Tag Archive | "real estate prices"

Investing in Chaos


Many recent messages have looked at living, business and investing in chaos during times of turmoil and change.

investing-in-chaos

Ecuador at times may seem chaotic.

Chaos is caused by transition from one wave of productive technology to another.

Investors and businesses who understand this have an enormous advantage because they know to look for the next wave.

In a moment, we’ll look at the potential for chaos in Ecuador.

First, let’s look at some positive chaos that could ruin some basic utilities but also create millions (maybe billions) for some businesses and investors.

The industrial revolution has been a time of continual chaos.  There was a time of turmoil when mankind shifted from steam technology to the internal combustion engine. Investors who had been big in railroads (but were smart) shifted to investing in automobiles and trucking and bus lines.

Then chaos came again when the jet engine made the airplane a more effective form of transportation than long distance.  Bus travel and smart investors shifted from Greyhound into airline shares.

In the information era; the PC, Internet (and Microsoft) became the major carrier of mankind and investors who saw this potential once again jumped ahead of the pack.

Where do we go next?

One new wave of technology may come in a product we all take for granted…. creating what I would call the independence era. Let’s just look at the break through.

A forward looking reader sent me the Utah Daily Herald article “New battery could change world, one house at a time” by Randy Wright.

Here is an excerpt:  On a modest building on the west side of Salt Lake City, a team of specialists in advanced materials and electrochemistry has produced what could be the single most important breakthrough for clean, alternative energy since Socrates first noted solar heating 2,400 years ago.  — a new generation of deep-storage battery that’s small enough, and safe enough, to sit in your basement and power your home.

It promises to nudge the world to a paradigm shift as big as the switch from centralized mainframe computers in the 1980s to personal laptops. But this time the mainframe is America’s antiquated electrical grid; and the switch is to personal power stations in millions of individual homes.

The battery breakthrough comes from a Salt Lake company called Ceramatec, the R&D arm of CoorsTek, a world leader in advanced materials and electrochemical devices.

The convergence of these two key technologies — solar power and deep-storage batteries — has profound implications for oil-strapped America.

With small-scale electrical generation taking place at millions of individual homes — as opposed to today’s large-scale power generation from a handful of giant power plants — there would be less worry about what’s called “point failure” on the grid. That’s when a single component gets knocked out and shuts off power to a whole region. California-style rolling blackouts would be history.

The threat of terrorism has heightened the worry. But wide distribution of batteries in homes would virtually eliminate it.

Inside Ceramatec’s wonder battery is a chunk of solid sodium metal mated to a sulphur compound by an extraordinary, paper-thin ceramic membrane. The membrane conducts ions — electrically charged particles — back and forth to generate a current. The company calculates that the battery will cram 20 to 40 kilowatt hours of energy into a package about the size of a refrigerator, and operate below 90 degrees C.

This may not startle you, but it should. It’s amazing. The most energy-dense batteries available today are huge bottles of super-hot molten sodium, swirling around at 600 degrees or so. At that temperature the material is highly conductive of electricity but it’s both toxic and corrosive. You wouldn’t want your kids around one of these.

The essence of Ceramatec’s breakthrough is that high energy density (a lot of juice) can be achieved safely at normal temperatures and with solid components, not hot liquid.

Ceramatec says its new generation of battery would deliver a continuous flow of 5 kilowatts of electricity over four hours, with 3,650 daily discharge/recharge cycles over 10 years. With the batteries expected to sell in the neighborhood of $2,000, that translates to less than 3 cents per kilowatt hour over the battery’s life. Conventional power from the grid typically costs in the neighborhood of 8 cents per kilowatt hour.

Re-read that last paragraph and let the information really sink in. Five kilowatts over four hours — how much is that? Imagine your trash compactor, food processor, vacuum cleaner, stereo, sewing machine, one surface unit of an electric range and thirty-three 60-watt light bulbs all running nonstop for four hours each day before the house battery runs out. That’s a pretty exciting place to live.

And then you recharge. With a projected 3,650 discharge/recharge cycles — one per day for a decade — you leave the next-best battery in the dust. Deep-cycling lead/acid batteries like the ones used in RVs are only good for a few hundred cycles, so they’re kaput in a year or so.

How do you recharge? By tapping your solar panels or windmills. It’s just like plugging in your cell phone or iPod, only you plug in your house.

A small three-bedroom home in Provo might average, say, 18 kWh of electric consumption per day in the summer — that’s 1,000 watts for 18 hours. A much larger home, say five bedrooms in the Grandview area, might average 80 kWh, according to Provo Power. Either way, a supplement of 20 to 40 kWh per day is substantial. If you could produce that much power in a day — for example through solar cells on the roof — your power bills would plummet.

