Sometimes You Just Have To Ignore Your Better Half
How do you get started investing in real estate overseas? To borrow a page from Nike’s playbook…
You just do it.
You take the plunge.
You can’t wait until you’re fully prepared and you know everything. Neither of those things will ever be true, and no matter how many overseas property investments you make, you’ll come across something new every time, even when buying in countries where you’ve already bought before.
My first overseas real estate purchase some 20 years ago was a leap of faith supported by the real estate investments I’d made by that time in the United States. I naively believed that my U.S. experience would transfer overseas. That wasn’t necessarily a bad thing. A certain amount of naiveté is required when you’re just getting started at this.
The first foreign property market I got into was Spain. After driving most of the coast of this country to see what I could see and to learn what I could learn, I met with a developer on the Costa del Sol. This developer had a long track record and had just launched a new pre-construction project the day before I arrived. I met with the developer’s agent, who made his pitch, showed me the floor plans, and answered what questions I thought to ask.
I did have the presence of mind to ask to see the site, so we got in the guy’s car and drove to where the apartment buildings would be built.
The site was a stretch of sand with fishing boats tied up in one direction and some restaurants in the other. The onsite sales office was under construction, but otherwise we were standing on a scruffy parcel of raw land in front of the ocean.
Nevertheless, I was sold. The terms of the pre-construction offer were 5% down when signing the reservation agreement and then staged payments of 5% apiece over the two years of construction. This was back before the real estate glut in Spain, when pre-construction purchasing was very much in vogue and lots of people were making lots of money buying and flipping.
I wanted in.
Kathleen wasn’t as sold as I, though, when I called her that night from the hotel to say that I wanted to buy one of these units and needed to sign the next day as most of the best units in the first building had already been reserved (remember, the developers had only launched the project the day before I met with them).
Kathleen finally, reluctantly agreed, and I signed the reservation agreement the next morning. Then I went in search of a Spanish attorney to review the deal and the developer for me.
Of course, that was backward. I should have engaged an attorney before signing anything. Fortunately, my instinct about the developer was right. The group had a good track record and was part of a large conglomerate in Spain, which meant they had money backing them.
Jumping ahead two years, when the building I’d invested in was close to completion, I got a call from the developer saying they had a buyer for my unit. I’d listed my apartment for resale with the developer almost immediately after signing the purchase agreement. It was one of the things that closed the deal for me—the fact that the developer had assured me he’d be willing to relist my unit for sale through his sales office.
The buyer the developer found for me wanted to move in right away rather than waiting for a unit to be completed in another building, even though that would have cost him less. We closed the deal a month before I would have had to come up with the final 50% of the purchase price and take possession of the condo myself.
I realize today how lucky I got with this. The timing worked out perfectly… meaning no unpleasant conversation with my wife.
If a buyer hadn’t appeared on the scene for me when he did, I had a Plan B.
If I’d ended up in a position where I had to close on the unit myself, I could have obtained a mortgage for the remaining 50% of the purchase price. Banks were lending easily at the time.
Plus, the property was right on the beach, which meant it was part of a limited supply compared with the big volume of cookie-cutter condos elsewhere along the Spanish coast sitting back from the beach. I wasn’t concerned about flipping this property.
I took the plunge, mostly on the strength of instinct and very aware that I didn’t know everything I needed to know about buying property in Spain. I acted on what I believed to be a great deal because it was in front of me when I was ready to act.
Could I have found a “better” deal? Probably. Should I have tried? No.
If I’d decided to wait and seek out a “better” opportunity, I likely would have missed out on the opportunity altogether.
Moral of this story? You can’t wait around for the perfect or the best opportunity. Get yourself up to speed and put yourself “in the market,” as I like to say. Then allow yourself to recognize a good deal when you see one… and act on it.
Lief Simon
