fishbuck
Banned
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It's still too early. Give the US mortgage crisis time to sink in a little.
People are still in denial about it and when reality sets in they will dump their Baja properties to save their primary US home and lifestyle.
So 1-2 years to bottom out and may last 5 years before it recovers.
Plus the US may be heading for a recession so I would imagine Baja will feel that also.
"A ship in harbor is safe, but that is not what ships are built for." J. A. Shedd.
A clever person solves a problem. A wise person avoids it. – Albert Einstein
"Life's a Beach... and then you Fly!" Fishbuck
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The Gull
Super Nomad
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Using US standards doesn't work
For many folks, the house or houses that they own in Baja do not represent their primary residence, but often times represent one of their "second
homes".
Therefore, there is no "need" to sell in a typical market. Also, people who have vacation homes in the US in great measure bought their homes with
serious amounts of cash, not loans. Also, someone who has more than one house is in the upper bracket of knowing something about loans and real
estate and would not be a likely victim for the mortgage problems like the marginal buyers (borrowers) in the US.
So don't be surprised that foreign recreational, vacation or investment property does not drop in a crappy US market.
In Costa Rica and Mexico, the prices didn't go down, but they didn't go up, in the 1991-1997 US market downturn.
If you expect to buy a house in Baja below market, then you have to do the same as you would have to in a stable US market - look for sellers with
problems - divorce, health, death, questionable ownership, property rehabilitation...
�I won\'t insult your intelligence by suggesting that you really believe what you just said.� William F. Buckley, Jr.
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bajadock
Super Nomad
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Location: Punta sur de \'Nada
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Fishbuck and Gull,
Objective, experienced analysis, thanks. Especially agree with the cash purchase axiom v. leveraged purchase. It certainly is different without a
mortgage payment every month.
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Woooosh
Banned
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When sales are slow in Mexico they just double the price and stand tough. Let them. There aren't any sales taking place in the Rosarito area right
now. Centruy 21 just filed bankruptcy. I'm sure the market farther from the border is more stable.
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gnukid
Ultra Nomad
Posts: 4411
Registered: 7-2-2006
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There's plenty of opportunity, but it is outside the false world of fake RE agents in baja. You need move into the domain of mexican families, speak
spanish, be friendly, gentle and get to know people over time to feel comfortable enough to sell you something in their domain. They don't want some
crazy jerk living next door, they want a friendly helpful neighbor who may impact their life in a positive way. Gringos don't understand that, they
need to like you to sell to you.
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The Gull
Super Nomad
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Location: Rancho Descanso, BCN
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| Quote: | Originally posted by Woooosh
When sales are slow in Mexico they just double the price and stand tough. Let them. There aren't any sales taking place in the Rosarito area right
now. Centruy 21 just filed bankruptcy. I'm sure the market farther from the border is more stable. |
Yes, it is a Mexican pricing tradition to increase prices in a recessionary market. It isn't limited to Real Estate, either. When the demand for
anything in the country goes down, the price goes up. Monopolistic economies have that trait in common - volume goes down, prices go up and margins
are flat or increased as a result.
Unemployed "Real Estate agents" (like that term means anything in Mexico) is a thing of beauty. Sorta like a busload of attorneys being driven off a
cliff.
�I won\'t insult your intelligence by suggesting that you really believe what you just said.� William F. Buckley, Jr.
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bajaguy
Elite Nomad
Posts: 9247
Registered: 9-16-2003
Location: Carson City, NV/Ensenada - Baja Country Club
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Mood: must be 5 O'clock somewhere in Baja
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Eng.......check your u2u
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bajadedom
Nomad
Posts: 124
Registered: 12-12-2007
Location: Oregon
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Mood: Ready for a change of latitude...
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Gnukid is right on the money - there is plenty of opportunity in the market for the right buyer....a simple person,not a developer -and someone who
will be a true friend. This type of american will blend right in with the culture,and live amongst the locals, willing to forego many of the luxuries,
speak the language(how many of you are U.S. "English only" advocates but Nomads who don't speak spanish?)and not need to be on the water in a 2,000
sq. ft. "Our little paradise" - with hopes of the neighborhood growing similarly and more Americans moving close to them.....So if you're looking for
a good deal on a million dollar place crowded with gringos.....try California!
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The Gull
Super Nomad
Posts: 2223
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Location: Rancho Descanso, BCN
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| Quote: | Originally posted by bajadedom
So if you're looking for a good deal on a million dollar place crowded with gringos.....try California! |
No such place..."good deal on a million dollar place crowded with (fill in the foreign nationality of choice) ...try California!"
�I won\'t insult your intelligence by suggesting that you really believe what you just said.� William F. Buckley, Jr.
