Buying Real Estate Overseas For Cash Flow (And A Better Life): Get Started With As Little As $50,000

Preface

Strategic Advice and Recommendations Amidst and Post the Coronavirus Pandemic—Challenges and Opportunities for Cash Flow Investors Overseas

As this book goes to press, more than 90% of the U.S. population and more than 20% of the entire global population are under instructions to stay at home and shelter in place. Millions of workers are filing for first-time unemployment, and trillions of dollars have been erased from stock portfolios. We humans are living through the greatest health crisis since the Spanish flu of 1918 and could face the biggest market meltdown since the Great Depression. The personal and financial challenges we're navigating are existential, the pain and hardship they're creating overwhelming.

What do they mean in the context of these pages?

We believe the COVID-19 crisis is also going to lead to one of the greatest buyer's markets the world has ever seen. Overleveraged owners, bankrupt businesses, desperate sellers, and rock-bottom currency values will translate to the fire-sale of a generation if not the century. The eighteenth-century British nobleman and banker Baron Rothschild said it so we don't have to. You should buy when there's blood in the streets, and that's the view today.

With the help of contacts in key markets worldwide, we're taking stock of pre-crisis trends, property listings, government interventions, currency values, and COVID-19 casualties. We want to be prepared to act as soon as it makes sense to do so, and we recommend you do the same.

Because, eventually, the pandemic will be contained and global markets and economies will recover, and, again, the fallout from the crisis will present the world with unprecedented investment opportunity. Perhaps more important, however, the experience of having lived through this period will leave us with a reinforced and maybe a reinvented understanding of what matters most in life.

Considered from a post-crisis perspective, where in the world will offer the best options for diversifying your investment portfolio and, at the same time, your lifestyle? Where should you look now to embrace the many opportunities our world continues to offer while positioning yourself for cash flow, upside, and security in the face of whatever tomorrow brings? We think we must consider that COVID-19 is not the only global catastrophe we could face in our lifetimes. Given that position, we further believe it is more critical than it has ever been to expand where you spend your time and your money so you're not at the mercy of any single government, economy, marketplace, or currency.

We have a moment now, while the world sits on collective pause, to regroup on what we'd like our lives to look like and to connect the dots between our ideal lifestyle and the top choices for the best places to think about spending time while making money overseas.

Our overriding objective in these pages is to show you how to build a diversified portfolio of hard assets overseas to generate cash flow to fund the lifestyle, the retirement, and the legacy you want. So, as we consider our world post-pandemic, let's start there.

What will global property markets look like post the COVID-19 crisis?

We do not believe we're going to see 40–70% drops as we did in the wake of the 2008/2009 global crisis, when real estate markets worldwide took huge hits with few exceptions. However, localized markets and individual properties will experience those levels of price reductions, even if only in U.S. dollar terms.

The Crisis Will Create a Supercharged U.S. Dollar

That is to say, one of the biggest opportunities created by the current crisis is going to have to do with supercharged U.S. dollar buying power. The Colombian peso and Brazilian real, for example, have weakened significantly against the U.S. dollar since the virus crisis began. These countries are oil exporters and commodity producers. The values of their currencies depend on their abilities to sell those products on the global market in dollars and then trade those dollars back into pesos and reals. Will the Colombian peso or the real return to pre-virus levels once the crisis abates and oil prices begin to recover? Probably. Meanwhile, properties in these countries will stand out as crisis-level buys for U.S. dollar holders.

How Long Until Tourist Rental Markets Recover?

Short-term rentals are a key element of any global property portfolio, a top choice for generating diversified cash flow overseas. What's the post-COVID-19 picture for this asset class?

The vacation rental business disappeared overnight when borders closed and planes stopped flying. Hotels are being converted to hospitals in some countries, and short-term rentals are being relisted as long term. That's one benefit of owning a furnished rental. You can reposition it according to market demand. In Dublin, Ireland, for example, the available inventory of long-term rentals jumped 83% in March 2020 compared with March 2019, while short-term rental listings on Airbnb fell accordingly.

Since the advent of Airbnb, many cities have seen sharp declines in long-term rental supply, increasing the cost of housing for locals. In an active tourist destination, a short-term rental can produce a much higher net yield than one rented long term. Now we're going to see a dramatic shift, which is good news for locals looking for affordable housing but not necessarily for global property investors. However, we believe this is a temporary trend and will revert as tourist markets are reborn.

You can easily switch a rental from short to long term in a European city, but making a change like that won't get you far in a resort town like Playa del Carmen, Mexico, where's there's next to zero long-term rental demand. Expect, therefore, to see hugely discounted vacation rental prices in destinations like Playa del Carmen when people begin traveling again. Also expect to see properties for sale at discounted prices from owners who either need to sell their investment real estate to shore up their personal financial situations back home or because an extended loss of cash flow has put them behind on their mortgage payments. As we remind our Live and Invest Overseas readers often, leverage is a double-edged sword.

