April 13, 2016
I was in Panama two weeks ago. It was a quick trip. I was only there for 3 ½ days. The primary reason for my visit was to see a mango farm that was promoted by Live and Invest Overseas at the conference I attended last year in Medellin.
The last piece of my international diversification plan, which I have not yet implemented, is to invest in real estate outside the U.S. I’ve been working and saving up money so that I could do this. Now I have enough saved for a modest real-estate purchase.
What I am considering buying is a 1-hectare parcel within a 3000-hectare mango farm. 1 hectare is the minimum parcel one can purchase in this project. The cost is much more than if you simply bought 1 hectare of land, but it includes new trees to be planted and cared for by professionals. The planting and care for the trees is all included in the price up until the trees are allowed to start producing mangoes for profit. Once the trees start producing, maintenance costs will be deducted from my profits.
The purchase price also includes harvesting and selling the mangoes, when the time comes. Everything will be taken care of for me. It’s a turn-key investment.
The farming is all done organically and the mangoes are being produced for export. Mango trees grow in Panama like grass and weeds grow in the U.S. There wouldn’t be a market for them in Panama. However, as more and more people in the developed world discover the benefits of mangoes and the benefits of eating organic produce, a shortage of organic mangoes has been developing.
I was given a personal tour of the farm and the nursery where the new mango trees are born and raised for about 18 months.
The people involved in this project seem to be of the highest caliber, both in agricultural skills and business savvy. Everything I was told about the farm and the project sounded perfect. Moving forward, the next step for me is to proceed with intense due diligence efforts…making sure that everything they have told me is true.
If not for my friend, Valerie, who has lived in Panama for some time, I would have thought my due diligence was done. She told me about a couple who was scammed into buying a house. This couple was sold a house and empty lot next to it. The only problem was, the person selling them the house and lot didn’t own them. People can and will go to great lengths to obtain your money.
I, personally, have been the loser in several investments with people who were either intentionally scamming me or didn’t understand the dangers of their projects. I am not interested in losing anymore money so if I decide to proceed with this investment, I will hire a competent lawyer in Panama to look into all the important aspects of the investment.
Some things that Valerie and her friend, Paul, told me are that only contracts written in Spanish are valid in Panama. Therefore, there is a possibility that the contracts I have been given in English do not match those that I will sign, which will be in Spanish.
Also, I was told that the plan is to build a facility on the property to refrigerate the mangos shortly after harvesting them. Then, they will be shipped in refrigerated containers to other parts of the world. There is no guarantee that the facility will be built nor that they will be able to sell the mangoes for what they expect to sell them for.
I was told that the mango sale price they have been using to project the return on investment is the current price of conventional mangoes, not organic mangoes. Hence, the actual return shold be even better than the numbers they have been using to market their investment.
I heard mention of a contract with Whole Foods. I would need to dig into that further. It doesn’t do much good to grow all of these mangoes if you can’t sell them before they rot.
Other Possible Real Estate Investments
Before my trip, I reached out to find other agricultural projects in other areas of Latin America. I am still considering some of those projects so I’m holding back on the next due diligence steps relative to the mango farm. I want to have something else to compare it to. Considerations include the amount I have available to invest as well as the amount of diversification I’ll achieve with the investment and, of course, the return on investment.
I’m torn between investing in an agricultural project vs. a rental property. In general, less money is required to invest in some of the agricultural projects I know about, as compared to buying a house or apartment. If I had a rental property in a place I would consider living, it would provide a backup plan in case I decide it’s time to escape from the U.S.
I also have hopes that my children will come with me when the time comes, if things are looking particularly dire. So it’s important that the rental property be in an area that could provide opportunities for my business and scientifically-minded offspring.
To be honest, I really wanted my real estate investment to be in a country other than Panama. I already have permanent residency there, as well as a business entity and bank accounts. That gives me diversification between only two countries: the U.S. and Panama. I would like to be further diversified.
The other investment opportunities I know about and am considering are in Colombia, Paraguay, Uruguay and Argentina. I think that Argentina is particularly interesting right now because of their new president. The crazy economic policies of Kristina Kirchner are behind them now and President Macri will be enabling a more stable and growth-oriented economy there. I would love to own rental property in Argentina, but I don’t know if I have enough cash to be able to do that right now.
Stay tuned as I explore the various real estate investment opportunities I’ll be learning about.