Jason Hartman just returned from his second real estate scouting trip to Belize and doesn’t have much to show for it in terms of cash flowing income properties. In this episode you’ll hear his discussion from the beach in Ambergris Caye, San Pedro, Belize with a developer who is active in four countries in the region. More at: https://www.jasonhartman.com/
Female Voice: Welcome to Creating Wealth with Jason Hartman. During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing fresh new approaches to America’s best investment that will enable you to create more wealth and happiness then you ever thought possible. Jason is a genuine, self made multi-millionaire who not only talks the talk but walks the walk.
He’s been a successful investor for twenty years and currently owns properties in eleven states and seventeen cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it. And now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman: Hey, welcome to the Creating Wealth Show. This is your host, Jason Hartman and this is episode number 306. Today we’re going to do something a little bit different. We’ve done it a couple of times in the history of this show, but not for a while, not for a long time. We’re going to talk a little bit more about international investing, since this is sort of top of mind and with my recent trip to Belize, my second time there, and we did a show after my trip to Eastern Europe where I visited five countries, looked at real estate in all of them, went around with real estate brokers there, met with them, saw their operations and their office and so forth. And on that trip, the best thing I found was properties in Romania, but again it wasn’t good enough to recommend. And by — I still haven’t quit achieved that internationally but I like Mike. I met him in Belize and I think he’s a — a straight shooter and really has some good information — some good knowledge of the Central American markets in a few countries — there are four countries, really.
So, you’re here perspective on that and I think you’ll find it interesting and if this starts to make sense to us and we can find properties that work from a cash flow perspective, or they’re rented to year round renters and not vacation rentals which we’re not a huge fan of, as you know and it’s something more than just a second home to retire, which is fine to do if — if you wish, it’s just not what we do. It’s not a — it’s not an income property investment and we are all about staying narrowly focused on income property. And in addition to that hard money lending or private lending, so that’s something I haven’t talked about for a while either.
So, if you’re interested in that, always just let me know as you have done before. You can shoot me an email directly or do it through the site at jasonhartman.com. Anyway, be sure that you get your tickets. A lot of you are registering and getting the early bird price for the Memphis Creating Wealth in Today’s Economy Boot Camp, and the distressed property tour in there. We’ve got two different local market specialists that will be showing their wares, if you will and talking about their properties and you’ll see their properties first hand and meet them first hand and get some good experience in, as well and get the Creating Wealth in Today’s Economy Boot Camp and that early bird price will be increasing as people register. So, it will be increasing pretty quickly.
So, be sure to do that. Register at jasonhartman.com in the event section and let’s talk to my friend Mike and let’s look at some properties in Central America and just get kind of a perceptive on that. And here we go. We’ll be back with that interview in just a moment.
Female Voice: Here’s your chance to catch on all of those creating wealth shows that you’ve missed. There’s a three book set, with shows one through sixty, all digital download. You save ninety four dollars by buying this three book set. Go ahead and get these advanced strategies for wealth creation. For more details go to jasonhartman.com.
Jason Hartman: Hey, welcome to today’s show. This is your host, Jason Hartman, and I am sitting on the beach literally, looking at the water in Belize here in Central America and it’s my second trip here. I came here about a year and a half ago looking at properties and so forth, and honestly I wasn’t that impressed when I came here before, and I’m still not that impressed. But my guest today sitting here on the beach with me is a real straight shooter, and that’s what I really like about him. You know, he’s a developer. He’s — he has properties down here and he sits on the board for one of the banks that a lot of Americans bank with down here, and you know, I just really like his presentation. I’ve got to know him during through the past few days and we’re just going to have some questions, learn about the economics in — here in Central America. And he’s an American and so you’ll hear more.
Anyway, his name is Mike Cobb and I want to say welcome to Mike and ask him to start off just tell him it’s a little bit about his background. Mike.
Mike: Sure. Jason, thanks for having me on the program and it — it is nice. I appreciate being on the program. I’m happy to tell you a little bit about my background but, yeah I am a straight shooter and quite honestly of all the countries in — in the region that I would want to live in, Belize — Belize would be my — my personal least favorite. So, I understand there are different strokes for different folks and — and I appreciate your candidness. And you’ll find that for me, as well.
Jason Hartman: Now you live in Managua, Nicaragua —
Jason Hartman: — which you like and I — I’ve been to sixty four countries but I have not been to Nicaragua yet, and it’s funny because the other night when I met you, you were taking about how you love the raw nature of Nicaragua and it’s raw. But tell people where you’re from and your background.
