All Forum Posts by: Mike Lambert

@Vivian Huang  Town or beach it depends whether you're buying for investment purposes or for yourself or both.

I'm buying mostly for investment purposes. I want my occupancy (and revenue) to be maximized so, for me, it's very important to have something unique that the other places don't have so my condos will stay rented throughout the low season and in case of a downturn in tourism. In the hotel zone, boutique hotels charge between $500 and $1500 or more a night. They're not connected to the electricity grid and don't have air conditioning or amenities. So I'll be buying closest to the beach. We'll have two private beach clubs (most developments in Tulum have none) and amenities at least as good if not better amenities than any other development in town. the great thing is that being close to the beach fits my lifestyle and vacation style so my goals are congruent. If you prefer to be close to the restaurants, bars and nightclubs, you might be better off in or closer to the town although Tulum isn't that big so you have access to everything from the beach area as well. A the town and amenities expands towards the beach, there is a real risk that properties on town side will relatively lose value in my opinion.

@Vivian Huang  You're welcome. Yes, the fideicomiso fees are around $550 a year. You'll need a Mexican lawyer to put it together indeed. You need to have it set up for when you're getting the title on the property so you have time if you buy pre-construction.

The other costs are the closing costs, the commmissons for vacation rental management and the taxes on rental income if you rent and cable/internet.

@Kevin Smith You're welcome. The reality is not necessarily what you're buying told or shown and you can only know for sure if you're an insider.

Regarding Anah, I sent the following email to my developer, which is self-explanatory: "A good friend of mine is investing with Anah Hunab in Tulum. I remember when you were driving me around last December you mentioned one developer was in (financial?) trouble and had to stop a project people both you and I know have invested in. You said you thought it was Anah. A little bit later, I passed by Anah's project on 5th Avenue and I noticed that the project had been stopped. Then, I remembered that our friend xxx used to recommend Anah's projects but hasn't over the last few years. Putting everything together, are they in trouble? Should my friend worry? I referred to you as a good friend to make sure he responds in a timely fashion. :)

It is not true that all developers are late on their projects. This is the excuse those who are late for various reasons are using.

Tao used to be good developer. However, I have heard from various trustworthy sources that most of their latest projects haven't been selling well. You could corroborate that with agents.

You seem to have a misunderstanding about what GMB does. GMB stands for Gamma Master Broker. They are a broker; they're not a builder. They're selling the projects of developers who are not capable enough to sell their projects by themselves. They have been along for long but they haven't built anything. They're all about mass selling. I was invited and went to their end of year party the purpose of which was to give awards to their brokers who sell the most. I let you judge whether these are the type of people you should be trusting.

You're right when it comes to the financing. It's normally not offered and certainly not by the best developers. Its very costly to them and they don't need to do it. Like you wrote, those who offer it do it probably because it's the only way they can sell their not-so-good project. However, a few insiders like me get it from the best developers and so people who invest with me benefit from it as well. The developers who give it to me will never offer it to you. And if you ask them, they're gonna respond that they don't provide any financing. It suits them to offer some financing and they only give it to their connections and those related to them. I'm a careful person by nature but I've been doing this for 2 years and my friend who introduced me to that has been doing it for 15!

There are two reasons why I don't mention the name of the developer. If you wonder why the developer keeps the pre-sales under wraps, ask yourself how you would feel if you're the first person to get to the laugh of a project and you learn that some people just bought the same condo as you a few weeks before and paid 35% less. Would you be happy? I don't think so. Then, if I promote the projects I invest in in places like here and create demand at the launch, my investors and I could make a huge profit by flipping our contracts. I think this is unethical so I just don't do it. I don't promote what I do generally speaking or here for that matter. If investors want to invest with me and share in my privileges, they need to contact me.

As to the 40% commission, you're right not everyone charges that. It's up to 40%. I just want to accentuate how outrageous I think that is. Many charge 30% and it's not that much better. This being said, if you're happy to make 8%, then everybody's happy.

@Brunnhilde Wijnaar @Kevin Smith @Patrick Sullivan

Correction to my previous post. The first sentence should read "I have been investing in pre-construction condos in the Riviera Maya since 2017, targeting Playa del Carmen AND TULUM". I'm focusing on Tulum these days and the project I'm currently investing in is in Tulum. Playa del Carmen is more of an established market while Tulum is more of a growth market.

@Brunnhilde Wijnaar @Kevin Smith @Patrick Sullivan

I have been investing in pre-construction condos in the Riviera Maya since 2017, targeting Playa del Carmen. I'm connected with the best developer in the region and I by directly from him, along with investors. I buy in exclusive pre-sales before the launch at a huge discount and I get financing from the developer, which multiply our returns severalfold. A much as I'd love to recommend them here, I cannot because these pre-sales are unadvertised and the developer want to keep them under wraps so I can only disclose them to the people who decide to invest with me.

However, I can opine on other developers if I know anything about them. Patrick, I don't know anything about R4. Kevin, I don't know if you signed up with Anah already. I wouldn't touch them with a 10-foot pole. My develop told me they are in (financial?) trouble. Some people in my network used to deal with them. Not anymore. Some are stuck in a project. In fact, they have a project on upper 5th Avenue in Playa del Carmen. I passed along when I was there in December and the property was fenced. Nothing was happening and it looked like the construction was interrupted.

This underscores my policy of not giving any money to a developer in Mexico unless I know them personally or somebody I trust knows them. You guys need to do your due diligence.

