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Now It’s Easy—How to Make Money in Global Real Estate

Rocha, Uruguay

Sometimes, a real estate developer charges a different price to different groups for the same condo, lot or home. Obviously, you want to be part of the group that pays less for your overseas property and gets more favorable terms. By more favorable terms, I mean a lower down payment…and, in some cases, interest-free finance.

For example, two years ago I wrote to Real Estate Trend Alert members about pre-construction condos close to Fortaleza’s boardwalk (in North-East Brazil).

This is a great location with a strong developer. Brazil’s middle and upper classes come here to vacation. The plans called for high-end, hotel-standard amenities. RETA members who bought (two weeks before launch) paid 15% less than the launch price. They got in with only 1% down. Most condos cost $100,000 or so.

That’s a saving of $15,000 per condo on the launch price. Because the terms for RETA members were favorable, only $1,000 was needed as a down payment on this $100,000 condo.

This is what’s known as an “off-market deal”.

This type of developer has two targets: The investor and the end user. The end user is buying because he has fallen in love with a project or area. He wants to spend time there. Investors, on the other hand, are looking for a deal. We want to be up money from the minute we sign on the dotted line.

The developer allowed RETA members in at the lower price and with the better terms because he knew that they were only interested in a deal. He used the group to build sales momentum in advance of his launch to the local end-user market. The group used him for a deal.

Getting in at a lower price and with better terms isn’t enough for an “off market” deal to stack-up. The launch price needs to be at a level from which you see potential for further price increases. In this Brazil example I’m talking about, it was such a deal. Prices rose in the months after launch.

In fact, one of the units I bought was priced at $92,000. Today (with some help from a currency gain) the unit next door is listed for just over $150,000.

A couple of months later, I had researched another Fortaleza pre-construction opportunity and send the details to RETA members. This time it was right on the boardwalk. The smallest and lowest priced units here came in at $100,000 (give or take depending on what floor you bought on). These small units will generate the highest rental as a percentage of the purchase price.

Again, members could have gotten in with only $1,000 down. Available units today are priced 40% higher in Brazilian real (the local currency in Brazil) terms than the pre-release prices. Add gains from Brazil’s strengthening currency and the paper gains are even higher.

These opportunities got top marks in my “off market” deal-o-meter when buying property overseas:

- Below market price: Check
- Terms that give the maximum upside with minimum cash exposure: Check
- A strong market where prices are likely to continue to rise: Check
- A developer with a strong track record: Check

Deals like this don’t happen every day…but they do happen every few months. In fact, in the past two years I’ve told Real Estate Trend Alert members about opportunities in “off market” deals in six countries. Each time, you would have been ahead of the game from the get-go if you had received my reports.

Another example from earlier this year is Rocha in Uruguay—where you could have had your choice of lots and a pre-release discount of 26%. That’s a saving of $15,000…or more. Interest-free finance on 70% of the purchase price was available. Plus, the area is set to take off. The best beaches in Uruguay are here. This coast will be in hot demand from Argentine and Brazilian buyers.

Yet another example is the Tulum area on the southern edge of Mexico’s Riviera Maya where, as recently as 12 months ago, you could have bought Penthouse condos for $205,000 with only $5,000 down. Today the price is $244,000 and prices are set to rise further in the coming weeks. Mexico’s finest white-sand beaches are here and a government plan (including a new international airport) aims to increase tourist numbers from 2.9 million to 11 million by 2020.

You get the idea. In global real estate, you make money by buying well. That is, being ahead of the game from the get-go…and positioning yourself for future gains. That’s where deals (like the ones I’ve briefly told you about above) come in. That’s how you can make money in markets good and bad.

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