Mike: Well sure, yeah. Yeah, no I grew up in Western Pennsylvania, about an hour north of Pittsburg in the country and right after — I went to college a couple of hours north of Pittsburg in a little school called Allegany College” in Meadville, Pennsylvania. And right after college I said, you know what, I got to get out of western Pennsylvania. Actually, I knew that a long time before I got out, but anyway.
I moved to the DC area. Lived in northern Virginia and was in the computer business for about thirteen years and it was a great time to be in the PC — I was in the PC side of things. It was, you know, the big wave of transition from main frame [inaudible] to a PC world, and it was a great time to be in the business and got out in — in ’98. And it was very, very good to me. I was good to the business and it was good to me and I had a great time, but you know somewhere in there in ’93 — ’94, I came to Belize for the first time, right here Amburger Ski, this Island and started to see you now, it’s a fun place to come vacation. I figured all right, yeah. No shoes, no shirt, no problem whatever and I’m in this high stress computer job in the DC area.
So, I came back a couple of months later and bought a condo — two condos, me and my friend each bought a condo and started coming down a lot, and what we saw were these incredible opportunities to serve consumers in ways that they weren’t being served in this part of the world. Banks in the U.S. would not lend on a Belize piece of collateral and a Belizean bank would — would not lend to a Gringo. You had to be a resident to — to — to get a loan. And so all — you had all of these —
Male Voice: A loan?
Mike: — a loan for real estate, that’s right. Probably a loan of any kind, actually at the time. And so — and what we saw was this opportunity to serve consumers who wanted to own property in this part of the world but didn’t have, you know, one hundred fifty – two hundred grand to buy a condo. They might have fifty grand and they needed to borrow one hundred grand or one hundred fifty grand. And so we started working with developers and — and — and helping them to finance the sales of their property to North Americans and that’s how I got involved in the region.
Then in 1998, we actually bought this resort that we’re sitting in today. It is a foreclosure property and — and I’d left the — I — I left the computer business a few months before that. I got married and my wife and I moved down here to basically turn around a foreclosure property. And that was my real entrée into doing business in this part of the world.
Jason Hartman: Okay. So, you moved to Belize first then, is that correct?
Mike: Yes, 1998. But I was here a short term. It was a six month — it was roughly, figure six months, come in, hire new people, put systems in place, get the property profitable and then leave. And that’s what we did. We — we came for six months and then we moved back to the DC area, stayed there until 2002.
Jason Hartman: And so, you’re down here — we’re at this conference call called global escape patch conference. I’m speaking tomorrow here at the conference. You spoke today and I think you like it into the Wild West down here. It’s kind of like going back to America, maybe I don’t know, some ways of course it’s not and then it is in other ways. Maybe seventy years ago or — you’re kind of going back to the old days where there wasn’t a lot of infrastructure. There’s not a lot of infrastructure here, which is what I don’t like about it. But it — at the same time that does represent some opportunities and I — I do see that and I notice it.
And with all these different speakers that I’ve seen here over the past two days, it’s just kind of interesting, but — but it’s raw. How many countries are we looking at? There’s basically like six Central American countries and you do business, I believe, in four of them. Is that correct?
Mike: That is correct. We — we work in Belize, Nicaragua, Costa Rica and Panama, and we’re looking at property in South America, as well. I’m working on a deal in Ecuador and we’ll end up with property in Chili, as — as well at some point. So, we’ll be in six countries but there are six countries in the region, seven if you count Panama. They call themselves South America, but Panama, Costa Rica, Nicaragua, Belize, Honduras, Guatemala and El Salvador, and we work in four of them.
Jason Hartman: Fantastic. So, you talked about something today that you call the S curve and that’s a — a — a term Harry Dent uses all the time. In the S curve, as it applies to these different countries, some are a little bit more advanced and established and that would be like Panama, for example, and some are far less advanced and less established and those less established properties may represent four countries. They represent more of a — a ground floor opportunity but more risk I assume as associated with that. Kind of talk about that for a minute and which countries are where on that S curve.
Mike: Absolutely. I — I think, you know if your start sort of the — the — I — I — I — you know something I use it as a popularity curve. That’s sort of my thought process and — and in sort of a thumbnail way to kind of gage, where does a country fall on this S curve, this popularity curve.
I think, you know, one of my favorite thumbnail things is where do people take their honeymoons? Right. Where are people taking honeymoons, and if you look at a country like Nicaragua, I mean nobody’s taken their honeymoon in Nicaragua or Honduras, very few. And if you look at a place like —
Jason Hartman: Berkley, hippies and the Peace Corp., will take your honeymoon there, and — and I just had to make the disclaimer, folks, if you haven’t heard me say it before, my mother graduated from Berkley in the ’60s, with a degree in social welfare, but she was never a hippie. It’s kind of funny.
