Podcast

Is Mexico a Good Real Estate Investing Market?

1Q21

An open discussion on the real estate market in Mexico, the challenges associated with investing internationally, and learning the best ways to conquer those obstacles to capture strong returns

Read The Transcript

For the next episode of Real Wealth, Real Health, we welcome Fletcher Wheaton, founder of Cabo Key Real Estate, and an international real estate investor with extensive experience in the Cabo San Lucas region of Mexico. Following the Great Recession in 2008, Fletcher decided to bet on himself as an entrepreneur and he ventured into real estate, where he started by purchasing housing assets aimed at young professionals and college students. Having been a renter himself, Fletcher saw and understood the opportunities for growth that exist with strategic investments in rental properties. When his Father purchased an investment property in Mexico, his investment focus – and life shifted.

Fletcher recognized a burgeoning market with plenty of room for growth, and little competition, and has since dedicated himself to learning the ins-and-outs of the Mexican real estate market. His amassed expertise and excellent video exhibits of the marketplace have positioned him as a leading resource for prospective investors, and among the growing expat community in Cabo. Our enlightening discussion touches on the various challenges one is likely to face when starting (and continuing to operate) as an international investor, the changes Fletcher sees on the horizon for Mexican commercial real estate, and his predictions for appreciation that will make Cabo stand out as an even greater investment opportunity. As always, we also touch upon Fletcher’s personal views on wealth building, and the meaning behind one’s pursuit for financial security.

Key Insights

  • Understanding the process of getting involved with international commercial real estate investing as a US citizen
  • Examining how seasonality (Spring Break) impacts Mexico’s tourist-centered real estate markets
  • Tips for navigating the structural and cultural challenges of investing abroad
  • Breaking down the reasons people seek investments overseas, and why Mexico stands out as a popular choice
  • Assessing the future of Mexican commercial real estate, and how investors can maximize value on the way

Guest Bio:

Fletcher Wheaton is an international real estate investor and educator.  He first got into real estate in 2008, when he and his family invested into student housing in his hometown of New Orleans, LA.

On a real estate scouting trip in Los Cabos, Mexico, Fletcher met his wife who also works in real estate, and the rest in history.  He has since transitioned to an investment portfolio in the Mexican beach markets.  Fletcher now helps North American investors buy into these markets with his extensive knowledge and local connections.  You can connect with him on LinkedIn or visit his site cabokey.com.

Resources:

Real Wealth Real Health

Alpha Investing

[email protected]

Fletcher’s LinkedIn

Fletcher’s YouTube Channel

Cabokey.com

Podcast Transcript

Speaker 1:

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Speaker 2:

Welcome to Real Wealth Real Health, the show that empowers you with insights, information and inspiration to achieve your version of financial wellness. Learn how to balance living a full life today with planning for the future. This podcast is brought to you by Alpha Investing, a real estate centric private capital network that provides exclusive investment opportunities to its members. And now, here are your hosts, AdaPia d’Errico and Daniel Cocca.

AdaPia d’Errico:

Hello, and welcome back to another episode of Real Wealth Real Health. Our guest today is Fletcher Wheaton, an international real estate investor and educator, owner at Cabo Key Real Estate holdings and the podcast host of Real Estate Without Borders, which focuses on international real estate markets and investing. Fletcher first got into real estate in 2008 when he and his family invested into student housing in his hometown of New Orleans. Then his life changed on a real estate scouting trip in Los Cabos, Mexico, where he met his wife and has since transitioned to building an investment portfolio in the Mexican beach markets.

AdaPia d’Errico:

Fletcher now helps North American investors buy into these markets with his extensive knowledge and local connections. In this episode, we break down the reasons why people would seek investments overseas and why Mexico stands out as a popular choice, especially for Americans. We assess the future of Mexican commercial real estate and how investors can maximize value on the way while digging into the specifics of Cabo and what makes this market unique, whether it’s from a demographics perspective, what it takes to diligence a potential investment in Mexico from the developer to financing legal and entity considerations, all of which are very important for anyone considering entering into this potentially lucrative market. Fletcher, welcome to the podcast.