“Batteries and PV are about to merge,” said MIT’s Nocera, using the shorthand for “photovoltaics” or solar power. “First Solar is now saying that it takes $1 a peak watt to manufacture, and another 80 cents for installation. So they’re saying that you can get PV for under $2 a watt. That’s a reduction of cost by a factor of four. Only a few years ago, it was $8. If CoorsTek and Ceramatec come up with a good battery, the market will develop quickly.”

The long-term impact of home electric generation for a power company’s business model could be huge. After all, you can’t stay in business if nobody’s paying for power. Exactly how that will play out remains to be seen.

This technology is new to me… but seems breathtaking and loaded with opportunity.  Please send any thoughts, ideas, information or opinions you have.

Before you invest though, remember the golden rules of investing.

1. Money isn’t everything
2. Work only with people you like
3. Buy businesses, not stocks
4. Invest only in what you understand
5. Don’t over diversify
6. Keep looking for new opportunities
7. Buy businesses you plan to keep for life
8. Look for businesses that are available at a good price
9. Do what you like

Potential Ecuador Chaos

investing-in-chaos

The people of Ecuador are friendly and happy.

There is some potential for change in Ecuador that could benefit those moving and investing there.

First, let’s look at the cause of the turmoil.  A recent message entitled Investing Internationally shared news about the Ecuadorian government’s plan to take back a number of radio and TV frequencies stations. We promised to stay tuned to what happens and share observations and opinions from trusted sources in Ecuador about this.

Since that time, the Western press has published even more bad sounding news.

A recent AP article entitled “Ecuador Wants Citizen Committees To Defend Gov’t” said:  QUITO, Ecuador — Ecuador wants to create local citizen committees that would defend the government and its “revolution” — sparking criticism that the president aims to control opponents in a system reminiscent of Cuba or Venezuela.

Citizen Participation Minister Doris Soliz told Ecuador TV on Thursday that local citizen groups are needed to defend against coups like the one that recently deposed Honduran President Manuel Zelaya, or against outside agitators, noting U.S. military plans to use Colombian bases.

Other articles covered lots of rhetoric from Venezuela’s President about winds of war in the area (Chavez’s commenting on the announcement that the US would place military in Colombia).

Since the daily press distort, dramatize and magnify the negative; here are more comments from Ecuadorian business people with this comments.

Dear Gary: Sorry for the delay in my reply.  Correa is an unpredictable president.  On one hand he tries to emulate everything Chavez has done in Venezuela.  It is clear that Chavez gave him millions to finance his political campaigns and now he is obligated to do whatever Chavez wants.

On the other hand, he knows how far he can push the people of Ecuador.  If he is not careful, he can end up like Zelaya in Honduras.  I see strong confrontations coming if he tries to close radio and TV stations like Chavez did.

As you say in your reports.  We all need to be diversified in order to avoid problems in one place and not have anywhere to go in thing go bad.  I do believe the Ecuadorians are not as passive as the Venezuelans, and if Correa pushes too far he will find out. Let’s wait and see.

I agree with this reader. Ecuadorians are an independent people, and I have watched them (peacefully) oust a number of Presidents who abused their power.

Here is another opinion from one of my many sources.

Gary,  My comments are just some personal opinions and for that reason I prefer that I not receive any credit.   There is some noise going around that Correa wants to have “block leaders” who will report back to the government of any dissent. You can imagine what this means. Stifling dissent. It is a time to be careful and hope the Ecuadorian military remains faithful to the people of Ecuador. While there are so many needs and opportunities in Ecuador to be attended to, one could ask why does the president feel it is necessary to be out speaking of “winds of war blowing” against Colombia?
Anyway, it all comes with the territory of being in the Latin governmental world I suspect.  If the leaders were just humble people looking to improve the lot of their people instead of being megalomaniacs hell bent on being Castro or Hitler, life would be easier for all.

investing-in-chaos

Here are children in a parade in Cotacachi.

Readers should note that it was not Correa, Ecuador’s president who made the comment about Winds of War but Chavez of Venezuela. A lot of press makes it sound like Correa is much more closely aligned with Chavez than I believe he is.  Good or bad, I do believe that Correa is his own man and is pretty independent.

Here is another comment by an Ecuadorian with a great political and historical background.

Thanks for asking.  Correa. He is all right.  His big problem is being too young.  There is
a proverb in Spanish “mas sabe el diablo por viejo que por diablo”.  (
The devil knows more because he’s old than because he’s the devil). That is Correa’s problem.  He is not old enough.  Velasco Ibarra who was president five times, was very much like Correa, when he was young. When he grew older he became much more sedated.

Again I agree with this. Everything I have seen has led me to feel that Correa has many good intentions and is trying to correct many wrongs and has a big job.  In his youth he may be too ambitious and impatient.  Time, inertia and politics should correct a lot of that!

Here are more comments.

He usually talks too much.  He talks every Saturday for 3 or 4 hours continuously.  It is not highly recommendable to quote him or mention his speech. Sometimes he just changes his mind. Or does not follow what he mentioned in the previous weekend.

