Knock, knock… I already know who’s there. It’s another desperate broker asking if I’m the owner of the condo I’m staying in, and if so, would I sell it.
I’m staying in a rental in the sunny beach town of Lagos on Portugal’s Algarve. Back in 2020 I recommended condos in this community (called Adega) to members of my Real Estate Trend Alert group, and since then prices have skyrocketed. One RETA member bought a condo here for €480,000 and has since sold it for around €675,000. That’s an incredible profit of approximately €195,000.
Thanks to accessible and low-cost Portuguese bank financing, some RETA members who bought here have even tripled their money invested.
I tell the broker I’m not the owner, but I wish I were…
Prices in Lagos are still climbing. That’s why I’ve had two brokers knocking on the door of my vacation rental in as many days. Demand for real estate is soaring but at the same time there are very few properties left on the market. Small-time brokers, who normally manage about 50 listings, are down to one or two—or none at all. They have the buyers but don’t have anything to sell them. So they go knocking.
At RETA, however, we use a different strategy. We don’t chase deals, we get out ahead of them. By being first to a hot new market, we see powerful price increases in the short to medium term. Just like members have at Adega. And just like they have at another Lagos community called Santa Maria, where thanks to a 10% discount, RETA members got in from just €310,500 in 2019. Since then, two-beds that were selling there for €630,000 have been listing for as much as €850,000.
I still have my sights on Lagos. More and more people are arriving here from North America thanks to its California-like lifestyle, historic old town, and incredible golden-sand beaches. Plus, the Path of Progress that moved along the Algarve coast from Faro international airport and helped drive profits in Lagos is still at play.
There are overlooked neighborhoods in this beach town that could yet see gentrification. However, with such a scarcity of developable land and prices reaching new levels, I’m already knocking on the door of the next Lagos…
That’s what recently took me to the far western Algarve, to an area just north of the town of Aljezur on the Atlantic coast. It looks like Portugal from three or four decades ago, with tourism still very much in its early stages. You’ll see surfers, hikers, and adventurers…but none of the trinket shops and champaign bars that signify mass-market towns. This is a rugged and wildly beautiful place, with vast beaches and huge potential. And it’s still just one hour from Faro international airport, with connections all over Europe.
Being west-facing, the beaches here are more exposed to the elements than you’ll find in the central Algarve, which might be an issue for sun-seekers who demand perfect vacation weather. But for types like me, who are drawn to quieter regions for longer stays—like the Silver Coast farther north where I own a condo—this tucked away corner of the Algarve is a revelation.
It’s the Silver Coast but sunnier…the central Algarve but less crowded, and more rugged and dramatic. It might still be too early to find the kind of real estate I’ve been bringing to RETA members in Lagos—luxury condos from best-inclass developers—but there might be an opportunity here for a land banking play. Essentially, you can own the land that developers will want to build on when this place starts getting noticed. And with brokers now running out of properties to sell in extremely popular beach towns like Lagos, it’s only a matter of time before they come knocking…
Your Real Estate Questions Answered
Louise asks: When you buy overseas real estate for investment, how do you know when to sell?
Ronan says: Hi Louise. There is no single rule of thumb for when to sell. A lot of it comes down to your financial situation, what other investment opportunities you have, and if you have a personal attachment to the property.
That said, always sell if you get offered more than you think it’s worth. Following that rule is what got me started in overseas real estate in the first place. I sold an investment property in my home country of Ireland because I got offered more than it was worth. And when I saw no value left in that market, I started looking abroad instead.
Personally, when I get a good offer where I can more than double my cash invested, I give it serious consideration and often sell—even if I think the market could rise further. That’s because, through my Real Estate Trend Alert group, along with fellow members, I always have early-stage opportunities where growth can be fastest.
Sometimes I sell early and leave a lot of money on the table. Take a RETA deal I got in on in 2019 along with fellow RETA members. The deal was for two-bedroom condos, a minute’s stroll from the beach, in the little town of Akumal on the Riviera Maya. I sold early making a profit of $75,200, more than doubling my cash invested. I then rolled that money into other RETA deals where I was also able to see fast early-stage appreciation. But a similar condo to the one I sold for $250,000 recently sold for $400,000. That’s the way it sometimes goes.
Of course, if you’re making strong rental income and enjoying personal use of your investment, the process might be different. I was recently offered $600,000 for my condo in Cabo, which I bought in a RETA deal in 2015 for $336,156. And while I believe I could increase my return on capital by selling and reinvesting elsewhere, I choose not to because I’m looking forward to decades of winter use.
Editor’s Note: Ronan McMahon is the editor of Real Estate Trend Alert and a contributing editor to IL. Email Ronan with your real estate questions and comments at mailbag@internationalliving. com. We may publish your question along with Ronan’s reply in IL Postcards or here in IL magazine.