Archive for July, 2008

The 8 Biggest Mistakes With Offshore Real Estate…and how to avoid them

Wednesday, July 16th, 2008



It doesn’t matter if you are a broker, agent, loan officer or an investor, what you DON’T know exceeds that which you DO know when it comes to investing outside of the

United States. For most people, this “unknown” is enough of a hindrance to prevent us from enjoying the tremendous upside of investing abroad. 

If you have watched the real estate markets for more than a dozen years, you’ve seen ups and downs before, of course. Why is it then, that THIS particular downturn seems different? Is it the rapid decline of values? Was it the news that Fannie Mae and Freddie Mac were in trouble? Even the most optimistic agent or investor understands that the majority of potential buyers currently suffer from a “deer in the headlights” approach to real estate. Many investors and realtors are frozen with fear and indecision regarding how to clearly capitalize and thrive in the current market. 

Some savvy investors saw this downturn coming years ago. Many did not. Those that did already made the shift in their strategy, marketing, sales and investments to use the slump to their benefit.  

You can too. 

We all start with the premise of not understanding enough about foreign markets in order to make a decision. Therefore, the ONLY decision you can make right now is to the decision to learn about how, where, and why to invest abroad. The fears most people have are normal, but they do not have to prevent you from expanding your reach, diversifying your portfolio, and earning tremendous returns for yourself and your referrals.
Investing offshore can dramatically accelerate your retirement plans and give you the opportunity for a tax-haven previously known only to the ultra-wealthy. 

There are several KEY factors that one should consider to set themselves up not only to survive this market, but to thrive big time. 

1. When one area of the world has a slowing economy, often there are areas which thrive in relation to it. (weakening US dollar, etc.) 

2. Ultra wealthy investors don’t participate in the financial markets the same way the average person does. They don’t necessarily “cheat” but they do set their own rules. 

3. Fear and ignorance of IRS rules keeps most people from even learning how offshore investing/banking/finance works. 

Nearly half of ALL equity funds are not marketed in the

United States. The stringent rules of the SEC have made it too expensive for many companies, funds, and securities to be marketed in the

USA. Most people are unaware that there are savings accounts available with double digit returns in other countries. US citizens are unaware because those banks are not allowed to advertise in the

USA. 

When it comes to investing in real estate beyond the borders of the

USA, these same issues are compounded by fear, lack of knowledge of foreign exchange rates, governments, culture and language.  

When one opens their mind up to the possibility of investing in foreign markets, these limitations begin to fade away. Once the limitations are gone, the opportunities are sure to keep you awake at night with excitement! The possibilities of secure wealth, lifestyle, and a reduced tax-burden are enough for anyone to “get in the game,” learn all they can, and get started! 

Here are the 8 things to INSIST upon when it comes to investing abroad: 

1. Government. After speaking with hundreds of investors, the question of banana republics and dictatorships comes up a lot. When you preview property in a foreign land, check out the history. How did it become a republic? Who was in charge before? What legacy did the previous government leave behind? No matter who is in charge now, there are ALWAYS people and power centers left from previous administrations. Be sure to work with countries with a long history of stability. 

2. Tax Haven. It is important to not only work with democratic governments, but ones that are friendly…very friendly to foreign investors (That’s you!). In the

USA, if a banker does not disclose private information to the authorities upon request, they can be prosecuted. In tax-haven friendly countries, the opposite is true. If a banker reveals private information to the authorities, the BANKER can be prosecuted! A low or non-existent tax rate for foreign investors is preferred. Any lack of banking privacy is a non-starter. For example, in November 2001, the Cayman Islands concluded a tax information exchange agreement (TIEA) with the U.S. that provides for exchange of information relating to

U.S. federal income tax. 

3. Land Ownership.

US land owners take for granted the idea of property rights. Even countries based on English common law don’t have the same protection that we take for granted. Visiting the Turks and Caicos, I found that deeds are the responsibility of the crown and not supervised by a third party. A US-based title insurance company is best for security, peace of mind, and reduces the learning curve.

Mexico, for example, requires a foreigner to co-own property with a domestic person or entity. Yuk! 

Equally important, does the developer “own” the land? Not only on title, but what about encumbrances? Select developments where the land is paid for, that way, any delays in development won’t compound the developers’ finances. 

4. Team. A project is only as solid as the team behind it. When it comes to getting permits, title, surveys, and entitlements, does your project have a manager who is local? Do they have an inside track on the national, regional and local regulations? Does the project manager have friends in the government? Is the developer perceived as a foreigner or a local? Are they using local labor? Is the master plan designed by professionals? Are there any sales? Analyzing the team is as important as understanding the project and you must know WHO you are dealing with. 

