Episode 54: The Best Places in the World to Buy Real Estate in 2024

“The world keeps turning and it keeps creating opportunity,” says International Real Estate investor, Ronan McMahon. Since 2008, Ronan and his team have been scouring the globe for the best real estate deals on the planet. When they find them, they share them in Real Estate Trend Alert—Ronan’s investment advisory service. To be included, the terms are simple: this needs to be an investment that will at least double in value within five years.

That’s no small task, and Ronan’s team of hand-picked experts travel and research extensively to find opportunities that they’re willing to put their name to. But there’s more to buying an international property than the financial returns. What about weather, beach access, sports facilities, culture? Every buyer has a different list of what they want in their dream home overseas.

That’s why Ronan and his team have compiled the International Real Estate Index, ranking the best places in the world to buy property, via ten categories from Availability of Bank Finance, to Holding Costs, to Climate.

If you’re enjoying the podcast, we would really appreciate it if you could leave us a review on your favorite podcast platform: https://lovethepodcast.com/internationalliving.

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Chapters

• 2:00 Introduction to Real Estate Trend Alert
• 4:04 ‘The World Keeps Turning and it Keeps Creating Opportunity’—Here’s How to Find it.
• 8:15 Investment Focus vs. Retirement Criteria
• 10:03 Preconstruction Deals and Developer Evaluation
• 15:48 Evaluating Geopolitical Risks in Real Estate
• 19:45 Where’s The Best Place to Buy Real Estate? The Answer Depends on You.
• 24:09 Figure Out *Your* Criteria For Real Estate Locations
• 33:37 Financing and International Banking for Real Estate Deals
• 36:15 Researching Locations

Transcript

Jim Santos 10.65 
Hello, everyone. I'm Jim Santos, and this is the International Living Podcast. In this podcast series, we introduce you to a bigger world, full of communities that are safe, welcoming, beautiful, and sometimes undiscovered. A better world, too. A friendly, warm, great value world where you can live richer, travel more, invest for profit, and enjoy a better life. So let's get started. 

Greetings everyone, and welcome to the International Living Podcast. You know, now more than ever, North Americans are interested in finding places overseas where they can invest their money and build their nest eggs. Today I'm happy to welcome international Living's real estate expert to the show, Ronan McMahon. Ronan heads the service Real Estate Trend Alert, or RETA, and is a frequent contributor to the IL magazine and website. Members of RETA get access to pre-construction opportunities at below market pricing, as Ronan and his team are constantly traveling.

The globe looking for the best deals.

For the first time ever, RETA has compiled The International Real Estate Index, which Ronan wrote about in the December 2023 issue of International Living magazine in an article called the ‘20 Best Places in the World to Buy Real Estate in 2024’. 

Ronan, welcome to the International Living Podcast, and thanks for joining us today.

Ronan McMahon 01:41 
Lovely to be here. A pleasure.

Jim Santos 01:44 
Anyone who's read International Living or attended the conferences has certainly heard your name before and heard about RETA, the Real Estate Trend Alerts. But for those listeners who may not be familiar with it, how about a little background first? Exactly what is RETA and how did you get that started?

Ronan McMahon 02:00 
Sure, Jim. April 2008, I founded RETA, Real Estate Trend Alert. It is an international real estate investment advisory service. So, long story short, Jim, for the past 15 years, I've traveled the globe on behalf of my RETA members, scouting and ferreting out international real estate investment opportunities for profit. So this is very important, Jim. The core focus of my RETA service is places. International destinations where we can buy ahead of big change, ahead of influx of people, and make a lot of money doing it.

Jim Santos 02:48 
So this has been around at least 15 years?

Ronan McMahon 02:51 
Yeah, absolutely. And it's very interesting, Jim. The moment I founded RETA was 2008. It was a moment of despair and a moment of fear in North America and in Europe. We were afraid cash would stop coming out of the ATM machines. But even in that type of environment, I was able to find opportunities in places like Northeast Brazil, where we could very successfully invest. 