That could describe more than one politician!

I have met the President a couple of times. He actually stopped next to us on the street at 9pm at night and met our son and was very sincere and asked what we thought about how things were here in Ecuador.  He is very headstrong, but I think that he is a very intelligent guy and he knows how to negociate  and what it is going to take for Ecuador to become a stable economy and that is with foreign investment and tourism.

Again this is the way I see it as well.

This is from a Quito businessman:

Dear Gary:  Many thanks for sharing the concerns some of your readers have about President Correa. I get some emails on the subject too.  I should start by saying that I am no fan of President Correa,  far from it. I don’t particularly like his discourse as if from the union trenches of the 60s and 70s.

Some of his economic policies seem to go counter current and his relative closeness with Chavez is a blemish.

Nonetheless, there are merits too, amongst which is great effort in improving education and health care. Also, in attempting to fix some wrongs and distortions we’ve had on several fronts.

In spite of Correa’s antics, Ecuador continues to offer, and perhaps more so than ever, rather remarkable opportunities for real estate investors, visitors and expats.

Let me explain:

The new, fresh-out-of-the-oven, Ecuadorian Constitution states, following with the tradition of the previous one, that foreigners have exactly the same rights as Ecuadorians under the law.

Furthermore, private property is protected under the law as one of the main pillars of our economy. Confiscation is prohibited and eminent domain (expropriation) situations are extremely rare, much less so than what they would be in Miami, London or Toronto for that matter.

While some people may believe that Correa is not particularly pro foreign investment, the reality is that Ecuador, just as the next country, needs investment to prosper and, hence, the President is very welcoming of it, he just demands responsible practices.

While the pitfalls of politics-as-usual and nationalistic grandstanding in Ecuador, can and does preclude some major investments from coming in (picture hydroelectric, oil exploration, etc), for most of us, of your readers Gary, this should not be a problem.

Regarding the Government’s stance towards foreigners coming to Ecuador and investing here, something quite nice and reassuring happened to me recently, which is telling about how reality differs from perception.

Here’s the story:

While working in the concept for a coastal development with international capitals and geared mostly towards foreigners, we realized that better government planning and zoning was needed in the area if we were to spread our wings the fullest.

I decided to call the Production Ministry, which is a high level coordination entity on top of many other ministries in Ecuador to see if they could perhaps give us some light as to getting some better zoning for the area.

I was immediately transferred to the head authority in charge of foreign investments in Ecuador and in a few hours was meeting with him along with other officers from the ministry he had called in.
They were not only incredibly welcoming of our ideas and concepts but asked us to create with them a road map not only for planning and zoning, but for infrastructure, education of the local community, and much more.

They have let me know that they are ready to lend a hand as needed and that when the time comes, once we have things down on a plan we can meet with the secretary of the ministry and even President Correa for further vision.

What is the reason for this incredible support? Well, that they are really pro investments and that when you want to do the right thing, doors become open.

On the subject of visas, something that concerns many foreigners, I can say that the President has prompted a very open regime for foreigners to come to Ecuador. However, some changes in the procedures are driving some of us nuts. We just have to adapt.

In any case, you can expect to get a resident visa in Ecuador in 3 to 6 weeks in most cases. The new director of Migration is quite a gentleman and very open and understanding. It’s a pleasure to work with him.

With regards to some radios being closed, this is something the President declared as a possibility on grounds that some radio frequencies had been granted with irregularities according to an audit. While the audit may be correct, President Correa does have a bitter quarrel with the press and his fixation with it is over the top now.

Getting back to real estate; I’d like to add that foreigners have been investing and buying real estate in Ecuador for some time, and that this is a trend that is seemingly quite on the rise.

I am seeing the start of a major wave here.

Ecuador has excellent real estate opportunities and values and the current international crisis where former “safe havens” have been shattered is making this truth about Ecuadorian real estate all the more compelling.

Investors into Ecuadorian real estate ought to buy soundly into capital preservation and important appreciation potential.

As final thoughts, given the current financial problems the world is seeing, the violence in Mexico fending off tourists and investors… the bursting of the real estate bubbles throughout, the baby-boomers coming of age with individuals lusting for active living with quality of life to boot, Ecuador is starting to make some tremendous sense to many.

Our President may be a bit of a showman (to put it somehow), granted; and we as a nation have a ways to go into maturity; we are rough around the edges, but we may have among the warmest, most welcoming people on earth, and no development can buy that.

We have good infrastructure and low cost of living. Those who see beyond the perception should be able to get in early on the trend, ride this major wave and make the best out of it.

These are good points… especially this one… the government may be talking one way or the other… but look at how it is acting. In this case it appears that the government is pro tourism… pro investment and is welcoming residents from abroad.

Here is one final comment.

Gary, I don’t get involved in my host country’s internal politics.  I am however a strong believer in the Open Society and the value of ideas meeting arguments, so I guess I would prefer more media outlets to fewer.  By the by, Ecuadorians I know say this is the first time they feel they cannot express freely what they feel about their government, for fear of repression.

