Rental Strategies & Multi-Use Properties: Your Questions Answered

◼ Geoffrey says: Hi Ronan, you write a lot about different rental strategies, be it renting long- or short-term, or renting just in high season so that you can also get personal use out of your overseas home. What strategy do you use yourself?

◼ Ronan says: The rental strategy I use is a function of my financial and lifestyle goals, as it should be for everyone who owns a rental.

Because I spend so much time researching and writing for my Real Estate Trend Alert service, I want to minimize the time I spend dealing with my portfolio. That means fewer short-term tenants and rentals for now. (I’ll flip to more profitable short-term renting when I have more time.) Instead, I look for high-quality long-term tenants—who are more like caretakers than guests. Money rolls into my account each month. It’s about as hands-off as you can get.

Then, in places where I want to spend time, I adapt a slightly different strategy. For instance, in Cabo, Mexico, where I like to spend part of the winter, I make sure to block off time for my personal use. For the rest of the year I make it available for a single tenant at $3,000 to $3,500 a month. Owning in such a strong rental market makes it easy to dictate the terms and duration of stays.

I take yet another strategy with my condo in Playa del Carmen. Again, it’s a place where I personally want to spend time. For four months of the year, I’ll make sure it’s available to me by switching to a short-term renting strategy and blocking out my own time. This also allows me to tap into Playa’s flaming-hot short-term rental market during peak winter months. Then, for the other eight months of the year, I apply a hybrid strategy, renting long- or medium-term.

Similarly, I rent out my condo on Portugal’s Silver Coast during the peak summer months. Thanks to the income from that alone, I literally own a beachfront condo in Portugal for nothing! The rent more than covers the cost of the mortgage, HOA fees, taxes, my golf club dues, insurance, gas for the car, plus pocket money for when I’m there.

The strategy you use is all down to your personal needs: the amount of work you can put in and the amount of personal use you want. Your strategy can evolve over time as your situation changes.

◼ Ralph says: Hi Ronan, I notice you mostly cover single-family properties and not too much about multi-family, commercial, or mixed-use real estate overseas. I’m wondering about having a mixed-use property, such as one with a storefront on the ground floor and one to three condos above. Can you cover this idea sometime?

◼ Ronan says: Hi Ralph, there’s a very simple reason I focus on residential condos above all else. It’s where I can offer most value to my Real Estate Trend Alert group. Thanks to the collective group buying power of RETA, we get special discount pricing that regular retail buyers don’t get access to. Often $60k…$80k…even $100k less than what anyone else is paying, for best-in-class real estate in incredible locations.

In other words, we get no-brainer deals. Some members buy multiple units in a project, making it a multi-unit play for them.

But that’s not to say I don’t see opportunities elsewhere. For instance, over the past couple of years, I covered some interesting opportunities in commercial real estate in Ireland.

One is an opportunity to own a traditional Irish pub. Covid closures decimated many of Ireland’s rural pubs, which were already struggling due to changing social habits and stricter laws. I identified an investment play to buy one of these traditional pubs at fire-sale pricing, do it up, and turn it into a short-term rental catering to party groups and tourists. Thanks to government planning changes, huge potential yields became possible.

I’m also looking into self-storage. Thanks to the rise in people moving abroad long-term and the cost of real estate, it’s become a booming business in many popular overseas destinations. In short, people need a place to put the stuff they’ve accumulated, and self-storage units are proving cheaper than renting or buying a bigger home. I’m seeing huge demand for it in Cabo, where I stay in the winter. The play is to buy cheap land where you could have a facility within easy reach of the town.

In terms of mixed use, there are perks to having a commercial premise on the ground floor of a residential building in some overseas destinations. For instance, at one point you could get tax exemption on rent for 30 years in Casco Antiguo, Panama, and there was a similar opportunity in Medellín, Colombia. A mixed-use premise can also be easier to develop in some areas, with less requirement for individual parking spaces, for example.

There are a lot of opportunities out there in commercial and mixed-use real estate, and I highlight them when I can. But ultimately my team and I spend most of our bandwidth in pursuit of high-return opportunities in residential real estate. Not only is it less complicated, but like I say, it’s where we can make full use of group buying power using the industry connections we’ve built up over two decades. This gives us a unique advantage that few other investors can boast.