Booms usually get off to a slow start. Once they get going, they’ve got their own momentum. As prices rise, fever sets in. It’s interesting to watch developers in an overseas real estate boom. Everyone scrambles for a piece of the pie.
Folks with no experience pile into the market to do a project. Developers with experience back home jump ship, thinking that creating a community overseas is much easier than doing one in the U.S. or Canada. Folks with agricultural land, owned by their family for generations, decide to switch from keeping cattle to building homes.
Developers Get Reckless
They often don’t even bother to do any research on where their buyers are coming from or what they want to buy. They reckon that if everyone else is making money, so will they.
Even established developers can get carried away. They turn from building mid-range homes to building bigger and better units with fancier finishes and bigger price tags.
It’s all fine as long as the market is rising. But when there’s a downturn, it’s what happens next that gets my attention.
Some of the wannabe developers ignore the downturn and carry on building. Savvier ones slow down, matching their pace with that of the market, perhaps putting more ambitious schemes on hold until things look up. Smart developers, on the other hand, take a look at the new market and cut their cloth to fit.
International Property & US Real Estate Investors
I saw this for myself when I first visited Los Cabos in Baja California Sur last year. This was a market heavily reliant on U.S. buyers. They bought luxury homes and condos in this exclusive, upscale market.
When the economic crash hit the U.S., buyers dried up. They could not use equity in their property back home to buy overseas. They were hit by stock market crashes, commodity price falls, and job losses.
The outcome was a slowdown in the Los Cabos market. Some projects stalled at the drawing board stage. Some buyers never got the infrastructure they were promised, like the sparkling swimming pools or the gourmet restaurant. Some developers carried on, ignoring the lack of buyers and hoping things would improve, before ending up facing foreclosure.
Some developers, the smart ones, check to see what the new market wants and change tack to deliver it. They’re the ones that emerge stronger from the slowdown.
Los Cabos Real Estate Investing Climate
Today, the property market in Los Cabos is picking up. Recovery in the U.S. is triggering an influx of buyers. Sales were up in 2014. But today’s buyer is more cautious. They won’t just buy any old property. They want to buy from a strong developer and they want to buy the best in class in this area.
I did a lot of research before I scouted Los Cabos. On the ground, I checked out a long list of properties. I pinpointed one project that stacks up. It’s in an established beachfront community with world-class amenities.
Los Cabos is exclusive, high-end, and luxurious in every way. It’s tailoring a part of its community for discerning buyers. They’ll get to live the glamorous Los Cabos lifestyle—in style—with everything they need on their doorstep.
Editor's Note: Margaret Summerfield & Ronan work hard scouting out properties overseas for US investors. Go over to REIClub.com Freebies Page to get your free copy of “How to Due Diligence Your Overseas Property” .