Fletcher Wheaton:

Thank you, AdaPia. Very excited to be on today.

AdaPia d’Errico:

Yeah, it’s great to have you. It’s great to have you. I’m really looking forward to the conversation because your background as a real estate investor starts in America and then we’re going to talk a lot about what you’re doing currently in Mexico and specifically Cabo. So we always like to start with telling a little bit about your story. It’s always so interesting to hear how everybody kind of rolls into real estate investing because we all have different ways that we got into it. So how did you get your start in real estate?

Fletcher Wheaton:

So I’ve always been fascinated with real estate. When I was little, I would kind of like do mock-up like architecture stuff where I remember I had a little firepole where I would slide down and stuff. But if you fast forward to college, when I was in college, I remember living in with four roommates and just I didn’t know who we were paying rent to. And I was like, well, this seems like a pretty gravy job because I knew the guy had two places. So when I got home after I graduated, I talked to my father and I said, “Why don’t we get some rental properties?” And this was maybe 2008 and Hurricane Katrina had hit New Orleans in 2005. He would say, “Hey, that’s a terrible time to invest.” But New Orleans was already at a low. So we accumulated duplexes and triplexes in the university area and really focused on young professional or student housing. So that’s really how we got in. And we basically got up to about 20 tenants and that’s how I really got into rental properties and real estate investing.

AdaPia d’Errico:

So how did you actually do that when you say you accumulated? What was your first step towards like I’m thinking about financing? How did you finance your first and what led you to say, hey, we’re actually going to accumulate and what were property prices back then?

Fletcher Wheaton:

So I have a lot of people reach out that are younger and I had the good fortune of having the backing of my father. So I always recommend that people can start out family and friends. I was in a fortunate position where my father had capital that we could put to work. So we’re looking at houses and these properties we got for I think it was $110 per square foot in New Orleans. It was $250,000 were our first two properties. One was a duplex, the other was a triplex. And then those cash flowed really nicely. And we had those for about two years and said, hey, this is doing very well. And that’s really when we started adding to the portfolio. But it was definitely family money that was involved.

AdaPia d’Errico:

Wow. Yeah, I mean, it’s how Alpha started. Maybe not with like fathers, but definitely like friends and family money. And even when I worked at a hedge fund years and years and years ago, the hedge fund managers, by the time I was there, there was a half a billion dollar fund. But they had started with friends and family. And so it’s similar. And I always use that as a parallel when I speak to investors because I remember I was an investor relations at the fund and they would say like, we are not losing our family’s money. And so that’s how we started, how a lot of people start. So you started there, but now you live in Mexico. So tell us about that transition.

Fletcher Wheaton:

Yeah, quite a turn. So that’s actually, I remember this quite vividly. It was a Monday and my father called me and basically said, “Hey, look,” I had no idea about this, He said, “Hey, look, I bought two places in Los Cabos. Would you like to go down on Friday with me?” And at the time, I didn’t even know where Cabo San Lucas was. So I did a little research and I was like, “Ah, beach. Okay, let’s go.” And basically that weekend we get down there and right when we get to the hotel we’re staying at, his phone buzzes and it’s the realtor coming to pick us up to show us the model house because it was preconstructed.

Fletcher Wheaton:

And that was Cinco de Mayo weekend. And long story short, that realtor is now my wife. She showed us around and then I was like, “Hey, have you guys celebrate Cinco de Mayo here?” And she was like, “Well, we do because you guys do.” So we ended up going out for Cinco de Mayo. But I’m now married with Elisa. We have a son, Parker and she’s been in real estate for 10 years. And those two houses have turned two houses and three condos right now.

AdaPia d’Errico:

Wow, that’s a great story. I love… I’d actually didn’t know that about you. That’s a fantastic story. So you decide… Okay, so now you’re there. And I know you because we’re in the same mastermind and you’re so focused on creating a lot of content. And you’ve been really getting into, I wouldn’t say promoting, the wrong word, but you also have access to opportunities in Mexico. So I think where I would like to really go now is to understand… Let’s break down an opportunity for those of us here in America where we’re just like, oh, I don’t know. How do you invest in Mexico? Why would I want to do that? Isn’t it complicated? Starting from that perspective where it’s like, wait a second, I don’t know about this. Why is it such a great opportunity? Because you’re so passionate about it. And honestly, the videos that you’re posting, it’s gorgeous out there. I want to move there. So what is it about the properties there, where is the opportunity and how would somebody make that opportunity happen?

