Have you ever dreamed of buying a house—for cheap—in a foreign country and moving there to live the expat life? Or buying an investment property and renting it out? Or getting a fixer-upper and flipping it for big bucks down the road? This could be your moment. While the coronavirus pandemic has been devastating, it has also had a silver lining by creating real estate bargains around the globe at a time of unprecedented low interest rates. “Nothing like the coronavirus crisis has come along before,” says Ronan McMahon of Real Estate Trend Alert, a publication from InternationalLiving.com, a site that tracks the best places in the world to live, retire, travel and invest.
Real Estate Trend Alert recently released a report on the five best places to find bargains around the globe. According to McMahon, the idea is to take strong US dollars or borrow money at historically low rates, and put it all to work in overseas markets by buying undervalued assets and locking in the potential for income and appreciation. “Many people feel powerless in the face of this chaos, but my feeling is that if you play this crisis right, it can prove to be quite lucrative over the long term,” says McMahon.
Add to this a work revolution—with companies pioneering remote employment—and you have the recipe for expat success.“The world is not going back to how it used to be,” says McMahon. “This is either scary or exhilarating—either way it’s happening. And for opportunity-focused folks, it’s a gift.”
When looking for real estate, McMahon says it’s important to focus on three different kinds of places. “That means looking to internationalized markets, like Mexico’s Riviera Maya. Or to places where the middle class is exploding, like Colombia. Or to downward-trending spots like parts of Europe where the population is older and innovation is limited, but where offerings have historic appeal, like Italy, for instance,” says McMahon.
McMahon also emphasizes that while buying in a crisis can appear easy in hindsight, it’s not as simple as it seems. His advice: “Buying right in any crisis requires cold sober thinking. You start with your personal criteria for an investment. Then you ruthlessly adhere to those criteria. You need to be unemotional and clear-headed. Step out what you consider value and do not be fearful when you find a deal that matches your criteria. Don’t be greedy. Don’t hesitate because you think a deal might be better if you wait. If it matches your criteria, act.”
Read on for the lowdown on five cheap—and amazing—places to get real estate deals right now. You can get more details in Real Estate Trend Alert’s full report.
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The Scoop: Due to the economic impacts of coronavirus, McMahon is predicting that prices in Italy will drop to historic lows. “We will see big falls in value of best-in-class real estate. I’m figuring on 30% in Italy on prices that have been already been falling for 15 years,” says McMahon. “The value of marginal real estate in the hills and empty villages will go to zero.”
And when tourism bounces back in blue-chip locations like Venice and Rome, it will open up a new market for vacation rentals—meaning you can rent out that apartment you just bought. If you don’t want to live there yourself, that is.
Insider Tips: Italy has become famous for towns giving away fixer-upper houses for a mere 1 euro each. “Italy has been giving away ‘free’ houses for years in an effort to re-energize depopulated hill towns,” says McMahon. “These are often historic, beautiful towns in stunning places.”
The hook is that you need to invest money to fix up your new home, but if you’ve got the willpower, there’s no better deal anywhere. The latest town to start hawking free homes is Cinquefrondi, a COVID-free village located in Calabria—a region in southern Italy—and McMahon predicts the trend will now move northward.
Even before the crisis, McMahon says he was finding apartments in places like central Florence and Venice that create double-digit yields. “The trick was to buy something old and unloved but in the right location, do some smart cosmetic work and market it better than any of the competition,” says McMahon. “I came across apartments under $200,000 that fell into this category.”
Riviera Maya, Mexico
The Scoop: Mexico’s Riviera Maya has been transformed over the years from a sleepy backwater into a world-class vacation destination. And along with the tourism growth, mobile professionals and digital nomads have flooded to towns like Playa del Carmen and Tulum. “Tulum has cornered the market for being eco-chic,” says McMahon. “It’s the kind of place where stars who fly in private jets can feel virtuous by spending a few nights off-the-grid on the beach. It’s as fashionable a destination as St. Barts, St. Tropez and the Greek island of Mykonos.”