Look for More Seller Financing Options

Speaking of leverage, note that banks in countries where financing has been an option for foreign buyers will be focused on helping locals recover first. We think, therefore, that institutional financing options for us foreign investors will become thinner on the ground for a period.

On the other hand, we also predict that global property buyers will find sellers and developers more open to more creative terms than they've been in a long time, especially in Latin American markets dependent on foreign buyers. Seller financing will be particularly easier to come by in Panama and Belize, for example.

Buy on These Dips

Some markets in Europe are already experiencing broad real estate price drops. Greece is top of this list. We believe this country will represent a bona-fide blood-in-the-streets opportunity, and we will share specific opportunities with our Live and Invest Overseas readers in real time. (You can stay up to date with these opportunities as a reader of our free e-letter service. Go to www.liveandinvestoverseas.com/cashflowupdates to sign up.)

In addition, we expect prices in Portugal, where values had appreciated significantly between 2015 and 2019—particularly in Lisbon, Porto, and Lagos—to soften and perhaps to fall when pent-up supply is released after Europe reopens. The window of opportunity here, though, will be short.

We predict price drops across Latin America. Emerging markets are going to be hardest hit by the pandemic crisis, and their economies will be slowest to recover. This means countries at the top of your post-crisis opportunity list should include Mexico, Belize, and Brazil.

Panama is an exception in this regard in this part of the world. This country reacted quickly to the coronavirus threat, showing itself again to be more than just another banana republic. Panama closed its borders in a matter of days, then restricted the movement of its residents in inventive ways. At the height of the threat, women were allowed to leave their homes at assigned two-hour increments on Mondays, Wednesdays, and Fridays, while men were able to be out for two hours at a time only on Tuesdays, Thursdays, and Saturdays. Everyone had to stay home Sundays, and the government banned the sale of alcohol. No baby boom for Panama but we predict a quicker return of economic activity certainly than anywhere else in the region. In addition, our contacts in the country report that President Laurentino Nito Cortizo's administration is planning an aggressive program of investor incentives to attract direct foreign investment post-pandemic lockdown. Again, we'll keep our Live and Invest Overseas readers up to date on these programs as they are rolled out, at www.liveandinvestoverseas.com/cashflowupdates.

The Winningest of All Cash-Flow Investments Overseas

The second cash-flowing asset class every diversified global property portfolio should include is agriculture. Amidst and in the wake of the COVID-19 crisis, this investment option remains the big winner. While short-term rentals are producing zero cash flow during the global shutdown, agricultural properties are still growing food… and people are still eating.

Meaning crops need to be harvested. The United States, Germany, and other developed-world markets rely on migrant workers for their harvests. With borders closed, farmers in these countries are worried about how they're going to bring in their crops before they rot in the fields. In the countries we recommend in these pages for turnkey agriculture investment—Panama and Thailand are at the top of this list—farmers don't rely on migrant labor. They use seasonal workers, but recruit them locally. One more benefit of diversification.

The most resilient part of any real estate investment portfolio during the current or any other crisis will be timber. Trees don't care about a virus. And, even with less attention from caretakers, they keep growing.

Three Countries We like Best Post-Pandemic

Our objective in the pages that follow is to show you how to generate the cash flow you need to be able to afford the lifestyle you want. Looking ahead to the other side of today's crisis, what might you want your life to look like and where in the world might you be able to realize that ideal? Here are three places where you could restart your life putting health, self-resilience, and community first, while also investing in diversified, income-producing hard assets:

#1: Portugal's Algarve Coast

At home on Portugal's coast, you could wake every morning to the sound of local fisherman announcing the morning's catch and the soft chimes of bicycle bells signaling the start of the daily commute. Offshore this 100-mile-long stretch, the Atlantic Ocean crashes, as it has for centuries, carving arches, coves, and caves into the sandstone, creating a picture-postcard view at every turn. Portugal's Algarve region is not only a top option for retirement in Europe but one of the best places in the world to live, thanks to its

Year-Round Sunshine

Portugal enjoys one of the most stable climates in the world and 3,300 hours of sunshine per year, meaning more sunny days than almost anywhere else in Europe. The Algarve coast has no bad weather months.

Safety

Portugal ranks as the third-safest country in the world. Violent crime is rare, and petty crime is limited to pickpocketing during the busy tourist season. As well, this country has managed to keep itself separate from the immigration crisis that is playing out in other parts of Europe.

Good Infrastructure

Portugal has enjoyed important infrastructure investments in recent years, specifically to do with the country's highway network and airports. As a result, this is a great base for exploring all Europe and North Africa.

