Editor’s Note: The following is an excerpt from Lief Simon’s just-released book, “Cowboy Millionaire—The New American Pioneer,” a collection of the wisdom he’s learned in three decades of living and investing outside America.
Read on for Lief’s insights on how to become independently wealthy… and claim your free copy of his new book…
I bought my first investment property in the United States.
It was 1995, and I bought a three-flat building in Chicago. I was renting an apartment in another three-flat, and the owners told us they were selling the building. Until that moment, I hadn’t been thinking about buying a house, let alone a multi-unit building.
But I liked the apartment where we were living, so I began looking into whether it would be possible for me to buy the building. I started to educate myself, running numbers, speaking with mortgage lenders, checking the prices of other buildings, and trying to understand the market.
While the negotiations didn’t work out for the building where we’d been living (that really was a great apartment… designed by Frank Lloyd Wright), the seed had been planted.
I found another building that met all my parameters…
Friends and family all thought it was a bad idea to buy. Too risky.
Why was someone as young as I was at the time—in my 20s—just starting out, thinking about making such a big property purchase?
With the help of a $5,000 loan from my first wife’s parents, I put a down payment on that three-apartment building.
It turned out to be one of the best investments I ever made.
I sold the building less than three years later for a leveraged return of 3,000%, turning my $5,000 down payment into $150,000 in profit after closing costs and commissions. I’d sold it for almost double what I’d paid.
I’d run the numbers and knew that building was a great prospect. There was some risk—for example, if the property lay vacant and we couldn’t get renters. But for me, it was worth taking the risk because of the potential upside…
It worked out.
With that willingness to take that risk early in life, I was able to achieve my ambition to become a millionaire by age 35, and my net worth has grown and grown since.
I’ve applied the same principles from that first investment to my investments since then.
I study the market… I run the numbers… and if the numbers stack up, I buy.
By looking overseas, I’ve been able to find opportunities to grow my wealth that I never would have found back home…
With that “nut” from my Chicago investment, I was able to purchase (along with Kathleen) a property in Ireland… which, thanks to Ireland’s strong property market, we were also able to eventually sell for more than three times our investment.
My next real estate investment was in Spain. I bought a pre-construction apartment on the beach.
Again, I was looking for an opportunity where the numbers stacked up…I spent 10 days traveling the entire southern coast of Spain looking at real estate and speaking with a dozen developers and agents.
By the time I got to Estepona on the south end of the Costa del Sol, I had seen a lot of properties—most of them crap.
The developer I met in Estepona had released a new beachfront project the day before I’d arrived. His group didn’t even have their sales office set up at the property yet. They were working out of their main admin office down the road.
We visited the site, I looked at the plans and prices, and I was ready to invest.
This was the best opportunity I’d seen on the entire trip… and because it was pre-construction, the initial capital outlay for the deposit wasn’t much.
I called my wife, Kathleen. She’s a fairly conservative investor. Her first reaction was to tell me I was crazy to be thinking about investing in Spain… in a pre-construction project. What did we know about buying pre-construction real estate in Spain?
While a 10-day trip couldn’t be called an all-encompassing education in Spanish real estate, it was enough, as I explained to Kathleen, for me to know a good deal when I saw one.
She begrudgingly agreed to buy a unit because I was there and she wasn’t. She had to trust my instincts.
And, in the end, she sure was glad she did.
That purchase falls into the top 10 of my more than 60 real estate investments over the years. The developer sold the apartment for me before it was completed. The returns were almost 100% profit over the less than two years that I held the property.
Other great deals I’ve invested in over the years include…
- 80% profits in just eight months in Romania. Thanks to my legwork and my contacts on the ground, I spotted a market in Eastern Europe that was set to rise—before most anyone else was looking. Before I could begin the renovations I planned, a buyer came to me… cash in hand… and I almost doubled my money…
- 20% net yields and 100% appreciation in Panama. This home-run purchase at one of the best addresses in downtown Panama City has provided double-digit cash flow as both a short-term and a long-term rental. Today, it is worth more than twice what I paid for it and serves as Kathleen and my personal pied-à-terre as we come and go for business and pleasure from the Hub of the Americas…
- 50% appreciation in less than a year and a half from a coastal pre-construction buy in Cyprus. This recent investment is on track to bring me a greater return than my pre-construction win in Spain…
This, essentially, is how you make your fortune in real estate… how I made my fortune.
My personal research and my trusted contacts have helped me see more overseas real estate returns like that over the years…
As I wrote in my previous book, “Buying Real Estate Overseas For Cash Flow (And A Better Life),”
“How do you get rich investing in real estate overseas? You make one purchase in a market generating decent yields. Rent it, setting aside the excess cash flow each month, until the property’s value has appreciated to a level where it makes sense to sell. Roll over the accumulated rental income and the capital gain into a next property in a next market.
“Do this until you’re accumulating enough excess cash flow that you can afford to buy a next investment without selling one you already own.
“Continue in this way, on and on, until, in time, you’re a bona fide global property baron earning enough cash flow to fund a life of travel and the retirement of your dreams.”
This is the lifestyle of the New American Pioneer…
Lief Simon
Director, Overseas Property Alert