Saturday, July 24, 2021
Dear Your Overseas Dream Home Reader,
Welcome to your Weekly Wrap-Up!
This week I brought a special opportunity to RETA members…
A chance to get a discount of €45,500 on premium condos, right in the heart of Lagos, the most historical town on Portugal’s Algarve…and just a short stroll from some of the best beaches in the world.
Lagos is a place I love to go for some R&R. I consider it the best beach town on the Algarve…
It has amazing restaurants, artsy boutiques, imposing old fortifications, and a Southern Californian vibe. In fact, I know of at least two Californians who say it’s a better place to live than California…more affordable, certainly safer…with weather just as good.
And you can own here for a fraction of what you’d pay in California…
In fact, with cheap Portuguese financing, you can own premium, profit-making real estate for what you’d pay in taxes and HOA fees alone in California.
For our Lagos opportunity, you can secure a mortgage of up to 80%, with rates less than 1%…so you’ll be into the deal for about €81,900 with low monthly payments of less than €1,000 ($1,176), depending on your term.
The developer is only making a small handful of condos available at these prices…and the 10% discount in this development will only be available for a very limited time.
Interested RETA members need to move on this fast…
Members can read my full report on this opportunity and reserve a condo—if they are still any available.
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We have this deal, in part, thanks to my contact on the ground in the Algarve.
He’s one of the smartest investors I know, and he’s been playing the Algarve’s red-hot rental market for years. This summer in fact, despite travel restrictions, he is set to gross $44,000 in July and August, renting his house to vacationers.
Numbers like that are one reason why I figure our opportunity in Lagos could easily see 7% annual appreciation (that’s after your 10% discount) and a 7% gross yield from rental income from the two-bed condos, which are ideally situated and feature luxury amenities.
My own latest Algarve play, in which I’ve partnered with my contact there, is working out exceptionally well, too.
You might recall that in November I told you we had an offer of €410,000 accepted on a repossessed condo in one of the most prestigious communities in the Algarve.
We bought with no money down, and a monthly mortgage of €1,400. Now, after some renovations, we can charge €3,500 per WEEK in August.
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And like I say, we’re only into the deal for closing costs plus the cost of renovation and furnishings—I figure about €55,000 total.
That’s savage cash-on-cash rental yields. The expected net income per year (after mortgage and other costs) should amount to €20,000—that’s a 36% annual cash-on-cash yield.
And it gets even better…
An identical unit to our is listed for sale at €830,000. That’s €420,000 over what we closed at, which gives us huge built-in gains on top of our rental income.
If you’re a RETA member and you want details on further fire sale opportunities, get my report and connect with my contact now.
The Algarve Versus the French Riviera—Which Is Best?
As she continues her search for a new home-base, my senior researcher, Margaret Summerfield, is heading to England’s southern coast in coming weeks.
It’s been quite a whirlwind tour of Europe so far…
She started in the Algarve, taking in Faro, the region’s capital; the wild party town of Albufeira; and the historic town of Lagos, with its incredible golden sand beaches and endless cliff walks.
Then, after a brief stint exploring the grand summer palaces and mansions of Cascais on Portugal’s western coast, she made her way to the French Riviera… To the glitzy towns and pebbly shores of Cannes and Antibes…to Juan-les-Pins, with its Jazz Age allure…and to the chic city of Menton with its ornate palace hotels.
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Earlier this week, I asked Margaret to share her thoughts on the French Riviera when compared to the Algarve, as far as cultural offerings, climate, and other key factors.
Although the Algarve has some delicious seafood, the Riviera was the clear winner in the gastronomy category. But what Margaret had to say about the weather, beaches, and infrastructure could surprise you…
Rental Profits in Tuscany
This week I shared a real estate investment story from Debra Kolkka.
Debra built her dream home in Italy’s picturesque Tuscan hills and spends about six months out of the year there. The rest of the time, she rents it out and covers all her costs. The ideal arrangement.
I won’t spoil the rest…I’d like you to get it straight from Debra herself. She talks about renovating the ruin that became their home, village life, and how they’ve managed to create a property visitors love.
I’d love to hear about your own experiences with investing in a property abroad. If you have an overseas rental, tell me about it, especially any valuable lessons you’ve learned along the way.
Send a message to: feedback@realestatetrendalert.com.
Who knows, you might see your name in print…
That’s because I’ve started work in earnest on a new resource for RETA members. I’m putting every single strategy and secret I have learned in my years of profitable real estate investing into one place.