Mike: She was not a hippie?
Jason Hartman: Never, never.
Mike: Okay. So you’ve got one end of the extreme, right people that have taken their honeymoons, not in Nicaragua, not in Honduras, not in Guacamole, not in El Salvador. At the other end of the spectrum, you’ve got where people are taking their honeymoons, which is the Pacific Cost of Costa Rica. You know, Jaco Beach or Guanacaste Peninsula. There’s a — a Four Seasons in Papayagos. So I mean in — in — in J.W. Marriott’s. So, it’s — it’s arrived. I mean, people are taking their honeymoons by the thousands in Costa Rica.
And then you’ve got Panama, which is maybe just a little less popular and Belize somewhere where the — the S kind of begins that curve. And so one of the things that I — I talk with people about who are investors, real estate investors, is that if you’re looking for cash flow — if — if you’re a cash flow investor, which I know a lot of you folks are when they’re buying rental properties —
Male Voice: [Inaudible].
Mike: Right, one hundred percent. If — if you’re looking for cash flow, don’t look in Nicaragua, don’t look in Honduras because those are immature markets and you want to be looking on the Pacific Coast or Costa Rica. You want to be looking in Panama City because — and — and even Belize is now sort of cusped over. It’s still cusp — it’s over the hump, and — and again, by defining your location very specifically, you can be in a cash flow place in Belize, or you can be maybe a little on the other side of the curve.
If you’re looking for appreciation, well then you want to be looking at a place like Nicaragua. It’s the least popular of the countries in the region, and I think it’s — and I don’t think, I mean it suffers from a perception problem — negative perception problem. The reality is very different. So, people that come to Nicaragua, they see it, they understand it that — like — I mean Agora’s got a huge project there. I mean, it’s — I mean, a — a lot of folks have invested in Nicaragua once they’ve come and looked at it. But — but the perception issue is what has artificially depressed prices in Nicaragua, and then you know again, you kind of come up the scale. Honduras roads are a little more popular. And then you get to Belize and then you kind of get into the more popular countries.
So, if you’re looking for a real value that’s been priced into the market, look at a country like Nicaragua. The risk factor, by the way — I — I don’t think it’s a risk factor in the way that we would associate with Nicaragua, ooh, they’re going to seal my property. That’s not the risk. The risk is that it takes longer for Nicaragua to gain popularity, so it’s a timed value of money risk because nobody knows the future. So — I mean, I’m going to have to sit on this property for three years, five years, seven years, I don’t know to get a — to get a double or a triple out of it. That’s what — that’s what a country like Nicaragua holds, but it also holds that risk whereas as cash flow’s fairly predictable, you know, in the sense that you can know what you’re going to rent it for and you can do your numbers.
Jason Hartman: Okay. So, very interesting point there and — I’ve got to ask you, though you know when it comes to enforcing a contract — I mean first of all, who is your renter? Is it an x-pad? Are you talking vacation rentals here, because we get pitched, literally, my real estate company which you can find out more about at jasonhartman.com, this is my jet setter show, so we don’t talk too much about my real estate company. I have a few different businesses, but that company, we get pitched all the time from most commonly, Costa Rica promoters and we get Belize also, you know developers that have projects in Belize and so forth and there’s really no cash flow model that they can ever present because the natives can’t afford to rent anything — they want the arch clients to buy. Maybe an x-pad would rent something, but most of these are like resort properties and it’s not only vacation rentals, they’re all really recommending things that you just buy and retire in or you just buy for — someday you’ll want to come and retire there. I mean, is there a true renter business model here?
Mike: Great question and — and I hope not too many developers are listening, although they’d be kind of upset. But here’s — here’s my belief about rental return, generally. And again, I think there’s specific ways to — to deal with this. But generally, I believe that if a project cash flows significantly, like ten, twelve, fifteen percent, which is generally what you hear. If you walk up and down the beach, people try to sell you a condo and they’re going to sell you a condo based on this, oh buy the condo and it’ll pay you sixteen percent cash-on-cash, if we only do 60 percent occupancy and that’s a conservative number, blah, blah, blah, blah, blah.
What — what I believe is — is, and — I’m sorry. Let me just say something. I’m a developer. We well to end user consumers. We don’t really sell investment product, although we have people who buy our product as an investment, but generally I think most of them are thinking, oh I’m going to use it in three years, five years, so in the meantime I’ll rent it out and make a little money when I’m not here, but in five years, I’m going to move to Belize or Costa Rica or Panama to live in my home and — and — and that’s why I’m really doing this.