I mean, we were investing there 2008 to 2010. Condos were doubling in value. So this kind of frames my entire perspective, which is that if you're willing to look everywhere, Jim, there's always opportunity somewhere. No matter how difficult the investment environment or the financial environment is where you are, the world keeps turning and it keeps creating opportunity. And the key for us is to take control and to put us in those places where the opportunity is.

Jim Santos 04:04 
I think what's interesting to me is you see a lot of things on the web and in magazines like Forbes where people are touting real estate values around the world, but they're writing them from their office in New York or from their office in Chicago. And you get the feeling sometimes they could have just looked up information on Wikipedia and are putting this in here. But you and your team actually go out and investigate these places with boots on the ground. Correct?

Ronan McMahon 04:31 
100%, Jim. So I mean, I'm talking to you today from Guadalajara. Tomorrow I go to Los Cabos. I spend literally at least half my time on the road scouting opportunity. Right now some of my team is in the Dominican Republic digging on an opportunity there. Other members of my team are in Panama, others in Medellin, Colombia. So over this 15 years, I have assembled a team of scouts and our little group I cut checks for in excess of a million dollars a year just to fund travel and research. So that's what we do. 

The PR game, which you're kind of referring to there, which we participate in, we create these press releases as well. But all these big publications want is listicles. They want a list. They don't really dig on the value proposition. They want a list because it captures PR eyeballs and there's fun and there's a novelty in that when the list is valid. But really the meat in what we do is really scratching and really understanding what the true long-term prospects for this destination are. What's happening in terms of supply issues, what's happening on the demand side that's going to create valuable opportunities for our readers.

Ronan McMahon 06:17 
And then Jim, as we go, we also find some incredible, really desirable opportunities that don't cut RETA muster. And by don't cut might not, we might not be able to double our money within five years. So for example, I'm in Umbria and I see a beautiful cottage, accessible to the beach, but there's nothing really happening that's going to result in that increasing in value. But it's a really compelling value proposition from a lifestyle perspective. So as we go, we also find these incredible kind of lifestyle value properties which I've also created a place to share with my readers. So it's an interesting journey. 

And I guess as I travel and as I've built a life around my profession and my business of finding these international investment properties, I've also chosen where to physically put myself. So I've also been in the shoes of the International Living reader trying to find what the best place for them is. And sometimes that 100% overlaps with my RETA beat. And sometimes I choose to make a home in a place and in a community that doesn't cut RETA musster. So it's kind of an interesting perspective because a RETA deal is purely financial, but I also investigate, because of the nature of my life, places that make sense based on other criteria.

Jim Santos 08:15 
So primarily, you are looking at investment opportunities rather than necessarily a retirement spot, but occasionally you do run across both.

Ronan McMahon 08:24 
Yeah. So there's a significant overlap as we research. So I and my team, we research destinations. The primary focus of RETA is the investment angle. The bar is, do we expect, conservatively, that we'll double our money within five years by buying A, B and C, and that's the RETA criteria. But then, as we go frequently, that investigation leads to the conclusion that, no, this isn't a RETA deal, but it's actually very compelling for other reasons. 

And kind of a prime example of that would be Portugal’s Silver Coast, which is my home. And I investigated that five years ago, wearing my RETA hat at the time. I took the view that it didn't cut RETA muster, but it cut muster as the best place on earth for me to create a you know, I told RETA members that I was moving there and why, but I didn't present it as a RETA opportunity. Now, Jim, that's one I got way wrong, because values have gone absolutely through the roof and rental market is very strong. But that's an example of how the process works for most of these opportunities. 

Jim Santos 09.18

You're looking at preconstruction deals, right?

Ronan McMahon 10:03 
We're looking at the best way to profit from a situation so frequently, and in many cases, certainly in the more recent environment, that's preconstruction, because a preconstruction scenario allows us, as a group, to club together and to bring buying power to the table in terms of negotiating with developers and to get special pricing and terms. Now, jump back to Spain and Portugal in 2011 to 2013-14, and our primary focus then was finished construction, because back then, the biggest opportunity was fire sale inventory direct from the bank. So in that crisis moment in Europe, the best thing to buy was distressed finished construction. So it's a function of the market and it's a function of the moment.

