Rental Real Estate Passive Income in 3rd World - Good Idea?

[rudder]

I was wondering if anyone here besides @publicduende has experience building a rental income empire exclusively from real estate in whatever 3rd world countries they're "happier" abroad in? @publicduende has experience with this in the Phillippines. To start, I have a beautiful piece of land with awesome views, that includes an area that I could rent as a cheap campsite, and also includes a house, that I can use for a somewhat pricey vacation rental. I wouldn't mind camping out on my land for a few nights a month when there are paying guests and attending to the guests. Just renting the house out 4-5 nights per month would cover all my living expenses for the month, since we can live on the cheap here. No mortgage, no rent, no utility bills (other than a 25 USD per month phone plan) since we're off-grid. We produce some of our own food.

I was thinking about taking Myles Wakeham's Succeeding with Rental Real Estate course. I'm hesitant to pay $189 for what's essentially only 15 hours of audio lectures. Also, I'm sure most courses and books on this topic are for first world situations. This country, Bolivia, for example, is notoriously bad for delinquent tenants, also good luck trying to find a reliable property manager. A maintenance guy? Forget about it. Maintenance is a four letter word here. One avenue I was thinking about approaching here, would be to buy pasture land and then rent it out to cattle owners. This is actually a pretty common practice in the rural area where we're living. The hectare generates 25-50USD per month, which is not bad money here.

[gsjackson]

I once owned a couple of rental properties in a third world country -- Detroit -- when I was living in Louisiana (long story as to how I came into possession of them). Just about the worst experience of my life. Finding a reliable property manager is job one, and good luck with that. I had one who collected about $5,000 in rent and didn't give me a penny of it. Just dared me to come to Detroit and do something about it. These were all white people I was dealing with, by the way, every one doing whatever he could to steal as much money from me as possible.

So I certainly wouldn't recommend renting at a distance to normal tenants who want to live full-time in your property. But going after up-market tourist types to rent a view property, or the pasture land idea sound like they could work. Good luck, and be careful.

[Shemp]

You could probably do well with AirBnb, focusing on tourists to Machu Picchu. What you need to do is build a YouTube/Instagram presence as free advertising. Some advice:

1) Confine all your politically incorrect opinions, including about covid, to HA and never, ever, ever link your public internet persona with your HA presence.

2) Do lots and lots of practice with videos and photographs before going live on YouTube. Obviously, you can always delete and replace initial attempts, but better to do it right the first time.

3) Imitate the other politically correct influencers. Mention that you are fully vaccinated (buy a fake certificate somewhere) yourself and very safety conscious, but don't say anything about requiring guests to be vaccinated. LBTQetc welcome.

4) Read what other AirBnb hosts say about the business. Avoid interjecting politically incorrect opinions into those AirBnb forums or you will be banned.

5) VRBO and other alternatives to AirBnb are important in case AirBnb bans you got whatever reason. Don't be too dependent on amy social media. Build your own website and duplicate eveyrhing there that you put on YouTube, Instagram, etc, just in case they change terms of service.

6) Be patient. Tourism is still slow because of covid, bit should be back to normal by 2024. Keep making new videos each month YouTube and eventually your follower count will grow.

[edit] and go back immediately, @rudder, and delete all mention of country where you are located, because that makes it too easy to dox you. You absolutely cannot let your business be associated with HA.

[MrMan]

My wife might gets some land that is an up-and-coming area in Indonesia where they are getting land out of government hands and making free hold or HGB or whatever category of property out of it. She'd have to pay some fees to get it changed to different stages of property ownership. We probably aren't looking at rentals, but maybe some non-profit use, and possible farm tourist type activities there some day in the future.... maybe. We'll see.

So I'd be interested in the thread.

In some countries it is hard for foreigners to own land except for air space (apartments, not an actual plot of land), so you can sort of own it through a wife. Risks on that depend on your relationship. You might also be able to own stock in a corporation that is legal to own land.

