As I write, I’m at my home in Guadalajara, Mexico…
Tomorrow, I’m flying to the state of Oaxaca to scout the real estate scenes in Huatulco and Puerto Escondido on the country’s stunning Pacific coast. These destinations are known for their postcard-perfect beaches, excellent surfing, oceanfront restaurants, and unspoiled reefs for diving and snorkeling.
I’m excited to see what I uncover there…and I’ll be sending you updates from the road in the days ahead.
Today, though, I wanted to share the story of my home here in Guadalajara…how my wife and I built it for just $80,000 (a fraction of what it would have cost to buy something here)…and how the strategies we used can be applied to other real estate investments.
Huatulco on Mexico’s Pacific coast boasts a dramatic coastline and golden-sand beaches. I’m about to scout the real estate scene there. Stay tuned to Overseas Dream Home in the days ahead to see what I uncover…
My wife’s parents grew up in Guadalajara, and in recent years they moved back to the city. My wife, Sayuri, and I typically divide our time between our homes in Cabo, Portugal, and our primary home in Ireland. But we tend to spend at least a few weeks every year in Guadalajara so we can spend time with her parents and extended family.
Having a home here has other benefits, too…
Guadalajara is one of the region’s major up-and-coming economic centers, dubbed the “Silicon Valley of Mexico” for its booming tech industry. It’s also a wonderful place to spend time.
The city is a heartland of Mexican traditions, a center of tequila and mariachi. And it boasts an incredibly rich and diverse food scene. This is very much a city of culture and the arts. A long list of artists, poets and musicians have called the city home. You can enjoy shady parks, colonial plazas, and plenty of museums.
Guadalajara is also an excellent base from which to do some real estate scouting…
Near the city, you’ll find prominent expat havens such as the town of Ajijic, on the shores of Lake Chapala. The coastal city of Puerto Vallarta, one of Mexico’s leading resort destinations, is less than three hours’ drive away thanks to a new highway that just opened between the two cities. And as I say, I’m using Guadalajara as a jumping off point to explore coastal towns in Oaxaca.
Since my wife and I tend to spend some time in Guadalajara each year, we wanted our own place here. So, my wife designed and built a home for us. She did this by adding a new story to her parents’ building and creating a separate home. The total cost of this was just $80,000.
Our neighborhood is gentrifying rapidly. Virtually every home that’s sold here is turned into an apartment building or large, multistory structure. By adding a story, we got a new home in a lovely neighborhood of Guadalajara for a fraction of what it would have cost to buy something here. (From one of our terraces I look up at condos that sell for over $1 million.)
There’s another advantage to living in this leafy neighborhood…
Guadalajara has a reputation for crushing traffic, but because of the neighborhood where we live, that all comes off the table. We can walk almost everywhere, and when walking isn’t an option Uber is incredibly affordable. It’s an interesting point about cities with bad traffic—if you have flexibility and live in the right neighborhood, traffic becomes a non-issue.
Now clearly building this home was a lifestyle play for us. But this strategy of adding a new floor to an existing building is a time-honored way to see incredible gains as a real estate investor.
In another building I’m looking at close by in Guadalajara, the construction costs of adding an additional floor with two or three rental units could be recouped in less than four years. That’s insane…own the building and that’s a 25% yield!
So, this strategy of adding a floor can be highly profitable. In fact, it’s a play I’ve recommended before to members of my Real Estate Trend Alert group…
My home in Guadalajara looks out to these towering buildings. This neighborhood is gentrifying fast…but by applying a “mini-developer” strategy, my wife and I were able to get a new home here for a fraction of the cost to buy.
Several years back, I got word about a special opportunity in Medellín…
Medellín is Colombia’s trendiest city and a major hot spot for well-heeled digital nomads and work-from-anywhere professionals. In fact, this city is becoming so popular that I rank it among the 10 best places in the world to buy real estate in 2024. (Check out a brand-new video guide to the full list here.)
In 2020, a contact there told me about a three-floor building in Laureles, a leafy, low-rise neighborhood that’s popular with digital nomads. This building was already an established Airbnb business divided into 10 studios and was turning over between $5,000 to $6,000 a month.
Here’s the play I recommended to RETA members…
I figured you could get the building for around $350,000. Then you could spend another $50,000 or so and reduce the amount of smaller studios and create two larger, one-bed condos per floor.
After these renovations, you’d have a total of eight units rather than 10. But these would be larger studios facing out onto the street with balconies. These units work best for single travelers/digital nomads, meaning you could charge higher short- or long-term rental rates.
This would also allow you to increase the number of floors in the building.
In Medellín, the number of floors is restricted by the density of units in the building. By reducing the number of apartments, you would have reduced the density, making it possible to add another floor with more units.
So, after your renovations, you’d have more real estate and more income in one of the most sought-after areas of Medellín.