This will be the ultimate compendium for overseas investing, with guides and strategies for pinpointing upcoming destinations, finding off-market deals, maximizing rental income, and much more.
I also want to share stories. Not just my own, but yours too…
So, if you’ve invested in real estate overseas…if you’re using it as a rental, or simply enjoying it as your full-time home as it appreciates in value, I’d love to hear from you and share your story.
Drop me a line at feedback@realestatetrendalert.com.
One Way to Boost Rental Income
I talk a lot about investing in “internationalized” places, those that attract visitors from around the world. The idea is that by owning in a destination that caters to different markets, you won’t be exposed if one segment of the market drops off.
The Algarve is one of these internationalized places…
There’s a huge mix of markets. Northern Europeans come in the summer, North Americans are increasingly coming to visit and live…Scandinavians escape their harsh winters to play golf and relax around Lagos…people come from all over Portugal, Spain, France…
Even as travel ground to a halt during the pandemic, rentals in internationalized places like the Algarve still did ok. Last year, despite the lockdown, I hear some property owners were still pulling in gross yields of 7%.
My contact on the Algarve tells me that in 2020 the average occupancy for well set-up and well-managed properties was around 35 weeks. He should know, as he manages a lot of rentals in Lagos and elsewhere on the Algarve. And, like I said earlier, he regularly rents out his own home—he’s expecting to pull in $44,000 in just two months this summer.
With my own rental in the Algarve, I can charge €3,500 per week in August—that’s a high season.
Like I say, buying in an internationalized destinations, is one of my top strategies for boosting rental income. If you want to get more tips and tricks, check out this piece I shared on Thursday.
When travel bounces back in full force, a rental in a place like the Algarve will be the first to see a surge in demand. As will other internationalized destinations on your RETA beat: the Costa del Sol, Panama’s Pacific Riviera, and, of course, the Riviera Maya, specifically towns like Playa del Carmen and Tulum.
My last time in Playa, back in late April, the place was absolutely buzzing. My contacts tell me the main drag, 5th Avenue, has been thronged with people this summer, the restaurants packed, the beach busy…
On my trip, I made my way over to the island of Cozumel for the first time ever. A stunning place to spend some time or come over for the day on the ferry from Playa.
In April, Cozumel seemed quiet. But recent reports suggest that tourism is bouncing back fast. Authorities there estimate 10,000 tourists have visited the island each day, prompting business owners to ask that the ferry schedule be increased to pre-pandemic levels.
Interestingly, 80% of the tourism that arrives on the island of Cozumel is national and 20% from abroad. Another example of why a mix of markets—including local—is so important.
You can watch a brief video from my scouting trip here:
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Wishing you good real estate investing,
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Ronan McMahon, Real Estate Trend Alert
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Your Comments and QuestionsArthur says: As a 73-year-old single man I have been thinking about living abroad for several years. While I have a decent income, I don’t have a lot of cash. I know I am going to have to get rid of a whole bunch of stuff (which is not really part of my question). I am used to owning a house but wondering if getting a mortgage is even feasible? I have traveled to Ajijic, Mexico; Cuenca, Ecuador; Medellin, Colombia; and the South of France in looking for an expat location, but have never gotten a definitive answer on the mortgage question. Is there one? While I have been to Southeast Asia. I had not considered that area until reading some recent articles in International Living magazine. It appears to be worth considering. Ronan says: Hi Arthur, yes, getting a mortgage is certainly an option, however, age does play a factor. In Portugal for instance, most mortgages run for 25 to 30 years, but if you’re over 60 you might require a shorter term. But you can still qualify with some banks up to the age of 80. There are other options too. Some older folks team up with a friend or family member to allow them to jointly buy with a longer-term mortgage. Of course, if you do this you should make sure that whatever arrangement you make is clear and legal. Another option is to supplement your mortgage in Europe with a line of credit against an asset in the U.S. This would allow you to get a smaller mortgage…one you can pay off within the term period. James says: You mention sites like VBRO, Airbnb, Flipkey for short-term rentals. What are the longer-term rental sites, if we want to rent out our property for six months of the year? Ronan says: Hi James. When you rent long term, it’s often to a local market, and so you should look for the local listing websites for whichever country you own in. However, some of your long-term renters could also be from abroad, and this will be a growing trend as the Work From Home set seek out overseas options. These folk are different to the local market in that they will still often rent through vacation rental portals like Airbnb—which they are familiar and comfortable with. However, to attract these long-term renters, I suggest you offer a competitive monthly rate (separate to your nightly rate).
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