Chief Investment Strategist, The Freeport Society
Hello, Fellow Navigator.
Real estate has long been a preferred investment of the rich – and for good reason.
As a real asset, it’s a natural hedge against inflation and currency debasement. Real estate is also tax efficient and generates income. And banks will make loans backed by real estate that they’d never make on any other asset class.
But what about offshore real estate?
Apart from all the same benefits you’d get from investing in your hometown, investing overseas gives you far greater diversification and, if done right, the potential for even better returns.
And beyond the obvious investment merits, who wouldn’t want to own a home in one of the world’s greatest beach getaways?
One thing I’ve learned in my time overseas – and living part time in Lima, Peru – is that wealthy people like to have a Plan B. They have one or multiple homes outside of their country… just in case things go sideways at home and they feel the need to leave.
In the Age of Chaos, that seems like a no-brainer.
I sat down this week to discuss overseas property investment with Ronan McMahon… a man I consider the walking embodiment of the Freeport ethos. That’s why we were overjoyed when he recently agreed to join The Freeport Society Board of Advisors.
Ronan scours the globe looking for real estate opportunities, and he was kind enough to share some of his recent finds.
To listen to our full conversation, press play below.
If you’d like to learn more about investing in overseas real estate, Ronan’s Real Estate Trend Alert regularly delivers a wealth of information. To learn more about the incredible returns possible in international real estate, click here.
To life, liberty, and the pursuit of wealth,
Transcript
Charles Sizemore: Charles Sizemore, here, Chief Investment Strategist of The Freeport Society.
You are in for a treat, because in this video edition of The Freeport Navigator, I have the man himself Mr. Ronan McMahon, the founder of Real Estate Trend Alert. Welcome!
Ronan McMahon: Thanks, Charles. Lovely to be here.
Charles Sizemore: And for viewers that are not familiar with Ronan, I am going to sing his praises here for a minute. If there is ever a guy who lived the Freeport ethos, it would be Ronan. He could be in an office slaving away somewhere. But instead, he lives life the way he wants to. He travels the globe looking for interesting real estate opportunities in places most people have never been, and will probably never go. It’s a life of adventure and opportunity, I would say.
Ronan McMahon: Absolutely. I just wouldn’t trade it, you know, just that idea of trading the office and trading traffic. Trading it for a life where I never use heating or cooling. A life where I am generally left alone by governments. A life where I feel like I have both kind of financial and time and experiential abundance.
And again, it’s all thanks to the steps I took to internationalize myself and internationalize my investments primarily through international real estate.
Charles Sizemore: Yeah. And we’re going to pick your brain here in a minute about some of your recent opportunities you’ve uncovered because that’s the good stuff.
But first, let’s go big picture for a minute. Why should our viewers consider offshore real estate? Why should they consider looking around the globe for opportunities?
Now, I would say there’s a couple obvious reasons… Real estate in general, whether it’s next door to your house or halfway across the globe, has traditionally been a good inflation hedge. It’s generally been a good currency hedge.
But beyond that, the further you go here, you’re getting real diversification. Right? Most people think they’re diversified if they have a couple rental properties in their general area. But the local economy – what affects one, affects all – whereas when you’re looking at a global economy, you get real diversification there.
Ronan McMahon: Absolutely, Charles. I mean, not only are you getting diversification, but you’re getting an opportunity to position yourself and your capital in places that will do extremely well, irrespective of how things are in the stock market, irrespective of how things are back home. So, to give you a couple of examples… There are places like, for example, Panama City, Panama and Costa del Sol in the south of Spain.
These are two places that when times of geopolitical turmoil, regional turmoil, folks who are free and folks who have businesses and who are mobile, they’re sucked into these destinations. So, to give you an example, back in 2008 and 2009, when the world as we knew it was unraveling, when folks were afraid cash would stop coming out at the ATM machines in North America and Europe. There was a flood of people moving into Panama because things were also very uncertain and volatile in places like Venezuela and Colombia. Likewise, in Spain’s Costa del Sol, the same thing happened, along with the Great Recession or following the Great Recession, with all these little pockets of geopolitical turmoil and uncertainty. And what happens? People tend to think like us. They up sticks, they move their families, they move their businesses, and they bring them to places where the weather is incredible, where they’re physically safe, where they’re left alone. And these are places that do well irrespective of times good and bad.
Charles Sizemore: You bring up a good point. I, myself, live in South America most of the year and what I’ve noticed is everybody I met in Peru, they all have their plan B.
It has been an unstable region in the past, and they’ve learned. They’ve heard stories from their parents, their grandparents, and uncles. Things kind of went sideways. And so, they’ve always been big believers in having a plan B, just having an apartment, a house, some sort of property away from home. So then if things really got bad, they have a place to run to. So, that’s something we don’t often think about in the developed world because we’ve lived in comparative stability. But it’s a very legitimate reason to have properties outside of your home country.
