Preface

Strategic Advice and Recommendations Amidst and Post the Coronavirus Pandemic—Challenges and Opportunities for Cash Flow Investors Overseas

As this book goes to press, more than 90% of the U.S. population and more than 20% of the entire global population are under instructions to stay at home and shelter in place. Millions of workers are filing for first-time unemployment, and trillions of dollars have been erased from stock portfolios. We humans are living through the greatest health crisis since the Spanish flu of 1918 and could face the biggest market meltdown since the Great Depression. The personal and financial challenges we're navigating are existential, the pain and hardship they're creating overwhelming.

What do they mean in the context of these pages?

We believe the COVID-19 crisis is also going to lead to one of the greatest buyer's markets the world has ever seen. Overleveraged owners, bankrupt businesses, desperate sellers, and rock-bottom currency values will translate to the fire-sale of a generation if not the century. The eighteenth-century British nobleman and banker Baron Rothschild said it so we don't have to. You should buy when there's blood in the streets, and that's the view today.

With the help of contacts in key markets worldwide, we're taking stock of pre-crisis trends, property listings, government interventions, currency values, and COVID-19 casualties. We want to be prepared to act as soon as it makes sense to do so, and we recommend you do the same.

Because, eventually, the pandemic will be contained and global markets and economies will recover, and, again, the fallout from the crisis will present the world with unprecedented investment opportunity. Perhaps more important, however, the experience of having lived through this period will leave us with a reinforced and maybe a reinvented understanding of what matters most in life.

Considered from a post-crisis perspective, where in the world will offer the best options for diversifying your investment portfolio and, at the same time, your lifestyle? Where should you look now to embrace the many opportunities our world continues to offer while positioning yourself for cash flow, upside, and security in the face of whatever tomorrow brings? We think we must consider that COVID-19 is not the only global catastrophe we could face in our lifetimes. Given that position, we further believe it is more critical than it has ever been to expand where you spend your time and your money so you're not at the mercy of any single government, economy, marketplace, or currency.

We have a moment now, while the world sits on collective pause, to regroup on what we'd like our lives to look like and to connect the dots between our ideal lifestyle and the top choices for the best places to think about spending time while making money overseas.

Our overriding objective in these pages is to show you how to build a diversified portfolio of hard assets overseas to generate cash flow to fund the lifestyle, the retirement, and the legacy you want. So, as we consider our world post-pandemic, let's start there.

What will global property markets look like post the COVID-19 crisis?

We do not believe we're going to see 40–70% drops as we did in the wake of the 2008/2009 global crisis, when real estate markets worldwide took huge hits with few exceptions. However, localized markets and individual properties will experience those levels of price reductions, even if only in U.S. dollar terms.

The Crisis Will Create a Supercharged U.S. Dollar

That is to say, one of the biggest opportunities created by the current crisis is going to have to do with supercharged U.S. dollar buying power. The Colombian peso and Brazilian real, for example, have weakened significantly against the U.S. dollar since the virus crisis began. These countries are oil exporters and commodity producers. The values of their currencies depend on their abilities to sell those products on the global market in dollars and then trade those dollars back into pesos and reals. Will the Colombian peso or the real return to pre-virus levels once the crisis abates and oil prices begin to recover? Probably. Meanwhile, properties in these countries will stand out as crisis-level buys for U.S. dollar holders.

How Long Until Tourist Rental Markets Recover?

Short-term rentals are a key element of any global property portfolio, a top choice for generating diversified cash flow overseas. What's the post-COVID-19 picture for this asset class?

The vacation rental business disappeared overnight when borders closed and planes stopped flying. Hotels are being converted to hospitals in some countries, and short-term rentals are being relisted as long term. That's one benefit of owning a furnished rental. You can reposition it according to market demand. In Dublin, Ireland, for example, the available inventory of long-term rentals jumped 83% in March 2020 compared with March 2019, while short-term rental listings on Airbnb fell accordingly.

Since the advent of Airbnb, many cities have seen sharp declines in long-term rental supply, increasing the cost of housing for locals. In an active tourist destination, a short-term rental can produce a much higher net yield than one rented long term. Now we're going to see a dramatic shift, which is good news for locals looking for affordable housing but not necessarily for global property investors. However, we believe this is a temporary trend and will revert as tourist markets are reborn.

You can easily switch a rental from short to long term in a European city, but making a change like that won't get you far in a resort town like Playa del Carmen, Mexico, where's there's next to zero long-term rental demand. Expect, therefore, to see hugely discounted vacation rental prices in destinations like Playa del Carmen when people begin traveling again. Also expect to see properties for sale at discounted prices from owners who either need to sell their investment real estate to shore up their personal financial situations back home or because an extended loss of cash flow has put them behind on their mortgage payments. As we remind our Live and Invest Overseas readers often, leverage is a double-edged sword.

Look for More Seller Financing Options

Speaking of leverage, note that banks in countries where financing has been an option for foreign buyers will be focused on helping locals recover first. We think, therefore, that institutional financing options for us foreign investors will become thinner on the ground for a period.

On the other hand, we also predict that global property buyers will find sellers and developers more open to more creative terms than they've been in a long time, especially in Latin American markets dependent on foreign buyers. Seller financing will be particularly easier to come by in Panama and Belize, for example.

Buy on These Dips

Some markets in Europe are already experiencing broad real estate price drops. Greece is top of this list. We believe this country will represent a bona-fide blood-in-the-streets opportunity, and we will share specific opportunities with our Live and Invest Overseas readers in real time. (You can stay up to date with these opportunities as a reader of our free e-letter service. Go to www.liveandinvestoverseas.com/cashflowupdates to sign up.)

In addition, we expect prices in Portugal, where values had appreciated significantly between 2015 and 2019—particularly in Lisbon, Porto, and Lagos—to soften and perhaps to fall when pent-up supply is released after Europe reopens. The window of opportunity here, though, will be short.

We predict price drops across Latin America. Emerging markets are going to be hardest hit by the pandemic crisis, and their economies will be slowest to recover. This means countries at the top of your post-crisis opportunity list should include Mexico, Belize, and Brazil.

Panama is an exception in this regard in this part of the world. This country reacted quickly to the coronavirus threat, showing itself again to be more than just another banana republic. Panama closed its borders in a matter of days, then restricted the movement of its residents in inventive ways. At the height of the threat, women were allowed to leave their homes at assigned two-hour increments on Mondays, Wednesdays, and Fridays, while men were able to be out for two hours at a time only on Tuesdays, Thursdays, and Saturdays. Everyone had to stay home Sundays, and the government banned the sale of alcohol. No baby boom for Panama but we predict a quicker return of economic activity certainly than anywhere else in the region. In addition, our contacts in the country report that President Laurentino “Nito” Cortizo's administration is planning an aggressive program of investor incentives to attract direct foreign investment post-pandemic lockdown. Again, we'll keep our Live and Invest Overseas readers up to date on these programs as they are rolled out, at www.liveandinvestoverseas.com/cashflowupdates.

The Winningest of All Cash-Flow Investments Overseas

The second cash-flowing asset class every diversified global property portfolio should include is agriculture. Amidst and in the wake of the COVID-19 crisis, this investment option remains the big winner. While short-term rentals are producing zero cash flow during the global shutdown, agricultural properties are still growing food… and people are still eating.

Meaning crops...