Coastal Dreaming

I came across a really good article this week in the Financial Post about Markus Raty, a former investment bank researcher from Toronto who started up a cigar import business from Nicaragua.  A great read for anyone interested in, or already doing business in Latin America.  Being in that category, of course I enjoyed the read.  I particularly liked his words of advice for other entrepreneurs looking to do business in Latin America…

• Learn the culture — both social and corporate — and respect it
• Make every effort to communicate in Spanish whenever possible
• Develop strong relationships with the right people, and things will happen
• Extend your timelines beyond original expectations. - Always have a plan B

I think these are all very true - particularly the last one!

Tags: business, Cigars, import, Mombacho

Jones Lang LaSalle just released to the public their 2008 Real Estate Transparency Index (free). For anyone interested in foreign real estate, is is a good read and helps you understand the different types of indicators that institutional investors look at when assessing global real estate opportunities. This is a bi-annual report and this is the 5th time JLL has release this report. As an investor in Central America, here were my general take away’s:

• Globally, real estate transparency is on the rise.
• This steady improvement in transparency is closely linked to forces of globalization.
  • These forces drive investors to move across borders in search of higher risk-adjusted returns
  • They compel multi-national corporations to buy or lease space in lower cost labor markets, or in fast growing countries where they hope to gain market share
  • It has created an incentive for governments to streamline bureaucratic practices that prevent foreigners from injecting capital and opening up offices, stores or manufacturing facilities
• 82 markets were surveyed - 26 more than in 2006. The very fact that JLL found it difficult to score these 26 in the past but can now, is indicative of how the markets have opened up to international companies, investors, and service providers
• Nearly one-half (27 out of 56) of the markets surveyed in 2006 demonstrated an improvement in the 2008 report.
• Of the 11 countries surveyed in Latin America Brazil and Panama registered the largest increase in transparency

Many low income countries were unable to have transparency scores calculated because their commercial real estate markets remain undeveloped and largely inaccessible. However a high level of transparency does not eliminate risk or guarantee a strong investment return or an efficient transaction. The sub prime issues in the US are a perfect example even though they tied for second in the overall transparency ranking. Furthermore the report goes on to state that high transparency does not prevent market volatility.

Of the central American countries only Panama and Costa Rica were able to be scored. For investors in these and other central American countries this should not be a deterrent. These countries still offer tremendous investment potential, but it will just take some time before their commercial markets are strong enough in the commercial real estate sector to be part of a survey such as this, and as stated above this is a data point for consideration and not an indicator of investment return.

One interesting thing to note - the report specifically called out Panama and how its scores are greatly improving, and with increased activity in the area. Among the factors cited for this increase I think could and will soon apply to some of its neighbors including Nicaragua:

• The countries central location within the Americas
• Economic and political stability
• Low cost of living
• Favorable climate

Overall, an interesting read, and good food for thought.

Tags: Jones Lang LaSalle, transparency index

When most offshore real estate investors think about their target market, it is often the retiree that has the freedom, and the capital to make such a move, but times are a changing…

There is a growing population of younger people starting to relocate outside of their home countries and central America is no exception. Why is this? Part of the reason is the Internet, which has allowed people to work where they want. They could be working from a US based office or from a home in Nicaragua for example. With Nicaragua being in Mountain time, people would not know the difference. When we were there visiting, recently a friend of ours had a house down by the beach outside of San Juan Del Sur. His friend at the top of the hill had a satellite Internet, and he had a dish out his window that he could bounce a signal to the satellite uplink, and he was in business with full Internet access.

This blog post from NuWire talks about Young Americans seeking a life abroad. The post refers to an article from US News and World Report. They talk about people in the age of 25-35, which interestingly enough is the group right between the so called Gen X and Gen Y. I believe this group takes traits from both of these generational groups. They are still used to working hard and grew up in a time still before everything was team based and everyone got a trophy - hungry and often entrepreneurial. They want to seek and build their fortunes on their own, and not have it handed to them like many in the current generation. However they are also tech savvy and know how to use it to their advantage. They read books like the 4-hour work week and can see both sides of the argument on its premise, but in the end want to be successful in whatever they do. They don’t want to wait until age 65 to retire, and are very independent having grown up being taught that the government will not have money to take care of them (nor their parents).