Ronan McMahon: Yeah, absolutely. A plan B in terms of a place to physically put yourself and then also this real estate that we can own, when we’re not using as it can generate very diversified revenue streams. So, for example, in Portugal, I’ve rental properties and my renters come from the Middle East, from Brazil, from Spain, from Portugal, from Scandinavia, from the U.K.
I have a very, very diversified source of renters. And when times are good and when times are stable, this isn’t a big deal. You know, it’s clear and it’s easily accessible from Spain and northern Europe. But where the economy is to take a hit there, it’s very reassuring that there are still folks who come to escape the heat of the Middle East, still folks who come from Brazil, still folks who come from China.
And that that’s really, really important because some places on the international beat, again, depending on how much diversification you want, are still very, very closely tied to the U.S. For example, Cabo San Lucas, where I spend my winters and where I have a portfolio of rental properties, that’s a market that’s very, very closely aligned to the California market. That’s not going to get you the same level of diversification as, say, investing in Montenegro or Panama City will offer.
So, you raise a very, very good question and something for folks to consider is, what exactly are you looking for? Are you looking for a plan B home? Are you looking for rental income and capital appreciation in a world of continuity and stability in the U.S.?
Or are you legitimately looking for a full and true plan B? In which case, maybe you want to be looking at Uruguay, maybe you want to be looking at Montenegro. Maybe northern Portugal. So there’s a whole range of ways that you can play this, from a lifestyle perspective, from a plan B perspective, from a rental income perspective and from a capital appreciation perspective.
Charles Sizemore: It’s a big globe, isn’t it? There’s a lot of choices.
Ronan McMahon: Absolutely, a lot of choices and a lot of criteria. Fundamentally, out of the variety of cases for international real estate, the reason why I’m all in on international real estate is at least kind of 90% plus of my net worth on international real estate is I’m fundamentally a real estate person. I grew up with real estate and I did extremely well from real estate in my home country of Ireland. When making money on real estate was like shooting fish in a barrel.
And what I’ve done since founding RETA in 2008 is I’ve gone out there in search of similar sets of situations, similar major economic transformations like I saw in Ireland growing up in those Celtic Tiger years, and to basically replay the golden era of the gains.
And what I found is that if you’re willing to look everywhere, there’s always opportunity somewhere. If you think back to the great real estate frenzy in Austin in 2020 to 2022. You think back to moments in New York, South Beach in Miami as it kind of transitioned from a no go area to a chic destination.
All those situations that we’ve seen play out and look back and say, “Geez, I wish I was there, I wish I was in South Beach buying empty lots in 1982.” Those exact same situations exist in other parts of the world right now. So, once we can figure out where the people are going, position ourselves there ahead of them and buy and own the real estate before they arrive.
It’s just a beautiful, time proven formula. And it also means that we get to physically put ourselves in those stunningly beautiful places as well. Because with all this change and in technology, you know, this kind of post-Covid world where I think folks have copped on to realities and they’re not willing to settle for a status quo of what the government tells them, the big corporations tell them. People are on the move and we can get to these beautiful places ahead of them, buy the real estate, rent it to them, and ultimately resell it to them. And just make a lot of money and create a great life for ourselves. Just by front running those big trends.
Charles Sizemore: You bring up a really good point. You have a share of Apple (AAPL) or a share of Microsoft Corp. (MSFT), that’s nice to have in your portfolio but you don’t get to really enjoy it the same way you get to enjoy a nice, prime piece of real estate. You can actually go there and enjoy it for yourself while also benefiting from the capital appreciation and income potentials. It is a very special asset class in that respect.
So, about that, you always have deals in the works. I understand you have one in particular you’ve been wrapping up of late in the Dominican Republic. Why don’t you tell us about that, because that one really got my attention.
Ronan McMahon: This opportunity, it’s in Cap Cana, which is a master planned community. It’s twice the size of Manhattan, along a strip of the most pristine and just unbelievably beautiful white sand beach you’ve seen anywhere. You have a drive of about ten minutes from the Punta Cana airport, which connects really, really well with North America. You get in those gates and you’re just in another world. It’s almost like a microstate. It’s got its own utilities, it’s got its own power generation, it’s got its own health care. Everything you could imaginably want is within those gates. Fine dining, casual dining, yachting, sports, fishing, amazing golf, world class hotels.
I see it as an adult paradise, certainly for me, as someone who loves bright blue skies and white sand beaches and I’m a big golfer. Then within the master planned community of Cap Cana, there is the finest piece of beach called Juanillo Beach. There’s an incredible beach club there. The developer is planning a whole new mini town center built just to the rear of Juanillo Beach.