Fletcher Wheaton:

Okay. Yeah, that’s a great question. So first of all, one of my ideal investors are people buying real estate here would be somebody like my father. And historically, he just had, I think at that time, he had basically realized he’s like, look, I have a very sound financial foundation, but I’m very heavy into stocks. And we had obviously done the rental properties in New Orleans, but he was kind of like, hey, let me kind of… He had studied abroad. He went to Stanford and then studied abroad in Mexico. And basically that’s kind of how he got there. And since we’ve got those properties, I will say from a price point, it’s way cheaper than anything you’d find in the United States for, especially being in that beach market.

Fletcher Wheaton:

So I think right there, you’re going to get the value off the fact that, hey, some of the… I’d say the condos that we’ve got aren’t going to be around 200 to $250,000 brand new. We’re not talking right on the beach, but we’re talking about ocean view. So we’re talking about that same property in let’s say San Diego or somewhere like Miami or Florida, you’re probably looking at three, four times that. And then on top of that, what a lot of people don’t realize is Cabo, I’d say the real estate market is probably 75 to 80% United States and Canadian buyers. Therefore everything’s going to be in a dollar. And I would say out of the remaining about 20% of that, it’s going to be affluent Mexicans. And a lot of these affluent Mexicans want to diversify outside of the peso.

Fletcher Wheaton:

So the dollar is king in Cabo as well as Puerto Vallarta, Tulum, Playa del Carmen, all these places you’re going to be buying real estate in US dollar. And on top of that, you getting your rental income in the US dollar. So for us, you look at the United States right now and especially with the very low interest rates and just from 2008 on up, I think you could say that real estate could be expensive in a lot of markets. I don’t know if that means in five years, it’s higher, but you could definitely say it’s to the point where it’s very unaffordable for many people in the United States. I think in Cabo and other parts of Mexico, there’s an opportunity because you’re just getting in sort of at the ground level.

Fletcher Wheaton:

Also I really liked the demographics of Latin America and Mexico and I can speak more to that too. As far as the marketing, Cabo is just a great place. You can take out the photo or a video and it just kind of… The first time I took a video, somebody was like, “Wow, man, that sky is… That blue is insane.” And I was like, “Okay, maybe…” Because AdaPia, I was always writing articles and whatnot. So I did the first video and it got a lot more attention than any articles I wrote. Maybe I’m a bad writer or maybe Cabo was beautiful. Either way, that was kind of how I got into the video marketing there. And it’s just really kind of helped me create my niche there.

AdaPia d’Errico:

Well, I would also say we’re not really reading that much. We just don’t read that much. I’m a writer. It breaks my heart because even I find myself really a lot of times unable to really read. And then also you’re really in a really beautiful place. Anytime you’re in a beautiful place, the visuals are going to do it so much more justice. And I was just thinking, as you were speaking, because I didn’t really know about Cabo or really exactly where it was. And it’s spring break right nowish. What spring break like in Cabo versus Cancun or other places? What’s the market like there right now?

Fletcher Wheaton:

That’s pretty funny. This year, it’s going to be a little bit more tame obviously with coronavirus. But for my perspective, this is probably the worst time to fly into Cabo because you’re going to have the hood, oh, sorry, the airplane tickets are going to be a little bit more expensive. But really the weather in Cabo from I would say mid-October to right now when you’re going through spring break season, that’s peak season. And this is really the last tailwind of that. And that’s not to say that the rest of the year is dull. But I would say it can get… It’s not going to be a very super collegey like you might go to other markets.