These are two key points also. I do not get involved in politics anywhere.  My feeling is that time is better spent adapting to whatever the politicians do rather than joining into the political fray. Reality is that if you do business fair and well, whatever the political system is you’ll be welcome.  The second point is about freedom of speech.

I recall feeling fear like this recently when talking to my son over the phone. I was about to make a joke about a certain president and decided not to thinking… I had better not joke about this.  The problem was I was in the US… not Ecuador.

The great technology that has created such great access to information has destroyed our privacy as well…everywhere.

My new real estate acquisitions are in Ecuador . Recent messages have looked at the importance of seeing reality. People write often asking if it‘s safe in Ecuador. I was thinking of the reality of this as Merri and I concluded a long Ecuador morning walk. The birds were singing, roosters crowing in the distance and we saw two very young children, a girl of maybe six or seven and her little brother maybe four or five walking alone through the village on their way to school. This is so typical in Ecuador.

I wondered how many children of that age in North America are allowed to walk alone through town as they are in Ecuador.

investing-in-chaos

More Cotacachi children in a parade.

You see young girls like this (maybe eleven or twelve) walking around night and day. This is not because Ecuadorian parents are careless. It is because there is a great deal of safety in Ecuador .

Here are a few facts I know.

#1: The Ecuador constitution protects landownership of citizens regardless of citizenship. No local government can take land by eminent domain for economic development.

#2: No Ecuador children have been shot in school.

#3: Ecuador schools do not require metal detectors.

#4: No Ecuador police force has used a “no knock” search warrant to break down a door and then shoot an innocent 80+ year old resident 50 times.

#5: We do not worry in Ecuador about being sued if someone spills hot coffee on themselves at our hotel. By the way our coffee is hot here.

#6: Ecuadorian doctors do not have to shut down their practices because of malpractice insurance costs.

#7: Parents in Ecuador are not at risk of having their child diagnosed as having ADD and being forced to give them Ritalin. Read http://www.ritalindeath.com/ if you want to have your heart rendered over the weekend.

investing-in-chaos

There is a deep culture in Ecuador.

Back in early 2007, a potential real estate buyer visited me about buying a $93,000 house in Otavalo. As we enjoyed a “cuppa tea” and visited I could see he loved the house but was really worried about loss of property due to Ecuador’s constitutional reform.

My view was that the reform was unlikely to reduce individual land rights. As we can see above, the opposite took place. the constitution strengthened property protection.  Ecuador’s base of wealth has always been individual land ownership.

Then I pointed out to this potential buyer that his  real bigger risk was buying a similar three bedroom house in England. A similar house would cost him between $400,000 and a million dollars. The risk of losing $93,000 in value when the overheated English real estate market dips seemed greater to me than the chances of losing $93,000 in Ecuador because a house would taken due to constitutional change.

Prices were way overblown in England.  This was exactly what happened.  Real estate crashed in England while real estate prices in Ecuador have remained strong.

Plus Ecuador offers the benefits of $1.40 a gallon gas, lovely weather, sweet people, no capital gains tax on real estate sales, very inexpensive but good medical and dental help, ridiculously low property tax, almost no tort liability, inexpensive cost of living, low crime and better food.

In the west, the cost of living is so high that many people can barely move!

So where is it safe to live? I think when Merri and I are really realistic, we feel that there are many aspects of safety in Ecuador.

Many of us feel many changes in our homelands that are not good. If you do, don’t despair, the sun always shines somewhere as it did here in Cotacachi, Ecuador. Here’s the sun coming up!

Merri and I always practice diversification…in asset class as well as geographically.  We are over weighted in Ecuador so we are voting with our money that the chaos here will create more opportunity than trouble.

See more about Ecuador diversification here.

Change and chaos are parts of the rhythm of life.  The never ending evolution created by time and space creates turmoil but also opportunity.

We hope the chaos in your life brings only good to you.

Gary

Combining good international investing with the greatest asset of all, the ability to earn wherever you live, brings everlasting wealth in chaos.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am willing to pay you $300 to attend either our Ecuador Super Thinking plus Spanish seminar in September or our North Carolina International Business & Investing seminar in October.  Sign up for either seminar and I will email you our Tangled Web… How to Have an Internet Business Course (offered at $299) free plus I’ll knock an extra dollar off your seminar fee…. to round up the $300 savings.

See details of the two seminars below.

Join Merri, Thomas Fischer of JGAM, our webmaster David Cross and me in North Carolina this October and enroll in our emailed course on how to have a web business free.  Save $300.

Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

Oct. 9-11 IBEZ North Carolina

Here is an email for a recent seminar delegate: Amazingly helpful, amazingly timely … thank you for this !

