foreign country, this is because that bank took some local assets as collateral or gave an unsecured loan. Obviously, this is not a financing specifically for the overseas property and the borrower could use the money to do anything they want.

I'm into doing joint ventures with local partners and I use to lend big money to Latin American banks in my previous corporate career so I get access to the local banking system and so the investors who invest with me can benefit from the leverage that goes with it.

So what can you do if you want to invest by yourself? Seller financing if you can find any. An alternative would be to invest in pre-development properties if you can get developer financing. I've done it elsewhere in Latin America through my connections but I don't know if you can get it in the Dominican Republic. I'm actually working on a beachfront condo project where my local partners and I are actually going to be the developers and sellers and our plan is to include financing as part of the package, which I think would be a first in the Dominican Republic.

Regarding locations:

Las Terrenas: big yes; that's where I'm the most active in the country

Cabarete: yes but less potential than Las Terrenas I think

Sosua: no because of the sex tourism

@Chloe Gray

Banks will never financed a property in a foreign country because they don't have the necessary means, knowledge and willingness to go through a foreign legal system to repossess the property should the borrower default on his mortgage.

If you hear or read that somebody got a property financed by a local bank in a foreign country, this is because that bank took some local assets as collateral or gave an unsecured loan. Obviously, this is not a financing specifically for the overseas property and the borrower could use the money to do anything they want.

If you want to use leverage in Mexico, the alternatives to local bank financing are developer financing for pre-construction properties (which is rarely given if you don't have the necessary personal relationships) or seller financing.

@Anthony Dooley

You can rarely be successful in real estate just on your own, like in any business or investment endeavour. So whatever you do, even at home, you risk being screwed over when working with people if they're the wrong people. You are right in that that risk increases if you're not around.You just need to work with the right people. My Rolodex is filled with trustworthy people in many countries who I know on a personal basis and with whom I or close connections of mine have worked with successfully (and oftentimes repeatedly). On top of a high return, this is actually one of the main things investors who invest with appreciate: they have piece of mind. Knowing that you deal with people you can trust considerably reduces the risk of an investment. You are right again when you say that you have to exert control on a daily basis and this is what I do, even with the people I trust. When money from partners is involved, this is non-negotiable!

I'm sorry that you've been screwed over several times but many people are investing internationally without having that issue. If it was the rule rather than the exception (which pretty much everybody would know thanks to the internet and social media), there wouldn't be that many people investing internationally today. Yet I totally understand where you're coming from. You want to prevent what happened to you from happening to other people. There is no better intention! Also, after what happened to you, nobody will blame you for deciding to stay at home when it comes to real estate investing.

Finally, there are no guarantees in life and, in spite of all the research I do, the precautions I take and the control I exert, the possibility always exist that I could be screwed over, like in any venture. If that was to happen to me, I would warn people, learn and share what I could have done better if anything and suggest actions to take to prevent such an issue and mitigate its effects if it happens nevertheless. I wouldn't want investors to be robbed of the benefits of diversification and potentially higher returns because of something that remains the exception rather than the rule if you are careful. But that's me and everybody is different and entitled to their own opinion. I'm no better than you!

@Account Closed

I buy (and am planning to build) Airbnb properties abroad in various countries with investors. It has to be profitable and legal. I especially like the places where the authorities actually encourage Airbnbs rather than discouraging them like in most places in North America.

Medellin is a great place to invest but there are restrictions on Airbnbs. If you want to operate an Airbnb in an apartment, at least 70% of the owners have to approve Airbnbs in the building. They are serious about enforcing the rules and shut the illegal ones down. So you can do it profitably but you need a good deal and you need to follow the rules. Mind you, I'm looking at other strategies there that could be more profitable than Airbnbs.

@Parius Futch

This sounds great! You focus on a niche market and have limited competition. In the vacation rental market, you have more competition but you should still do well because the tourist numbers keep increasing in the Dominican Republic and the hotel occupancy rate is already very high. Both strategies are valid. My strategy is to get the advantages of both sides to be able to offer superior returns to my investors. It consists in focusing on a niche within the vacation rental market by offering superior properties and a better service to still have access to the mass vacation market.

What kind of returns do you achieve with your strategy? Obviously, your rental income is lower than with vacation rentals but I assume that the prices you pay for a property is much lower given that 1) you are not on the beach and 2) you don't need to offer property of a quality/luxury level that can compete with hotels.

@Parius Futch

Yes the DR is awesome and Punta Cana is its most established destination. Hopefully you do pretty well there.

I personally know one of the head honchos in the Ministry of Tourism. When I was visiting recently, he mentioned to me that I'd most likely make more money in other parts of the country for that reason. This is why I'm focusing on the more emerging destinations that have more growth ahead and when I don't have to compete against the all-inclusive resorts. Most visitors go to Punta Cana for the all-inclusive experience the all-inclusive. People who prefer to stay in short-term rentals generally prefer to go elsewhere to stay at or to use as a base to explore the country.

The first step is to the in-house research in order to determine if there are opportunities in the area at the macro and micro level. It's easier for me because 1) I have a friend who travels the world to find the best locations and I can piggy back on that and 2) I focus on popular places and it is therefore much easier to do research.

The second step is to find the best local contacts and organize a field trip. Ask plenty of questions to plenty of people. Personally, I either already have the connections or I'll find them through my contacts or my research.

If possible, I'll try to validate the facts, figures and information through different sources, especially when I haven't established yet whether a source is trustworthy.

I invest mainly outside of North America and there are surely plenty of people here who know the area so they'll probably have a better opinion than me on this specific transaction.

It's really cool you invest internationally. I also invest all around the world with investors. It's the best way to have a truly diversified portfolio and take advantage of area where most of the growth happens.

Regarding this deal, I'd just say that, if I was investing in the US like you're doing with this deal, I would use debt, even the one you have which seems actually pretty good. This is the only way to make such an investment worthwhile, in my eyes at least.

I own property in the Riviera Maya with investors and I'm looking at Puerto Vallarta to diversify going forward.

My main advice would be to know what you're doing or get assistance and/or work with people who do. I could give you plenty more advice based on my experience. Do you have more specific questions, as that would make it easier?

@Cody Emily @Reyes Velasco

That's awesome! While it is a great idea, investing in Colombia is not easy. However, if it was easy, everybody would be doing it and the opportunity would not exist or be as good. Moreover, as part of the BiggerPockets community, we know that we oftentimes need to know what's difficult to reach success. And you're not alone. Don't hesitate to reach out if we can help you along your journey!