If somebody was really producing twelve percent, cash-on-cash return, I know if I would — let me say it was me. If I had a — if I had a cash flow deal that was increasing twelve percent cash-on-cash return, I would have cancelled checks. I would black out the person’s last name — I would — I would have a wall of cancelled checks in my sales office and when somebody walked in I — I mean I wouldn’t answer any question. I would just put the paperwork in front of them and go, sign here. And if they go, what about — I’m sorry, twelve percent. What part of twelve percent aren’t we getting? Sign here. Well, what about — no, no, twelve percent, sign here. That would be my sales presentation.
I have yet to see a wall of checks, okay. All right. So, I don’t know that I believe very often or ever the — the condo seller’s story about you know sixty percent occupancy, twelve — twelve percent return, blah, blah, blah, blah. However that all said, I think there are tremendous opportunities like we saw in the states. People went to Miami and picked up condos for thirty cents on the dollar. You can pick up a two hundred thousand dollar condo for whatever, you know, seventy grand, okay.
I mean, now all of a sudden what do you need to rent for it to get a decent cash-on-cash return? Those kinds of opportunities are available in the region. They’re not the, hey I came on vacation, I walked down the beach and I found this great deal. No, no, no, no. I mean, if you want cash-on-cash return as a — as an — an investor, you need to come down here to live — live in this part of the world. Pick a country. Pick Costa Rica, pick Panama City. If you’re looking for rental, Jaco Beach or Panama City, you’ll live there for three months, sniff out the bank deals, sniff out the guy that has to move back because of whatever —
Jason Hartman: Get to know the network. There’s always an informal network there, right?
Mike: And then buy a condo or a home for thirty — fifty cents on the dollar and then the market — I’m going to just wrap up. I know you want this microphone back, but the market is x-pad. You want to rent it to an x-pad.
Jason Hartman: Yeah very, very interesting point and x-pads are — are they ever going to be long term renters, that’s one question, but the other question is, can you do single family homes? I mean, does your company — I know your company builds condos and you know me, I’m no fan of condos because you’ve got a homeowner’s association and they exert power over you property and I just love this — my third commandment is thou shall stay in control of your investment and a homeowner’s association, you relinquish some control.
Now, a detached home, you can also have a homeowner’s association but they never exert that much control when the walls aren’t connected. It’s – it’s a different type of association, but do you build single family too? I know you’ve got right here — here in Ambergris-Caye — here in Belize some condos, but do you also have single family?
Mike: Yeah, we — we do both depending on where we’re — where we’re developing. Here in Belize we have condos because we have a small parcel. It’s six acres, six and a half acres, so we’ll develop that as a condo community, with — I’m going to add some restrictions, with the condo association, absolutely.
Our grand pacifica project, we’ve got forty single family homes. We’ve got twenty two condos, so we’ve got about sixty residents as completed, and then we’ve got another forty two under construction. And there we have again, twice the number of single family as we do condos because it’s really built to be a single family type of neighborhood, and — and — and I — and I personally do too. But — but the one thing I would say, and you heard me talk about this earlier today, is that actually condo associations are property owner associations and in this part of the world, are actually your best friend because unlimited freedom — again in the U.S., you’ve got county regulations, city regulations, state regulations —
Male Voice: You’ve got no regulations.
Jason Hartman: Yeah, yeah, yeah.
Mike: That’s right.
Jason Hartman: And we’re going – we got to get into that, Mike, because when you told me about the building inspector, what a joke. It’s hilarious down here. Basically what they do is they come in and they pound a sign in front of your property that you’re building and then you never see them again. You told me that. That was — that was fascinating. But the — so the condo association’s actually, you may need them more in this part of the world wherein the states you don’t need them as much, because you’ve got public roads, you’ve got county rules and regulations, you’ve got city rules and regulations. So, that’s a very good point. Maybe those associations that you’re — you’re — what I call, private governments, that’s what a homeowner’s association is. It is a little bit of a different thing and as long as you don’t get like radical vigilantes on the board of directors, which you do in the states, all these people that are hungry for power and have no power in their own lives who want to exert them over others when you did on some board — there’s even a show on — an episode on Frazier, the TV sitcom from the old days, in the states where they get on the condo board and Frazier’s fighting with the condo board and you know, it’s — it’s pretty accurate, really.
But you get that, and the other problem you have in the states with condos is they always seem to find their way into litigation, and as soon as they find their way into litigation, no bank wants to lend inside that association and as soon as there’s no financing, the properties just plummet in value. It’s a terrible thing and the litigation can be either side. It might be the condo association’s suing the developer which is almost always happens right before the ten year mark is up.