International Standard Health Care

Health care in Portugal is high quality and a fraction the cost of health care in the United States. If you become a resident, public health care is free.

Golf

Portugal's Algarve region boasts 42 courses in less than 100 miles.

Great Beaches

The European Blue Flag Association has awarded 88 beaches along the Algarve coast Blue Flag status, recognizing their excellent water quality and environmental standards.

Affordable Cost of Living

The cost of living in Portugal is among the lowest in Western Europe, on average 30% lower than in any other country in the region. A couple could live here modestly but comfortably on a budget of as little as 1,300 euros per month. With a budget of 2,000 euros per month or more, you could enjoy a fully appointed lifestyle in this heart of the Old World. And right now your dollars buy a lot of euros.

The Language

English is widely spoken. Living here, you could get by without learning to speak Portuguese.

Healthy Living

The Portuguese are the biggest fish eaters per capital in Europe, and fresh fish of great variety is available in the ever-present daily markets. The year-round sunshine and fertile earth in this part of the world mean an abundance of fresh produce, too, also available in the local markets. Meantime, pollution rates are low, and streets, towns, and beaches are clean and litter-free.

Retiree Residency

Portugal offers the most user-friendly residency option in the eurozone. You can qualify to live in the country full time simply by showing a reliable income of at least 1,200 euros per month.

#2: Mazatlan, Mexico

For decades, Americans have voted Mexico the world's best place to live or retire in the way that really counts—they've packed up and moved there. This country is home to between 1 and 2 million American expats and retirees, more than any other country. Its biggest advantage is its accessibility. Living or retired on Mexico's Pacific coast, you can come and go from the United States by car. Moving to Mexico can be as hassle-free as an international move gets. Nothing's as easy as loading up a truck and driving south. Your entire moving budget could be gas and tolls.

Why else does Mazatlán stand out as a top Plan B option?

Familiarity

From its administrative set-up (the Mexican government is a stable democracy, with executive, legislative, and judicial branches functioning in a similar way to those in the United States) to its big-footprint shopping, Mexico is familiar and therefore comfortable. If you're itching for an adventure in a foreign land that's not too foreign, Mexico could be the experience you seek.

Language

All the North American attention from both expats and tourists means that many Mexicans, especially in the service industry, speak English. This can make things like navigating the residency process at the immigration office and managing the real estate purchase process with your attorney much easier.

Property Markets

Property markets in many areas of Mexico are soft and growing softer thanks to current global events. In addition, the U.S. dollar is at an historic high against the Mexican peso, meaning you having supercharged buying power in those Mexican markets where real estate trades in pesos.

Easy Residency

Automatic six-month tourist stays and easy and fast immigration make it possible to come and go and spend as much time in the country as you'd like. You can maintain a second home here (a place you rent out when you're not using it yourself, say) without having to bother with the expense of obtaining formal resident status.

Keep Your Medicare

Living in Mazatlán, you could return easily to the United States to use Medicare. If you're considering this move as a retiree, nearing or over the age of 65, this can be Mexico's most compelling advantage. Mexico offers excellent health care, but Medicare won't pay for it—with limited exceptions, Medicare doesn't cross any border. However, if you retire in Mexico, you'd be only a drive or quick flight away from accessing your benefits.

This means keeping and continuing to pay for Medicare coverage in addition to any other health insurance you might opt for. This can be a good strategy for a Medicare-eligible retiree moving to any foreign country, a safety net.

The Cost of Living

While the living is not as cheap as it was in the 1970s when Americans began migrating to Mexico in volume, it's a global bargain and more of a budgeter's delight right now than it's been in a long time, thanks to the U.S. dollar's strength.

In some parts of the country, this translates to super real estate deals. But even where real estate trades in U.S. dollars, the strong dollar makes everything else—from a liter of gasoline and a week's worth of groceries to a suite of bedroom furniture and a night out on the town—a bargain. Two can dine five star, enjoying three courses and good wine, for less than 50 bucks.

#3: Cayo, Belize

Belize remains off the world's radar. Nobody is targeting or intent on stirring up trouble in this little country that's part Caribbean, part Central American. Most people don't give Belize a second thought. In today's world, that's a plus.

The country is one of the most important members of the Caribbean Community, thanks to its arable land and agricultural capacity. It helps provide food security for CARICOM, an international community of primarily small English-speaking island nations.

Belize has pristine marine, rainforest, and riverine environments and a small population, so, in addition to being food secure, it is a great vacation destination and an ideal place to live. Cayo is the breadbasket of Belize principally because of the industriousness of the Mennonites of Spanish Lookout, a booming town with thriving businesses and a back-to-basics, traditional way of life.

