The 4 Best Real Estate Investments for 2010

Written on December 7, 2009 – 5:04 am by International Living

By Ronan McMahon
For International Living

Next year is going to be the most exciting one real estate investors have seen in a decade. I’ve got my eye on four spots, in particular—diverse opportunities around the globe, each of which represents an excellent value play.

1.) In Brazil, I’ll show you a way to capitalize on that nation’s continuing boom, particularly along the North-East coast.

That region boasts some of the world’s most glorious beaches. With big infrastructure projects on the horizon, it’s an area where the already-increasing property prices are going to spike in the months to come.

2.) In Europe, projects and banks are in deep distress. That has created pockets of opportunity where you can buy quality cash-flow property for 50 cents on the dollar in prime European cities.

3.) In Costa Rica’s southern zone, a new coastal highway is set to open in 2010 and an airport is on its way.

With improved accessibility, property prices here will increase, just as they have elsewhere in the country when better roads have gone in.

4.) And in safe, stable, cultured Uruguay, there is an undiscovered stretch of coast big international developers have just begun to snatch up.

Rich Argentines have been coming here for generations—but keeping the secret to themselves. The best beaches and seaside towns in Uruguay are here. And now’s the right time to stake a claim.

These are the four markets I’ll be keeping the closest eye on in 2010.

Categories: Crisis Opportunities, Opportunities in Brazil, Opportunities in Costa Rica, Opportunities in Europe, Opportunities in Uruguay | Tags: , , , , | No Responses

8 Reasons to Visit Portugal (That Have Nothing to With Beaches or Golf)

Written on October 19, 2009 – 2:58 am by International Living

By Ronan McMahon
For International Living

Read the original article published by International Living here.

Weather, golf, beach and accessibility are the major drivers of Europe’s internal tourism and second home market. In fact, for both Spain and Portugal, golf is a bigger driver than beach. I understand this. I visit Portugal’s Algarve most years but I have never stepped foot on one of her beaches. I come here like many millions to golf.

I can leave my home town of Cork, Ireland on a dark dreary November morning and make an 11.00 a.m. tee time here. The last flight I took from Cork to Faro set me back 4.99 euro (excluding taxes). Budget airlines like Ryanair and Easyjet offer amazing accessibility direct to Algarve’s Faro airport.

The Algarve’s golf courses offer variety in terms of quality, difficulty, and price. Her beaches have the reputation of being among the finest in Europe. The coast here has been protected from sprawling distasteful development.

The sun shines for over 3,000 hours a year. Refreshing breezes mean July and August are comfortable. Winters are short, mild with fine and dry spells. Today it is sunny and 75 degrees.

This is why the Algarve is desirable for northern Europeans who want a vacation…or to buy a second home. As real estate investors, we care about this because it tells us that there is strong end-user demand. Restrictions on development have meant that there hasn’t been the overbuilding and over supply seen in parts of Spain.

While Portugal was spared these problems, it did experience a construction boom. Banks lent to developers to build. Developers built in anticipation that there would be no problem selling their units. They thought the good days could never end. Then everything stopped. Credit and financial crises hit. Sales dried up. Projects have been cruelly caught out. Banks are squeezing. Forced sell offs are happening quietly under the radar.

Today, there are distressed opportunities in Portugal. These are projects that, through greed or bad luck, mistimed the market. Discounts are being discretely offered. Incentives, like free fit out and paid transaction costs, are being thrown in.

In an effort to get themselves out of a bind, banks make the deal sweeter and offer up to 100% financing.

Sound interesting? It’s got my attention, too. That’s why I hop on a plane next week to see eight distressed projects and review the resale market in mature developments.

As always when looking at distressed opportunities, I’ll be following my three golden rules:

- Buy quality (location, construction, amenities and fit-out)

- Don’t take on any construction risk…buy completed units

- Don’t take on any project risk…make sure the condominium is functioning

Real Estate Trend Alert members will receive a full report of the best deals I find.