Sept. 17-21 Ecuador Super Thinking + Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 21-24 Ecuador Import Export Tour

Nov. 6-8 IBEZ Ecuador Seminar
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador seminar or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

Read the entire article New battery could change world, one house at a time

Funky Global Business Part III


Here is a funky Ecuador real estate business idea.

The last two messages were part of this three part series on thinking outside the box or Funkiness Thought.  If you missed part one or two, see Funky Global Business here.   See Funky Business II here.

Big problems create big opportunity,   One big problem is the rising cost of living in North America. This is why I have been writing about investing in low cost Ecuador real estate for over a decade.

When I started sharing this idea 14 or 15 years ago it was WAY out of the box.

This has been a great idea but now prices have risen in some of Ecuador’s more popular areas.  So we have to work harder to be out of the box in our Ecuador real estate thinking.

I recently posted a Loja Ecuador guide at Ecuador Living as a funky business idea.

Funky is created by thinking outside the box and as more North Americans move to Ecuador, one place they have missed is Loja.

Recently Dario Espinosa placed an advertisement entitled Ecuador Luxury Villa in Loja Ecuador at our site.

His ad offered rentals of the  luxury Villa Serena.  The villa is built around a magnificent courtyard with a fountain and wide corridors.

loja-ecuador-villa-for- rent tags

You can see many similarities in the colonial architecture of Villa Serena and our hotel, Meson de las Flores in Cotacachi.

ecuador-hotels-cotacachi-meson

Shortly after the ad appeared Dario wrote:

Thanks Gary.  I have received several inquiries as a result of your e-mails.  Looking forward to the article about Loja next week.  I really would love to see more foreigners starting to discover Loja.  It is such a lovely city.  I would love to see them buying old colonial homes and restoring them.  I will be happy to assist them with that for free, just to see the architecture of Loja in good hands and preserved.  That is basically why I am selling Villa Serena.  It has a lot of sentimental value to me because it was my family house, but if I sell it I will use the same money to continue buying old properties and restoring them.  Besides, I really enjoy doing it.  Regards,  Dario

I thought… what a funky idea. fix up old places in Loja!

So I asked Dario to tell us more about Loja Ecuador.  There may be some business potential fixing up property in Ecuador. I know this idea has worked well for Merri and me in Cotacachi where we fixed up our old colonial hotel and Casa Blanca condos.

loja-ecuador-picture

Photograph of Loja, Ecuador by Milton Ramirez.

I asked Dario if he would create a Loja Ecuador guide for us.

loja-ecuador-photo

Loja at sunset picture at Tripadvisor.

Here is what he shared.

Loja a hidden gem in the south of Ecuador.

The city of Loja is located in the south of Ecuador at 6,200 feet above sea level in the Cuxibamba  valley.

In September 2008,  Travel and Leisure magazine said “The remote village of Loja hidden in a small valley in the high Andes, looks very much like a South American Shangri-la. This is one of the best preserved colonial cities in South America, it remains off the beaten path, unlike Quito and Cuenca.”

This is a fairly accurate description of the lovely city of Loja.  There are approximately 150,000 people living in this wonderful city.  Because of its relative small size, almost everything is within walking distance.

Cars are more a luxury than a real need. Taxis like in most Ecuadorean cities are always available and the rate almost any place around the city is $1 US.  Incredible!

Surrounded by magnificent mountains and two rivers, the city of Loja is considered the Music Capital of Ecuador.  Culture has always been a very important factor in the life of its citizens.  Loja has beautiful churches, museums, two universities, the oldest highs school in Ecuador was founded in Loja. The music conservatory has produced some of the most acclaimed musicians in Ecuador.

On weekends, the city comes alive with live music and dance in its many cafes and bars.

For the last 20 years, Loja has been the pioneer city in Ecuador when it comes to protecting the environment.  Loja’s Municipality has a recycling program that has been copied by other cities in Ecuador and South America. Loja is the cleanest city in Ecuador and it was designated “Ciudad Ecologica” and received international awards for its commitment to environmental protection.

Safety is a major concern for foreigners looking to retire in a foreign country.  Crime rate in Loja is extremely low.  Citizens in Loja feel safe walking around the city day and night.

With more than ten private clinics, and two large hospitals, Loja offers first class medical facilities. Needless to say, medical expenses in Ecuador are extremely affordable.  As an example, an appendectomy and three nights at the best private clinic in Loja in a private room costs $1,100 US. The same procedure and the same accommodations at a medical facility in the United States will be above $12,000 dollars.  Many doctors in the city are educated abroad. Loja’s private clinics offer the latest equipment and technology to treat almost every medical condition.

Moving to Loja and staying in contact with relatives and friends abroad is easy. Loja offers excellent internet and telephone services.  You can also have access to Cable and Satellite TV with a variety of international TV stations.

