Hard-money Profits In Uruguay
Sept. 12, 2008
Panama City, Panama
PLUS:
n A Great Retail Investment
Play In Uruguay…
n Plus An Even Better Wholesale
One…
n The Roberto Clemente Santa Ana
Clinic…Doing Good In Rural Nicaragua…
n Happiness In The
Caribbean…Celebrating Blue Skies In Bocas…
AND:
n Panama Vs. Mexico…
----------
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How To Buy In Latin America’s Top Havens
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estate investment experts about where and how to pursue your dreams of living,
retiring, or owning a second home in Latin America and the Caribbean.
Dear Overseas Opportunity Letter Reader,
Global real estate investing guru (and my husband) Lief Simon writes:
“Sugar
Loaf Ocean Club and Spa is a private residential community on the
coast of Uruguay near Piriapolis. The man behind Sugar Loaf,
David James, is a longtime colleague and an experienced developer who has been
living and doing business in Latin America for the past decade.
“David launched Sugar Loaf a year ago. He has had a good response to initial
sales offers, and the project is well under way. One-hundred-and-fourteen houses
(“villas”) are planned; six are under construction.
“The villa offer is very appealing for the end user—that is, Sugar Loaf is a
nice place to be and a great place to think about living or retiring, especially
if you’re looking for a part-time or second-home in the sun opportunity. And,
indeed, the villas offer investment potential, mostly in the form of rental
income. In other words, they are a retail investment play.
“However, the developer at Sugar Loaf has decided to accelerate the pace of
infrastructure. To that end, he needs to raise additional capital and has
decided to invite hard-money loans.
“This is not a retail investment offer. This is a serious opportunity for the
wholesale investor looking to expand the more aggressive piece of your
portfolio.
“Specifically, David is offering lots within the Sugar Loaf development as
collateral to investors lending a minimum of $105,000.
“This is perhaps the most attractive kind of hard-money loan (that is,
private loan to a developer) you’ll find, for it’s backed by subdivided lots
within an active, in-process development.
“The deal is straightforward. The developer will put up three separate lots
with a total retail value of $269,700 as collateral for an investment of
$105,000. In 18 months, the developer will repay the loan plus $45,000 in total
interest.
“In other words, $105,000 turns into $150,000 in a year-and-a-half.
That’s an annualized ROI of 26.84%, an excellent return with reasonable risk
considering the stage of development of the project.
“Why would a developer make an offer like this one? While the project is
selling as projected, the fall of the dollar over the past year has had
far-reaching effects. In Uruguay, property is priced in U.S. dollars, but
construction costs are in local pesos. Therefore, the profits from initial
sales, which David expected to contribute to ongoing infrastructure costs,
haven’t materialized.
“Rather than slow the momentum of the project, the developer is making this
hard-money offer to raise cash so he can continue on according to his planned
schedule for infrastructure.
“The beauty of a hard-money loan like this one is that you get both excellent
returns and the real estate backing. In this case, you’re looking at a 39% loan
to value and a 26.84% ROI, which might sound too good to be true. However,
you’ve got to consider the big-picture value to the developer. It’s of paramount
importance to him to maintain his momentum. In his mind, this is a fair
trade-off.
“For you, it’s a serious opportunity.”
Again, this isn’t for everyone. But for the right investor, it’s worth paying
attention to. Lief can tell you more:
LSimon@LiveandInvestOverseas.com.
Kathleen Peddicord
TODAY:
About five years ago, an old friend in the States rallied contacts and
colleagues in and around the small town of Limon on the south Pacific coast of
Nicaragua to plan for the launch of what she named the Roberto
Clemente Santa Ana Health Clinic.
Before the clinic, this rural region of the country had no formal medical
facilities. The more than 10,000 people living in the area had to travel
two-plus hours over dirt roads for even basic care.
Julia’s response to the obvious need was a call to action. “We should build a
clinic,” she said. And, over the past five years, indeed, that’s what she’s
done. The 1,140-square-foot primary care and triage facility Julia has
championed is staffed and supported 100% by donations. It’s a worthwhile
grass-roots cause. Take a look:
www.NicaClinic.org.
***
While we in the rest of the country are sopping through the rainiest days of
the rainy season, the islands of Bocas del Toro, out on
Panama’s Caribbean coast, are enjoying sunny days and blue skies. To celebrate,
as they do every year this time, the good people of this archipelago are making
preparations for their annual Del Mar Fair: calypso music, boat
racing, fishing competitions, and an international crafts fair, with displays
from craftsmen from Peru, Bolivia, Costa Rica, Colombia, and here in Panama.
Little Bocas is looking for 20,000 visitors over the 10 days of the festival.
We’re hoping to join them. See
www.bocas.com.
FROM THE MAILBAG:
“Could you please tell me the differences between Panama and
Mexico? I plan to move shortly to Mexico (Lake Chapala) to see
if it is right for me.”
-- Judy V., United States
Lake Chapala is a good choice for a single woman. This
region of Mexico is home to an established and thriving community of American,
Canadian, and other expats. There’s a developed support system in place, from
bridge clubs to gardening classes to book groups. The locals are well-accustomed
to foreigners living among them, and many speak English.
As Chapala is in the mountains, the weather is pleasant. Guadalajara
is nearby, meaning you have easy access to all the services and conveniences of
a big city, including an international airport with regular service to the
States.
Lake Chapala is what you might call a “tourist retiree” destination. The
local Mexican community has adapted to and made accommodations for the gringo
community. The area has developed into something like the Costa del Sol in
Spain, where sometimes you have to remind yourself that you’re in Spain.
Chapala isn’t as touristed as the Costa del Sol, but it’s a very gringo-fied
part of Mexico.
On the other hand, in many ways, Panama City, too, is an
increasingly gringo-fied place. You’ll never mistake Panama’s capital for
anything other than the developing world (my assistant Marion corrected me this
morning when I referred to Panama as the “Third World”…”That’s now how you call
it,” she chastised). At the same time, this city, with its high-rises, shopping
malls, mega-movie theaters, jazz clubs, trendy restaurants, and art galleries,
more resembles Miami than it does any other city in this part of the world.
A single woman might also be comfortable in Boquete, in the
interior of Panama, where, as in Chapala, an expatriate community has taken
hold. Plus, Boquete is near David, which offers shopping
(including Costco) and other support services. And Boquete, again like Chapala,
is in the mountains, meaning the weather is pleasant year-round (certainly more
pleasant than here in Panama City).
One big plus for Panama is that the mountains are close to the beaches.
Boquete, for example, is only two hours from the nearest beach. El Valle
is less than an hour from the coast. So you can have cool mountain living with
easy, anytime access to the beach…