Jim Santos 11:07 
When it comes to the preconstruction, that's where, in my opinion, your boots on the ground is really important. I know ten years ago, when we were looking at buying a property and moving to Ecuador on the beach, there was a company that had a very slick website promoting this building that they were going to be building, and you could buy in really low now to get these wonderful accommodations. 

And they have yet to do a single thing about building this. And if you actually went there and looked at the site that they were talking about, it was way out of the way. There was just a dirt road to it. It was a place where a small stream exited into the water. So the beach was really just terrible. And if you looked at it, you could tell in a minute that they were never going to build this luxury high rise that they were talking about. So that's really a valuable piece of RETA, it seems to me, is that you are actually going out there and looking at the place and talking to the people who are doing the building.

Ronan McMahon 12:02 
Yeah, there's the boots on the ground. And then the big thing, Jim, is who is the developer. So in a lot of these destinations that we investigate, these places can be like bees to honey for slick or shady. People are also people who start out with good intentions but just can't pull it off. So the developers of the deals that I primarily recommend to RETA members, in basically every case, they're local, they're typically multi-generational with a very significant land. 

You know, to give you an example, RETA members have done phenomenally well from deals in Playa del Carmen in Mexico in recent years. And in those Playa del Carmen deals, we have typically been dealing with developers whose families have been in the hotel and land and real estate business for at least two generations. That means that all the know-how at the construction level, but maybe even most importantly, they have the best land. So they own the best land, which gives the potential for the best projects. But they've also owned that land for decades. So it really gives a lot of wiggle room in terms of the pricing that we can negotiate on behalf of our members.

But even more importantly, Jim, the capacity of that developer to withstand a shock so something goes wrong, they've got a lot of wiggle room because the land is paid for many, many years ago.

Jim Santos 14:01 
I suppose you have to be very aware of geopolitical situations as well, because stability of the government and ebb and flow of things like that could also be very important.

Ronan McMahon 14:10 
Yeah, absolutely. There's geopolitical and the risks are different in every place. Security in Mexico, let's say, at a very kind of base top level, is an obvious geopolitical and security risk. But then you look at other places like Portugal, and there can be other risks because we've been around through the last financial crisis, we know that it's at the banking level that things can really unravel. 

So, for example, a developer's line of credit gets withdrawn, which certainly happened last time around. So we need to feel comfortable that that developer can withstand that shock. There's currency implications. You go to Brazil or Colombia, and we've seen over the past kind of 15 years or so very significant currency movements. And these currency movements can create incredible buying moments for us, but they can also, if we get on the wrong side of them, erode long term value. 

So there's all these moving parts and Jim, it's all these moving parts that create the opportunity, because if everything was clear and simple, it would be easy for everyone and anyone to do it right.

Jim Santos 15:48 
Risk and return are very closely related.

Ronan McMahon 15:52 
I wouldn't agree, I'd push back on that. I mean, there's, for example, I see very high risk to investing in many blue chip markets in the US at the moment for almost no return. Whereas you go to for example, one of my team just sent a video of a penthouse in Laureles in Medellin. 200 meters, incredible penthouse over two levels, just a Hollywood apartment. Bit of an older building on the market for the equivalent of $200,000. Would immediately throw off a 13% to 14% rental yield renting to it to a strong tenant who's probably a remote worker. 

And this is Medellin, and this is Colombia, with very pretty fragile geopolitical situations. Got all that geopolitical and currency risk that we've alluded to but that condo for me over any type of medium term is about as low risk as you can get. I mean the strong cash flow is near guaranteed. You're buying it for half of replacement cost, half of what it would physically cost to build it. So you've got a moat, you've got this protection around it. So with my beat, of course there are risks and of course there's the geopolitical risks, there's a whole basket of risks but in general I consider our beat much lower risk than many developed markets.

So Jim, by way of background, I started as a real estate investor in my home country in Ireland which yeah, I think Ireland is now the highest GDP per capita on earth. Maybe Qatar is higher but basically it's a very rich well developed country with massive scarcity of rentals but the risks there are just so different. 

There's regulatory risk because every year I have a new set of regulations to deal with. There's tax risk because the tax net is just tightening on this rental income. And there's also huge political risk in Ireland to being a landlord because we now have this huge property crisis and there's a scarcity of rentals. So there's a big political push to kick landlords, implying that it's landlord's fault that there aren't enough houses for everyone. 