Loja has plenty of stores with all sorts of merchandise and supplies. Supermarkets are very well stocked with American and European brands. The green markets offer fresh produce at incredibly low prices. You can walk to the markets and buy fresh products every day.  Or if you prefer, you can have your maid do it for you.  Labor is extremely affordable in Loja and most of Ecuador. Having a maid is not a luxury while living in Ecuador. For $200 to $300 a month you can have a person come to your home to cook and clean five or six days a week.

People are friendly and the majority of the young generation of citizens in Loja speak some English. People in Loja feel good about foreigners and are always willing to help when needed.

After all these positive remarks about Loja you must be wondering about real estate prices.

Loja offers a variety of properties for every budget.  There are many new condos and town houses as well as beautiful colonial homes that can be restored.

Prices are very low compared with other cities in Ecuador. As an example, a brand new two bedroom condominium can cost between $40,000 and $60,000 depending on the type of building and how close you are to downtown. A three bedroom apartment could cost between $50 and $80,000. A luxury penthouse apartment with  five bedrooms, 5 ½ baths, two terraces, two parking spaces, a large storage room, two living rooms, dining room, laundry room, kitchen and a bar is offered at $250,000.

Finally, with a fantastic mild weather all year round, there is no need for heat or air conditioning. You will not find one single house with heaters or AC units. It never gets too cold or too hot.  During the day you can wear light shirts and t-shirts and at night a light sweater or a comfortable jacket and you will be fine. Loja enjoys a temperate spring-like climate all year long. Temperatures fluctuate between 16° C (60° F) and 21° C (70° F), with an average daily temperature of 17° C (63° F).

Visit Loja in your next trip to Ecuador and you will fall in love with this magic city and its friendly people.  Dario Espinosa

loja-main-square

Photo of Independence Square also known as San Sebastian in Loja shown at Travelpod.com.

Read an in depth Loja Guide and see how you can receive a 20% discount on villa rentals in Loja Ecuador here.

Gary

Join Merri, me, my webmaster to learn more on developing an internet business and more Feb. 11-14 at our  International Investing & Internet Business seminar, in Mt. Dora.

You can also join our group and travel to Ecuador after the Mt. Dora seminar.

Feb. 15-16   Travel to and visit Quito
Feb  17         Travel to Manta
Feb. 18-19   Coastal Real Estate Tour
Feb. 20        Travel to Cotacachi
Feb. 21-22   Imbabura Real Estate Tour
Feb. 23-24  Quito-Mindo Real Estate Tour
Feb. 26-27  Cuenca Real Estate Tour

Cheap Ecuador air fares make it less expensive to get to Ecuador than ever before… plus there is still time to enjoy great Ecuador tour savings at a discount.

Monthly payments can now be made to attend our Ecuador tours. See below.

Join the International Club and start attending our seminars and tours in February.

Along with cheap Ecuador air fares there are really incredible Ecuador tour savings if you plan to attend six seminars or tours any time in all of 2010.

Our 2010 International Club membership allows you and a guest to attend as many of the 51 courses and tours we’ll sponsor and conduct in 2010  (fees would be $38,452 for all these courses individually).

The 2009 club fee was only $2,999. Because we have added four extra south Ecuador beach tours, the 2010, International Club fee rises from our 2009 enrollment to $3,500 on January 25th 2010.

Enroll in the International Club now at the original fee of $2,999. Save $501.

International Club 2010 monthly payments.

Attend our 52 investment, business, Spanish, real estate and export, courses and tours in 2010 with one small enrollment fee of $2,999.

Because holiday expenses often tighten the winter cash flow, you can enroll with three monthly payments… $1,025 in January… $1,025 in February and $1,025 in March 2010.

International Club 2010 Membership $2,999 Enroll here

International Club Three Monthly Payments of $1,025

Here are the 51 courses and tours you can attend free. Plus there is even one more savings you will see below.

Feb. 11-14   Quantum Wealth Florida -International Investing & Internet Business, Mt. Dora, Fl.

Feb. 15-16   Travel to and visit Quito
Feb  17         Travel to Manta
Feb. 18-19   Coastal Real Estate Tour
Feb. 20        Travel to Cotacachi
Feb. 21-22   Imbabura Real Estate Tour
Feb. 23-24  Quito-Mindo Real Estate Tour
Feb. 26-27  Cuenca Real Estate Tour

Mar. 11-14     Super Thinking + Spanish Course, Mt. Dora, Fl.
Mar. 15-16    Travel to Quito and Andes
Mar. 17-18     Imbabura Real Estate Tour
Mar. 19-20    Cotacachi Shamanic tour
Mar. 22-23    Coastal Real Estate Tour
Mar. 25-26    Cuenca Real Estate Tour
Mar. 28-29   South Coast Real Estate Tour

Apr. 12-15   Ecuador Export Tour ($499 or couple $749)
Apr. 17-18   Imbabura Real Estate Tour ($499 or couple $749)
Apr. 20-21  Coastal Real Estate Tour ($499 or couple $749)
Apr. 23-24  Quito-Mindo Real Estate Tour ($499 or couple $749)
Apr. 26-27  Cuenca Real Estate Tour ($499 or couple $749)

