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Buy What You See?

Kathleen Peddicord by Kathleen Peddicord
Jun 02, 2009
in Investing
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Buying a property overseas
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International Real Estate Investing Fundamentals: Buy What You See And Pay For What You’re Buying

“‘Buy what you see,’ your real estate investing advisor Lief Simon tells readers all the time. Yet, at the same time, he promotes pre-construction investments. How does that make any sense?” wonders a reader this morning.

Lief replies:

“Perhaps we should adjust the mantra from ‘Buy what you see’ to ‘Pay for what you see.’

“Taken literally, Buy what you see leads you to conclude that you should invest only in real estate that is 100% complete. Totally built-out. All infrastructures and amenities in place.

“If you’re an ultra-conservative investor or a retiree not interested in taking any chances, this safe-bet strategy can make sense.

“However, the point of the advice is to help the would-be real estate investor get back to basics. To remind you of the fundamentals of real estate markets, cycles, and pricing.

“If what you see at the time of your purchase is a plot of land with no improvements or infrastructure, then that’s what you’re buying…and that’s what you should pay for.

“That’s the crux of the thing. Make sure that, whatever you’re buying, you’re paying a price that reflects the reality of the product at the time of your purchase.

“‘Buy what you see’ does not translate to mean never buy pre-construction or raw land. It means to understand what you’re buying…so you can assess and accommodate for the risks…and so that you pay the price you should pay given what you’re paying for.

“The trouble starts when investors forget this fundamental and are tempted into paying ‘something-there’ prices…when there’s nothing there.

“In Panama, for example, during the heyday of the pre-construction boom, people began paying prices that reflected potential values, not current, pre-built values. That’s not buying and paying for what you see. That’s buying and paying for what some developer is promising you.

“When you buy early, you should pay a price that reflects a discount compared with comparable completed projects.

“Unfortunately, in Panama, as elsewhere through various boom and bust cycles, the developers got greedy…and the buyers, greedy, too, were led astray by promises of profit supported by claims from earlier buyers who had, in fact, bought at discounts to completed construction prices.

“If your risk tolerance is low, then maybe, yes, you want to follow the advice literally. Buy only what you see. Understanding that this means, sometimes, you’ll miss out on profit opportunities.

“But maybe you don’t care. Maybe you’re looking for a nice place to live in retirement, and you don’t want any surprises.

“However, if your agenda is more profit-driven, then you don’t want to limit yourself literally to buy what you see. You want to pay for what you’re buying. Which means the earlier you buy, the bigger the discount you should enjoy.”

Kathleen Peddicord

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Kathleen Peddicord

Kathleen Peddicord

Kathleen Peddicord has covered the live, retire, and do business overseas beat for more than 30 years and is considered the world's foremost authority on these subjects. She has traveled to more than 75 countries, invested in real estate in 21, established businesses in 7, renovated historic properties in 6, and educated her children in 4.

Kathleen has moved children, staff, enterprises, household goods, and pets across three continents, from the East Coast of the United States to Waterford, Ireland... then to Paris, France... next to Panama City, where she has based her Live and Invest Overseas business. Most recently, Kathleen and her husband Lief Simon are dividing their time between Panama and Paris.

Kathleen was a partner with Agora Publishing’s International Living group for 23 years. In that capacity, she opened her first office overseas, in Waterford, Ireland, where she managed a staff of up to 30 employees for more than 10 years. Kathleen also opened, staffed, and operated International Living publishing and real estate marketing offices in Panama City, Panama; Granada, Nicaragua; Roatan, Honduras; San Miguel de Allende, Mexico; Quito, Ecuador; and Paris, France.

Kathleen moved on from her role with Agora in 2007 and launched her Live and Invest Overseas group in 2008. In the years since, she has built Live and Invest Overseas into a successful, recognized, and respected multi-million-dollar business that employs a staff of 35 in Panama City and dozens of writers and other resources around the world.

Kathleen has been quoted by The New York Times, Money magazine, MSNBC, Yahoo Finance, the AARP, and beyond. She has appeared often on radio and television (including Bloomberg and CNBC) and speaks regularly on topics to do with living, retiring, investing, and doing business around the world.

In addition to her own daily e-letter, the Overseas Opportunity Letter, with a circulation of more than 300,000 readers, Kathleen writes regularly for U.S. News & World Report and Forbes.

Her newest book, "How to Retire Overseas: Everything You Need to Know to Live Well (for Less) Abroad," published by Penguin Random House, is the culmination of decades of personal experience living and investing around the world.

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