[Spencer]

Maybe can do course cus 189 chimp change and man do some biz exprences in poverty worlds so no risk excepting 15 hours you time

maybe land no good for asia tropic lands cus most not have lawful way for forner buy also if tryfor long leasing and take caring land sooooo many pitfal

maybe covids make buyer market if shop round for on fire sales apartmentals same before yohan public duende

[publicduende]

I was wondering if anyone here besides @publicduende has experience building a rental income empire exclusively from real estate in whatever 3rd world countries they're "happier" abroad in? @publicduende has experience with this in the Phillippines. I am in a high jungle region of Peru, and thinking about going that direction. To start, I have a beautiful piece of land with awesome views, that includes an area that I could rent as a cheap campsite, and also includes a house, that I can use for a somewhat pricey vacation rental. I wouldn't mind camping out on my land for a few nights a month when there are paying guests and attending to the guests. Just renting the house out 4-5 nights per month would cover all my living expenses for the month, since we can live on the cheap here. No mortgage, no rent, no utility bills (other than a 25 USD per month phone plan) since we're off-grid. We produce some of our own food.

I was thinking about taking Myles Wakeham's Succeeding with Rental Real Estate course. I'm hesitant to pay $189 for what's essentially only 15 hours of audio lectures. Also, I'm sure most courses and books on this topic are for first world situations. Peru, for example, is notoriously bad for delinquent tenants, also good luck trying to find a reliable property manager. A maintenance guy? Forget about it. Maintenance is a four letter word here. One avenue I was thinking about approaching here, would be to buy pasture land and then rent it out to cattle owners. This is actually a pretty common practice in the rural area where we're living. The hectare generates 25-50USD per month, which is not bad money here.

@rudder

LOL I don't think I have exactly built a "rental income empire" in the Philippines, that's a gross exaggeration, and a sore note, too. Yes I own 3 condo units outright, one in Davao (where I am now) and 2 in the Ortigas business district of Metro Manila. Yet, only one is currently rented out and provides a small passive income. Because of the pandemic, rentals have plummeted all across the Philippines and, I would say, every emerging country that had to say adios to casual expats and long-stay tourists.

I bought this particular 1-bedroom in Ortigas, right on the same floor where my home is. I fitted it out and furnished it to very decent standards, expecting to rent it to one of the many foreigners who work for the Asian Development Bank (which is walking distance). Then Covid lockdown and travel ban struck, all the ADB foreigners were told to work from home and they're probably still all in their home countries.

To cut it short, I had to cut my rental expectations from 50/55K to 25/30K. I am now renting it at 33K, including association dues (which are about 4K every month), so the net is half of what I would have expected, in a standard estate market.

Finding a tenant for this condo unit in Davao is gonna be even harder, much harder. The unit has been fitted to extremely high standards, luxury dare I say, and I refuse to rent it out for less than 90K, including dues and use of a parking slot downstairs. Weren't it for Covid, market rate would have been 110/115K.

All in all, investing in real estate in an emerging country like the Philippines is generally not a good idea. It might make sense if one has a bit of a spare cash and wants to invest in a small unit (a studio or small 1-bedroom) that can be easily rented to locals. Anything bigger or more expensive than that, might become a burden in terms of finding a tenant or buyer.

Truth be told, I never meant this condo in Davao as an investment. In my 2015 mind, this was supposed to be my home. Little could I imagined that

1) my Davao business would fold after 2.5 years
2) the condo developer would delay the projection completion by at least 3 years
3) I would find C in Manila and opt to live there
4) a global, multi-year travel ban would be enforced and severely cut the market for the larger/better condo cuts.

[JackFlexer]

What about the heating?

[rudder]

I was wondering if anyone here besides @publicduende has experience building a rental income empire exclusively from real estate in whatever 3rd world countries they're "happier" abroad in? @publicduende has experience with this in the Phillippines. I am in a high jungle region of Peru, and thinking about going that direction. To start, I have a beautiful piece of land with awesome views, that includes an area that I could rent as a cheap campsite, and also includes a house, that I can use for a somewhat pricey vacation rental. I wouldn't mind camping out on my land for a few nights a month when there are paying guests and attending to the guests. Just renting the house out 4-5 nights per month would cover all my living expenses for the month, since we can live on the cheap here. No mortgage, no rent, no utility bills (other than a 25 USD per month phone plan) since we're off-grid. We produce some of our own food.