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CaboRon
Ultra Nomad
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Location: The Valley of the Moon
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I really think a lot of people believe that equity is real money. It is only real if someone is willing to pay that price.
Sort of like the collectables market...... remember Beanie Babies   didn´t think
so.
CaboRon
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SDRonni
Nomad
Posts: 481
Registered: 8-28-2006
Location: Serra Mesa/Rosarito
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There is so much rental inventory in Rosarito I think anyone would be beyond foolish to think that they could get $2500/wk every week of the year
except four......fortunately, we bought just for ourselves to enjoy, but there are many who bought several units to flip and are now finding
themselves in trouble. If people buy to rent, planning on the rental income to pay the mortgage, I think they're going to find themselves also in
trouble. The sales people's line of "think of all the money you can make renting" is just a bunch of hogwash. Even we are doubting our decision to
buy in light of the increasing crime.
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Woooosh
Banned
Posts: 5240
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Location: Rosarito Beach
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Check this out from Nanncy at www.gringogazettenorth.com
Developer’s Seminar Brings Fresh Faces
“Proven Track Record” is the new buzzword
By Nancy Conroy
Last week, Mr. Hector Bustamante of the Bustamante Realty Group gave a seminar at Fox Studios entitled “Understanding Baja Real Estate in 2008”. In a
fancy auditorium, it was a multimedia presentation discussing the future of Baja real estate development, featuring speakers, slide shows, suits,
commentary and buzzwords. To an outsider that is unfamiliar with the Baja real estate scene, the presentation probably looked like a fairly standard
developers meeting, similar to something that might happen in the US. But, the very ordinariness of this meeting was actually extraordinary, because
this time the organizers had credibility and what they were saying made sense. And that, my friends, means that the local real estate scene has just
made an important improvement.
The difference between this seminar and past events that looked similar can be summed up with one of Bustamante’s favorite buzzwords: “Proven Track
Record”. That a seller should possess a tangible history of satisfied clients and completed deals is a reasonable standard, in line with the
expectations of American buyers. A respectable Baja developer should be fully financed, have completed projects, and provide bank trusts and title
insurance to buyers at closing. Even though this is obvious, it is not necessarily the norm in Baja. There are number of very high profile Baja
developers that flunk the Proven Track Record test. And, even though they flunk, many of these same individuals sponsor real estate seminars, speak in
public forums, give interviews to US media, and are board members of real estate and developers associations. American buyers know that these
imposters lack a Proven Track Record, and they are tired of hypocrites. So, when a developer with a good reputation like Bustamante stands up there on
the stage and provides leadership, people notice.
People start noticing even more when they listen to what Bustamante and his colleagues are saying. Bustamante explained that the Baja real estate boom
of previous years was driven by the overvalued California market and by speculators, who were quick to dump their investments at the first sign of a
downturn. He said that 2008 will be a tough year, developers now have cash flow problems, and much of the inventory available is mismatched to the
market. In other words, he gave a realistic assessment of the current down market, without hype and puffery. Moreover, the speakers did not hesitate
to discuss sewage, water, infrastructure, and crime, and did not sugarcoat the issues. One speaker, Patrick Osio, said that these matters were a
“responsibility on the shoulders of developers”, adding sternly “if you don’t do it, you won’t have a market”. On many occasions, Bustamante spoke
directly and frankly, saying things like “don’t be an accomplice to those that are not doing things right”. He even flat out mentioned that there were
a number of developers who were noticeably absent from his seminar, and he did not appear concerned about that. Overall, Bustamante looked like a
trustworthy developer that tells the truth and takes a stand, leadership qualities that are badly needed in this market.
One important impact of the recent boom is that new developers were attracted to Baja, players that Bustamante calls the “Big Boys”. These companies
are Mega Turismo Bajamar, Trump, Icon, Bay View Grand, Delphi, and Homex. These are huge corporations with ample financing, Proven Track Records, and
higher standards. Bustamante says that these players will change the marketplace. Probably, these out of towners could care less about local Rosarito
politics, which means that they are not influenced by the Rosarito Old Guard real estate mob. In fact, the Old Guard mob is their competition, which
means that local corruption and treachery may now have a powerful new enemy. That would definitely bring positive change to the market.
Bustamante’s dialogue is compelling and makes sense, but he will have trouble bringing this message to the market. He is at a disadvantage because
most of his friends and colleagues are Mexicans. He has no name recognition among Americans, and very few Americans attended the recent seminar.
Bustamante does not have US media contacts, which means that less qualified real estate ambassadors are currently dominating the spotlight. Anyone in
Rosarito that bears a message of high standards and reform will always encounter opposition from the Old Guard, so he will have to contend with that
too. Still, if Bustamante just keeps on doing what he is already doing, he has a good chance at uniting Baja developers and bringing new messages and
new faces to the forefront.