So I think it's a misperception to think that the type of returns we see on my beat are a function of risk. I'm an investor in developed markets like Ireland and the UK and those are markets that I'm slowly withdrawing from because I just see them as low return and high risk.

Jim Santos 19:15 
Something I definitely want to get into here is this article that's in the December 2023 issue of International Living, RETA's done something a little different this year for the first time you've compiled RETA's International Real Estate Index for 2024. So basically in this article you have a list of the top 20 countries or locations with investment opportunities. How did you go about creating the ranking for that?

Ronan McMahon 19:45 
A this is not an investment list Jim, so just to kind of clarify that upfront, this is our best places in the globe to buy real estate based on these ten criteria that I believe are the most important. So this Jim, for the first time ever, is where I've married up the RETA beat of investment opportunities with the more lifestyle beat, where this basically stems from. 

Every IL conference. I'm hanging out with IL readers and they say, where's the best place in the world to buy real estate? And my answer is, well, that depends on what your criteria are. Are you an investor? What's important to you? For me, I've been through this, I would say, pretty agonizing process over the past 15 years, because I've made every mistake imaginable. I've made every mistake that every IL reader has made or hasn't yet made in terms of choosing where to go. 

For example, when I started out, I put myself in the Riviera Maya in Mexico, which is a place I've done extremely well from my financial investments. But Jim, it's too humid for me. I found out very quickly I'm the type of person who needs to be in low humidity, mid 70s, warm sunshine, t shirt weather, cool at night for sleep.

And this was a top criteria for me. So this is a place where I've taken, I guess, the 15 years of RETA experience, scouting the globe, finding the best opportunities for profit, finding the best places for lifestyle. And I've constructed a set of criteria just back to where I started, which was the question at every IL conference is where is the best place to buy real estate? And I say, well, that depends on what's important to you. 

Are you looking for relative value? And by that I mean a low price compared to what an equivalent property would cost elsewhere? Is climate the most important thing to you? Is rental income really important? Are you someone who needs income from your property when you're not there? Are you the type of person who wants to be in a near zero holding cost environment? Are you comfortable with HOA fees and property taxes? 

So what I did was, for the first time ever, I guess, I created a framework whereby, first of all, anyone can look at this table, this table which is created from a spreadsheet and get my take on what the most important criteria are and how I rate the best places against these criteria.

Ronan McMahon 23:07 
But I've also, Jim, set up a framework where everybody and anybody can create their own hit list and apply their own subjective values, because there is a degree of subjectivity to this, like with IELTS, other indices. To me, the best weather is low to zero humidity, temperatures in the 70s, cool at the evening. But I know I have friends who love the sweaty humidity of the Caribbean. So there's a degree of subjectivity, of course, with some of these measures. And in terms of the investment components, which also go into that, that's based on our RETA rigor.

Jim Santos 24:00 
So the 20 countries or the 20 locations that are in your ranking here are based on all ten of the categories, 100%.

Ronan McMahon 24:09 
And it just threw up these really it was actually a really fun and interesting process because it threw up some really big surprises. For example, number two, there is a place called Caminho in Portugal, which I spent some time in earlier this summer. And this is a place that hits it out of the ballpark in terms of relative value because it's like a time machine. It's like a Portugal time machine. It's like going back to the Silver coast of ten years ago or going back to the Algarve of 30 years ago. 

And that's a place that has only very loosely featured in RETA because it's so strong on those lifestyle factors. Likewise, Umbria is there, and Umbria is a place that's never made the cut in RETA as a RETA-grade investment deal. But again, it scores a ten on relative value. It scores incredibly strongly on all the lifestyle factors. So that allows it to carry the fact that I see poor weak potential for rental income and weak potential for capital appreciation. Then top of the list is Los Cabos, which has been one of our top RETA destinations over the past eight years ago now.