Fletcher Wheaton:

And I would say that because if you look at the average daily rate of hotels, Cabos are right around $300 and it’s a very pricey place to go. If you go to the Riviera Maya, Cancun, Tulum, Playa del Carmen, that average daily rate is about $160. So it’s almost double. So in that regard, you’re actually kind of pricing out that… And look, don’t get me wrong. You’re still going to have a party vibe, but it’s nowhere near. It’s not like you come down and all of a sudden, people are doing beer bongs on the beach. It’s a little bit more sophisticated. But without a doubt, you’re going to have that extra tourist boom during these times.

AdaPia d’Errico:

Yeah, so it sounds like that would probably be… If you’re going to travel around now, that’s your better place, especially if you’re a little older. I put myself in that camp these days where I am not interested in beer bong. But I was actually surprised when you first told me about the hotel rates there and that it is this more, like you said, it’s like a more affluent market. I have a friend who’s currently staying in Sayulita. And he was saying, and I live in Topanga, California in which is kind of like hippie. And he is just like, oh, he’s like, no, he’s like, Sayulita is like everyone thinks they’re a shaman. And so it just seems like if someone is going to travel, it’s kind of sounds like Cabo is almost like a gem that a lot of people haven’t discovered.

Fletcher Wheaton:

Yeah, no, without a doubt. So Cabo has really kind of distinguished itself as like the luxury and that’s not taking away from Puerto Vallarta or Tulum. It’s just you walk around or you go around Cabo and there’s definitely some people that have money. However, that has presented a lot of opportunity. When I got to Cabo, it was kind of like this, I call it three markets. You have this kind of ridiculous beachfront kind of managed in like celebrity type villas and that’s obviously beautiful. And then you really had this lower tier where it was like this kind of Montevideo like 1990s shoddy Mexican construction that you wouldn’t necessarily want to stay in. And then you have this middle market and that’s where we really like it, where it’s affordable enough for the working class to pay as well as people right now that are working remotely or… But we really like that middle market.

Fletcher Wheaton:

So you have a whole plethora of markets. But yes, I would say there’s plenty of opportunity in Cabo. And another thing too is that Cancun just turned 50 years old and Cabo basically, everybody in Cabo would call Cancun a mature market at 50 years old. So you had a lot of this land in Cabo in the 1990s that was public domain. And it opened up the private investment in from there. So right now you still have more land than you actually have development. And for that reason, it’s a less mature market. Cabo just has a lot of room to run. And with that being said, right now you have development popping up left and right. So there’s still, I think for the next 10, 15 years, you’re going to see a very good market here. And another thing is if you look at population grows, Quintana Roo, which is where Cancun, Playa del Carmen and Tulum and Los Cabos are the fastest growing populations from 2010 to 2020, both growing at over 3% a year for population growth and that’s just kind of speaks volumes to the attention that these beach markets are getting.

Daniel Cocca:

So let’s talk about how a US-based investor should think about making the decision to invest outside the US. And so most, we’ll call them high net worth, ultra high net worth investors are already under allocated into US real estate. And then you add the additional hurdle of the unknown, which is investing in another country. How should people think about it? Is it hard? Was it really easy to get it done? Is it something everyone should be considering?

Fletcher Wheaton:

Yeah, no, I mean, that’s a good question. The first thing people are like, whoa, whoa, whoa or something like, hey, is Mexico safe first of all? And then like, hey, is it legal to own real estate there? And that’s really where somebody like me comes in and kind of links you up. I’m very well connected to attorneys, accountants, all that. But at the end of the day, people have been safely… There’s over, it’s not like you’re a pioneer these days, there’s over one, I think it’s right now, the last census, there’s 1.1 million Americans growing are living in Cabo and, or sorry in Mexico and that’s growing.

Fletcher Wheaton:

So you have this really large ex-pat population. So the structures we can get into that, but it’s very safe to own real estate. It really depends which way you’re going, if you’re looking for multiple properties or a beach house. But from that perspective, there’s nothing that would prevent you from buying there. And a lot of people just don’t understand that and has that, Daniel. If I go into the safety, I think that’s just something that’s overblown as well.