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Woooosh
Banned
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Location: Rosarito Beach
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And what can happen t oyour money if you don't do your financial homework.
Gabriel Robles Sued
President of Baja Developers Association
BY NANCY CONROY
The President of the Baja Developers Association, Gabriel Robles, has been sued by two American investors who collectively loaned Robles $720,000.
Robles and his company, Baja Resort Advisors, have defaulted on the loans and the investors question whether Robles intended to repay them at all.
Robles said that the original loan agreement, which called for a 30% interest rate, was usurious. The Puerto Nuevo development project in question is
encountering financial problems and there may be other affected investors and condominium buyers. The details of the lawsuit are available online at
www.bajaresortadvisor.com (with no “s” at the end of “advisor”). Aside from the specific lawsuit, the case also sheds light on the types of
business practices that are common in Baja among underfinanced developers who do not have a proven track record.
Gabriel Robles is the President of the Baja Developer’s Association (ADETUR), a Baja developers group. When the group was first founded a few years
ago, the members were Robles as President, Hugo Torres as Vice President, and a few other like minded friends. Many independent developers in Baja did
not join the group for several years, probably because Torres has a poor reputation and Robles had no track record at all. In five years, Robles has
never successfully constructed a development in Baja, a light resume for the President of a developer’s association. But, Robles has proven adept at
publicity and promotion. Robles has succeeded in portraying himself as a local real estate leader, and frequently appears in interviews with the US
press. Robles does not necessarily have a wide following in the real estate community, but he maintains this image via the Torres-owned newspapers and
the foreign press. Although his overall credibility was never particularly strong, he has no known history of involvement in fraudulent projects and
no previous scandals. However, since he is the President of the Baja Developer’s Association, the public will conclude that his practices are those of
the Association. The organization’s image already suffers from a perceived affiliation with Hugo Torres, who is one of the worst developers in Baja.
Robles’ company, Baja Resort Advisors, was promoting a development project in Puerto Nuevo. Financing for the project was to come from private
investors, who would lend a total of $2.7 million dollars. That this was a risky investment to begin with should have been clear, but American
investors rarely notice red flags. First, Robles had no provable track record, even though he claimed to have personally developed Cancun and to have
participated in 180 Mexican developments. The investors should have asked why Robles did not therefore obtain ordinary construction financing through
a bank, at a regular interest rate. Instead, the company offered a high 30% rate of return, on a private loan offering aimed at Americans. Investors
should have heeded the warning in the Baja Resort Advisors investment offering: “this is not a securities offering, and it is not regulated by any
government authority in the US or Mexico”. Most importantly, the investors should have realized that the business model of obtaining millions of
dollars in private financing for a Baja real estate development has rarely been implemented successfully.
The project was probably never really viable, and it was not difficult to foresee that it would likely encounter problems. Kevin Young, one of the
investors that sued Robles, invested $150,000. The due date for the note came and went, and Young alleges that Robles refused to repay it. Robles
argued that the 30% interest rate was usury, even though his company had originally offered that percentage in the investment proposal. After one of
Robles’ advisors also did not get paid, the advisor turned over a number of confidential emails to Young. The emails show discussions between Robles
and the advisor about strategies to avoid repaying the note or the interest. “I am not paying him 185 or 180, I will spend 50 not to pay him a thing”
wrote Robles. Other comments in the emails show a cavalier attitude toward debt repayment.
After the allegations emerged, Robles circulated a statement saying that Young made a usurious loan, and that Young falsified the promissory note.
Robles also claimed that Young was committing a crime because of the similar names of the parties’ websites, www.bajaresortadvisors.com (with “s”, which belongs to Robles), and www.bajaresortadvisor.com (without “s”, belonging to Young). It is believed that other investors may come forward in the future.
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The Gull
Super Nomad
Posts: 2223
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Location: Rancho Descanso, BCN
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| Quote: | Originally posted by SDRonni
There is so much rental inventory in Rosarito I think anyone would be beyond foolish to think that they could get $2500/wk every week of the year
except four......fortunately, we bought just for ourselves to enjoy, but there are many who bought several units to flip and are now finding
themselves in trouble. If people buy to rent, planning on the rental income to pay the mortgage, I think they're going to find themselves also in
trouble. The sales people's line of "think of all the money you can make renting" is just a bunch of hogwash. Even we are doubting our decision to
buy in light of the increasing crime. |
Perfect solution on the same thread...sell to bajaeng
�I won\'t insult your intelligence by suggesting that you really believe what you just said.� William F. Buckley, Jr.
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