At Real Estate Trend Alert my beat is to find places where real estate is undervalued and where something is set to happen that means values will increase. I call this “the trigger event.” This trigger event could be a fast-growing, new, middle class or new infrastructure projects that will bring improved accessibility.
Let me give you an example of a place I’ve honed in on. It’s a place where my readers have done well and where there’s still one pocket of opportunity where we could profit—again.
Fortaleza in north-east Brazil has been on my radar since April 2008. Condos members of Real Estate Trend Alert bought more than doubled in value during construction. I’d like to walk you through the trigger events my boots-on-the-ground research uncovered…and to tell you about our next play here.
North-east Brazil has hundreds of miles of stunning sandy beaches backed by palm trees or dramatic dunes. It’s where Brazilians come on vacation. That says something because Brazil has the reputation for having the best beaches in the world. Foreigners, mostly from Europe, also come, many to invest and buy a buy a beach home here.
I came to north-east Brazil to check out what these foreigners were doing and to see if there was an opportunity for us to profit from this trend. But, boots-on-the-ground research has a funny way of throwing up great finds you aren’t looking for. That’s why I spend up to two weeks of every month scouting locales that are on my radar.
A couple of days into my visit I heard about the launch of a new beach condo community 30 minutes east of Fortaleza. Condo buildings like this get launched to the local market at special launch parties. (One such party is being quietly planned for November 30th…but you don’t have to wait. More about this later.)
Back then I wasn’t connected locally like I am now. I didn’t get an invite to this private friends, family and connected-locals event. By the time I heard about it 18 hours had passed…and 80% of the units had sold. I visited the site, liked what I saw, and raced straight to the developer’s office to lock down two condos for myself.
All but a handful of the buyers were local. I’m not talking about rich folks from Sao Paolo and Rio. These were people from Fortaleza.
I watched from home in the following months as my condos increased in value. It quickly became clear to me that I first visited following the wrong trend. The big story wasn’t the surge of foreign investors. The big story was the strong and surging demand from locals.
I honed in on where this group, which is growing in affluence, wanted to own: Fortaleza’s glimmering boardwalk on a curve of beach, near high-rise luxury condos and hotels.
This is Fortaleza’s “in” address. Condos here rarely come up for sale because locals never want to give up a boardwalk address. As one local contact explained to me, “We’d sooner eat nothing but one-eyed steak (eggs) than give up our boardwalk address.” Keeping that address takes priority over everything else.
There was only a limited number of condos available for sale…but a surging demand for those properties. It got better. The boardwalk was all finished with construction. There were only a couple of developable sites remaining.
As real estate investors we always need to keep one eye on potential future supply. We look for supply constraints. That’s because if developers can keep building, we have a problem. More supply will constrain price appreciation. I knew the right deal along the boardwalk would be gold. The play was to wait for the right pre-construction deal in this area and, to get in early before prices rose over the construction period.
Over a six-month period I recommended two condo buildings on and just off the boardwalk. I was more than proven right in my recommendations. Values rose by 109% and 88% from our pre-release pricing to delivery.
I bought four condos in one building with a small down payment. I was able to sell on two of them before completion. I walked away with two debt-free condos. (Remember what things were like in 2009. Everything was tanking, but not my and Real Estate Trend Alert members’ investments in Fortaleza.)
After this surge the boardwalk was done for me. It was getting expensive. Not crazy expensive…but, expensive enough that there was now downside risk.
I began to look for a new play in Fortaleza, a new segment of the market. A new metro was just the thing. A $6 billion investment in Fortaleza’s infrastructure was underway. I wanted to get ahead of it from an investment point of view. So, I recommended buying pre-release in a leafy area where a new convention center was under construction and where ground had broken on a new metro line. All that development meant more people—and more jobs. (There already was a strong stable employment base in this area as this is the legal center and an academic center). This is extremely important as Fortalezans want to live near where they work.
Because of my insider contacts we got to buy pre-release at special RETA members-only pricing and terms.
I knew these condos would be perfect rentals. Just the type of condo that the market would want here. Again, I was right. Prices rose by 46%.
After that, I went looking for a new pocket of opportunity. Plans called for the extension of the boardwalk to the Iracema beach area. This area had become grimy and seedy. Beach bars, night clubs…buzzing by day but not a place you would like to stroll at night. A plan called for re-gentrification and transformation into a tourism and residential area.
Prices on my recommendation rose by 44%.
We had a good run with pre-construction condos in Fortaleza. But that opportunity is done. Luckily something else big is happening just west of the city. Something very, very big. Something that needs your attention now.
Plans are quietly underway for one of those special launch parties on November 30th…but members of my Real Estate Trend Alert group can get in now. That puts them ahead of the curve—not only ahead of the locals but at prices 10% less than the launch party list price.
We can get in with as little as $3,780 down and monthly payments from $230. I’ve just sent members of Real Estate Trend Alert my full report on this opportunity and confidential details on how they can act. Join Real Estate Trend Alert to immediately access it.
Editor’s Note: Ronan McMahon lets his Real Estate Trend Alert members know about special, limited opportunities like these off-the-radar deals…and he looks for these opportunities in places all over the world. For more information, see here.