The architectural concept for the commercial, the shopping, the restaurants area, they’re taking inspiration from Las Ramblas in Barcelona. So, it’s going to be grand, it’s going to be fine. It’s going to be both casual and luxurious at the same time. And this new town center is going to be the whole centerpiece to this incredibly beautiful Caribbean.
I was going to say Beach City, but it’s not quite a beach city in the sense that you’ve got these open spaces and you’ve golf and you know, you’re not going to have the downsides of the city, like the traffic congestion, maybe the concerns about petty crime and all these things. Then just three minutes behind the Juanillo Beach Town Center, that’s where the condos are, that my group and indeed me personally just got in on last week.
This is a luxurious condo community. From the roof, you’re going to have an infinity edge pool with just incredible views out to the Caribbean. The condos, they’re wide glass frontage and they open out onto the new Jack Nicklaus golf course. You’re looking beyond your ground floor amenities to open spaces and to golf. And then from the roof you have these Caribbean views. Our members of my group, we were able to buy condos there from $382,000, which is significantly below market.
As as you know, Charles, the way, the way our group works is that I combine our group buying power and that allows me, instead of negotiating a price for a for a single condo for myself, I’m negotiating the price on a hundred condos and the developer effectively, from the developer’s perspective, they’re getting a bulk purchase of 100 condos. But we each individually buy our own condo.
This is a classic play. You know, I expect values on the condos we’ve bought will increase by $275,000 within five years of delivery. We can generate rental yield long term in the region of 9%. You go short term, and you take on the extra headaches, and I guess the extra risk of short term renting. You’re looking more like a gross 12% yield. So, it’s this formula that we’re getting in at a moment when Cape Cana is proven, it’s all ready, there’s nothing like – in the Caribbean islands – in terms of size, in terms of scale, scale of amenities, scale of hotel development.
We’re getting in at a moment when the concept is proven, when it’s just ten minutes from the major international airport, but also before this huge transformation around the Juanillo town center and village takes place. So, it’s proven, but at the same time we’re getting in at a somewhat ground floor moment. And at prices that are just almost unimaginable for the full package of what you’re getting.
Charles, this is a deal. And this is what I’ve been telling my readers, this is a deal that really brings me back to 2015, which was the moment we were getting in at the ground floor of some of those Cabo San Lucas resort deals. And those are deals that have more than doubled in value since then.
Those are deals that throw off annual rental yields, in excess of 10%. And, you know, those are deals where I physically put myself for three months of the year. And I absolutely love to – in addition to the very significant capital gains and the income I’m getting from it – to be able to go and spend three months a year in my beach condo in Cabo San Lucas. For me, that’s priceless because I live in Ireland. I’m talking to you from Ireland now, and things get pretty bleak and dreary over here come winter time.
Charles Sizemore: I can sympathize. There’s about six months out of the year in Lima where you just don’t see the sun. The fog rolls in off the ocean and just parks and then doesn’t leave. So, the sky, the ground, the sea, the buildings, it’s all kind of the same color. This weird gray scale. It’s like you’re living in a black and white TV show.
So, there’s a lot of stuff to unpack – what you said. And what I liked in particular was the way you can customize, you can make it what you want it to be. You can rent it long-term, as you mentioned. That’s kind of a different universe than renting it short-term. You rent it short-term, yeah it’s not going to be rented everyday, but it’s open for your personal use. If you want to go live there for a month or two, or six, out of the year. Then, you can. And you can rent it when you’re not using it.
One of the best aspects of this is it’s really what you want it to be. You can use it however you like to use it and still have it be a very profitable investment.
So, it’s been a while. To get to Miami from the Punta Cana airport, it’s what, about an hour and half? It’s a real short flight.
Ronan McMahon: Yeah. That’s it.
Charles Sizemore: Yeah, this is right next door. These are the kind of opportunities that exist on our doorstep.
Ronan McMahon: Yeah. And Cabo San Lucas is maybe two hours from L.A.. These are incredibly accessible places. Earlier this year, we had just an incredible opportunity in Playa Flamingo in Guanacaste, which is about 40 minutes from the Liberia Airport in northwest Costa Rica. There, you’re looking at more of a four hour flight time.
