Buying Real Estate Overseas For Cash Flow (And A Better Life)

26Don't Be Tempted to Take a Second Bite

The greatest real estate loss of our investing careers earned that position of honor thanks to good, old-fashioned greed. This one was all Lief. Kathleen was never on board. Just like every other investor we knew, Lief got caught up in the exuberance of global markets in the years leading up to the 2008 global real estate crisis and double dipped, despite Kathleen's reluctance.

A colleague had a brother. His brother had a friend who was working with a developer in Northern England. The project fit all the parameters of a great deal. It was preconstruction, so the pricing was below market. The payment terms were the standard of the day—10% down with two more 10% payments over XX months. The developer had lined up banks to finance the remaining 70% upon completion. The rental-income projections were conservative based on current rents and would slightly better than cover the mortgage and other operating expenses. On paper, the deal was golden. Lief reserved one of the condos.

A colleague invested, too, and, after we'd made our initial deposits, he updated us regularly on sales and general progress with the project. A few months after we'd made the purchase, the colleague sent an email saying that 10 units had come back onto the market. A group of Italian investors had fallen out.

By that time, the developer had increased prices, which is typical with this kind of preconstruction offer. To create momentum and to get cash flowing, preconstruction ...