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Irish Village Life

Written on September 22, 2009 – 6:25 am by International Living

By Len Galvin
For International Living

Read the original article published by International Living here.

An Irish vintage show is like a village fete, but with lots of restored cars and farm machinery from 50 to 100 years ago on display, too.

We got there early so our 2-year-old, Patrick, could bounce around the giant inflatable castles without getting trampled on by the older kids. But all he wanted to do was sit on a 1960s Massey Ferguson tractor and pretend he was driving around the field.

The Irish countryside is a good place to raise a family. Patrick knows that the best place to find blackberries isn’t in a plastic container in the store, but in the hedgerows along the lanes where we live. (And this time of year, he has the purple mouth and hands to prove it.) He’s known…and spoiled…by every neighbor within a square mile. When he’s older, he’ll go to the (free) village school which has a top-notch curriculum and a high teacher-to-student ratio.

Within a couple of miles of the village, there are dozens of thatched cottages, some built a hundred years ago. Two castles nearby overlook the River Suir—one from the 1600s, the other much older, both with cannonball damage.

When I lost the key to my car door, I didn’t bother getting a new one—I never lock it anyway. And I rarely lock the house.

The soul of Ireland is still pretty much what it always was. But if you’ve visited in the past 10 years, you may not have found the Ireland you were expecting, particularly when it comes to costs.

The land of saints and scholars became the land of credit and commerce during the past decade. Ireland—Dublin in particular—regularly appeared in the top spot of the “most expensive” lists.

Big price drops this year mean that Irish hotels are now the cheapest in Western Europe…and there’s very little in it between Ireland and the cheapest in the whole of Europe (the Czech Republic).

But the most significant evidence of lowering prices in Ireland came from a note Ronan McMahon sent me about the first Irish real estate listing to get his attention in four years:

“This property includes 14 houses, a 10,000-square-foot country mansion, 47 acres, exclusive fishing rights, a gatehouse and outbuildings….all for 1 million euro ($1.5 million).

“The 14 houses alone were valued at 7 million euro two years ago.

“This is prime bloodstock country. Two years ago one of the ‘horsey set’ would have snapped up the 47 acres for 1 million euro just to raise horses.

“The country mansion has intrinsic value. The outbuildings have future value: You would be able to get permission to build where there has been a structure in the past. Without these buildings this might be impossible. Permissions are in place and the foundations have been laid for an extension to the main house. The plan was to convert it to a hotel. For a fishing enthusiast the fishing rights are priceless!

“This would be perfect as a location for a facility to use for retreats, rehab…helping people who have been eating too much or eating too little. Maybe a corporate HQ, training courses or old folks home. Endless possibilities.

“There will be opportunities in Ireland for the brave and cash-rich. Expect the floodgates to start opening from October.”

P.S. These days, Ronan has his eye on “distress deals,” prime real estate trading at a huge discount because of the cash flow problems of major developers. If you get his Real Estate Trend Alert service, you’re already benefiting from Ronan’s research in this area. To get your own RETA subscription, go here.

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The Best Crisis Investment I’ve Seen

Written on September 21, 2009 – 2:28 am by International Living

By Ronan McMahon

Read the original article published by International Living here.

In the 1990s and the first half of this decade there was a roaring party going on in the UK’s cities and large towns. It was called “buy to let”. This basically means rentals. The term was misleading. For the last few years of the boom (at least), letting didn’t come into it.

Here’s how it worked. Brownfield sites are development lots in prime urban areas that have historically had some kind of industrial use. Docklands or linen mills, for example, in Northern England. A developer would get planning permission (permits) to build shiny new condos on a brownfield site.

Once the party had started, credit was flowing freely. All the developer had to do to get the cash to build was to show his pre-sales to a bank. Banks would compete for the business once the pre-sales were in place. They wouldn’t do any due diligence on the buyer’s capacity to complete the contract. They didn’t care. Their boss from head office had told them they need to lend twice as much this year as the previous year.