But these are incredibly accessible places now where, for some people who even commute back and forth maybe every two weeks they go into the office for three days. And this accessibility point is really, really big because it’s just drawing a much more fluid market to these places. You know, it’s not the type of commitment – it’s not leaving the kids, and the grandkids, and the business, and the office behind forever. It’s saying, “Hey, out of every month, you know, maybe I’ll be here 20 days and back at base ten.” Or folks are really getting creative about cutting up their time in that way. And I suppose Charles I’ll just add another kind of rental category to what you said about short term versus long term, and that’s this idea of doing hybrid. First of all, in terms of my Cabo San Lucas home, my wife and I, we only rented to a single tenant for the nine months that we’re away. We don’t want the short term rental wear and tear, but each year we find a single tenant for 8 or 9 months when we’re not there. So it’s a long term rental, but at that eight or nine month term. Then, with hybrid rentals – and this is going to be my strategy both for Cap Cana and also another home I bought in Playa del Carmen in Mexico – under that strategy, I’ll rent the condo with the single tenant for six months of the year and then do short term for the peak, those peak winter months when short term rentals are most in demand.
And Charles, that’s also the time I want to be there. So I’ll be able to move in and out, take a week here, take a week there, and have my rental manager take care of it the rest of the time. So again, everything is more fluid now, everything is more creative.
Another thing folks are doing more and more is they’re buying homes in places like this, in places like Cap Cana and places like Portugal, and they’re using them as a base to travel the world purely by putting them on home swapping platforms.
Again, this is an asset that you can enjoy. That can be a plan B, but it can also allow you to live rich in a way that just wouldn’t be possible for so many of us if we didn’t have this real estate to use as the platform and the basis for doing that.
Charles Sizemore: I love it. Well, where can our viewers find out more about RETA? We can put up a link here that gives them direct access. And any parting thoughts?
Ronan McMahon: No parting thoughts, Charles, other than to just… as I look out in front or behind, I’m looking into my backyard, and the sky is getting dark and the leaves are falling. And for me, it’s just such a gift to know that I can be here in my hometown, in my home country, for as much as I want, but that I have properties dotted all around the world and that allow me to to travel freely between my bases.
These are places that are generating rental income when I’m not there. I can use them. I can jump to them whenever I want to, whether that’s because of the weather or because of some other situation that makes me want to be there. I’m just back from northern Portugal, and my wife and I have bought a home in the north of Portugal.
We have a beach home north of Lisbon, and we’ve been able to buy a historic home, Charles, with all the furniture. So the original builder of the home is one of these folks who left the northwest corner of Spain and Portugal, they headed to places like India and Brazil, and they made their fortunes. And they came back and they built these incredibly beautiful mansions.
It’s got all the original beds, wardrobes, original furniture that came from Brazil over 100 years ago. The house has just got these incredible views to a lagoon and to the ocean beyond. It’s two minutes from a charming village. It’s right on the border between Spain and Portugal. And we’re buying for $90 per square foot, a 5000 square foot historic home in beautiful gardens for €410,000.
My wife and I are just so excited about this being part of our lives and our future. It’s a place we can go, but Charles, it’s also a place that I’m very confident will be worth over €1 million within 5 to 7 years, because more and more people are coming to this part of Spain, it’s only an hour from Porto. It’s just been overlooked because the people haven’t come yet.
I’m convinced they’ll come and it will double in value or more. But heck, Charles, if no one comes, I’d be very, very happy to keep it to myself.
Charles Sizemore: You might be happier if no one ever comes, it’s all yours!
Ronan McMahon: Exactly. It’s a win win, you know, I can walk down the hill and drink an espresso and sparkling water by the lagoon, or go to the beach, which is about 4 or 5 minutes away, you know, for €2. Have lunch for €5 to €7. It’s just this freedom. It’s just so liberating to be disconnected from all the financial burdens, all the bureaucracy, all these other things that we experience being enmeshed in other systems. So, it’s truly liberating.
I’m pretty evangelical about advising people to get out, test the waters, experience new places and make it a part of your life and of your future.
Charles Sizemore: Well I will add to that. I have been to that little corner of northwest Spain, and it’s like another world. It’s very different from the rest of Spain. What’s funny is that the people that live there are Celtic blooded, which kind of blew my mind a little bit as a Caltic blooded person myself. You guys are Spaniards but you’re Celtic blooded?
But, yeah. Good stuff. I have nothing else to add, you’ve said it all for me. I’m imagining your house – every house you live in – has a go-bag which is just a backpack with swim trunks, sunglasses, and your passport so that you can be at a beach in a moment’s notice whenever the urge strikes.
Ronan McMahon: Exactly. Well, I mean, Charles, an incredible and indirect benefit of this life is that ‘ve certainly found I’ve got very successful, decluttering, of limiting wardrobe and just limiting just the stuff that’s unimportant. I need a car that works, I’m not chasing a fancy brand. You know, it just puts things in perspective in a very enriching way.
Charles Sizemore: I love it.
We’re going to put a link here at the bottom, where our viewers here can directly access RETA to see what it’s all about, and see what Ronan’s all about.
And that’s going to wrap it up for today.
To life, liberty, and the pursuit of wealth.
This is Charles Sizemore signing off.