If you have been to Playa to Tulum, you undoubtedly have seen huge billboards from GMB advertising various projects and supposedly guaranteeing the buyer a return between 8 and 13%. Two things here. Firstly, why would you take the risks of investing in Mexico for an 8% return or even 13% when you can get that or better in the US with much less risk and more control. Secondly, think about what this means. If the revenue from your own unit or the pool isn't enough to pay you 8%, somebody (them or the developer) will have to pay the shortfall. If it's them they guaranteed a huge number of project. So if there is a worldwide or local downturn in tourism, they'll have to pay huge sums of money to the buyers, which they might not have. GMB is a broker, not a developer, so it is likely they wouldn't have the money and their company doesn't own property or most likely doesn't have the assets to liquidate to pay you. If somebody was offering me a guarantee, I would and should ask for their balance sheet to see if they're good for it. And even if it's the developer who issues the guarantee, many of them wouldn't have the money to honour it either. Thankfully my developer is one of the richest family in the area so I don't have the problem but they don't (need to) give me a guarantee anyway. Generally speaking, if somebody other than a bank or an insurance company issues you a financial guarantee, you should ask for their balance sheet to check if it's likely they'll be able to honor the guarantee. Ask GMB or the developer to show you their balance sheet and look at their face. Finally on this guarantee topic, let's assume that whoever issues the guarantee has enough money to pay you. It doesn't mean they're going to. Try to win against a Mexican company in a Mexican court. Good luck!

Finally, there is one kind of project I would avoid like the pest and I suspect that those offering a supposedly guaranteed return fall into that for obvious reasons. If you buy in certain projects, the developer will force to rent through his rental pool and will give you some limited personal usage. This mind sound great at first glance. You have nothing to do and you have less risk because you get paid based on the occupancy of the whole complex, not just your unit. I think this is a very bad deal. First of all, it's horrendously expensive. No matter how much your unit rents, they will take first dibs, generally 40% of the gross income. In other words, you're the one investing the money and taking the risks and they make most of the money without investing a cent and taking any risk. Secondly, you don't have any freedom. You cannot use your unit as you please (for own occupancy or renting) and, worse, you cannot fire them as property manager even if their performance is bad. Think about this!

Hopefully I didn't sound too negative or discouraging. I love the Riviera Maya and Tulum and I love to invest there. It can be a winner for you but you need to know what you're doing! It's important you know and understand all that I mentioned. Nobody's gonna mentioned that to you there and certainly not the brokers who have a vested interest in selling to you and regardless don't have the background to understand some of the things I explained.

Hope this helps everyone and I'm happy to help more if I can.

@Javier De la Rosa

It's definitely worth discussing. I just sent you a message.

Thanks

Mike

@Charles Carillo Europeans can get as low as 1% and Europeans as low as 2%. If was talking about the countries where foreigners usually invest in real estate and where it makes sense to do so and they’re all in Western Europe indeed.

@Julian Ramirez luna I invest internationally but I do it where I have access to financing. I've looked at Colombia because it's a great market but you can't get financing. So you can't apply the same strategies as in the US unfortunately.

@Charles Carillo I'm not sure where you get your information about European mortgages. Foreigners can get mortagages for up to 50 years @ 2%, when Europeans can get 1%. Can you get that in the US? I don't think so!

@Sandra Nelson You might think I'm a bit biased because what I do is invest in rentals internationally with investors. Of course it's much better you know local people or if you know people you do and if you have the right connections to access leverage to enhance your returns. Investors invest with me because they put down less money, make much higher returns and take less risks than if they were investing by themselves. This is to show that is possible for everyone to invest internationally 

Nobody knows for sure what will perform better between US or international. Regardless, it doesn't make sense to have all your eggs in one basket. Presumably your primary residence is in the US, your 401k, maybe your stocks. Those who suffered from the Global Financial Crisis know what I'm talking about. Besides, if you're a passive investor, you know that, if you buy in the US today, you cash-on-cash return won't be very high. Also, given that prices are elevated, it might take you very long before you see significant capital gains. It depends what to buy of course.

Also, real estate is much cheaper in the most promising international markets than in the US. You would be surprised about how far your 500 k would go. You could already do great even if you only allocate a part of that to international.

Regarding the countries, I confirm that Panama and Portugal are great countries. I have been focusing on Mexico lately because it is the best time there. However, I have the connections in Panama and Portugal as well and I'm planning to start investing in those countries this year.

Feel free to contact me if you have any questions. BiggerPockets is all about helping each other. Welcome to the network!

Simon,

As far as I know, you would have four options as far as the re-renting is concerned:

1. You rent rooms as in a boarding room. The problem with this is that generally speaking renters will be the underprivileged people who cannot afford a proper apartment. Personally I wouldn't do it because you won't be able to make much money because your renters won't be able to pay much and you'll risk a lot of trouble, assuming that the landlord agrees that you do it in the first places.

2. You rent the rooms on Airbnb. This is illegal in most places. I wouldn't use somebody else's property to do something illegal. It could spell a lot of trouble. The only option to do this is if you live in the apartment yourself but that means you have one room less to rent and you can only have one project like this.

3. You rent the rooms to students. You could do that but, as far as I know, students already share low rents between themselves so I would have to find students who cannot get the lower rents and are ready to pay more.

4. You can rent the rooms furnished by the month so that it's not considered short-term rentals but I'm not sure if there is a market for that as, generally speaking, people who rent furnished places by the month are people who have money and want a place for themselves.

Hope this helps and let us now what happens if you decide to pursue this avenue.