So that's a place that hits it out of the ballpark in terms of income potential. This is a place where you can buy a condo for under $300,000 that will comfortably generate $40,000 a year in rental income, even renting long term. So, very interesting process. And it threw up some big surprises. I mean, Estepona came in joint third, and I did not expect that. Estepona is a place that I'm extremely fond of. But when I laid all the data out, it really surprised me that it came in third.

Jim Santos 26:35 
Yeah, I was interested to see Rocha, Uruguay in the number four or five spot there, I guess.

Ronan McMahon 26:41 
Yeah, Jim, I was too. That was another one. It was really interesting. I wouldn't have called this. We crunched the data and it came out the way it does. And again, when I see it laid out in front of me, it makes sense. The value proposition from Rocha is compelling. It is for IL readers who aren't familiar with Uruguay, and I know many, many of you are with Portugal. It's kind of South America's Portugal historically, it's got this kind of reputation as the Switzerland of South America.

Jim Santos 27:27 
Very stable banking and stable government.

Ronan McMahon 27:30 
Yeah, it's got all those parallels. But when I'm in Rocha and when I'm in Uruguay, I feel the Portugal parallels. I feel that I see hitchhikers in Uruguay. I see those pine forests which are sand dunes between pine forests and beautiful Atlantic beaches. I feel that just that comfort. There's a certain kind of quiet comfort to rural Portugal, which I also see in Uruguay. 

Plus, you've got the investment potential because Uruguay and Rocha in particular is where development is going. So there's a number of things happening. Uruguay continues to attract more people as the globe, and particularly the region, becomes more unsettled. And then as people come to Uruguay, development is moving along that Atlantic coast towards Rocha. So it's getting to better beaches, wild open spaces. So we've got a path of progress event coming. 

And it's also a place where we can still buy cheap. And then it's got those security and the quality of life benefits. And that just kind of that neat and tidiness and kind of quietness. That can be difficult to find in other parts of Latin America.

Jim Santos 29:07 
Yeah, we spent two weeks in Uruguay and was really impressed with it, really is a beautiful country. I was also really surprised to see Montenegro. You don't really hear a lot of information about also.

Ronan McMahon 29:16 
This is very interesting, Jim. I would have expected Montenegro to come out a lot higher because I guess my personal biases orient more towards the investment question. So why would I have thought Montenegro would have come out higher? Well, the investment case for Montenegro is, let's say you land in Dubrovnik airport in Croatia today. The real estate all around you is going to be extremely expensive. Dubrovnik is totally maxed out. I mean, it's like Venice now with just thieves of people going insurgent. Very unpleasant, very unpleasant to visit, in my opinion now, compared to what it was 10, 15, 20 years ago. 

But you drive 20 minutes and you cross the border into Montenegro. Montenegro, which is a member of NATO, it's a country that is at advanced stages of joining the EU. So they've very much thrown their cap in on, let's say, that the western side of a line, real or imagined, which kind of involves compliance with various kind of institutional integrity and all these things. But the real estate prices will be 60% to 70% lower just across this border. Quite simply because development post the war in the 1990s, development came to Croatia, which is absolutely stunning, absolutely beautiful country.

It's central to Europe and it's accessible to Europe. So it's maybe like an eight hour drive from Munich to northern Croatia. Development came to Croatia, it became maxed out and very expensive for very good reasons, very fast. But that development stalled at the Montenegro border. And now that transformation is happening in Montenegro. 

And also a very interesting dynamic is that historically, Montenegro would have had kind of close tourism ties with Russia. So, for example, I would say going back pre the Ukraine war, at some points in the summer, there were like 18 flights a day from various Russian airports to Montenegro. Of course, that all went away. And now that traffic has been replaced with visitors from the UK and from Scandinavia. And this new market is much more primed to longer stay to higher end and also to buying real estate. 

So this is a place that's very much coming on the market now for international real estate purchases. And a big thing to bear in mind, too, Jim, with all of this, is I'm talking about demand from European sources, and this is very important for IL readers to understand, is that they'll also invest in places where now the US investment might be low to negligible, but they're buying ahead of demand from another source. So that's very important to bear in mind that when you think of rental demand and resale demand, there's big affluent markets in other places like Scandinavia, like Northern Europe, et cetera, that's non US. And for whom the accessibility and the logistical implications are different.