Okay, it’s — it’s — welcome to the United States, right, where litigation is the name of the game. Or it could be homeowners or you know some slip and fall or whatever in the association that are suing the association from the internal threat or the external. It could be plaintiff or — or defendant, it doesn’t matter. If there’s litigation, the lenders need to put up their hands and go whoa, we don’t want to loan in there because it’s just — you never know. You — litigation is just too volatile.
So, the building inspector thing is interesting. It’s a very good point you made about the condo association. I want to ask you about building because when we were walking back from the restaurant last night, there were several of us in the crowd, and you showed me a condo complex that was very interesting and quite an interesting land fill there, I guess. They — they just do things kind of however they want over here. Maybe you don’t want to talk too much about it, I’m getting the sense that you don’t, but anything you want to say about that?
Mike: Yeah. Again, I — I am careful what I talk about and — and I — I suggest strongly that people do due diligence when they’re buying property and that’s one of the reasons I’m — I’m a — again, even my sales people kind of hate me a little bit because I usually tell people look, don’t buy on your first trip. Right. What you really need to do if you want to buy here on Ambergris Caye would be to come down and spend a week, two, three, right, invest. Hey, you’re an investor. Invest a little money in your due diligence and hang out. Walk up and down the beach, talk to — talk to fifty people about the three or four places that you think you want to own and let them tell you all the stories about it, because an x — an x-pad who’s lived on this island for fifteen, twenty years or three years or seven years or whatever the number is, can tell you an awful lot about the history of a project or the history of a site and — and those types of facts, those types of insights that you can get are — are invaluable. Because once — look, once the cement’s up, once the plaster’s on the wall and it’s painted, you have no idea what’s behind those walls ever. And — and that’s critically important.
Jason Hartman: It sure is. I mean, it goes down to the level of what did they do to the land before they built on it? Did they fill it up with compacted dirt or is the property going to in a few years, sink into the land and there’s going to be all kinds of structural problems? You know, this is not the United States folks. This is the Wild West, like you say.
The other thing that happens is the — the way they do the construction. You showed a great slide in your presentation today about the rebar that just wasn’t connected to the concrete and that was interesting, or — or the water lines where you know if you didn’t look under the sink, the — the hot and the cold water was just one valve and it’s supposed to be two. And then the power lines that come to the project, you call it three phase power where there’s three different lines coming to the project versus just one. So, you have redundancy and you have more power.
Another thing that you talked about was a lot of developers would put in septic tanks rather than being hooked to a public sewer and — and with that, the soil may not absorb the waste for the septic tank, right. So you know a lot of stuff, and what — what was the concrete made from? What kind of sand? Is it the sand that you find here locally or is it the sand that you find in another place that’s the right sand but you’ve got to bring it in — in — in a truck.
So, if you want to mention anything along those lines, I mean you’re — you’re company, from everything I’ve learned does like a legitimate western style construction job, but most people don’t down here, huh, because they don’t have to.
Mike: I think that’s the key, they don’t have to. I — that’s — that’s a correct way to say that, but a lot of people do and — and — and I’m not saying we’re the only people that do it right. Not all of them are bad, but unless you really do your due diligence, there’s really no way to know, and it – and is — is it okay if I tell people how to get these fifteen questions? Yeah? Okay, I’ve got fifteen questions that we — we presented today and these are the fifteen questions that you should ask a developer or a real estate agent, if you’re buying property over seas because there’s no way to know a lot of these questions, unless you’ve lived here, worked here, done business here, seen it with your own eyes, because quite honestly, who would believe that underneath the cabinet in the bathroom where the faucet is, that you’d see one pipe coming out with a wire adapter going to the hot and the cold, and you don’t have hot water in the bathroom. I mean, why would you even think to look for that, right?
Male Voice: [Inaudible].
Jason Hartman: I would assume that you have hot and cold water, right?
Mike: You have two handles and they both work, right. So, if — if you’re interested in the fifteen questions, send me an email. Just put fifteen questions in the subject line. I’ll — I’ll send them out to you. These really are — if — if you’re even possibly considering owning property overseas, these are the fifteen questions. And what will happen is — is — yeah the mustache, but what will happen is, if you start to ask these questions and you start to think through these questions, you’ll come up with five or six or eight more of your own. You’ll be like, well I’m — what about that and what about this, and — and you’ll tease out information from the developer from the real estate agent real fast because a — a real estate agent or a developer will either love you for asking these fifteen questions, because I — when somebody asked me these fifteen, I love them because I know that like eighty percent of my compactors are dropping off like flies.