Daniel Cocca:

So if I’m comparing rental property because we’re talking about rental properties here in the US verse Cabo for example, how do you look at that? What’s your yield on cost? Are you getting more bang for your buck in a place like Cabo or can you still find some markets in the US where maybe it makes more sense?

Fletcher Wheaton:

Good question. So I actually just sent an email to somebody yesterday with two properties and the yields were, just on the rental yields were 6 1/2% and the other one was about 7.7% on rental yields. So I think the rental yields are very good there. But however, and as an investor, I never really factor into appreciation, but I think that’s really where the money is. If you get in right now in these Mexican markets, I think if you look 10 or 15 years and then you look at what’s going on in the United States, I think there’s a far less risk from an appreciation standpoint. I just think, from a cost basis, I think a lot of properties, a lot of markets in the United States are very expensive. I’ve been saying that for a while now and it keeps going up. So I’m not saying that won’t happen. But I do think from appreciation aspect, I think these markets have a long way to run.

AdaPia d’Errico:

Well, so okay, I just have a really quick question on the yield. So are these apartments or are they single family, are they bungalow? What’s kind of the makeup of sort of that, we’ll call it housing stock?

Fletcher Wheaton:

So yeah, those two properties are condos. And so Cabos really going to have houses, condos and then smaller multi-families like the multi-families. Then you’re going to see 20 units to 40 units. You’re not going to have these 300 unit complexes because if you do, they’re getting sold as condos. It’s not like nobody’s building that and then… And there’s a lot of asset classes that don’t exist. For example, I remember when just from the investment background, looking at senior living, that’s really not a thing in Mexico. Mobile home park is not really a thing in Mexico. But really that’s condos and that’s actually preconstruction pricing for condos too.

AdaPia d’Errico:

Okay. So, okay, I was going to actually ask about development and there’s… And I experienced some of this when I was living in Italy where things don’t actually get built. Is that something that happens there? I don’t want to say the word corruption, but just culturally and just story-wise, what is the situation there? And especially also, as you said, there’s so much building going on that can these developers actually keep up with it. And I know because you’re there and you do this all the time. So from… You are boots on the ground there. So you’re not just finding listings online, you’re actually talking to these developers and you know what they’re going through. So how does that work down there? Because if you’re talking about presale or preconstruction rather, that’s a different price point than when it comes on the market. So talk us through that a little bit.

Fletcher Wheaton:

Yeah, no, this is a really good point, AdaPia. You have to vet out the developer. The joke is, oh, hey, we’re getting it delivered in December. And then the joke is, well, which December? So you really have to vet out the developers. And with that being said, the projects that we invest in the developer that I work for, we’re talking about 15 year track records. We’re talking about projects all over. So as far as new kind of fly-by-night, I definitely would not do that. I would stick to proven developers. And this might go down another rabbit hole, but I think one of the easiest ways to vet out a developer is to see what financing offer they have or they can show you because the fly-by-night companies will not get any banks to give them money for developer financing. Whereas the stronger developers that have these proven track records and have done multiple projects and done them on time where you can see their work, they will have access to this financing.

AdaPia d’Errico:

Yeah, it’s funny when we do, when we evaluate our sponsors. At Alpha, one of the primary things that we look at is their lender relationships. Is there other capital partnerships so important? So I was just kind of chuckling that you were saying that because you might have accomplished a project here and there, but fundamentally, you’re financing is going to make or break a deal. And then when we don’t invest in development, but on the development side, that’s going to be even more important because then you might break ground and then you can’t get it finished.

AdaPia d’Errico:

Oh and speaking of that actually, how does it work? Because you work with contractors and I know you said your brother-in-law, we were talking about this before is an architect and talk to us about permits and how that piece kind of factors in because let’s say for example I’m interested in purchasing a condo and it’s in the development phase, it’s preconstruction and I’m really antsy. I want my condo because I want to come down and I want rent it when I’m not there and I want to use it when I want to. How does that factor in like the permits and the process? You said the joke is which December. How much does that factor into?

