Shopping For Yields

Shopping For Yields

“Did you know that you can buy good houses for just $50,000 in the Miami area?” reports a friend. “I’m beginning to think that property is the best investment I can make now. Stocks could fall another 50%. I’ve got municipal bonds, but who knows what towns are going broke. I don’t trust the dollar. What else can I do?

“I buy a decent house, and I know what I’ve got. And right now, I can rent those $50,000 houses for $1,000 a month. So, figuring I miss a few months, I’ll get a gross return of 20% per year. I pay my expenses for half that. So I’m getting a very good yield…”

Sounds like a solid plan to me.

That is, this sounds like the start of a very solid investment strategy. I don’t trust the dollar, either…so, by all means, buy those $50,000 Miami rentals…then look further afield for other income-producing real estate investment options, as well.

For the past decade, it’s been tough to make a decent return as a landlord. Property values rose too high. In most markets, a disconnect developed between the cost of a house (or apartment or condo) and the amount of monthly rent it could command. Net rental returns shriveled.

Now, property prices are falling in key markets…and, again, in key markets, rental demand is increasing…expanding rental returns to very attractive proportions.

I told you last week about five markets where purchase prices are falling and rental rates are holding steady or better. If you’re shopping the globe right now for yield-producing real estate opportunities (as you should be), take a look first at Panama, Nicaragua, Paris, and Portugal’s Algarve.

In addition, I told you this week about a particular opportunity to buy for yields at a greatly reduced and appealingly low cost of entry on the island of Boracay in the Philippines. Each unit comes with a guaranteed yield from rental of 7.8% per year for three years. Bank financing is available. This is a hotel-condo project on both a beach and a golf course. Fully turn-key, with rental and property management on site and each unit sold furnished at no additional cost.

Crisis investing opportunities are emerging quick around the world. Those that allow you to buy at a substantial discount while, at the same time, setting yourself up for income in a market with a rental track record are among the most interesting.

Our scouts are searching out more of them as I write. Watch this space.

Kathleen Peddicord

P.S. Also this week:

  • What can the overseas investor learn from Madoff and Stanford? Eight things, specifically…
  • 10 steps to launching a new business in a Caribbean paradise…
  • Intrepid correspondent Paul Terhorst checks in from the road: “Vicki and I are traveling through rural China in southwest Yunnan province,” writes intrepid Correspondent Paul Terhorst. “Tibet and the Himalayas are just up the road a ways.”Immaculate villages with their adobe-brick houses line the river valleys. Below the villages and closer to the river, farmers tend small plots of beans, tobacco, rapeseed, and herbs. Dali, for example, is an historic jewel. Life here is so pleasant that the thought does occur to you: Maybe this wouldn’t be a bad place to settle down…to retire. Perhaps 50 Westerners have already done so, so you wouldn’t be the first.
  • When trying a place on for size, to determine whether it might be the overseas retirement haven with your name on it, we say: Rent before you buy.Maybe rent, period. In the wake of the tumble and even collapse of property markets around the world, maybe you don’t want to mess with investing in real estate at all as part of your retire overseas plans. Renting long-term, rather than owning, leaves you mobile and flexible. No maintenance, no repairs, no property taxes…Understand, though, that even renting abroad can come with complications you may not expect. Here are 11 things to know before you sign a lease in a foreign country.
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