The developer would pitch these condos to investors. Investors could get in with as little as 5% down and nothing due until completion. On completion, 80%-85% (or more in many cases) finance would be available. Thing is: Investors could get 80%-85% of the “value” of the condo. Annual prices were rising well into double digits. On completion investors could flip or just get a mortgage for more than they paid for their unit and pocket the difference. Low transaction costs in the UK helped facilitate this type of speculating.

The party was so good it attracted more and more revelers. More off-plan projects and more salesman ploys to ensure greed overruled good sense. Then, in the middle of this decade something happened. Supply outpaced demand, UK interest rates rose and banks tightened their lending policies. The UK is a diverse market so this happened at different times in different parts of the UK. The party was over before the current financial and economic crisis hit. The crisis made sure that the last few stragglers were shown the door.

Developers have been left with unsold units and banks looking to recoup what they can. There are deals to be done. There is an extremely active rental market in many of the UK’s cities and towns. Today, we can go back to playing the “buy to let” game. Our friends from the party have a hangover and won’t be showing their faces for some time. You need to be careful however and always follow my three golden rules of crisis investing:

1. Buy quality (location, construction, amenities and fit-out)

2. Don’t take on any construction risk…buy completed units

3. Don’t take on any project risk…make sure the condominium is functioning

This is why I like deals like “Project X,” a deal I shared recently with members of Real Estate Trend Alert. The building is located in a prime location in the UK’s second city…the units are complete…the construction is high-end…and the condo is functioning. We don’t need to speculate about how good the construction quality will be—it’s there, it’s real.

The rental market and yields in this area today are strong. Buying at a 52% discount gets you gross yields pushing double digits with the strong prospect of capital appreciation. Your neighbor will most likely have paid twice what you pay. He bought pre-construction three years ago. With only 11 units still available there isn’t a risk that the building will lie empty or become run down. Prices start at £65,000 ($107,000).

If this is something that interests you, join Real Estate Trend Alert now and get all the details.

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The First Irish Property to Get my Attention in 4 Years…

Written on September 18, 2009 – 6:40 am by International Living

By Ronan McMahon

Ireland is in deep trouble. The banking system has failed and is in a limbo of government guarantees while politicians argue about where to put 100 billion euro or so in real estate loans. Borrowings increase every day just to pay teachers, police and nurses. Unemployment in absolute terms is higher than at any point in history while the unemployment rate is fast approaching the 17% and 18% last seen in the late ‘80s.

One of the biggest property booms every seen has spectacularly unraveled with disastrous consequences for the country. Since 2002 Ireland had become an economy that depended on the Irish selling houses to each other. Then, just as the domestic bubble was popping, global credit and financial crises came along. This is a perfect storm of domestic and international problems.

It’s pretty much impossible to value real estate right now in Ireland as there is no market. There have been very few fire sales. Developers and banks are waiting for the “bad bank” to be established so it can deal with the problems. A fire sale by any bank or developer would reveal the horrific state of developers’ and banks’ balance sheets. The government, banks and developers want the taxpayers to overpay (through the bad bank) for these bad loans. They want to kick the problem another decade down the line.

Against this backdrop it would take one hell of a deal to get me interested. I recently found one in an Irish newspaper.

Read the full article here.

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The Upside of the Downturn in Property Markets

Written on September 18, 2009 – 6:33 am by International Living

By Ronan McMahon

Distressed or crisis opportunities in some European markets are one of the hottest plays on my radar today. This is an opportunity we have because of the current economic crisis. I’m talking deals with discounts of 52% on list prices or 40% on official valuations. Deals in blue chip locations that will immediately throw off positive cash flow. Deals in locations that will be the first to recover once market sentiment changes. Deals where up to 100% financing may be available.

Real the full article here.

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