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

27Know Who You're Buying With

In the early 2000s, we met a young entrepreneur in Nicaragua whose family owned a piece of land on a lake. He'd begun, with family money, to develop the land into a resort. He had no prior development or construction experience. The lack of construction experience didn't bother us. You can hire that out. And we didn't worry about the lack of development experience because his vision was strong and his family backed him, because it had the financial resources and the local connections to follow through. The location was excellent, and the guy had prioritized the lakeside amenities—a restaurant, bar, and activity area—which were already in place when we visited for the first time. This was smart; these kinds of services help foster rentals.

The developer positioned the product as turnkey. The bungalow investment would be supported by rental and property management. As an owner, you bought your unit then waited for your income checks. That was the promise.

We invested early then watched, over a couple of years, as the developer sold a couple dozen more bungalows. Construction was slow at times, both because construction is always slow at times in the developing world and also because in this case roads and foundations were being dug from the side of a caldera. The dramatic setting was a big part of why we bought. Still, the developer stayed reasonably on schedule.

After our bungalow was completed, we visited to create a punch list of construction ...