Jason Hartman: Let me take a brief pause. We’ll be back in just a minute.
Male Voice: What’s great about the shows you’ll find on jasonhartman.com is that if you want to learn about some cool, new investor software, there’s a show for that. If you want to learn why Rome fell, Hitler rose and Enron failed, there’s a show for that. If you want to know about property evaluation technology on the iPhone, there’s a show for that. And if you’d like to know how to make millions with mobile homes, there’s even a show for that. Yep, there’s a show for just about anything only from jasonhartman.com or type in Jason Hartman in the iTune store.
Jason Hartman: But the other thing is — I mean look, real estate agents in most places around the world, unlike the states, are not licensed. There’s no license. There’s nothing to lose if you tell a lie. You can’t — I mean you can’t really sue them effectively. It’s not like the United States where you have — you know you have some recourse in the U.S. Out here it’s — it’s caveat enter, let the buyer beware, and will they even answer the question honestly in the first place? You know, I guess they’ll — I guess they’ll know just by the fact that you asked, that you’re – you’re paying attention so that will — that might scare off the bad guys, right?
Mike: Yeah, and I think it’s important to be — obviously to be able to read people and read their body language, right. Just read the body language. Is it an oh my goodness, I can’t believe they’re asking me these and they’re uncomfortable, or they embrace the questions because right — I mean — yeah, I — I — you can read so much by how somebody answers or how they react to the questions. I mean the answers are almost irrelevant although — although a lot of them are very visual. I mean you can look under the bathroom sink and see which way — right. I mean — so, probably half of them are visual and half of them aren’t, but you read the person and you’ll — you’ll know the answer.
Jason Hartman: Absolutely. Another thing I wanted to ask you about Mike is, what happens when someone wants to — and — and I want to do maybe another — we’ll just make it another segment, another show, talk to you about banking because I think banking is a — a big deal, you know. Lending, banking, offshore, all that kind of stuff and you’re on the board for one of the main banks here, so I want to talk to you about that, as well. But what — what happens with property management down here? I mean, do you — is it like the states where you hire a property manager? I mean, they’re not going to be licensed. They’re just like the realtors are not even realtors, they’re real estate agents. And — and the last I was down here, we spent like three days with a real estate agent, and every property we saw was in his boat. We — we saw it from the water and we’d pull up to docks and go look, but it was amazing. I’ve never been shown property in a boat before. You know, it was always in a car.
Male Voice: [Inaudible]?
Jason Hartman: Oh yeah, it was nice, it was nice. We saw a huge shark come below the boat too. It was mind boggling. I think I got a picture of that. It was pretty amazing, but what do you do about property management? I mean, the person listening is probably not going to be here. They’re not going to self manage the property. How do they handle all of that?
Mike: I think that depends on whether somebody’s buying inside a development or they’re buying a — a foreclosed property or a bank property or distressed property. In — in — in all of these areas, even — even in Nicaragua okay and that’s probably the least mature market, the least popular market, all the way to Costa Rica, Panama City, you’ve got people who do property management and if you’re buying inside a development, generally the developer will offer — sometimes they mandate it. That’s another good question. It’s not one of the fifteen, but — but does a developer mandate you use them, right. Maybe yes, maybe no. I tend to find exclusives to be not good. I mean monopolies generally don’t generally produce great service or results.
So — so, when — when there’s freedom of choice, it’s probably better for the customer, but — but there are always people who — who do the work, and — and — and I think the — the reality is that licensing doesn’t mean anything in the states, either, really. It just means you’ve passed some tests. Yeah you — you may have some bonding in there, some back — there’s some depth to it. Well go ahead.
Jason Hartman: Yeah. Let me just comment on that. The thing about licensing in the states is it — I don’t necessarily think — look at, I’m a — I like Milton Freedman, he’s against licensor and pretty much every profession. And you know, I see what he’s saying about that however the one thing a license for sure does, if it doesn’t do any bonding, if there’s no – there is no missions insurance, if there’s none of that, it gives the person with the license something to lose.
So, if — if — if they have made their career out of selling real estate or managing properties and they lose their license or their license is sanctioned, where like the department of real estate says, you can’t practice for six months, that’s — you know, that hands over their head. And I think that is a bit of recourse.
Mike: Jason, point — point taken. You’re right, that is. There — there is something to lose and that is an important — important consideration. In — in this part of the world, there isn’t licensing as you mentioned for realtors, for property managers. I mean and make a — make a business card. You know, I’m a property manager today.
