Bruce Brown
March 8, 2010 by admin · View Comments
Bruce Brown J.D.
Senior Vice President, Institutional Investment
Ron Brown
March 8, 2010 by admin · View Comments
Ron Brown
Senior Vice President, Institutional Investment
Josh Linnes
March 8, 2010 by admin · View Comments
Josh Linnes
Park Wilson
March 8, 2010 by admin · View Comments
Park Wilson
Working With Us
March 8, 2010 by admin · View Comments
Working With Us
If you want to get a feel for the steps and timelines involved in partnering with us in a Latin American real estate investment, read below.
If you’d like to see how our unique approach to real estate investment has proven itself during past investments, you’ll want to browse our track record.
1. Before Purchasing the Property
- Initial meetings to determine if we have the proper chemistry and goal alignment for a relationship. We’ll want to know your risk tolerance, experience level, expectations, etc.
- Once we’ve agreed on the investment parameters for the deal that we will be pursuing, a JV (or letter of intent) would need to be executed between ETI & you
- ETI uses its resources & networks to uncover ideal candidates for investment. We have our scouts building relationships constantly with farm owners, attorneys, real estate brokers… and pretty much anyone else who will stumble onto deals, at the local area. We likely already know of the perfect investment candidate for you, but we’re firm believers in the Warren Buffet quote:
“It’s better to pay a fair price for a wonderful company than a wonderful price for a fair company”
Except we apply that to land, and we demand a wonderful price on wonderful property. So we’d rather spend extra time scouting the deal up-front to leave us with plenty of profit generating options on the back-end. As much time is spent “courting the seller” in order to ensure a very low, what-the-locals-pay price, as is spent finding the land itself. - Simultaneously, ETI will consult with you on strategies for structuring the deal. We are not attorneys or accountants, and as such cannot give you legal advice, but we are very experienced in the transactions from the point of view of an investor. We have relationships with numerous reputable law firms and accounting firms. We only work with investors who are willing to remain in compliance with their home nations. Our investments offer world-class asset protection, however, there are ways to effectively do this and other ways that can be disastrous for the investor… our experience steers clients clear of trouble in this area.
2. Obtaining Property / Property Rights
- Once the agreement(s) has been secured with the property seller(s) (we most often create assemblages of multiple properties), we form an agreement/Letter of Intent with you on terms for closing. The investor will be presented with a “term sheet,” that explains the parameters of the deal. This is an important distinction and a key to our incredible success at shaping the market. Rather than simply buying the property for our investors, we partner in a business or company that:
Owns the property,
Has a budget to carry out the investment , and
Has an agreement with a management company to carry out any improvement and development processes, along with the necessary marketing.
- As an investor, you’ll receive ownership in the company that has been established for the purpose of carrying out the investment. There are multiple advantages to setting things up this way, but the bottom line is this: managing risk and maximizing profit means shaping the market and strategically investing in land the way commodities traders buy futures.
- Your payment will go into escrow at this point under an agreement that unless something negative is revealed in due diligence (contingencies), you will be committed to the deal. We can’t pull out of the deal either, so this commits us both equally.
- We then enter the pre-acquisition due diligence period. During this time, ETI is investing ownership claims, obtaining legal and engineering documents, validating market assumptions, etc.
- If, after due diligence, the investment is still deemed adequate, we complete the acquisition (usually 60-90 days from the date of our having the original LOI
- Close the transaction and begin shaping the market and saleable aspects of the property for maximum profit.
3. Post Acquisition
- We execute the plans for investment. Sometimes this includes obtaining title, securing ownership claims, fencing the property, creating roads/trails, obtaining any local or national permits, hiring a caretaker(s), executing and managing agreements with marketing companies.
- Marketing. Nothing succeeds like success and real estate is demand-driven. Our ability to successfully market land even in the face of traditional obstacles provides us with far more options than most “buy and hold” style investors.
- We provide you with financial, operational, and marketing reporting on a quarterly basis.
- We manage the process of negotiating with potential buyers. This is transparent and you will receive all information regarding these negotiations.
- We manage the sale of the property. Preparations with local & international legal and accounting firms are usually made during this phase with our legal and accounting teams. We can coordinate with the investor’s council on these matters as well to make sure that the timing and method of sale is as advantageous as possible for our side of the transaction.