May  13-14     Ecuador Shamanic Minga  ($499 or couple $749)
May  16-17    Imbabura Real Estate Tour  ($499 or couple $749)
May  19-20    Coastal Real Estate Tour ($499 or couple $749)
May  22-23    Quito-Mindo Real Estate Tour  ($499 or couple $749)
May  25-26    Cuenca Real Estate Tour  ($499 or couple $749)
May  28-29    South Coast real Estate Tour ($499 or couple $749)

June 24         Quantum Wealth North Carolina
June 25-27    International Investing and Business North Carolina  ( $749 or couple $999)
June 28-29   Travel to Ecuador and Andes
June 30-Jly 1 Imbabura Real Estate Tour  ($499 or couple $749)
July 3-4          Coastal Real Estate Tour   ($499 or couple $749)
July 6-7          Quito-Mindo Real Estate Tour    ($499 or couple $749)
July 9-10        Cuenca Real Estate Tour   ($499 or couple $749)

Sept.   3-6      Ecuador Export Tour  ($499 or couple $749)
Sept.   8-9      Imbabura Real Estate Tour  ($499 or couple $749)
Sept. 11-12     Coastal Real Estate Tour   ($499 or couple $749)
Sept. 14-15     Cuenca Real Estate Tour    ($499 or couple $749)
Sept. 17-18     Ecuador Shamanic Minga  ($499 or couple $749)
Sept 20-21      South Coast Real Estate tour ($499 or couple $749)

Oct.    7          Quantum Wealth North Carolina
Oct.   8-10     International Investing & Business North Carolina ($749 or couple $999)
Oct.   11-12    Travel to Quito and Andes
Oct.  13-14     Imbabura Real Estate Tour ($499 or couple $749)
Oct.  16-17     Coastal Real Estate Tour ($499 or couple $749)
Oct.  19-20    Quito-Mindo Real Estate Tour ($499 or couple $749)
Oct. 22-23     Cuenca Real Estate Tour ($499 or couple $749)

Nov.    4-7        Super Thinking + Spanish Course Florida ($749 or couple $999)
Nov.    8-9       Travel to Quito and Andes
Nov. 10-11       Imbabura Real Estate Tour ($499 or couple $749)
Nov. 13-14      Coastal Real Estate Tour ($499 or couple $749)
Nov. 16-17      Quito-Mindo Real Estate  ($499 or couple $749)
Nov. 19-20     Cuenca Real Estate Tour ($499 or couple $749)
Nov  22-23      South Coast Real Estate Tour (($499 or couple $749)

Dec.   3-5       Ecuador Shamanic Mingo  ($499 or couple $749)
Dec.   7-8       Imbabura Real Estate Tour ($499 or couple $749)
Dec.  10-11    Coastal Real Estate Tour ($499 or couple $749)
Dec. 13-14     Quito-Mindo Real Estate Tour ($499 or couple $749)
Dec. 16-17      Cuenca Real Estate Tour ($499 or couple $749)

If you join the International Club, the entrance fee for 2010 is $2,999 (until January 2010).  Your attendance fees at all courses will be waived. You and your guest can attend courses worth $40,947.

You can calculate the savings as our schedule of all 2010 courses is shown below.

Arrival dates are always one or two days earlier. Please double check with us before booking flights.

I invite you to be a member of the International Club which allows you and your guest of your choice to attend all of these courses which are valued at $38,452!

International Club 2010 Membership Enroll here

You may well wonder why I would make such an offer and ask why the cost is so low? Let me answer this question frankly and from the heart.

First, it helps us do a better job for you. We feel greatly enriched when we can really help our clients improve their lives. We have learned through years of experience the best way to do this is to meet with you regularly. We can best help you learn how to improve your health and wealth through continual expansion of knowledge.

Second, we gain enormous fulfillment from the many friendships we form through the years. Our friends have enriched our lives tremendously. Let me explain this in more detail.

As a member, you will be part of our international family that meets intensively over the next year to examine ways we can make our lives better. Our goal is beyond just having money. Our goal is to have quantum wealth… good health… wealth and fulfillment through service.

Though I give all course delegates my very best, I cannot help but to do a better job for those who come again and again. As we meet often; your particular wants, needs and desires become clear, and it is easier for me to point you in the right direction.

Another phenomenon is that repeat delegates help each other! They get to know one another, help each other learn, share their insights, make contacts and gain more wealth.

Out associates in Ecuador, are experienced business people who live or work and conduct our real estate and export courses.  They can also act as your local backup for the business.

Lifestyle for Two. There is more! I have learned at my courses that many repeat delegates were couples.