Fletcher Wheaton:

Permits is big. I think in Cabo is one of the strictest markets for permitting. And I think Cabo has learned from these other markets like for me and I love a lot of parts of Mexico. But for me, Cancun’s like Disney world. You just have these sky rises or high rises on the beach and they are the only ones entitled to that view. Whereas Cabo, and the Riviera Maya is relatively flat, Cabo’s mountainous. So you have a lot of areas where you can build housing and everybody has a view. So you have a very strict building code where if you were looking at buying a lot to build a house or build a condo development, some of these will only be zoned for two, three, four stories pretty much max.

Fletcher Wheaton:

So another thing is that the downside of having such a fast population group is the infrastructure. So things like water in Cabo, the water permit is something that I would not have thought coming from the United States would be an issue, but they’re very serious about making sure they keep up. They have diesel plants coming online and things like that. But that was actually one of the harder permits to get. And then you have a federal permit, which is basically, it’s all about the environmental use of the land and stuff. But it was actually quite cumbersome process.

Daniel Cocca:

Quick question as it relates to financing these deals and putting them together, what is the interest rate environment like in Mexico? And if you’re using US dollars, I think you said you are for transactions in Cabo, are these Mexican banks, US banks? How do you think about that whole process?

Fletcher Wheaton:

Yeah, so if I had really one thing that I would love to change about real estate, Mexico would be the financing options. So first of all, Mexican banks are really not an option. Well, first of all, if you went down there, your credit history just really doesn’t exist. And if it did and you had a really good credit score, you’d still be looking at about maybe 9% at the downside. Exactly, and so they have cross border lenders, which I’m going to be honest, they’re not… They started around 7%, but most of the deals that I’ve seen have been… And this is you can get 15, 20, 25 year financing, but you’re still looking at about 8%, you’re looking at about 40% down. We have stuck to the preconstruction model.

Fletcher Wheaton:

The only downside about preconstruction is you’re going to put 50% down generally and your terms are going to be probably five to 6% and you’re only going to be able to go out about 10 years. So those are basically your financing options. Then you have a lot of people. And I actually spoke to somebody in real estate in Cabo and this was about a year ago. And he was talking about how a lot of people take home equity line of credit out of their house in the United States to buy there. And he was talking about it. There was a crash. Because for awhile, it took me up, I was like trying to figure out the market. And it’s basically, it’s almost identical to what’s going on in the United States. And he was talking about how it would not be good for housing crash United States, for Cabo because so many people have HELOCs on… That’s what they use for their financing.

Fletcher Wheaton:

So that’s a couple ways. I recently spoke to a guy who was visiting and he does real estate in Spain and Portugal. And he told me that Cabo, this was in Cabo, but he said, Mexico in general just has the feeling like he was in Portugal in the mid ’90s and that better options were going to be there. And just talking to him, I was like, hey, there, a foreigner can get a 1%, 1 1/2% mortgage for 30 years, which is absolutely crazy. But those are really some of your financing options. So if you’re getting developer biasing, maybe five, 6%. If you’re going to do a cross border lender like a company like MEXLend or Global Mortgage, you’re going to be looking at closer to eight, 9%. And Mexican banking really is not an option.

Daniel Cocca:

Is that the same for 200 unit apartment building or is that just specific to single properties?

Fletcher Wheaton:

Yeah, that’s going to be more for residential. Actually the only commercial property that I was looking at, which was an 18 unit that I was looking at rehabbing, the banker that I reached out to, we actually were getting down to 8%. This was right before COVID. But you’re still going to have rates double of what you’re seeing in the United States these days. But I will say too the other side of that too is these really low interest rates in the United States right now, I think that’s part of why you’re seeing such price increases on a lot of things these days right now. And you’re starting to see cap rates compressed and people, they don’t even want to put in bonds or things like that. So I think you have a lot of other issues with that. Overall, it’s a negative. But I think when you look at it from that standpoint, I think that just shows you how much more these prices could run out if that financing gets any close to even 1/2 as good as that.

Daniel Cocca:

So we talked about this a little bit before the show, there are rules around how US citizens can buy real estate in Mexico, particularly within certain distances of the coast or the border. Can you just tell us a little bit about how that works and how people work around it and why it make sense?

