All Forum Posts by: Mike Lambert

Hi everyone, I have been investing in Mexico over the last two years thanks to connections in the local real estate world so I follow all things Mexico on here I know a thing or two about investing in real estate there. Therefore, I will allow myself to set the record straight on a few things that have been mentioned in this thread.

I love what  does and it makes total sense, although there's another way she could have done things. I've never been to Oaxaca but $200,000 for a fixer upper sounds an awful lot there, unless it's very big of course. I'm also not sure why she paid in USD given that Oaxaca is not one of the internationalized markets where properties are traded in USD.

What Trudy does makes sense because she wants to move to Oaxaca and live in that very house that she most likely carefully selected to suit her tastes.

As a pure investment though, it wouldn't make any sense. Let's assume the best case: the renovation costs are 0, the costs to hold the property are 0 and the property is rented continuously from day 1.

You put $50,000 and you get seller financing for $150,000. You'd be levered 3 to 1 in Mexico. That sounds awesome at first glance but when you dig a bit you realize that this is not seller financing. At least not as we understand it in North America. The whole idea of seller financing is to limit the amount of cash that has to come out of your own pocket since the loan from the seller is going to be paid by the cash flow of the property. In this case, you would make $15,600 in rental income, which would just pay for the interest on the loan. Therefore, the whole $150,000 to repay the loan will have to come from your own pockets.

So basically, you have to pay the whole $200,000 price tag in cash. The seller just gives you 3 years to pay but none of the cost of the house will come from the income it generates. This is a 100% cash deal, not a seller financing deal.

Finally, the deal doesn't clear the 1% rule. With $200,000 in the US, you can easily get more than $1,300 in rent and then you can put on leverage to get a much higher return. Why would go through the headaches and take the risks of investing in Mexico for making much less money than at home. I invest in Mexico only because I can make much more money than at home.

@Trudy Pachon in your reply to @Joe Splitrock, you rightfully mentioned that, if you want to buy property along the coast, you need to do it through a fideicomiso (you can actually also use a Mexican corporation) and then you say no thanks. There is nothing wrong with buying through a fideicomiso. It's exactly the same as buying in your own name. I know you don't want to be on the coast but those who do shouldn't refrain from buying because they have to do it through a fideicomiso, especially since the real money in Mexican real estate is done on the coasts.

Which leads me to an alternative strategy you could have followed. I've been buying pre-construction luxury condos in the Riviera Maya with investors there for less than $200,000. We get "real" seller financing that will get paid out of the cash flow from the property but I won't even go there since most people cannot get that. People have been renting similar condos part time for $60,000. This is 4 times what you'd make in Oaxaca and you don't even have to pay for rehab. Granted, most people wouldn't be as good with short-term rentals but you could reasonably get your invested money back in rental income over 5 years. I know you wouldn't want to live there but then you could pay for a similar house in Oaxaca with that rental money. You would then live in the property in Oaxaca and get the rental money from the big cash flowing property on the coast.

@Account Closedundefined

@Trudy Pachon  That sounds great. How much are you paying for the property and what are the terms of the seller financing?

@Trudy Pachon @Dan H.  There are plenty of foreigners buying pre-construction in Mexico without legal or other problems. I have been doing it for years now, as have many connections of mine. This is a well-oiled machine, although you still need to do what you're doing and deal with people who you know or who can be trusted.

When you buy an existing property, do NEVER buy a property with communal title, also known as ejido property. You need to have a clear title. If you don't, your property can be repossessed. Some uninformed people mentioned that it's dangerous to buy property in Mexico because there have been repossessions. They're talking about this type of property. If you're buying a property with clear title, it won't happen. If you have a cloudy title, it could happen. That's the case everywhere in the world.

Otherwise, investing in Mexico can be very lucrative and enjoyable. Just know what you're doing or deal with people you know.