I was thinking about taking Myles Wakeham's Succeeding with Rental Real Estate course. I'm hesitant to pay $189 for what's essentially only 15 hours of audio lectures. Also, I'm sure most courses and books on this topic are for first world situations. Peru, for example, is notoriously bad for delinquent tenants, also good luck trying to find a reliable property manager. A maintenance guy? Forget about it. Maintenance is a four letter word here. One avenue I was thinking about approaching here, would be to buy pasture land and then rent it out to cattle owners. This is actually a pretty common practice in the rural area where we're living. The hectare generates 25-50USD per month, which is not bad money here.

@rudder

LOL I don't think I have exactly built a "rental income empire" in the Philippines, that's a gross exaggeration, and a sore note, too. Yes I own 3 condo units outright, one in Davao (where I am now) and 2 in the Ortigas business district of Metro Manila. Yet, only one is currently rented out and provides a small passive income. Because of the pandemic, rentals have plummeted all across the Philippines and, I would say, every emerging country that had to say adios to casual expats and long-stay tourists.

I bought this particular 1-bedroom in Ortigas, right on the same floor where my home is. I fitted it out and furnished it to very decent standards, expecting to rent it to one of the many foreigners who work for the Asian Development Bank (which is walking distance). Then Covid lockdown and travel ban struck, all the ADB foreigners were told to work from home and they're probably still all in their home countries.

To cut it short, I had to cut my rental expectations from 50/55K to 25/30K. I am now renting it at 33K, including association dues (which are about 4K every month), so the net is half of what I would have expected, in a standard estate market.

Finding a tenant for this condo unit in Davao is gonna be even harder, much harder. The unit has been fitted to extremely high standards, luxury dare I say, and I refuse to rent it out for less than 90K, including dues and use of a parking slot downstairs. Weren't it for Covid, market rate would have been 110/115K.

All in all, investing in real estate in an emerging country like the Philippines is generally not a good idea. It might make sense if one has a bit of a spare cash and wants to invest in a small unit (a studio or small 1-bedroom) that can be easily rented to locals. Anything bigger or more expensive than that, might become a burden in terms of finding a tenant or buyer.

Truth be told, I never meant this condo in Davao as an investment. In my 2015 mind, this was supposed to be my home. Little could I imagined that

1) my Davao business would fold after 2.5 years
2) the condo developer would delay the projection completion by at least 3 years
3) I would find C in Manila and opt to live there
4) a global, multi-year travel ban would be enforced and severely cut the market for the larger/better condo cuts.

How about an update? Have things picked back up now? Here we haven't had much business with the tourism thing. Bolivia isn't exactly Macchu Picchu as one poster suggested. I just don't think the volume of foreign tourism exists in this area, so I'm not sure what to do. We set our land up for self-sufficiency, but you know most tropical soils aren't fertile, and there's always ongoing costs with organic fertilizers and whatnot. Plus just maintaining an off-grid home isn't cheap either. I don't known WTF I was thinking when we decided to buy this place and develop it. It's so big and hard to maintain.

[publicduende]

How about an update? Have things picked back up now? Here we haven't had much business with the tourism thing. Bolivia isn't exactly Macchu Picchu as one poster suggested. I just don't think the volume of foreign tourism exists in this area, so I'm not sure what to do. We set our land up for self-sufficiency, but you know most tropical soils aren't fertile, and there's always ongoing costs with organic fertilizers and whatnot. Plus just maintaining an off-grid home isn't cheap either. I don't known WTF I was thinking when we decided to buy this place and develop it. It's so big and hard to maintain.

Yes and no. Covid lockdown obviously went away as we managed to rent our Manila condo at a slightly higher rate for a couple more years. As of now, it's vacant and Heaven only knows when we will ever rent it again. Manila has a notorious oversupply of condo units, at least compared to the number of those who can afford spending $800/$1000 a month to live near decent malls and offices, still, in a third-world megalopolis.

