All Forum Posts by: Mike Lambert

Agreeing with @Erwin Groenendijk that the price of the average property in Spain is much cheaper than in Boston + as low as the average LTR cash flow might be in Spain, it's probably even lower in Boston.

This being said, you create wealth with capital appreciation, not cash flow. And the capital appreciation is much higher in Boston or the US because Americans are generally significantly wealthier than Spaniards.

That's why we buy in the Costa del Sol, as it is a special part of Spain where there's a huge amount of (wealthy) overseas buyers, including many Americans, who are pushing real estate values higher compared to other parts of the country. For them, these properties are still cheap by international standards hence the real estate market si still booming in spite of all the economic difficulties and uncertainties and there's likely a long trajectory upward ahead for prices.

@Spencer Feuerbach

It seems that you got your real estate education at a time when it might look normal to put very little money down at a very low interest rate. That's not normal and it's never been in most places across the world.

The reality is that being able to invest with a bank putting up 70% of the purchase price at a low interest rate is an excellent deal. This is what I've been getting and we're sitting on huge gains because we're buying right so we're enjoying huge capital gains in a record time with high short-term rental income to boot.

Because LTRs aren't very profitable there, you won't get a high return if you have to put down 30%. That's the fault of the business, not the fault of the bank.

Also, Spanish banks are very conservative in several respects:

1. They generally don't like rental properties because they think it's too risky (low profitability and tenant rights)

2. In order to qualify for a resident loan, you might need 2 years of Spanish of W2-style income. Otherwise, you'll need 2 years of US W2 income. Business income might work but it's more difficult. Also, bear in mind that the DTI ratios are much less favorable than in the US.

3. It isn't that easy to qualify. For example, we had a deal for which one of our investors, a US high net worth business owner, was making several times the amount of the mortgage in cash every year (properly documented) and yet the bank would refuse to give a mortgage. Thankfully for him, he still could get into the deal as a co-investor.

There could be exceptions but do you want to base a business model on exceptions. Spain is a great place to invest provided you do what works there. Trying to duplicate what works in the US (that you learn here) oftentimes won't work.

Hope it helps!

 @Spencer Feuerbach

You can't get the same type of commercial loans or cash-flow refinancings. Basically, the type of loans are different and it's also much more difficult to qualify. Loans aren't just about interest rates.

@Kevin Stewart

Personally, I'd never invested in anything like that anywhere in the world because you have zero control and the promoters/managers end up making up most of the money. But it's a question of personal risk/return appetite.

From my years of experience investing in the Riviera Maya, these numbers seem totally overhyped and idealistic. One thing I've learned is to never trust the developer's numbers. They're generally fabricated and reverse engineered to get the return they want to show. You need to do your own due diligence and come up with your own numbers.

While these numbers are already irrealistic today, I don't know if you're aware but there's a tidal wave of competing supply coming to market in the coming years with hundreds of developments under construction, planned or going to be planned. Ask yourself who's going to buy or rent all these properties.

Finally, I know the search tool here isn't optimal but there are plenty of posts that have been written about Tulum recently.

Hi Spencer,

Welcome to BP and good luck with your Spanish endeavours. Bear in mind that a lot of the BP content is US-specific and doesn't apply to Spain.

As mentioned by @Andreu Ferragut, the rent/price ratio of long-term rentals in Spain is low in absolute terms and compared to many areas in the US and you can't boost your returns with leverage the same way you can do it in the US. Also bear in mind that tenant laws favor the tenants.  For these reasons, we're focusing on short-term rentals in the Costa del Sol.

Hope this helps.

Hi Sohina,

As far as I know, you can’t set up new short-term rentals in Barcelona. And certainly not in the most attractive areas. If it’s allowed in outer suburbs, bear in mind that it might not be very profitable and that it might be banned in the future.

@Pantelis Papamanolis

You're welcome and Happy New Year to you too.

What you're saying about covering the mortgage expenses make sense. Mind you, that's the case with most of Canada and probably the US as well. A lot of the figures you see in the forum wouldn't work today because of the high interest rates and, when they'd still do, it'd be manly in markets where the potential capital appreciation countries.

I invest in Europe but in short-term rentals. This is a total different story as the differential between short- and long-term rental income is much larger than in the US. For this to work best, you'd need to be in a tourism hotspot and Greece isn't one of them. I think there are better countries for that strategy but, given your knowledge of Greece, you might as well do it there, assuming that it's legal of course.

@Sandhya Gupta Thank you and happy new year to you too.

I doubt there exists a similar forum of any substance overseas. Few countries have a real estate investing culture as the US or Canada have (which is an opportunity for those in the know).

I'm not sure what you mean by convenience of investing you mean and, generally, like in the US, the more convenient, the lower the return. You can go around that and get the best of both worlds by dealing with the right people, which will help you get the convenience and the returns.

As to the best places to invest, it'd depend on your personal objectives, which I imagine you might not want to share in a forum. In that case, feel free to share them with me through a DM (direct message) so that I can reply accordingly.

Hope this helps!
 

People who want to go to Puerto Vallarta want to stay in Puerto Vallarta to enjoy all it has to offer and not in the middle of nowhere. If I want to be in the middle of nowhere, there's no point in spending that much time and money traveling up to there. I can go closer to home for that.

I have mentioned in many replies to posts in the BP forums that the security risks for foreigners in Mexico (in areas where tourists go) are way overblown by a way too sensationalistic press looking for bad news to sell. However, I'm not sure that many people would feel safe to stay and spend even a single night in Mexico in that kind of place in the middle of nowhere, especially in such a "light" structure. And, even if people go, if anything happens to any guest while straying there, it risks destroying the business for good.

Make sure you know what you're getting yourself into.

Hello Pantelis,

Welcome to the community! I don't want to temper your excitement but, while there are a few of us investing internationally, BiggerPockets is mostly US centric. It's great to read the books you mentioned that cover the basics but bear in mind that investing in different countries can be very different and you cannot blindly apply a US recipe on Greek real estate. There is still lots of great and useful stuff in there though.

Of course, the fact that you're Greek will be hugely helpful, especially when it comes down to all the cultural aspects.

On another note, I love Greece but, if I was forced to choose between the two, I'd personally rather own property in Switzerland than in Greece. Of course, the price point is different and that's an understatement.

Good luck!