All Forum Posts by: Mike Lambert

@Fawaz Sabha

A few things:

1. I don't know that I'm necessarily the right person to listen to (it's in the eye of the beholder) but I'm just commenting of subjects I know, I try to give comprehensive unbiased answers whenever possible and I'm trying yo help. I'm telling people what I wish they'd tell me if I was in their shoes.

2. Kudos to you for opening a hair salon in Mexico City after being there for just 3 months.

3. I'm going to be the last person to criticize the stock market because that's my other passion, which I've been doing for 20+ years and I'm even coaching people on doing it successfully. It's like real estate. You need to invest in the right stocks, not any stock. I've been doing extremely well and the beauty is that I don't need rates to go down. But yes, sadly most retail investors don't know what they're doing and end up gambling.

4. Being in Mexico isn't mandatory if you buy a short-term rental. If you want to do anything more sophisticated, you need to be on the ground while it happens.

5. There are several issues with Tulum but the main one I was alluding do is the result of the former governor of Quintana Roo (the state in which the Riviera Maya is located: Cancun, Playa del Carmen, Tulum) gave 40,000 construction permits in a record time and there's no demand for that many housing. The end result is inevitably going to be a huge amount of properties you won't be able to sell or rent without taking losses, potentially very large. It's the typical oversupply situation but on steroids. That ship has sailed a long time ago.

6. The better the market, the harder it is to find a property because, in those markets, you have the reverse situation, in which the supply can't satisfy the demand. For example, I'm currently trying to find land for a development and, in spite of my knowledge and deep connections, it's extremely difficult.

7. A like-for-like property in Mexico is much generally cheaper than in the US but properties in great locations aren't that cheap that you can pay cash for 4 properties with $400k (unless they're minuscule) but you could use financing if you have access to it.

8. Nobody has a crystal bowl when it comes to the "next places" and, even if you find it, you don't know how long it's going to take , will you have the patience to wait and possibly be wrong? Mind you, there are signs but you can bet people in the know aren't going to share it and create a competition for themselves so you'll generally be on your own on this one.

9. There are no rules when it comes to price range, square meters and type of property. It depends on the markets and the specific properties. 

Hi Fawaz, it's always difficult to answer this kind of questions because we don't know what your objectives are and that would be the most important factor. So I'm going g to try to answer as best as possible by staying general.

Firstly though, it's important to understand that you can't apply all that you learn on BP and all that works in the US and expect it'll give you a similar result in Mexico. Many things work differently there. One of the main things is the financing so make sure you take care of that first to avoid potentially waisting a lot of time.

Now to your questions:

Buy and flip: that generally won't work in Mexico. There are exceptions though like you could buy a dilapidated colonial house in Merida and rehab it. Not sure if you can find that easily and if that would work with numbers. Another exception would be to buy condos pre-construction and flip the contract before delivery. Bear in mind that it isn't that easy anymore given the price rises over the last few years. You'd need to buy the right property in the right location, at the right time and, most importantly, at the right conditions.

Also, a realtor in Puerto Vallarta who deals with foreign clients once told me that every single of his clients who attempted a rehab regretted it and will never do it again. That included rehab pros in the US and people who normally love rehabbing.

Personally, I'd never rent anything long term. I don't think it's very profitable and even less given the risk.

That would leave you with the classic that most foreign investors do: short-term rentals. To determine the location, you just need to find out where you can get the returns you're looking for. Like everywhere else, investing is first and foremost about numbers.

While you generally don't run the regulatory risk like you would in the US, Mexico City might be the exception and I would stay away.

Tulum is being completely overbuilt so I'm not sure how you could be profitable long term there.

Merida doesn't have all year-round mass tourism buy maybe focusing on a niche could work.

Puerto Vallarta is great but it's become much pricier lately so you might need to find a deal if you want a decent return.

Hope this helps!

@NA Hoss

It makes total sense to invest outside of the US when rates are high and opportunities are few. Being from Canada, I'm doing the same but I'm targeting short-term rentals as they are much more profitable and justify the hassle and risk of going overseas.

A low interest rate doesn't make a good deal in and of itself. Even if your gross rental yield is (much) above the average, I'm not sure how high your cash flow is after expenses and mortgage payments, even with a 3 - 4.5% interest rate. But it seems to be working for you so that's the most important and I guess it doesn't necessarily have to be impressive.

Mind you, my main issue would be capital appreciation or the lack thereof. Portugal as a whole has had huge capital appreciation over the last few years but that was mainly a catch up from the Global Financial Crisis and it was led by foreigners, notably through the Golden Visa, that's now been abolished. Also, it's been concentrated in places like Lisbon, Porto and the Algarve, where the rental yields aren't the highest. Prices are still going up but demand is now dropping substantially because, without the foreigners' money pouring in, it's likely not sustainable and demand is dropping strongly at the moment. Most of tney in Portuguese real estate has been made selling or renting short-term premium properties to foreigners.

So my main issue would be getting any long term sustainable capital appreciation, as a little bit f cash flow doesn't make anyone healthy. After all, the average Portuguese is not wealthy and especially not the average renter and there's already an affordability issue in the country. So they might one day reinstate rent controls. The fact that you haven't had issues with tenants doesn't mean the risk isn't there. I don't know how long you've invested there but there are plenty of investors who invest in US war zones and don't have issues with tenants. It doesn't mean there's no risk.