5. Language & Culture. Going offshore means you WILL be experiencing a new culture. The only way to become comfortable is to understand that culture, accept the differences and embrace the common elements. With regards to language, be sure you speak it. Using a translator is inefficient and dangerous. Contracts not written in a language you understand is like playing with fire. Even if the contract is bi-lingual, in a court of law, the dominant language is the one that will prevail. 

6. On-site Visit. In order to truly understand a project and the opportunity, an on-site visit is a must. As an investor, I would never trust an agent who had not taken his time and money to travel to the project and “put their feet in the sand.” As an investor, it is a great tax-deductible trip…and gives you first hand knowledge of the area, people and project.  

7. High-end usage. Many investors start out with affordable housing rentals as their entry into the market. It appears less expensive, but management headaches are going to be high. When investing abroad, it makes sense to cater to people of high net worth. They travel more, sale prices and rents are higher, and the wealthy are immune to economic swings. With proper management in place, upper-end properties are safer and more lucrative. 

8. Location. Yes, the old adage, “Location, location, location” is still true when investing in other countries. Understanding values, appreciation, and market demand is very similar to what we do when performing due diligence in the states. For an extra layer of comfort, be sure to invest in properties that not only have great locations but have stellar locations! When investing in tropical areas, be sure to check out the neighbors. The

Caribbean is known for having beautiful resorts residing next to dilapidated shacks. Proximity to activities, shopping, and services is important, so be careful if you find that perfect private island getaway! If it is too far from civilization or any amenities, demand could be weak. 

BONUS:If you truly want to make a TON of money in this marketplace, you need to invest in it yourself. Nothing compares to the credibility of being an owner AND an agent. By owning a part of the project yourself, you set yourself apart from all other agents/ Your referral commissions can increase exponentially when you have not only taken the time to learn about a project, but have the confidence to invest in it yourself. 

I love my country and like having more than one child, I have learned to love other countries as well. Foreign real estate investment and ownership has more…more growth, more tax advantages and more lifestyle. Now is the VERY BEST TIME to learn more, and take action! 

For more information, details or questions, you may contact me at dcrowe@themayanislands.com or call 1-888-732-6224.

 

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The Market Stinks Doesn’t Mean You Have to!

Friday, July 4th, 2008

Take CHARGE of those things which influence your thinking, behaviors and actions.  Associate with like-minded, successful, and responsible people.  They can make a significant difference in not only how you think about money, real estate and wealth, but the association you develop will bring to you more opportunities for finding deals, associates, and financing.

When you look for what could go wrong with a deal, you will always find something.  When we say to ourselves, “I need more education before I make my first offer” we forget that TRUE education comes from applying what we learn, not the raw knowledge itself.  Of course, it is important to know the basics.  It would not be prudent to go out and expect to make money in real estate after simply reading one book in an afternoon.  Expecting to become a millionaire in a weekend is ridiculous. 

However, the bigger danger lies in substituting an excess amount technical knowledge for practical knowledge.  Go to any real estate investment club and you will meet people who have attended 2 or more boot camps, have read a dozen or so books, and have been deluded themselves into thinking they are investors.  They may have been “thinking” about investing for 2 or more years and have yet to get out and make an offer.  If this is you, don’t despair, however.  ALL investors, no matter what their experience, had an “incubation” period where they absorbed knowledge before going out into the marketplace.  This period can be anywhere from a month to a year or more.  This does NOT mean that you are doomed to become a seminar junkie.  But after a while, it becomes painfully clear that more technical knowledge is not the answer.  The REAL problem is our fear. 

Conquering your fear

If you think you are alone in this dilemma, think again.  With over 1 million investors in the United States, there is not a single one who didn’t show concern, worry, and doubt over his/her first deal.  Everyone has doubts.  Your mission is to conquer those doubts by reducing or eliminating as many risk factors as you can.  This is easily accomplished with the following basics:

  1. Due your due diligence.  Nothing compares to crunching your numbers 2 or 3 times, and then running them past a more experienced investor.
  2. Have a plan “B.”  When markets or financing changes, you need a back up plan.  Without a backup plan, you are opening yourself up to risk.  If you can’t sell your rehab, you better be ready to rent it.  If you don’t have the financial cushion to be a landlord, you better get one BEFORE you start the rehab.
  3. Take action.  The paralysis of analysis is the single biggest killer of wealth in this country.  Due diligence is important, but without action, it is a wasted exercise.
  4. Be accountable.  Even Michael Jordan had a coach.  Putting your plan into action all by yourself is foolish.  Plan your business thoughtfully.  Think big.  Take small steps and get moving!  Counseling with successful people will save you millions.