Fletcher Wheaton:

Yeah, so if you buy near the border or near the coastline, which is where all our five properties are near the coastline, you’re going to be putting that into a structure called if you do call me so. And that’s basically just for somebody who’s not a Mexican national. Now if you were going to buy a lot of properties like we are, you’re going to set up an LLC. And I will say that the accounting is very, very stringent on that. It’s a lot different than you setting up an LLC in the United States.

Fletcher Wheaton:

If you’re going to buy in the middle of the country, away from the border, any American could do that in their name. But basically, your two ownership options really. And if you needed something more than this, definitely introduce you to an attorney, but a fideicomiso is the one. So if you’re going down and you want to buy in Cabo on the beach, that’s obviously going to be right on the coast. You’re going to put it in a fideicomiso. That’s probably what 90, 95% of buyers are going to do if you’re going to buy multiple properties and you’ve got to start looking at an LLC.

AdaPia d’Errico:

Well, it’s good to know that you’re there to help because I certainly wouldn’t want to navigate that on my own. Yeah, definitely, this is super interesting. It’s so interesting. All the technicalities of it. This might be totally off. But if I had a lot of money in my self-directed IRA, can I be a hard money lender in Mexico? Would that make sense? I mean, if I didn’t like talking about a lot and some people have accumulated a lot, is that something that people do?

Fletcher Wheaton:

That’s a great question, AdaPia. I actually had, I’ve had a couple of people reach out and I think I just started a podcast for Real Estate Without Borders, but I had somebody reach out about using a self-directed IRA to buy property there. So I know it’s a thing. I know there’s some sort of asterisk next to that. I don’t know. I think if you’re using it as a self-directed IRA, it has to be an investment property. So you have to have somebody living there or you couldn’t live in there and I don’t know how they would enforce that.

Fletcher Wheaton:

But to my knowledge, that’s really how you would do that. And I do think being a lender like that, there’s definitely options because like I said, the biggest drawback or when people inquire about owning, it’s all like, hey, hey, hey, and then when you go to the financing options, it’s kind of you can see the sales deflate a little bit. But I think that’s definitely an option. And I think going forward, a lot more people are going to be looking into that.

AdaPia d’Errico:

And are people looking into buying? So let’s say like I live in LA, I’m not going to be moving permanently. But do people buy to then rent and then use it or are most people buying and just holding it there either for themselves permanently or could I Airbnb one down there? How could I maximize it if I’m thinking apples to apples in terms of returns and yields and everything like that? What are you seeing people do the most or generally?

Fletcher Wheaton:

That’s a good question. So I see a lot of people that want to use it as a vacation home, where obviously they’re only going to be there maybe a couple months or maybe a month out of the year. Then you see people that want it for retirement. And you see people that they’re going to buy and then rent it out and then COVID happens. I’m not doing it. So now you’re like strictly a rental property. And then there’s like people that… I know somebody who just sold her house in Portland and moved the whole family down there and was asking about schools and whatnot. So you have… I would say that most people, and for whatever reason, I’ve had a lot of people reach out right around like 50 years old.

Fletcher Wheaton:

And they’re like, hey, we’re going to buy this place. I’m going to be coming down a little bit. And it’s eventually going to become like my home. But right now I just want to basically have somebody manage it like Airbnb. And then I want to come down when I want to. So whereas three of our properties, we have a long-term rental down there. But most people that are going to buy a property to run out, they’re going to go the Airbnb route. And it’s really actually a pretty good market because as I was saying earlier, the hotel prices are so high that you can still get a pretty good return and charge a good rate on these Airbnbs.

AdaPia d’Errico:

Interesting. Yeah, I’m always interested in I think it’s always really important to have different options because like you said COVID and of course that is obviously like the once in a lifetime. However, I think in all of our lifetimes, we’ve had multiple once in a lifetime things happen like the great recession and COVID and 9/11. But that said, I think it’s important to have flexibility as real estate investors. And so it’s really just like lots to think about. I wanted to switch gears here as we kind of come to the end of it and ask you. So clearly or maybe not. I’m assuming real estate forms the foundation of your wealth building strategies. Would that be correct?