“Mini-developer strategies” like this can be enormously profitable, and there are a variety of them we can use to see big potential gains. Here’s another…
Medellín has become a major hotspot for digital nomads and work-from-anywhere professionals thanks to its outstanding climate and high quality of living.
Real estate that comes with developable value is always worth investigating. Here’s an example of what I mean…
In 2018, I told my RETA group about a lake-view house around the popular tourist and expat destination of Lake Arenal in Costa Rica.
The house was move-in ready, spanned 3,000 square feet, and came with 13 acres of land. But the owner was willing to sell for just $385,000.
The way this play works is you subdivide some of the land around the house and sell it. In the case of this house, it was relatively easy to do. The home was inside an established private community so it already had roads, water, electricity connections, etc. That means the heavy lifting was already done on the infrastructure, which is the biggest expense when you’re carving out lots to sell.
Back then, I figured lots of 1.25 acres in size with lake views would sell for $80,000 to $100,000. (Today those lots would sell for double this.) So, if you sold four lots at the top price, you would recoup the purchase price—and bag the house and eight acres of land for free.
I call this mini-developer strategy “divide and conquer.”
Lake Arenal is set in a tranquil region of northwest Costa Rica known for its lush hills and volcanic peaks. I have recommended “mini-developer” opportunities here to members of my Real Estate Trend Alert group…and anyone who followed them would have done very well.
Now to be clear, while mini-developer strategies can be powerful, the absolute best way to see big real estate gains is by buying in off-market deals…
Sixteen years ago this month, I founded Real Estate Trend Alert, bringing together like-minded real estate investors who understand, like me, that there’s always opportunity somewhere when you look everywhere.
Using the boots-on-the-ground scouting of me and my team, I identify a stunning destination overseas that’s on the cusp of a major transformation. Then, with the collective buying power of our RETA group, I negotiate an off-market deal with a best-in-class developer there.
By buying early in a transformation, and owning at killer discount prices that ordinary investors never see, we can get huge uplifts. Here’s a few examples…
- $222,000 Gain in Caribbean Mexico—In 2019, I brought RETA members the chance to own luxury condos on Mexico’s Caribbean coast, from just $174,800. A two-bed bought here for $178,000 later sold for $400,000.
- $250,000 More in Cabo—In August 2021, RETA members could get a penthouse in a community called Cabo Costa for $249,000. I got one. Today a penthouse in Cabo Costa lists for $499,000.
- $309,018 More in Playa del Carmen—In 2021, RETA members had the chance to buy two-bed condos in the beach city of Playa del Carmen on Mexico’s Caribbean coast from $265,304. In early 2024, a two-bed condo in Singular Dream was listing for $574,322.
The best-in-class Singular Dream community in the beach city of Playa del Carmen boasts rooftop pools with stunning views out over Mexico’s Caribbean coast. Prices in this community have surged massively since RETA members had the opportunity to buy here in an off-market deal.
Of course, these deals aren’t possible everywhere. I can only bring RETA’s group-buying power to bear in destinations that can host big projects.
For instance, RETA’s group-buying power works well in Cabo where developers have the space to deliver large-scale, amenity-rich communities. But it can’t be applied in destinations like Medellín since this is a densely developed city hemmed in by a valley, and it’s not feasible for developers to get large land parcels.
In those markets, we can look to mini-developer strategies like adding another floor or “dividing and conquering” by selling off developable land.
I’ll be sharing more mini-developer strategies like these in Overseas Dream Home in the weeks ahead.
First, though, it’s off to scout Huatulco and Puerto Escondido. I’ll send you some notes from the road…
Ronan McMahon, Overseas Real Estate Expert
P.S. Check out this brand-new video guide to my 10 best places in the world to buy real estate in 2024.
This video showcases all 10 places on my inaugural International Real Estate Index from sun-drenched beach cities on Mexico’s Caribbean coast to the historic town of Caminha in northern Portugal, offering insights into the most potentially lucrative real estate destinations on the planet. Click here to watch it now.
P.P.S. Have you joined our new Overseas Dream Home WhatsApp Channel yet? Launched just last week, this channel is a one-way broadcast system for me to send you text, photos, and videos live from the ground…perfect for sharing what my team and I are finding as we scout for international real estate.
I’ll be sharing updates in the channel live from the ground in Huatulco and Puerto Escondido. To get all the details of the channel, including how it works and how to sign up, click here.
Your Daily Dream Home
Divarata, Kefalonia, Greece
This two-story villa is in the small village of Divarata, on the Greek island of Kefalonia.
On the first floor, you’ll find a sizable living room, a dining room, a kitchen, two bedrooms and a bathroom.
The second floor has three double bedrooms, a large bathroom, and an open-plan living room.
Outside you’ll find a seating area, a swimming pool, and an outdoor shower.
Remember, we don’t make money from any listing shared here in the Your Daily Dream Home section. We have no dog in the fight. We’re just sharing cool properties we’ve found.
I haven’t visited this property or done due diligence on it. If you’re interested in the listing, you should hire an attorney and do your own due diligence.