- Site Visits. We’re pretty flexible in meeting the needs of the investors and they usually have a wide range of preferences. Many never visit the property. Some visit during the closing. Some visit during the hold period. Some properties lend themselves more than others to a visit. We’ve taken investors into properties in helicopters, big boats, small boats, driving them down the beach at low tide (because there wasn’t a road yet), etc.
- Meetings. Since we’re usually in several countries, we don’t have lots of boardroom type meetings with investors. However, if we need to fly up for a meeting, or they want to come down that’s fine too. We don’t spend a lot of time in an office, but we can work that out if necessary.
Our Track Record
March 8, 2010 by admin · View Comments
Our Track Record
“But does it work? All your strategies and transaction structuring and networking and risk management – do they pay off for you and your investors?”
Answer: Yes. Not only does our method of predicting, investing in, and shaping the Latin American real estate market sound good, it’s been proven to work by our investing track record to date.
Here’s a sampling of track record with Latin American real estate investments:
Acquisition of 400-acre island now valued at 176% of initial investment
Here’s the thing about local knowledge in Panama: there’s what the locals know, then there’s understanding what that means from an investment standpoint, and then there’s what the international investment community knows. And in between the gaps is where opportunity lies.
Just ahead of a new road entering a promising area we sent our scouts into a region of Panama to search for property. The locals knew the road was coming, but didn’t connect that with an increased desirability of the property on the part of investors. But we understood exactly what a new road would do to appreciate the value of the surrounding property. So we sent out scouts out to find opportunity.
The area contained dozens of islands just off it’s coast, and our scouts were able to locate a 400 acre island that was completely uninhabited, covered in primary & secondary forest, with over 5 miles of coastline.
After spotting the island, we used our connections to “look Panamanian” and contacted the property owner through proxy. A property negotiation was set up wherein our local attorney (who has part ownership in our company) was able to negotiate the deal for 1/6th of the owners opening price.
In other words, we bought the property at such a low price, that even if the real estate market tanked, we could still sell for a profit.
And in fact, the market did turn south shortly after we bought (and we still could have sold for a small profit). But we held onto the property, the road came through just as we knew it would, and property values skyrocketed.
In addition we were able to add value to the property by reducing uncertainty and risk for potential buyers. We:
- completed a topography of the property,
- secured an environmental opinion,
- completed water studies,
- documented chain of ownership, and
- created trails throughout the property to provide access.
The property is currently on the market for USD $4.75M – representing an over 75% profit
Purchased a farm in 2008, subdivided and resold in 2009 at 143% net profits to investors
After scouting the availability of a small farm that had approximately 400 meters of coastline, we were able to complete the acquisition at incredibly favorable rates by traveling to the farm on horseback and negotiating the deal in Spanish directly with the land holder.
After acquisition we completed a topography of the property, secured an environmental opinion, completed water studies, documented chain of ownership, and created trails throughout the property to provide access.
The property was subdivided into 10 lots and sold using an internet campaign and local contacts in order to market the property directly to end consumers. Resulting profits were in excess of 143% for the investors.
Purchased 400 meters of coastline, sold 25% as fractional ownership surf camp for 50% profits
We were able to negotiate incredibly favorable rates on an X acre unimproved farm with 400 meters of coastline. A variety of factors and market conditions (Along with the US, Latin America was also experiencing hard times for real estate during much of 2008) made a direct resale of this land for development a still-profitable-but-unattractive option for us.
We needed to shape the market for the unimproved land, create profits for investors, and hold the bulk of property for sale during better market times.
So we turned the coastline property into a fractional ownership camp.
Sold 25% of our shares for that camp (during the worst market in years), and generated profits in excess of 50% for the investors.
Best of all, we’re still able to convert the remaining project into a small, 20 lot development, having already profited 50% from the initial acquisition. We will be partnering with the fractional owners, and carrying out the development in 2010.
Secured option to purchase oceanfront farm in 2008, purchased and resold in 2009
After numerous lengthy negotiations with a family who owned a 35 acre oceanfront farm, we were able to reach a joint venture agreement with the family to purchase and sell the property.
As part of the joint venture, we did all of the topo, water studies, etc necessary to make the 40 acres of oceanfront property salable. We purchased and resold the property in 2009, resulting in more than favorable (but confidential) ROI to the investors.