Being in this demographic myself I can definitely relate, and on out trips to central America there are many people we meet in this space. Young couples who are ready to move down there and start the next great tourist business. Or some who at a younger age see the value in owning property offshore for investment and/or vacation reasons - those that run their own business that allows them to be flexible with their time.

The article focus’s on trying to understand why the exodus. Times are changing, culture shifting, but in the end does it matter? From an investors perspective it does, but mostly because its happening, and will likely continue.

Tags: abroad, expats, moving, young

I am a firm believer in the power of human ingenuity to triumph over adversity, when push comes to shove - when conditions get to a point of pain for many, when the business and financial rewards become viable innovation will stir. Take oil prices for instance. Until prices get to a point of pain for many people, little will really be done to increase the fuel efficiency of vehicles. Yes their are hybrids, but the the pressure to innovate in this space has really just started recently. Take for instance an article I read in Fast Company from last November about a guy named Johnathon Goodwin, who is truly innovating in this space. The article talks about how he has got 100 mpg out of a Lincoln continental, and has cut emissions by 80% and doubled the horsepower. His newest experiment is dropping a jet engine in a his version of a hybrid Hummer. When the batteries run low, the jet engine will fire and supercharge a set of batteries that will allow the vehicle to perform amazing feats of acceleration. Oh yes, and the turbine runs on bio-diesel and he has doubled the horsepower from 300 to 600. Now thats true innovation.

Innovation opportunities do not just lie in developed countries. In fact there is much more room for smaller but even more impactful innovations in developing countries. Things that might get passed over in many countries become life changing solutions in other parts of the world. Take for instance an article I just read today about a system deployed in Nicaragua that will pasteurize milk using solar energy. Not only does this now allow for energy conservation, in a world with ever increasing energy costs, but also will reduce the sickness and disease previously caused by unpasteurized or poorly pasteurized milk. Of course my mind immediately moves to the many other niche applications that solar energy or other alternative energy sources could provide to developing countries especially in the remote areas. A great example is a company called Blue Energy is using wind turbines to provide electricity to remote villages in eastern Nicaragua.

These innovations also become powerful tools for helping build sustainable developments in these countries. Not only does it reduce costs, but also makes developments more eco friendly, and self sustaining.

Tags: Blue Energy, innovation, milk, pasteurize, solar energy

Where is the summer going!  Here we are almost at the end of July, and only a couple of posts up this month.  Definitely not for lack of wanting to, but just a busy time with work and family both.  We do continue to post recent news of interest in Nicaragua which you can find in the right hand navigation bar on the blog, however hopefully insights in the form of blog posts will pick up as the summer starts to wane.

In the meantime, I did want to point out a great post from Henkel Smith on the NuWire Site with some tips about buying real estate to build a home on in Nicaragua.  Henkel founded Waters Edge Realty and lives in San Juan Del Sur.  Henkel - hopefully we can connect next time we visit in Jan 09!  Jan 09 we will be doing our first E-Travel Adventure trip (Entrepreneurial travel) to Nicaragua.  To find out more about this amazing opportunity, visit our web site for details.

Tags: building, home, Nuwire, Retirement

If you saw the news that Nicaragua’s San Cristobal volcano had a small eruption of gas and ash you may be wondering - is this a safe place to invest?  Nicaragua is the land of lakes and volcanoes and these geological formations are part of the draw to this wonderful country.  Yes San Cristobal and others are still categorized as active, but then again so are a number of the volcanoes in the cascades as well as those on Hawaii.  It is definitely something to consider as a potential risk, but be sure to weigh the risks and benefits of these beautiful formations accordingly when doing your own due diligence.  To us their asetetic beaty and tourism qualities far outweigh the risk of devastation due to major eruption.  They offer hiking and climbing as well as sand surfing!