The thing about it is, again, if — if you — I call it Margarita Madness. People come down, they — and they’re sitting at the bar, they meet a realtor, they’re happy, they go on their boat trip on a beautiful sunny day and the guy’s got snorkel fins and you jump in and right, whoa, now I’m going to live in paradise. I’m going to buy this house or this condo. The — the real issue is is that there are good property managers, there are not so good property managers. And the way you’re going to find that out is to be here for a week or two, talk to a bunch of people, right. Sit — you know, go — go out to the — to the wine and cheese party, hang out at a bar, but not just in bars, because they tend to be mostly negative, right, but — but mix and mingle at various parts. If you’re a roartarian, go to the rotary club meeting. If you’re a Lyons, go to the Lyon’s club, or the Guanines, right. Go to church, go volunteer at one of the organizations.
There’s so many organizations. Green Reef, it’s a — protects the reef. Or there’s a homeless shelter. I mean there’s a lot of places you can plug in. And if you plug into the community and just show your intention or you know, talk about your — you will learn about — and — and you can say hey look, I’m thinking about a property manager and you’ll hear three people say this person’s great, and this person’s not so good. Well, now you know, right.
And — and I think that’s truly — like that’s how you can make the best decisions. It’s — it’s a — it’s a patient process because again, you don’t have a licensor and you don’t have other ways to — to verify. And you know, the internet’s such a powerful tool now. Look if people screw somebody, it’s up on the internet.
So, you can do a lot of your homework up front if — right to — to see who, where, how why.
Jason Hartman: You know what Mike is really saying in there folks, is it’s like the government. The reason government doesn’t work is because the government — generally their philosophy is, if there’s a problem just throw money at it and just throwing money at something doesn’t solve the problems all the time. I mean it’s helpful sometimes, but you got to do some work here. You got to — you got to roll up your sleeves and do some due diligence and hang out and chat with people, and you’re going to learn stuff. Put your ear to the ground, as the old saying goes. So — so, good point there.
Well, let’s kind of wrap up on this property issue. Any other thoughts that you have? I just finished a beer and maybe I’m not the best interviewer when I’m drinking a beer. And — and — and sitting on the beach here with you, it’s beautiful out here. But I — we’ll — we’ll do another segment on banking because I really want to talk about the lending environment and the banking environment.
What if you want to have an offshore bank account how does that work? There’s lots of regulations especially if you’re a U.S. citizen. So – so, we’ll do another show on that, but any — any other thoughts that you have in the property market issue?
Mike: Yeah, I think the — the real bottom line is just do it like the Nike slogan right. Just do it. There are a lot of great properties. There are a lot of great developers. There’s a lot of great homes and condos, and — and — and for folks who are looking to be overseas, I encourage people to — to really do it. I mean, it — and there’s a lot of things that are scary, but — but it’s never as big a deal as people imagine it might be. It’s not as difficult as it might be.
We’re here at the escape patch conference. Bobby Casey, I — I interviewed him from my radio program. We’ll get you on ours in a few minutes. So, I think the turn about’s fair play, here.
But the — but he bought one-way tickets to Europe when he moved. He bought one-way tickets, and — and people — I’m sure lots of people were like, oh you’re out of your mind. And he probably is, but — but you don’t have to be out of your mind to buy a one-way ticket. I mean, just — just go do it. The opportunities overseas are phenomenal and — and that’s probably one of the reasons a lot of people come to this part of the world is because it is the land of opportunity, and it is the wild west in a way that — that the U.S. used to have this wild west land of opportunity go and — and make it, hang out a shingle and make it. And I love that. I love the freedom but I also understand that personal responsibility comes with freedom and — and — and if you bundle those two together, and you work in this part of the world, you can have a phenomenal experience, and — and I encourage people to — to take the steps and have the experience. It will — it’ll be a great experience.
Jason Hartman: Yeah. Thank you and — and the — the — the bottom line to that message is, as you said in your presentation today, you got to look out for yourself. You got to let the buyer beware, this isn’t where you have a lot of infrastructure like you do in the states or European countries, for example. You got to — you got to pay attention a lot more and you got to bring you’re A game to it.
But you know, one final question I do want to ask you is that, Costa Rica, it — it feels like people that talking up the Costa Rican real estate market for twenty years, now. Maybe it’s been longer. I didn’t notice it before that, but fifteen — twenty years I’ve been hearing about it.
It — it — Costa Rica, I mean with roads — with pot holes the size of Volks Wagon Bugs, I couldn’t believe it how big their pot holes were. It blew my mind, but is Costa Rica just sort of overdone and over saturated and — has the investment number — you say that’s a mature market and I’d agree with you. I mean, it seems like every other American has looked at the Costa Rica deal and — and I — I just got to think that the opportunity there just has — has largely disappeared. Yes or no?