The U.S. Department of Agriculture estimates that the average American meal travels 1,500 miles from farm to market. The movement is toward sourcing food from within 100 miles. In Cayo, your food could be sourced within 10 miles. Living here, you could even enjoy a zero-mile diet. Imported foods are available if you want them, but it's possible in Cayo to be food secure and not dependent upon an elaborate, vulnerable, and costly global supply chain.

Here are six more reasons Cayo, Belize, is an ideal option for a self-sufficient, resilient, sustainable, neighborly, and fun life …

Reliable Water Sources

Residents of Cayo catch, store, and filter rainwater, and groundwater is likewise in abundant supply. The rivers this area is known for provide a sometime alternative for garden irrigation and an everyday option for fishing.

Energy Independence

Living off-grid with solar and rain-catchment doesn't have to mean giving up the amenities of the modern world. In Cayo, you can live a fully self-sufficient life that includes high-speed internet, modern appliances, and all other comforts of the twenty-first century.

Low Population Density

During a disruption in the supply chain, as we are seeing now, it's good to be a safe distance from big, dense cities. Belize has a population density of just 37 people per square mile. The whole country feels like a small town. The small population makes it easy to become part of the community, and both locals and expats who've settled here are welcoming and willing to lend a hand or make an effort for a neighbor.

English Speaking

As a former English colony (and still a part of the English Commonwealth), Belize is the only officially English-speaking country in Central America. One of the biggest challenges you can face when making a move to a new country is communicating with your new neighbors. Anywhere you might think about moving, including Belize, you'll have to learn to overcome and adapt to cultural differences. A language difference makes that and everything else – from giving directions to a taxi driver and filling a prescription at the pharmacy to getting your broken hot water heater fixed and negotiating for the purchase of a new home – more difficult. In Belize, you don't have to worry about learning a new language if you don't want to.

Great Weather

The country is blessed with abundant year-round sunshine. The rainy season extends from June to November but, even during those months, skies are sunny more than they're not. The reliable sunshine makes for happy, healthy living and also a great growing environment.

Little Crime

Some small areas of Belize City suffer from a drug trade, gangs, and the activities that come with those cultures. However, those are localized neighborhoods. Avoid them. Otherwise, Belize is one of the safest places on earth and far removed from twenty-first-century troubles.

The Surest Strategy in the Race to Wealth, Health, Freedom, and Security

The surest way to prepare for whatever tomorrow brings is to diversify beyond your home borders, both your life and your investments. If you're searching for options right now, wondering what to do in the face of the current global landscape, we urge you to remember this critical truth. It's crisis times like these when a diversified lifestyle and a truly globally diversified portfolio of hard assets really pay off. So set the worrying aside. It only drains your energy and slows your progress.

How can you make sure you come through this crisis stage not only whole but stronger than ever? You must diversify into hard assets to generate cash flow overseas. It is the smartest strategy for protecting and growing wealth, especially in times of crisis. Gold prices and stock markets continue on a roller coaster. Real estate remains the slow and steady tortoise in the race to wealth and security.

Introduction

Earning Cash Flow from Real Estate Overseas Is the Same as Earning Cash Flow from Real Estate at Home … with These Three Important Differences

It's perfect. I'll take it. How much is it?

So said the Irish hairdresser to the Montenegrin real estate agent.

The agent was touring the young woman through an apartment for sale in the medieval town of Kotor. The woman didn't get past the entryway before making her buy decision. Indeed, she had been ready to invest before boarding the plane from Dublin. She was desperate to take her first step onto the property ladder but didn't qualify for financing at home in Ireland (the do you have a pulse? mortgages didn't become common in this country until a year later). No bother. Everyone was buying property abroad. She would, too.

The agent who sold the hairdresser that Kotor apartment told me the story when Lief met him the following week. We, too, were considering an investment in Montenegro.

It was 2004 and that agent (like all real estate agents in the country) was selling properties faster than he could count the commissions. All Europe and a few Americans like us were competing with each other to get into the hottest new property market on the Continent. Unlike the hairdresser, we didn't invest. The math didn't work.

That young woman from Dublin, like too many novice and even many experienced investors, was buying because she was certain the value of what she was buying was going to increase. She didn't bother to ask about the potential for rental yield or try to project the cash flow she could expect.

She (we assume and would have loved to have had a way to confirm), along with multitudes of other global property investors, learned the hard way and only four years later that, when investing in real estate, rising prices are not guaranteed. The 2008 crash wiped out values worldwide and, with them, investors who hadn't run the numbers but had bought for appreciation rather than yield.

Property values move up and down and matter only if you're selling the property. Cash flow can be reliable and is always bankable. Buying for appreciation is chasing paper profits. Buying for cash flow is putting money in your pocket.

What Frank Lloyd Wright Taught