The Davao condo is, fortunately, also rented out to a lovely Japanese family. All in all, we are getting some passive income. Yet, not enough to admit that investing in real estate rentals is a surefire way to get rich, as many seem to advise (for a fee, usually!).

I understand you bought a land in Bolivia. Well, at least you have a place you can call home and where you can cultivate your own fruits and vegetables, maybe even crops is large enough. By the way, usually land is not available for sales to foreigners. Did you lease the plot from another owner? Or you have a local girlfriend or wife who owns the title to the land?

[rudder]

How about an update? Have things picked back up now? Here we haven't had much business with the tourism thing. Bolivia isn't exactly Macchu Picchu as one poster suggested. I just don't think the volume of foreign tourism exists in this area, so I'm not sure what to do. We set our land up for self-sufficiency, but you know most tropical soils aren't fertile, and there's always ongoing costs with organic fertilizers and whatnot. Plus just maintaining an off-grid home isn't cheap either. I don't known WTF I was thinking when we decided to buy this place and develop it. It's so big and hard to maintain.

Yes and no. Covid lockdown obviously went away as we managed to rent our Manila condo at a slightly higher rate for a couple more years. As of now, it's vacant and Heaven only knows when we will ever rent it again. Manila has a notorious oversupply of condo units, at least compared to the number of those who can afford spending $800/$1000 a month to live near decent malls and offices, still, in a third-world megalopolis.

The Davao condo is, fortunately, also rented out to a lovely Japanese family. All in all, we are getting some passive income. Yet, not enough to admit that investing in real estate rentals is a surefire way to get rich, as many seem to advise (for a fee, usually!).

I understand you bought a land in Bolivia. Well, at least you have a place you can call home and where you can cultivate your own fruits and vegetables, maybe even crops is large enough. By the way, usually land is not available for sales to foreigners. Did you lease the plot from another owner? Or you have a local girlfriend or wife who owns the title to the land?

My wife's a national. We can't really turn a profit with commercial fruit sales, because the tropical soil has been exploited too much from previous owners, and doesn't have hardly any nutrient reserves leftover. We did some testing and it was very poor. We have been adding lots of inputs which is costly. Some areas of the property are OK though. It's so remote too, so we just want to concentrate on food for ourselves. We have to do an analysis of our overhead costs vs. the $ value of what it would cost us to go buy an equivalent amount of food from town. That's the only way it makes sense. E.g. Turning 50 dollars of manure into 100 dollars of fruit. We have a Papaya tree planted close to our house that received (at the most) 10 dollars of inputs and has given us about a bowling ball sized papaya per week over the course of the past two years, so that was a win.

Would you recommend we take out a loan against the land and buy my father-in-law's house in a 200,000-population city? It's a block from a neighborhood hospital and they just paved the street for the first time ever. He wants to give us a good price, but I'm not sure I'd trust hiring an "inspector" in this part of the world to look at the flaws and give us an accurate idea of all the renovation$$$ we will have to do. Bad roof? Bad Plumbing? Redesign the ventilation so the house isn't a sauna? And on and on. Peoples definitions of what's acceptable are different from my own in this part of the world.

What I like about it is that the main house is down a hallway, and on both sides of the hallway are two small studio apartment-size rental units with private entrances facing the street. It seems like it could potentially cashflow, but this is like what you were saying in your original post: renting to cheap locals for local prices. Each unit DOES NOT have their own "medidor" so you can't separate their electrical usage from the main house to bill accordingly. I don't like the culture here either where problems with delinquent "inquilinos" are common. I know my father-in-law has been burned in the past from renters that kept saying, "mañana, mañana, mañana."

That's about 3 hours from where we live, so I'm also worried we just wouldn't be able to deal with the place. The plan would be to set my brother-in-law up as the landlord and he would be responsible for finding new tenants and collecting rents. It's the repairs and renovations as well as our physical distance that give me the most pause. That and not having any savings.

[ElijahMike]

I used to live in a 3rd world country and real estate there was garbage if you're looking to rent out your house. Because the income of people is not good that means you will not be able to get much rent out of them. You wont be able to get your initial investment back even in 36 months.