Mike: No. I — I think anywhere it’s you know, location, location, location and you’re going to have places that have done better than others and I mean Costa Rica of all the countries in the region, when we had the big real estate bubble in the U.S., it bubbled with the U.S. And it probably most mirrored a — a Miami or south Florida. You know, it ran way up and then it fell way off. But the reality is is that if you just look at simple demographics, if you look at the number of retirees who are already living outside the U.S. —
Female Voice: [Inaudible].
Mike: About five hundred forty one thousand according to AARP, already live outside the United States, maybe two hundred – two hundred fifty of those live in Mexico. So, about half live in Mexico and half live else — elsewhere in the world.
Jason Hartman: And what was that statistic you quoted today, ten thousand per day or what was that?
Mike: Ten thousand baby boomers retire every day for the next nineteen years. So, we’re really talking about eighty four million U.S. baby boomers and another nine and a half million out of Canada. And — and the Zogby Company did a big survey. It looks — you know I mean again surveys are just what people might do, but another four to five million people looking at Latin America over the next twenty years.
So, do I think Costa Rica’s seen its day? No way. Costa Rica went up and it dropped off. It’s probably back to being a decent value in most places, and I think over the next ten, fifteen, twenty years, what we’re going to see is that — that — that Costa Rica will quadruple the number of x-pads living in I think each of these countries, not just Costa Rica. Nicaragua, Panama, Costa Rica, Belize, Chili, Ecuador — I think all of these Countries are going to see an influx of literally millions of U.S. and Canadian retirees. And so we’re — we’re actually at the very beginning of the opportunity in this part of the world.
But again, it’s serving consumers. It’s not a speculative investment, I’m going to buy a lot and flip it in three years. It’s — it’s not I’m going to put five percent down on a condo and sell it before the building’s done. I mean, that’s not what it is. It’s — it’s — it’s —
Male Voice: Gambling.
Jason Hartman: Gambling. No gambling. Remember, thou shall not gamble. That’s commandment number five, right.
Mike: And I love that one. Thou shall not gamble. And — and so the real opportunity is serving true consumers who want to be in this part of the world for some part of the year as part of their retirement lifestyle.
Jason Hartman: Yeah. Good advice. Good advice. And you know what we’ve been profiting from, and our clients have been profiting from is those baby boomers moving to the southern states, especially the southeastern United States, and a little bit of the south west, Phoenix and so forth, although that’s gotten a lot more expensive, but moving from the cold states, the respell states, a lot of them from Michigan, certainly. What an economic disaster that is, but a month ago Michigan became a right to work state. Maybe there’s hope. I don’t know. I’ll — I’ll keep my ear to the ground on that one.
But yeah, you know, baby boomers when they retire they want low cost living, they want natural beauty, they want recreational opportunities, they want cultural opportunities, and so we’ve noticed that in the southern United States, and I think for the more adventurous ones or the ones with less money getting out of the country completely and being an x-pad, you can live really inexpensively down here.
Mike: Tremendously inexpensively. I mean, in — in most rural areas of — of Nicaragua, Costa Rica and Panama, I mean one thousand five hundred dollars would be a — a nice amount of money to have. Two thousand would put you into a — really a life of luxury, full time maid, going to the movies, eating out, pretty much kind of a — a nice lifestyle for a couple. And a couple of grand a month, you’re not going to find that anywhere in the U.S. Really, that’s — that’s what this region holds for people.
Jason Hartman: And I think the reason I like merdinity too much and I’m not too into this is because maybe I’m just too successful. I can afford the United States. I like the U.S. I like Europe. I like the more advanced countries, but I kind of see it. I see what people are talking about. So, it’s been really good talking to you about this. I think this is the most straight forward answer in an interview I’ve had on this subject. So, I appreciate you coming on Mike, and just give out your website, if you would.
Mike: Sure. It’s ecidevelopment.com. Ecidevelopment.com. Look us up.
Jason Hartman: Mike Cobb, thanks for joining us and we’ll have you back on to talk about banking in Central America.
Female Voice: Did you know that we offer one-on-one coaching? This includes six months of one-on-one coaching. For more information, go to jasonhartman.com.
Female Voice: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected] Nothing on this show should be considered to be specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc., exclusively. (Top image: Flickr | Hector Garcia)
Transcribed by Debra
* Read more from JasonHartman.com
The Jason Hartman Show
Transcribed by Debra