With these details in mind, what you want to do makes perfect sense. And yes, Colombia is an awesome country to live and invest in and you can definitely get that sort of return.
You're welcome. My reply was actually a reflection of my current situation. I invest internationally with investors and I've been looking at Colombia for a while now, knowing that it's a great place to invest. Because I want the investors to get well above average returns, I'm always looking for the rare pearls, exceptional deals that will pay investors handsomely while leaving something for me too for finding, creating and managing the opportunity. So I'm looking for much higher returns that what you describe.

The best Colombian deal I've seen so far landed on my desk and it's in the best place, Medellin. If I could borrow like I do in other countries, it would be a fantastic deal. So I have to try to find another solution if I want to make it work as an awesome deal for investors, which is the standard I have imposed on myself.

If you want to open a bank account in Colombia, I can recommend the best person to you. I'm not sure I'm allowed to share her contact details in the forum so feel free to send me a private message.

Hi, I’m not sure why you want to buy property in Colombia to become financially independent. What is your plan? Do you know you can’t get a mortgage there?

@Jack V. Ospina  Financing is already an issue for Colombian residents and is extremely hard for foreigners. Should it work, the interest rate would be in the double digits. Unfortunately, you'll likely have to pay all cash. Let us know if you find out otherwise. The financing issue is what have prevented us from investing in the country, which otherwise would present some great opportunities.

@Larry Turowski @Account Closed  There's nothing wrong with Mexico specifically. I'd be nervous investing in any market I don't know without acquiring the knowledge first. Mexico is a foreign country so it's even more important that you have that knowledge as if you were investing in another US state.

@Account Closed   56% is actually a high occupancy rate for short-term rentals and, in my book and 70 - 90% looks like a total nonsense. To give you some perspective, Paris is one of the most visited cities in the world and there are tourists all year round. The occupancy rate for a short-term rental there is 74%. Puerto Vallarta is seasonal and the high season is only 4 - 5 months. Owners who have the best places in a given area and who do their marketing right will get very high occupancy rates wherever. However, they are in the minority and the purchase price of such a property could be so high that it wouldn't be very profitable as a short-term rental even at full occupancy.
We've been investing in short-term rentals in the Riviera Maya (where properties are cheaper and the occupancy is higher) and I have been thinking at Puerto Vallarta as a second market in Mexico. My understanding is that properties there are now expensive compared to the potential short-term rental income, which is not that high because of the seasonality. For this reason, I haven't explored further. Let me know if you find out otherwise. I love Puerto Vallarta and I'd love to buy there if the figures would make sense.

They have rebranded themselves as LifeAfar. I am indirectly conneted to them and it sounds like they are great people although I haven't invested with them.

I don't invest with them because, even if they give investors the advertised returns, they are way too low for me given the risk. Why would you invest in Colombia to get lower returns than what you can get in the US and Canada? To me, it is plain crazy to invest in Colombia to possibly make just 8% on an investment you have absolutely no control over!

I buy properties internationally with investors and give them better returns than they would get if they were investing internationally by themselves and if they were investing at home. This is the way it should be in my opinion or otherwise why would you invest with them!

@Conde McCauley I don't understand why you did a second investment with them when the first one did poorly. I understand you want to get the residency but there are other/better ways to get it without having to sacrifice your returns.

American investors should invest in international investors for many reasons. Most importantly, it would increase the returns and decrease the risk of their portfolio (which is possible because of the diversification international investing provides).

Too few investors do it but most do not because they have no idea how to do it and they do not have the right contacts. Of those who do it, some have success but others not because they don't know what they are doing.

However, it is possible to do it successfully. My mission is actually to provide partners and investors with better returns than they would get if they were investing internationally by themselves and if they were investing at home. Thanks to a combination of connection and knowledge, I can provide investors with a combination of both high cash flows and capital gains. The only exception is the development opportunities, for which there is no cash flow but the capital gains are substantial.

So I'd say go international but educate yourself of find partners who are educated.

Hi Ricky, I invest a lot in Mexico and this is very risky in my opinion. Puerto Vallarta was a great place to invest but it has become way too expensive. A lot of people are gonna get hurt when the cycle turns and that could be sooner rather than later.