Until now, a 1,000-square-foot oceanfront condo in Playa del Carmen could set you back $600,000, but things are about to change—for a brief moment. “Thanks to the crisis, a buying moment exists today—a pause in the mammoth growth trajectory of the Riviera Maya, which can be turned to an investor’s advantage,” says McMahon. “The goal is to buy the right real estate to be set up for income and appreciation.”
Insider Tips: McMahon’s advice is to move fast. “The Riviera Maya is in the midst of a multi-decade transformation and this current crisis is going to be a short sharp shock and then it’s back to the races,” says McMahon, who thinks buying pre-construction is a smart idea. That means: “By the time a person takes delivery of a condo, millions of vacationers will have long ago returned to enjoy the beaches, cenotes, international dining and tropical weather.” You can rent your new vacation home to just those people.
McMahon says he has seen spacious townhouses in Tulum for $149,000 that he figures will be worth $76,000 more within a year of delivery and could throw off a 13% yield or more on rentals. “Thanks to the crisis I was able to get a free pool thrown in with each home,” says McMahon. “The developer’s construction costs are in pesos but we are buying in dollars, so as his costs dropped, I was able to get him to concede more.”
He has also seen deals on two-bedroom condos just steps from the beach. Currently priced at $174,800, he predicts that they will be worth in the region of $260,000 within five years.
The Scoop: “In uncertain times smart investors look for a safe haven. They look to assets like real estate—in places where they can park themselves and their money,” says McMahon. “Uruguay is one of those places. This little country rarely makes the news headlines. It’s a beacon of stability in an uncertain world. So much so, it’s almost dull.”
Insider Tips: McMahon recently found ocean-view half-acre lots along Uruguay’s stunning Atlantic coast for as low as $31,356, along with interest-free developer financing on the table: a manageable down payment followed by 48 monthly payments of $490. “I predict these lots will be worth $50,000 in the next few years as the crisis passes and the world gets on with its business,” says McMahon.
And that’s not all: McMahon points out that because of the current crisis, sales have all but stopped for some developers, so this is the moment to come in and negotiate on that home in paradise that you’ve always dreamed about.
Just like London, New York, Singapore and Hong Kong, Panama City has become a global center of finance and commerce. Plus it’s safe and stable—a rarity in a turbulent world. “Panama’s robust economy weathered the 2008 crisis and Panama will withstand the current global crisis just fine, too,” says McMahon. “Panama is one of those safe havens that sucks in resources when things in the world get volatile.”
Insider Tips: Due to a proposed change in the Panamanian tax code, some real estate developers are enjoying massive tax credits—and passing the savings on to investors. An example: McMahon found a building with beachfront condos in a stunning community close to Panama City that was earmarked to be a hotel. The developer was discounting up to $65,700. “My prediction on gains? Easily six figures within five years,” says McMahon. “I reckon $135,700. And I figure on a gross rental yield of 15.7% when the community’s momentum is realized…and this is true beachfront.”
The Scoop: McMahon says that Colombia is another solid bet. It has emerged from its troubled past to become a major regional player, with a steadying political environment, market-friendly policies, rich natural resources, strengthening trade ties and a modernizing economy. But its currency has tanked and like everywhere else in the world, the real estate market has stalled due to the current crisis.
What does this mean? “We can buy cheap in a place with big upside potential because its currency is depressed and motivated sellers have to drop their prices to attract buyers,” says McMahon.
Insider Tips: McMahon keeps a close eye on opportunities in Medellín, which sits high on his global shortlist of incredible cities. “Medellín is a hip, must-visit city,” says McMahon. “Before the current crisis tourism was on a huge tear in Colombia. There’s no reason it won’t continue in the future.”
Adding to the appeal: “Buyers call the shots and can play sellers off against each other.” Today big luxury condos in Medellin’s best neighborhoods can list for $100 per square foot. Find a motivated seller and you could pay less than $80.”
How do you find a motivated seller? “Cast a wide net and let potential sellers compete for the sale.” McMahon advises offering 30% below asking prices.
An example: “In the city’s premium neighborhood one of my researchers found a nice-looking three-bedroom apartment with an asking price of $178,392,” says McMahon. It had been over $221,000 just a few months prior. “Now here’s the thing—that’s just the effect of falling currency,” says McMahon. “But as the crisis bites you’ll find more motivated sellers.”
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