[publicduende]

I once owned a couple of rental properties in a third world country -- Detroit --

LOL

[publicduende]

As far as I am concerned, this post didn't age well.

Manila is definitely not a place where it's recommended to buy a condo as a rental investment. It's OK to ignore the ridiculous prices for the sake of securing a decent accommodation in a place close to amenities (restaurants, maybe one or two malls, a hospital, etc.). This is because, with the insane amount of traffic and the glacial times to move from A to B, it's better to have what one needs at walking distance, or maybe 10 minutes away by a Grab car.

The problem with Manila is that, let's be honest, it's a shithole nobody in their right mind would want to live. Yes, there are job opportunities in the business districts (Makati, Ortigas, BGC) but, coincidentally, that's where the RE prices are the highest and very few people who work there can afford even renting one of those units, let alone buy them. Most still commute every way possible: metro, jeepneys, buses, shared cars, etc.

I am in Osaka these days, a fulgid example of how a city can be large yet livable, bustling yet clean and orderly. Yes, Japanese people are in a crisis yet they haven't lost their sense of discipline, of collective purpose and respect for the other. It's a dream, at least compared to Manila. I will be staying here until first week of January but temptation is strong to be back here often, perhaps by setting up a company, who knows...

Anyway, back to rental as an investment, rental prices are based on actual demand. Due to the massive oversupply of condo, the only way to have a fighting chance to rent your unit is by:

• furnishing it to the highest possible standards, like I did in Davao, hoping that it will stand out
• offering it 10-20% below the average market rate, i.e. "firesale"

If you bought the units cash outright, like I did, having a reduced rental income might not be a big deal. If you have a mortgage on it and the rental barely covers the mortgage payment, net of expenses, then the horror reveals itself for what it is: a shit investment.

Nowadays, one is much better off buying PEPE shitcoins. Everything crypto is still subject to insane volatility and irrationality, yet one can more easily make a quick book than investing in traditional assets like stocks and bricks.

[Shemp]

Title of thread itself is misleading: real-estate is not fully passive unless you own it as a publicly traded stock (REIT, timber and other natural resources companies that own lots of land, certain other businesses whose real-estate holdings dwarf the primary business, etc). Preceding statement is doubly true in less developed (aka 3rd world) countries. That is, directly owning real estate is effectively owning a business that has to be managed. As with any business, you can hire a manager to manage the day-to-day operation, but a manager cuts profits and can cause problems if incompetent or dishonest.

My main objection to real estate in less developed countries where you are a foreigner is that this is not a business where you are doing something a local could not do. So if it becomes known you are making big money, locals will push you aside by some crooked scheme. Maybe just kill you. Best businesses for foreigners are businesses that depend totally on the foreigner's personal involvement to be profitable. For example, the foreigner is who the clients trust and no local could ever gain that trust. In a business like this, locals can (and eventually will) milk the foreigner in some way but they won't cut him out entirely or kill him unless they are idiots.

Which brings up another point. Some foreigners like to surround themselves with idiots because idiots are easier to compete against. Problem is, idiots do idiotic things. For example, dishonest idiots might try to steal a business or kill the owner of a business that the idiot himself is incapable of running, but even honest idiots do dangerous things. Assuming your business depends on your personal involvement, better to be surrounded be intelligent thieves who understand that a milk cow has to be kept alive if they want to continue milking it.

[kangarunner]

The problem with Manila is that, let's be honest, it's a shithole nobody in their right mind would want to live.

Then why did (or does) Rock choose to live in Makati?

I am in Osaka these days, a fulgid example of how a city can be large yet livable, bustling yet clean and orderly. Yes, Japanese people are in a crisis yet they haven't lost their sense of discipline, of collective purpose and respect for the other. It's a dream, at least compared to Manila. I will be staying here until first week of January but temptation is strong to be back here often, perhaps by setting up a company, who knows...

Can we see some photos of you there sir? I'm putting forth a call for some evidence. Would you please answer that call sir?