Caribbean Real Estate Opportunities Abound

In the past year and a half I have been traveling in the Caribbean looking at and evaluating real estate projects to invest in, and I must say that the opportunities for savvy investors are endless.

My trips have taken me to Cayman Islands, Bahamas, Jamaica, Anguilla, Dominica, Antigua, Barbuda and St. Lucia. I also plan to visit St Croix, St. Kitts and Nevis, Grenada, Barbados and Trinidad in the next few months.

I have looked at all types of properties and development projects comprising of marinas, hotels and resorts, golf courses and residential subdivisions that range from $2M to $1B in value. However, I believe that the current sweet spot for investments are in the $5M to $15M range.

There are a number of reasons why the Caribbean is an attractive place to invest, and these are:

1. Properties hold their value much better than properties in other parts of the world such as US and Europe. Most of the islands are small (with the exception of Jamaica, Trinidad, Cuba and Dominican Republic) therefore there is only a finite amount of good land available for development. 

2.  No threats of terrorism. Everybody knows everybody, therefore where is a terrorist going to hide.

3. Stable democratically elected governments. Most islands operate under British common law.

4.  Larger international real estate companies have ignored the smaller investments and projects, preferring to focus on “brand name” investments in the $100M plus range.

5.  Many financial institutions prefer to finance projects that are $10M or even $20M and above. Most projects under $10M are struggling to get financed. Lenders that can offer creative financing solutions that include both debt and equity financing for these smaller projects can make a lot of money.

6. There are many projects that have stalled because the financial institutions that were once heavily lending in the Caribbean have either gone bankrupt (Lehman Brothers, Icelandic Bank, Clico Investment Bank etc), changed their lending criteria, or they no longer have access to their funding sources that they once had. There are many half built projects that still have purchaser deposits on their books. With much of the initial risk in the deal (permiting, zoning, pre-sales etc) already absorbed and with the property in financial distress, there exists an opportunity to acquire substantial equity at a discount. 

7. Occupancy levels are down and many hotels and resorts are just breaking even or losing money.  There are numerous reasons for this and some of the reasons are as follows: 

·        Too much debt

·        No marketing budget

·        No websites or poorly designed websites

·       High utility costs and not making use of solar power and/or solar hot water heaters to reduce costs

In many cases some of the properties I have looked at simply need to be recapitalized in order to upgrade to solar power to cut utility costs, refurbish the property, redesign their websites and focus on marketing themselves and local activities properly.

Let me give you an example. I am currently working on acquiring a property that has the following negative features:

Currently in foreclosure and owned by a bank

Some of the rooms need upgrading

Property needs to be completely painted and landscaped

Lousy website

No marketing budget

Low occupancy levels – due to some of the above

Now here are the positive things and why I like this deal:

30 acres of prime beach front land

A fully operating hotel with restaurant facilities

30 fully serviced and approved residential building lots

479 time share owners who are paying annual maintenance fees

$13M of unsold time share inventory

Very good visitor reviews on Trip Advisor

Easy access to North America

Now here is the best part:

It can be acquired, refurbished and recapitalized, which would allow it to restart the time share program, upgrade the website and initiate a proper sales and marketing program for approximately $5.5M. 

The projected potential profit in 5 years on the whole project would be $12M which would then allow us to have a debt free, sustainable and profitable hotel resort operation.

This is only one example of several that I have like this.

So while others may only see difficulties and the negative side of things, I see opportunity.  I see the opportunity to acquire assets / equity at substantial discount to market value and build a substantial Caribbean real estate portfolio of boutique hotels, luxury rental villas and commercial projects that could have sustainable recurring revenue based on fractional and/or timeshare ownership.

I also see the opportunity to create long term employment and to support the communities that we invest in, and thereby create a win - win environment for everyone involved.

If anyone is interested in partnering with me to take advantage of the Caribbean opportunities at hand please feel free to contact me directly.


Visit my website to see more of the Caribbean projects I am working on.


P.S.  Follow me on Twitter: @BruceRamsey1

 

Value Averaging Model Portfolio's

Everyone knows how volatile the stock market has been and how uncertain the world's economies have been over the last few years. The majority of investors have made little or no money from stocks or mutual funds for a very long time. This could be because the average investor does not have a trading strategy for making money from stocks, and therefore tends to “buy and hold” then sell at a loss. However, sometimes a bad year is a bad year no matter what investment strategy you use. 

For the past 12 months we have been working on testing and fine tuning a stock investing methodology based on the Value Averaging investment strategy and we are now pleased to announce the VA Model Portfolios. Managing the portfolio‘s over the past months has allowed us to fine tune the methodology to the point where we believe that is it a viable system for trading securities.

We have created these models as a way to show / teach investors how Value Averaging works and how to apply the strategy over time. The first model is called the VA Growth Strategy and it is intended to demonstrate that Value Averaging works across broad market sectors and is particularly valuable during times of high volatility. The second model is called the VA Internet Strategy and it applies the Value Averaging methodology to the largest companies primarily engaged in the internet industry. The model is designed for investors seeking aggressive capital growth with significant volatility. Over time we will add additional model portfolios.

We use ETF’s and Index Funds with a few select stocks for the portfolios.  Using Index Funds or ETF’s is a great way to achieve very good investment results because it sidesteps flawed decision making and psychological traps. The S&P 500 beats 80% of managed funds in long term returns. Therefore the investment vehicle you choose is far more important to your investments performance than the mechanical rules you follow to invest in it. 

Simple versus Complex

The majority of investors tend to prefer the complex and artificial as opposed to the simple and unadorned. Too many investors believe that stock market investing requires sophisticated strategies, the juggling of dozens of variables and complicated portfolio management. Nothing could be further from the truth. Value Averaging is simple to understand and easy to implement, requiring less than 30 minutes a month to execute.

Warren Buffet states that, to be a successful investor does not require one to have a high IQ but rather it requires two things: 1. A strong intellectual framework on which to base your decisions and 2. Not letting your emotions corrode the framework.

When making decisions, humans tend to view everything in the present tense. We time-weight information meaning that the newest thing always carries the greatest importance. Think of the last time you really screwed up. When the mistake was made you had to contend with emotion. The mistake becomes obvious when, drained of emotion and feeling, you take a historical perspective.

Value Averaging removes the emotion from investing, all you have to do is follow the easy to understand formula based system. No rocket science involved.

Monthly Trades

Each month we will trade a $1,000,000 virtual portfolio and produce a report showing the trades done and how the portfolio has performed. We will use the services of Marketocracy.com to manage the portfolio. Marketocracy provides access to exclusive tools to build investment skills and gauge success using virtual money while adhering to very real federal compliance rules and marketplace trading constraints. Each portfolio is allocated with a virtual $1 million – enough buying power to make lots of trades and to put together a diversified model portfolio. In addition, portfolios are monitored for compliance with S.E.C. rules for mutual fund managers so we can see how they respond when they are out of compliance. All portfolios are carefully monitored and every trade tracked for investment performance.

If anyone is interested in partnering with us to create a portfolio management business around the VA strategy please contact me to discuss further. 


To see the reports and the model portfolios please visit:  


http://www.vainvestmentsoftware.com/model_portfolios.html