Friday, June 17, 2011
Two and a half years ago, members of my Real Estate Trend Alert group bought units at the Landscape project on Fortaleza’s boardwalk. They have done well. Today, units are listed for up to 60% more. And, because buyers could purchase with small monthly payments they have only paid 30% (or so) of the purchase price to date.
So, on a hypothetical 100,000 reals condo they will have paid 30,000 reals… while its value could have risen by 60,000 reals. (Buyers have had some expenses such as the inflation adjustment developers apply monthly to outstanding balances). Meantime, the Brazilian currency, the real, has appreciated against the dollar, giving a currency gain on top of the price appreciation.
The Landscape building is racing out of the ground. Margaret visited a couple of weeks ago. Here's her video report.
As a reader of these alerts, you will know about the risks inherent in buying pre- construction. You are relying on a developer’s promise that he will deliver your unit. Because the Landscape deal met my golden rules for buying pre-construction, the risks associated with buying here were reduced.
Let me explain.
- The developer is strong. One of Brazil’s biggest construction firms has partnered with a strong local developer. They have successfully delivered hundreds of buildings of this size and quality.
- The project is located on the best site on the boardwalk: Fortaleza’s most desirable address. It will always be the best site on the boardwalk.
- This is the last developable site on the boardwalk. There is no more space for other buildings. This means that we don’t run the risk of new inventory coming on stream next door and putting downward pressure on prices.
- The economy in Brazil, and Fortaleza in particular, is strong. Plus, when we got in on the Landscape deal, the real estate market was in the early stages of its growth surge. This meant that values had room to move up. And it meant that we would continue to see strong growth in the number of people who would like to buy or rent our units on completion.
- The end user market (folks who would like to live or spend time here) for these Landscape units is broad. Visiting executives, young professionals, retirees, vacationers and folks relocating to Fortaleza would all like to live here. There are lots of these people…more than Landscape will be able to accommodate. And they are willing to pay top dollar for this prime location.
- The market in Fortaleza is liquid. There’s a lot of transactions. The vast majority of these are by locals. That shows us that we should have an exit strategy.
- Finally, we got in at special member-only pricing and terms. Because we got in with strong pricing pre-release we were ahead from the get-go.
On completion I expect these units will rent strongly. And prices will have substantially appreciated. Assuming no major bumps in the road, buyers will get what we hoped for: Strong rental income and capital appreciation.
P.S. The Landscape deal, with special pricing and terms, was only offered to Real Estate Trend Alert group members. This group hears about our newest real estate finds first…so they can take their pick of units…and they get special discounts, and payment terms. If you want to get first in line for property deals…and take advantage of members’ only terms…you can find out more about joining Real Estate Trend Alert here.