Many people drive cars yet are deathly afraid of flying. This is insane because we all know that statistically flying is between 60 and 200 times safer than driving, depending on how you measure it. Yet many people talk on their cell phones and change lanes all while speeding in traffic on the way to the airport. Then feel fear as the plane rolls down the runway. Risk and the perception of risk are two different things. Understanding the difference can mean exceptional profits and gains. Teasing out the facts and seeing the nuance between risk and what most people believe is risky is an information arbitrage. This is where huge money lays hidden, and a savvy investor can win big.
There are some great studies on why this is so, but let it suffice that this fear is irrational. But it is very real. Some people succumb to it and won’t get on an airplane. Most of us, however, if we have that fear, suck it up and get on the plane anyway. It is possible to get past this fear and get on with the business at hand. How does this example tie back into investing? Simply that what appears or feels risky, may actually be a lot safer than what we know. For example, ownership of property in Latin America may seem like a great risk. But is it? Only an empirical examination will actually tell us. The plane is leaving, with or without you. Opportunity is on board.
Sadly, the negative perceptions of a political crisis linger long after the danger has faded. This depresses travel and real estate purchases but presents savvy investors with timely opportunities. While many U.S. citizens are caught up in the politics of the 1980’s, Canadians can seize the moment and take investment action in a country held in low esteem by those in the “Lower 48.” Nicaragua, in many ways, is Costa Rica 30 years ago. It’s a time machine for in-the-know investors to use with 20-20 hindsight.
That’s because the country has been in and out of political turmoil for a century, much of it involving the U.S. In early 2018, Nicaragua faced civil unrest, and protesters were killed. It was a horrible set of events, but it ended 20 months ago. Investors who can separate perception from reality have a unique advantage in the marketplace. For those in the U.S., Nicaragua is a “no-go” zone. The divisive politics in Washington D.C. keep it in the public eye and perpetuate the negative image of the country. When the veil of politics is removed, the reality underneath is a beautiful country, with warm, loving people, who want jobs, food on their table, and school for their kids. This means the opportunity is wide open for everyone else.
Check out the bargains recently on the market. Natalie Sullivan of Discover Real Estate in San Juan Del Sur, a popular beach town said, “My average sale now is 40 percent off the original list price.” In Granada, the 496-year-old colonial city, Paul Daemen of Aurora Colonial Realty recently listed a 9-bedroom restored colonial home reduced from more than $500K to $350K USD. Other properties in and around the city can be had for under $150K USD. On the Pacific Coast close to Managua, prices have held due to the proximity to the capital city and major international airport. Road paving to Gran Pacifica will complete in June, dropping transit time from the capital to the nearest beach to under one hour. Homes and properties in a beach and golf village by the sea started in the low $100’s and an oceanfront condo facing a world-class surf break goes for $139K USD.
What if a small amount of due diligence on your part would uncover the facts and reality of such an investment? What if you examined hard data under the light of objective scrutiny and it showed that it was indeed less risky to own overseas property than owning shares of big blue-chip companies like AIG, Bank of America, GM, and GE. Are you ready to take action and “get on the plane?”
Smart, forward-looking investors will put themselves in the path of progress in the same way that Levi Strauss built hardware stores to serve the gold miners. More and more people will hear about the golden life south of the border and they will want to have it for themselves too. Old Levi ran a boring business of selling shovels, boots, and jeans. Boring, but exceptionally profitable. He served the needs of consumers and he got there first. You can too.
You may already be tuned into the incredible opportunities outside North America. If so, you are ahead of the curve and have a huge advantage. By owning a property that will serve these arriving consumers, you can, just like Levi, provide something that is desperately desired and earn a nice profit as well.
For investors looking to see their dollars go further, Nicaragua is the place to shop right now. When we can travel again, come visit. The country might scare some folks, but not the ones who have seen it with their own eyes. For them, the opportunity is about as sweet as it gets.
About the Author
Mike Cobb is CEO of ECI Development, a company that creates value through socially responsible development within communities in Nicaragua, Belize, Costa Rica, Panama, and Argentina. More info available at www.ecidevelopment.com.