We get asked the question about volcanoes and investment risk quite often.  Our 200 acrea Las Laderas property is actually on the lowest slopes of the Cosiguina volcano in the northwest corner of Nicaragua.  However this volcano is dormant and actually has a beautiful lake in the crater, offering great opportunities for hiking and horseback riding in the area!

 For more information on Nicaragua’s volcanoes and their location see this site.

Tags: eruption, San Cristobal, volcano

As traditional markets continue to struggle, the word about alternative options for IRA investment is starting to spread.  Investors just like you are waking up to realize that the people that you are paying to manage your IRA money at the banks or large brokerage houses aren’t doing much to protect your nest eggs.  You can see a couple of our previous posts on the topic of Using IRA’s for non traditional investments such as offshore investments:

• Using IRA Dollars for Offshore Investment (Dec 07)
• More on the Power of Self Directed IRA’s (May 08)

I came across yet another good resource - an audio recording recently on this topic from International Living.  It was a recording from May 2008 with a group of International Living Readers.  It was great validation on the process we use here at Coastal Dreams Worldwide.  The one interesting item that the speaker raised was the variety of different things his clients had used their IRA’s to purchase.  People are amazingly creative sometimes.  Self directed IRA’s are not witchcraft or  extremely complicated but is not something you will find on a how to document at your local IRA shop so its important to collect as many different data points as possible.  Please enjoy, and if you are interested in learning more about how we have done it from an investors viewpoint contact us.

Additionally, if you are in the Boise Idaho area, we will be giving a presentation at the local Entrust office (A self directed IRA company) on the topic of using IRA’s to invest in offshore real estate.  The event will be held at noon on July 29th so mark your calendar!  For more details see the entrust events calendar.  I will also try and get either a voice recording or potentially video as well for the rest of our readers.

Tags: Entrust Idaho, International Living, Self Directed IRA

I good thought provoking article about setting goals and when to reward yourself by Todd Millar on the NewWire Investor Site. The article points to 3 keys to staying on track:

1. Don’t let current appetites steal from your future feast
   • Don’t reward before the deal is done and don’t sacrifice long term benefits for short term gain (eg - taking equity out of your investments to pay for toys)
2. Don’t Cheat Yourself
   • Be sure to celebrate your successes
3. Plan It Out
   • Goals and milestones, short and long term

This article should also speak to offshore real estate investors as well as part of a greater investment strategy. What does it say to you?

Tags: Nuwire, real estate goals

The stock market plunged today, shooting the Dow down to its lowest point in nearly two years, as investors contended with a barrage of bad news: a surge in the price of oil past $140 per barrel and warnings of trouble in the key financial, automotive and high-tech industries. The Dow fell 358.41, or 3.03%, to 11,453.42. The Nasdaq dropped 79.89, or 3.33%, to 2,321.37, while the S&P 500 lost 38.82, or 2.94%, to 1,283.15. Declining issues outnumbered advancers by almost a 6-to-1 ratio on the NYSE, where volume was heavier, but not extremely heavy.

I personally predict a DOW in the 10,000 range by the end of the year. I sold all of my equities last year and moved them into offshore real estate to hedge against this equity crisis.  What about your retirement funds?  It is possible for anyone to use their IRA money to invest in real estate. Do not let your broker fool you into believing you cannot manage your own money. For information on how to unleash the power of your own IRA money please call or email us.

Related Topics

• The Dow is Falling
• Shrinking Nest Egg?  Think about Central America

Tags: , Dow, IRA, stock market

We have been working through the Nicaraguan legal system with a great lawyer in San Juan Del Sur to formalize our business entity in Latin America for quite some time now. It is a little more challenging sometimes being geographically dispersed, however email and scanners are a wonderful thing.

On Wes’s recent trip down there however, he got a copy of our official legal stamp on a scrap piece of paper! Hey its the small things too that help make building a business fun!