Fletcher Wheaton:

Yeah, no, I’ve always been… Historically, I really liked the stock market and after having money in the stock market, I did not like that I was not in control. So since I started, after I got out of college really, it was like, hey, we started the investment side, but I was still kind of following the stock market. And I just really like the aspect that you’re kind of in control with real estate. So I really like real estate as an investment.

AdaPia d’Errico:

Yeah, and then so when you think about building your wealth, what are some of the things that you focus on from that perspective? So we have real estate as a foundation, but within that, are there any tips or anything that you’ve learned in your experience that you think are really important to pass on when people think about building their wealth using real estate as a base?

Fletcher Wheaton:

Yeah, I think one of the biggest things I have going for me was the example that my parents set for me and that was living below your means and kind of knowing that spending money will only make you so happy. So I think living below your means is probably the most important thing that I would want to give to somebody because I think I kind of know what me and my family would need and I know that past that level, I will not get any more, greater happiness from it. But I would love to invest that and grow that wealth. I would get much happier from seeing that be done.

Fletcher Wheaton:

I also think of being contrarian is very important. I think just the bubbles and hindsights are, they’re very easy to see in hindsight, but I think being contrarion is very hard to do, especially at the tops of markets. But I think just being well-rounded, education, whether that’s courses or just being a voracious reader, I think all those things can help you. And that’s really… Real estate is one of those things that I’m very happy that I did it or I was able to get into it at a young age and really kind of get my hands on it because it can be intimidating, but it’s a great way to build wealth.

AdaPia d’Errico:

Yeah, I love it. I love it. Okay. Well, okay, so last question that we ask everybody who comes on with us is what does wealth mean to you?

Fletcher Wheaton:

So wealth to me really means being able to do what I want to do. It really has nothing to do with being able to buy stuff. So if I can look back and say, hey, I’ve lived a great life and I’m wealthy. It’s been that I’ve been able to, yes, put the kids through the schools they wanted to do, take the vacations, live comfortably. But also be at the point where I don’t really have to make decisions because I don’t have enough money or I really think having the confidence through investing wisely, I think that’s the biggest benefit you can have too from being wealthy, not the material possessions.

AdaPia d’Errico:

I love it. I love it. Having the confidence. So fantastic. Well, Fletcher, thank you so much for taking some time to talk to us today. It’s so interesting to learn about investing internationally, specifically in Mexico. So clearly everyone that’s listening, if they have questions, we’re going to put in the show notes where to find you. And I will reiterate this, I love your videos. So if anyone was on the fence after seeing them, I think they’ll probably want to move there at least like purchase and knowing how complex it sounds to me and knowing that there’s somebody trustworthy there to help is a really good resource. So I hope that people will reach out if they’re interested. So any kind of partying, specifically where people can find you, where would you prefer somebody to reach out to you if they were going to do that?

Fletcher Wheaton:

First, thank you so much for having me on, AdaPia and Daniel. I really like to talk real estate because not that many people understand the process in Mexico. Probably the best way to get to me would be either LinkedIn, Fletcher Wheaton. I have a website, Cabokey.com. You can contact me there. I got YouTube videos under Fletcher Wheaton. But I would say connecting with me on LinkedIn would probably be the best way.

AdaPia d’Errico:

Perfect, all right. Well, thank you, Fletcher so much for being on the show and we’ll talk soon.

Fletcher Wheaton:

Thank you. Enjoyed it.

AdaPia d’Errico:

Thanks for tuning into Real Wealth Real Health. We hope that you’ve enjoyed today’s episode and found it both informative and insightful. We welcome all your questions and your feedback about today’s episode and especially we welcome your questions about specific topics that you would like us to cover. So shoot us an email at [email protected] And if you have a moment, we really appreciate ratings and reviews as it helps us grow our online community and our interactions with you. And we’ll also be linking to a number of relevant articles on topics that we might’ve touched on during our conversations. Some of them are broad, some of them are technical, but we’re always aiming to provide information that helps you better understand mechanics of building this healthy financial foundation, especially if you’re looking to do this with real estate.

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