Mind you, I'm sure you get plenty of capital appreciation from your west coast properties so maybe that's not your priority.

In any case, kudos to you for making the effort to go overseas to find what you can't get in your state and also take the risks that go with long-term rentals! 

@NA Hoss

Incredible long term rental yields? Where? The average gross rental yield in Q4 23 was 5.65% so the CAP rate was way below that. So, renting long term isn't very profitable and it is risky, with tenant favorable laws. You can't apply the North American multifamily investing model there, as you can't refinance like you do in the US or Canada. Short-term rentals would be the way to go but you won't get a license in the most popular areas.

@Junior Jaquet Hernandez

I'm not sure what you what kind of long term you mean (renting by the year to the local population or by the month to visitors for example). In any case, I wouldn't because it's riskier and potentially much less profitable than short-term rentals. The problem with those anywhere in the Caribbean is the sargassum risk. I can get better returns elsewhere without having to take that risk, which for me is a deal breaker.

@Andrew Syrios

Regarding government abuse, I'd look first at whether the law discriminates against foreign investors and then how the law has been applied over a significant period of time, not necessarily just because the head of state changed recently.

Regarding crime, isn't it the same as in the US. Also, beware about national statistics. For example, the murder rate in Bogota, Colombia's metropolis, is lower than that of Indianapolis. Similarly, the murder rate in large parts of Mexico is lower than that of my home country Canada, which itself is significantly lower than in the US. Who'd have thought that?

I guess it always comes to doing our homework, doesn't it?

 You're welcome. The two main websites for Mexican properties are Vivanuncios and Inmuebles24. Beware that there could be fake listings.

@Andrew Syrios you brought a great point, which I only briefly touched on in my reply as the explanation for which I'd have issues investing in Asia. So thank you for mentioning it and sharing your thoughts.

Strong property rights are indeed essential but they're wishful thinking if you can't have a profitable investment in the first place and I'm not sure how you could get any decent return by investing in El Salvador.

I've heard great things about how the new president has tackled crime. Does that mean that property rights are safeguarded and that foreign investors are treated equally? While there could be a connection, I'm not so sure that there is one.

In any case, it could be worth investigating. It'd be interesting to follow your journey if you decide to invest there!

@Mateo Monsalve

This is a difficult question to answer because we don't know what your objectives are. So, the best I can do is tell you where I find interesting options that fit with my objectives. I'm an investor and I'm looking for the best possible risk-adjusted returns so you and other readers might have the same objectives.

I'm only interested in STRs for maximum profitability and because the other strategies generally aren't worth it. So I'm looking for the combination of affordable properties (cheap could be misinterpreted) and (mass) tourism. Thankfully, and it's no coïncidence, the places where I end up investing are great for lifestyle.

My pricing criteria eliminates Canada, Northern Europe and Oceania.

My tourism criteria eliminates Africa.

I eliminate Asia, including and up to the Middle East because, in most countries, foreign owners are treated second-class and that has serious implications from a risk point of view. As mentioned by @Bruce Lynn, Thailand is a great example. It'a cheap for a reason (although a lot of the stuff promoted to foreign investors looks cheap but is in fact expensive). Japan is an exception but, aside from exceptional cases, it's the last place where I'd invest since, unlike in the rest of the world, properties depreciate over time until they get destroyed.

I eliminate the Caribbean because of the sargassum.

What do I have left over? The two areas where I invest, unsurprisingly.

1. Latin America

There are several countries that would work but Mexico beats all of them hands down. Tourism, remote workers, digital nomads, snowbirds, retirees, near shoring induced economic boom, growing middle class, massive population (growth) and geographical location. No other country in the region can compete. There's no contest, although some other countries could work as well in specific niches. This is why a lot, if not most of my 1,250+ post replies in the forum to date are about Mexico, as many investors seem to agree. Beware of the Caribbean side though (see above).

2. Southern Europe

Southern Europe is what Mexico is to Northern Europeans, with the nuance that Southern Europe is full-fledged developed so it's mora a mix between Florida and Mexico with a weather more akin to California. Again, you can't beat the location inside the huge European market.

Of course, that's what's available to you but you need to either know what you're doing or have access to the necessary people and resources, in case that isn't obvious.

Hope this helps!

@Bryce Jamison Thanks for mentioning that. Just listened to it. What's mentioned is very basic and potentially a tad misleading in that investing in Mexico/internationally is very different than in the US. I've been investing internationally and in Mexico (the topic) and shared my experience by responding to hundreds of posts on the topic so interested investors might find what they're looking for here.

The great thing about the podcast is that I have been vilified several times for suggesting that investing in Mexico is a good idea so, now that it's in the podcast, I guess it's not so crazy anymore. So it's great that they did it, even if it's only for a few minutes.

Like they suggested, people should know what they're doing though. While prices are often cheap compared to the US, they've gone up a lot over the last few years and I see hordes of Johnny come latelys who are overpaying.

Personally, Mazatlan isn't my favorite place in Mexico (it's cheap for a reason). Roma in Mexico City is an awesome area for lifestyle but there's but STRs are going to be regulated there and possibly banned and LTRs are not a profitable alternative. Again, investors should know what they're doing, as mentioned in the podcast.