Friday, August 19, 2011
Dear Reader,
On Monday, I told you what I look for in a rental. In particular I look for a place where I can buy low (because I am focused on the yield I can generate) and where I can target multiple sources of renters (so I don’t have a problem filling my unit if one source of renters dries up). I look for a location where demand is set to grow…but, I watch the supply pipeline. Will there be future construction that will result in more competition for tenants?
The Iracema Beach area of downtown Fortaleza is a place that ticks my boxes. Here, you can rent units out short-term to tourists or visiting executives or long-term to local professionals. Iracema prices are up to 50% lower than a few clicks down the beach in the “old” boardwalk. So, yields are higher. Better yet, development is restricted by permitting limitations.
Some of Brazil’s nicest beaches are here in the Fortaleza area. And, being close to the equator with temperatures in the mid-80s year- round and refreshing trade winds, it’s a great place to visit.
In April and May it can be rainy. That’s low season for tourists. During these months, conventions come to town. The city is emerging as a major national convention destination. This market is set to explode with the opening of the new convention center that will be Brazil’s second-largest.
Fortaleza is Brazil’s biggest domestic tourism destination and will likely host 3.3 million Brazilian tourists this year. In the first quarter of 2011, 1.14 milion tourists visited Fortaleza - an increase of 23% on the same period last year. Each of these tourists need to stay somewhere and short-term rentals are hot in demand and short in supply.
This region of Brazil has historically been poorer than the economic powerhouses of the south. It’s fast playing catch-up even as the economy in the rest of Brazil is on a tear.
Fortaleza’s strategic location and some special tax designations are helping it emerge as a major manufacturing and export hub. The port expansions just outside the city at Pecem can’t keep pace with requirements. The region’s highway network is getting a major upgrade and a national railroad project that will end here will facilitate more growth.
The big boys are investing here. Like Eike Batista, Brazil’s richest man and the world’s 8th richest (according to Forbes) who invested 2.6 billion reals in a power plant here.
Major multinational and domestic companies are locating or setting up branch offices here. They can’t find the skills they need locally. They are bringing talent in from the south of Brazil, Europe and the US. In fact, the number of foreign work permits granted here is up by more than 20% this year. They need specialist skills across all sectors. To attract these specialists they need to be able to offer nice digs. Executive rentals…short and long-term…are in demand. And this demand is growing.
The area along the boardwalk (which was extended to Iracema this April) is where both tourists and professionals like these specialists want to be based.
To remind you, Iracema’s getting a facelift. The run-down bars are being replaced with a chic boulevard and tourist amenities like a new aquarium. Yet you can still buy here for up to 50% less than the top dollar units along the older section of the boardwalk.
Rental demand and rates are still strong. This is a good place to buy or own a rental.
My real estate contact on the ground, Daniel Neves, still has a small number of units available…right in the heart of Iracema…and ready to start generating income. Contact Daniel here for more details.
Ronan McMahon
P.S. Members of my Real Estate Trend Alert group were the first to hear about the potential of Iracema Beach…and got first pick of units in this rental opportunity…along with a free furniture pack. If you’d like to join this excusive group, click here to find out more.
Posted Under:
beachfront, appreciation potential, affordable, real estate opportunities, beach
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