Successful Purchase and sale of farm in the Southern Zone of Costa Rica for 111% profit
Jungle Trails Video
August 24, 2009 by admin · View Comments
[flowplayer overlay="true" single="true" title="Jungle Trails in Burica" desc="The owners of the neighboring property have several miles of trails through their property. Playa Burica buyers have access to those trails." thumb="http://video.surfburica.com/trails.jpg" height=270 width=480]
[video single="true" file="http://blip.tv/file/get/KimAronson-TwentySeconds65459.flv" file_hq="http://video.surfburica.com/trails.mov" desc="The owners of the neighboring property have several miles of trails through their property. Playa Burica buyers have access to those trails." ][/flowplayer]
Strategy
April 8, 2009 by admin · View Comments
Strategy
Clearly, investing in raw land in emerging markets requires a rare and unique combination of qualities in the entrepreneurs participating in the enterprise. Generally, the Third World entrepreneur must have professional boardroom experience, be a hearty adventurer, and have a high degree of cultural adaptability.
Primarily, we succeed in acquiring and managing emerging market real estate because we’re actually here on the ground in the Third World nation. Secondly, we enjoy the rare characteristics needed to be successful on the ground locating and securing raw land real estate opportunities in a Third World nation.
We invest in raw land in emerging markets. Since this is our business cornerstone, managing our business activities focuses on two areas:
- We’ve adopted a strategy in managing the acquisition of raw land in often remote areas of opportunity.
- We’ve adopted a strategy in maintaining our interest in the property pending resale of the raw land.
Impact of Current Economic Realities
April 8, 2009 by admin · View Comments
Impact of Current Economic Realities
Today’s global economic environment seems to change by the day. Prudent investment requires a constant analysis. It also needs frequent re-evaluation of the markets for investment participation, as well as re-evaluation of the investments and the exit strategy for each one.
In this section we share some of our views of the current macroeconomic trends and how they affect our investment strategy. This section will be updated from time to time.
Are There Markets Relatively Isolated from the Global Economic Storm?
We believe that investors money is necessarily held on planet earth. We believe that some emerging markets are relatively safer places on the planet to hold assets during the present economic storm. They also provide better opportunities.
What About the Crash?
It’s two years later, and real estate values have tumbled in the USA. Is there real estate opportunity there? Yes. But we don’t want to invest in the USA economy until it has stabilized. Also, we like some of the more traditional attractions many have discovered investing outside the United States.
For example, many people have found it attractive from an asset protection standpoint to move some assets offshore. Given the present economic situation in the First World, this reason for locating assets overseas has become even more compelling.
The World is Ever Flatter
We are here in Panama. We are finding that the world economy is creating services that normalize investing globally. This is particularly true in Panama. Panama’s professionals are poised to assist our investors in establishing a global investment base. We are poised to assist our investors in permanently involving themselves in global investment opportunities abroad from a Panamanian base.
Related Video
Globality VideoRealistic Tax-Planning and Asset Protection
April 8, 2009 by admin · View Comments
Transaction Structuring
Hard earned perspective on positioning vis-a-vis taxes and asset protection
Across the internet you will find, or may already have found claims of how international investment in real estate can be structured in a way that gives you benefits that include zero tax at home and almost complete asset protection. Several years ago, we investigated these claims and the structures underlying them.
During our investigation, we discovered these strategies depend almost entirely upon the “secrecy” (as opposed to privacy) a foreign jurisdiction provides an investor from the home nations courts and taxing authorities.
Aside from ethical concerns with these strategies, there are increasing practical realities. Home taxing nations have made it their highest priority to pierce the privacy of tax havens and begin imposing sanctions and even criminal penalties on those whose offshore investment strategy has been one that includes avoiding all tax at home.
Distinction between tax-avoidance strategies and asset protection strategies
Comply from a tax standpoint; plan from an asset protection standpoint
Home nations give their taxing authorities tremendous power. This power lets them completely ignore and look through structures and arrangements that separate a beneficial owner from the income generated by investments related to that individual for tax purposes.
However, home nations have commonly not been involved in ignoring foreign structures that assist an individual in protecting their assets from civil suits and other civil seizures.
We believe that in the current environment, adopting an offshore investment strategy that includes techniques and structures to completely avoid at-home tax risks personal disaster. However, we believe that asset protection and tax minimization strategies remain strong options for the offshore investor.
Therefore, we have aligned ourselves with professionals in offshore nations and in the USA that take a conservative position on tax and yet are open to facilitating asset protection with the assistance of offshore entities.
We are happy to share our perspectives and findings on this topic with you.