Successful people got where they are because they think and act differently than unsuccessful people.  Their attitudes, actions, beliefs, and even their friends are different.  There are people (even relatives!) who always look at what could go wrong, instead of who look at what could go right.  When you have a mentor who believes in you and encourages you to grow, change, get out of your “comfort zone” and go for it, you will definitely experience new opportunities.  The risk will always be there.  How we manage that risk is a critical component. It is important to perform due diligence and “crunch the numbers” on your opportunities.  But all too often, we look back on all the opportunities we missed, instead of reaching out and working towards those that lie ahead.

Below are some resources you might find helpful as you build a better financial future for you and your family.

http://www.dougcrowe.com News, articles, and a weekly radio show.  Free membership into the “insiders” club. Radio interviews with Robert Kiyosaki, Kim Kiyosaki, Robert Shemin, Sharon Lechter, Jane Garvey, Donna Bauer, and more.

http://www.hud.gov/buying/index.cfm         

http://www.habitat.org                                  

http://www.buyers-assistance.com 

http://springboardcorp.com 

http://realestateinvestingcourses.com   

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Offshore Can Be Safer Than Onshore

Thursday, July 3rd, 2008

In my 22 years as a real estate investor, I have seen residential, commercial, industrial, mixed-use, and hospitality products rise, fall, slide sideways and return healthy returns for the investors. The United States and the real estate market that supports our economy is the foundation for the majority of wealth in the world.

Until now…

The dark clouds on the horizon are nothing new if you are over the age of 40. You’ve already seen a recession or two, a couple of wars, and lines at gas pumps. What makes 2008 different? Won’t we recover in a few years like always? Isn’t the current decline of the housing market, stock market and increased job loss part of the cycle our economic professors told us about?

Micro and Macro economics aside, there are looming megatrends which are making predictions of a typical recovery harder to predict. History repeats itself. When you study the Roman, British, and Chinese empires, one has to admit that the USA is clearly losing its status as the dominant economic superpower. The meteoric rise of China and India, will overwhelm our spending and investing for the next hundred years. The United States has set itself on a course of self destruction largely due to our short sighted behavior, lack of savings, dependence on credit, and isolationist attitude.

I love Americans. I love my country. When you travel the world, however, you see that the rest of the world is growing, thriving, and expanding, while the USA staggers around and assumes that we’ll grow out of our slump like have during all previous recessions.

This time is different.

With the exponential increase in energy costs, the price of nearly everything is increasing. Coupling inflation (Wow, we haven’t been afraid of that for a while!) with our credit markets and the expansion of China and India delineates our power, prestige, control, and ability to recover. China will dominate the world economy in our lifetime.

  • The value of our own dollar has crashed over 40% in the past 5 years.
  • As of 2005, over 21% of our GDP was in the financial service segment.
  • Housing values have dropped 5-30% across our nation.
  • Foreclosures are higher than they were during the great depression.
    Blah, blah, blah….

Other areas of the world are seeing tremendous growth. Nearly 50% of all equities are NOT US-based. In fact, since they don’t register with the SEC, you will never even know about them. You see, there are strict laws about marketing monetary instruments to U.S. citizens…if it doesn’t pass approval, you can’t know about it. Ever hear of a 14% CD? I’m not talking about 1980, but right now? They are available, just not to US citizens. You have to be a “world” citizen to know about them.

Do you know of countries where the real estate has appreciated 36% in the past couple of years? “World” citizens know of areas where the economies are MORE stable than those in the USA and have STRICTER banking regulations that actually make their investments safer. Remember the Savings and Loan bail out of the 80’s? People with $100K or less in their accounts were insured. But, if you had more than that, you lost-big time.

There are hundreds of opportunities in as many counties that are flourishing and whose economic base has not been hijacked by misguided governments and financial corporations. Unfortunately, seeking these out takes more than a casual look on the internet. Worse, your financial advisor is not ALLOWED to even know about these opportunities.

In the coming months, as I travel the world, I will be sharing these with you in the only format I can…a travel log. By sharing with you my currency trading platform (That gives me 5-12% ROI PER MONTH!), international CD’s in the double digits, and other offshore investments, you will discover that the world is getting smaller, and it’s high time we all wake up and become wise to what is happening beyond our borders.

There is nothing scary about investing internationally. The main hurdles will be getting over the fears that our own government and entrenched financial institutions have placed upon us. It is up to you to seek out the truth…not from advertisers, but from the very individuals who are living the dream. I will be introducing you to my friends; friends who have Swiss bank accounts, trade currencies safely, and invest in countries where the currency is strong, and the real estate values are growing. Stay tuned and keep your eyes open.

Doug Crowe
www.dougcrowe.com

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