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Why My Smart Money is Moving Offshore by Howard Rich This is my first column for Caribpro.com, so allow me to introduce myself. My name is Howard Rich. My friends call me Howie, and I hope that in the months ahead, you’ll come to do the same. I’m a commercial real estate investor and have been for almost 40 years. Most of my success has been in Manhattan, though in recent years I’ve spread my investments throughout the U.S. So, why am I now moving my investments offshore – and in this column inviting you to do the same? I think it was pretty well summed up in a recent interview CNN’s Wolf Blitzer did with my fellow Manhattanite Donald Trump, a pretty shrewd real estate maven in his own right. Blitzer asked Trump how the downturn in the U.S. real estate market was affecting his operation. Trump explained that other than a few projects in Manhattan and Florida, his investments are overseas. "The stuff on the world basis is unbelievable,” he explained. “The world is doing very well” (which may also explain why he is building a $200 million luxury condo tower in Panama City). | ||||||||||||||||||||||
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| Well, the truth is I checked out “the world,” and I found that The Donald was right on target. International real estate is doing very well, thank you. My philosophy, as I’ll explain a little further down, is to get in early and cash out big. So, I have waded offshore. I’m still testing the waters. But, I like what I’m finding. And, if you’re a serious investor who’s interested in emerging markets, I invite you to join me. My philosophy of investing First, let me briefly share my philosophy of investing with you; not because I think I’ve found the magic elixir for making money, but because if you don’t buy into it, you’re likely not going to make the kinds of returns I’m going to predict. And, yes, as you’ll see below, I am going to make predictions, because if you enjoy the rarified arena of high-dollar ventures, that’s what makes our world go round. In commercial real estate investments, there are two kinds of investors: you can call them the “Plodders” and the “Plungers.” Both can make money. I happen to think the latter make more, quicker. So, you now know into which category I fall. The Plodders spend vast amounts of time and money doing due diligence and charting spreadsheets. When they make an investment, it’s for the long term. And they’re happy with a relatively small, but steady return, barely edging out a Random Walk on Wall Street. The problem for the Plodders is that they lose about 99% of the deals they set out to make. The Plungers see a deal, size it up, and cast their lot in what some would consider the twinkling of an eye. We get in early, we trust our instincts, and we often buy undervalued or “damaged” goods others overlook. The disadvantage: we make mistakes. The advantage: when we pick a winner, it sweeps the table. Let me give you an example – not to brag, but to provide you some context. Around 1977 to ’78, the real estate market in Manhattan was worse than dismal; it was disastrous. Rent controls, red tape, regulations, and skyrocketing oil prices had turned the Big Apple rotten, right to the core. A friend came to me with the “opportunity” to buy a 48-family apartment complex at 108 and Amsterdam that was, at best, marginal. To put bluntly, it was being dumped. So, against all of the advice of wiser counsel, I drove around the block on Friday – and I bought it on Monday. For about $25,000. Cash. As Ingemar Johansen said before his first fight with Floyd Patterson, “I saw sumptink.” A few short years later, I sold the complex for $2.8 million. Also cash. You can do the math: that’s better than a 100-fold return. Does that make me a financial genius? No, it makes me a Plunger – and that’s the philosophy I want to share with you in the coming months. So, let’s cut to the chase. Three quick predictions As Trump said, “the stuff on the world basis is unbelievable.” And we’ll venture to  every corner of it in the months ahead. But, let me start close to home, because that’s where I’ve already begun moving my money, and I intend to continue doing so wherever and whenever I can get in early and cash out big.Three countries in Latin America have jumped out at me, and I am predicting potentially high returns in fairly short order. Here they are (and if they sound like a far reach to you, then, frankly, we don’t share the same philosophy, and you could probably spend your time and money more wisely elsewhere): o Nicaragua – Now, I know some investors will be taken aback by this one, and I don’t blame you one bit. I don’t delve into offshore politics, but strictly from an investment perspective, electing the current government was something akin to collective self-flagellation. Which for high-rollers with risk capital means could mean a cash killing. A case in point: one 6,000-acre piece of beachfront property on Nicaragua’s beautiful Atlantic coast was being offered for a little over $3 million a year ago. Now, you can get it for nearer to half that. Granted, it’s not just pristine; it’s primitive. And for Plungers, primitive often means profits. o Roatan Island – Off the coast of Honduras, cradled in the turquoise waters of the Caribbean, Roatan Island is a pristine paradise. Some savvy developers have already discovered it – but it’s still not too late to get in early. Acreage that sold for $20,000 five years ago is now bringing upwards of $250,000 to $300,000. And I’m predicting that trend is going to continue unabated. As usual in emerging markets, a few developers got in undercapitalized, and now you can buy them out at bargain prices. It’s your call. o Brazil – Specifically, I’m looking at the northeastern coast; more specifically, a breathtaking city called Forteleza, surrounded by hundreds of miles of white-sand beaches. The Forteleza area is already Brazil’s #1 tourist attraction – with the number of high-spending visitors jumping 25% in the past two years alone. Yet, smart investors are still snapping up beachfront lots for as little as $17,500 and oceanview lots for even less. Europeans are already flocking to Forteleza, yet it’s completely off the radar screen for most North Americans – for now. Which is mu$ic to the ears of offshore investors.
Again, it’s your choice. I’ll catch you next month. | ||||||||||||||||||||||
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