Jim Santos 33:21 
Now, for someone thinking about investing in a property like this, is there like a bar about how much cash you should have available to do this, or is there any international banking involved with the RETA deals?

Ronan McMahon 33:37 
So that's why availability of finance, you'll see, there is a column item as well, and it's also a column item that probably, I would presume, has the lowest total. So you'll see, a lot of places perform very poorly on that column item because finance is generally not available, or if it is available, it's very expensive. 

Now, with pretty much all our RETA deals in places like Panama and Mexico, Mexico's resort towns, pretty much all of these come with developer finance. So RETA members typically are pre-approved for developer finance as part of a deal. Of course, the t's and fees of each finance deal is different, but just to give a kind of a very top level but you go to Europe and it's a completely different situation. 

You go to Europe and International Living readers who are American or Canadian can borrow at really low rates. I mean, you only have to go back, I would say, 18 months, and folks were getting 20 to 25 year fixed mortgages in Portugal under 2%. Now, we're in a different interest rate environment now, but still in Portugal and Spain, you can borrow mortgage finance from kind of between four and 5%.

And if and when we enter an interest rate lowering cycle again, obviously those rates will come down. So over the past decade, average rates in Portugal, for example, have been around are about 2%. So it's very appealing. Folks have been able to borrow at kind of two to 3% in an environment where inflation was running at six to 8%. So really a form I think of it as kind of a money printing subsidy that we can tap into from time to time.

Jim Santos 36:03 
Someone who's reading this article and looking over the list you have here, looking at the different categories, what advice would you have for someone who's interested in finding out more information about any of the destinations on this list?

Ronan McMahon 36:15 
First of all, what's the question your listener is trying to answer? Are they trying to pick the place that's for them? So I would start by setting your criteria. I would kind of match it to a short list of places. I would consume all the information you can, everywhere and anywhere, dig into the you know, reach out to all the IL resources, immerse yourself in YouTube. And then I think, make a concerted shortlist. But with your ruthless priorities. 

So, Jim, learn from me. I had this idea, because I like a place for vacation, that I thought it would be a nice place to live. But make those criteria ruthlessly based on a place that you'll be living, are spending significant amounts of time as opposed to vacationing and then, Jim, visit. I mean, this is it. There's no substitute for boots on the ground. 

When I moved to the Silver Coast, Portugal as the country, there were tax motivations were part of that equation. But once I had chosen Portugal, what I did was using Idealista, which is a real estate listings app that covers Portugal and Spain and I think Italy. But I followed the entire coast highlighting areas and I was looking for a condo that fit my top criteria, which are I want to see the waves crashing on the beach from my terrace, I want to have accessible golf on my doorstep, I want that weather, I want close proximity to a major international airport.

So, again, the proximity to Lisbon was very important. So I made my hit list and I made a short list of four places. I booked an Airbnb in each one of them and I took a month boots on the ground, doing full research on each place. And then I made my choice. So there is just no substitute for this, Jim. But the thing is, it's such a fun adventure and journey. So boots on the ground, whether it's for the investment case or to find that place, there's no substitute. And it's a lot of work, but I think it's some of the most fun and rewarding work you'll ever do.

39:24 Jim Santos 
We've been talking with Ronan McMahon about RETA's International Real Estate Index in his December 2023 article, ‘The 20 Best Places in the World to Buy Real Estate in 2024.’

Now, you can find out more information about RETA on their website realestatetrendalert.com and you can join RETA there if you'd like to get email updates and a host of other information. You can also follow the links on the International Living website to find your way to RETA. Ronan, thanks for taking the time to speak with me today.

Ronan McMahon 39:53 
A pleasure, Jim. Lovely to chat.

Jim Santos 40:05 
The International Living Podcast is a production of International Living. If you enjoyed this episode and you'd like to help support the podcast, please share it with others, post about it on social media or leave a rating and review. If you have an idea for an episode or a question you'd like us to answer, email us at mailbag@internationalliving.com. And don't forget to put podcast in the subject line of your email. That's mailbag@internationalliving.com. 

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Until next time, this is Jim Santos for International Living, reminding you there's a bigger, better world out there just waiting for you.