We want couples! As a member of the program, you are entitled to bring another person to every single course or tour. The cost for that extra person will be ZERO!  You can bring whomever you wish. Bring your spouse, a friend, son or daughter, partner, accountant, adviser. You can bring the same person each time or a different person, whomever you choose to accompany you. (Accommodations and air fares relating to the courses are not included for members, delegates or their guests.)

Won’t you join us in this exciting club and share Merri’s and my lifestyle for the next year? We look forward to seeing you at as many courses as possible and sharing this wonderful world of abundance and well being with you!

Gary

International Club 2010 Membership $2,999 Enroll here

International Club Three Monthly Payments of $1,025

Ecuador & Value Investing


Value investing in Ecuador

A recent message Value Investing Diary looked at value investing concepts.

My investment portfolio is worth about as much as it was in 2007 because of my focus on value.

One reason my assets held up well during the economic fall is that I bought good value real estate in Ecuador.  However I spent over six years looking and learning before I made my first purchase!

Fools rush in where value investors fear to tread. I was reminded of this when a reader sent me a note about a property advertised at this site.

Gary, I wanted you to know that the seller of the property you advertised had to flee our area because of so much trouble caused here. There were multiple lawsuits started.

There were real estate scam, among other things… teaming up with an Ecuadorian, they would acquire properties (unofficial “listings” actually) and sell them at greatly inflated prices to unknowing Americans.  They would pay off the original property owner and pocket the difference. The original owner had no idea of the inflated asking price.

In one case, the overcharge was $100,000 to some Americans and had to be returned.   There was another case with a $30,000 overcharge. I think that case is still in court. There are numerous other instances of this fraud as well.

I have learned that the price I paid was greatly inflated due to this person’s  involvement and this person probably singly responsible for inflating the real estate prices in our area.   This person has to sell their property and I know it is available at a greatly reduced price.

Be very careful as this person is not to be trusted.  Sorry to have to write this stuff but this person has been a nightmare.

I commiserate with this reader because I have seen so much of this marking up in Cotacachi as well.

Here is a tip on how to spot value with Ecuador real estate.

Merri and I just returned from Cotacachi. While there we updated our view of the Primavera condos.

Ecuador-value-investing

Here is a shot of Primavera IV in the background with the new Primavera V units now being built.

Ecuador-value-investing

Here is the builder Jorge Quilimbaci.

These units have sold for $39,000 for 750 square foot studios to $52,500 for 1,100 square foot two and three bedroom condos.  That works out at about  $45 a square foot.

If you get a chance, check these out.  If you are not in the Cotacachi-Otavalo area, then look for a similar type unit.  You will finds that construction costs in cities for mid range Western style accommodations are running in the $40 to $60 per square foot range.  Looking at such good middle of the road units provides you with a good bellwether.

Use this price guide to compare prices you are shown for other units, houses, land etc. If you are looking at a  house rather than a condo, ask how much more the land might cost?  If you are buying a luxury unit… what is the cost of the luxury?  If the land has a special feature… ocean river or lake front… special view… proximity to some place that adds value.   What does that added location or benefit add to the cost?

Then, always, always, always buyer beware!

This is why we usually recommend that you visit first… rent second and, if getting good value is important to you… buy third.

This is why (though we are regularly offered) we do not accept commissions on any real estate advertised or mentioned.  Neither Merri or I, nor any company entity or family member have ever in 15 years taken a commission on the sale of real estate from  one of our readers.  We are publishers so instead we ask developers or sellers to give our readers a discount if the reader  buys.

For example Jorge above provides a 2% discount to our Ecuador Living subscribers.

This is a real hassle for me because many real estate sellers try to lure our staff.  Part of our employment agreement is… no commissions received from anyone.  We have already lost one of our staff  who  took a commission on the sale of real estate from one of our readers.

Always buyer beware and look for value!  Compare. Look at more than one property and ask around.  Take your time!

You can see a full report on the new Primavera units as well as be eligible for discounts as an Ecuador Living subcriber.

Until next message, good investing.

Gary

We hope you’ll join us to learn more business and investing opportunities globally as well as Ecuador.

July 4-8 Ecuador Export Tour

July 8-9 Imbabura Real Estate Tour
July 10-13 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course

Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador

Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

Value Investing Diary


Value investing in Ecuador or anywhere is probably the best way that most of us can make good investments.

There are some disciplined investors who do well with short term trading… but most of us do not have the time, inclination or ability to invest this way.

In my case, I find that slower is better. Slow value oriented long term investing may not be dynamic or thrilling… but I still have all the money I had mid 2007.

That is more than a lot of speculators can say.

One problem with value investing is that it requires a lot of work, thought, determination, bravery, conviction and patience.  These qualities are not always easy to maintain long term.

Discipline is vital to multicurrency investing.

This is why I was delighted with what John Mauldin had to say when he spoke at the recent Naples seminar that Merri and I co hosted with Jyske Global Asset Managers.

multi-currency-talk

Here is John.  John is a Fort Worth, Texas businessman with over 1.5 million readers to his emailed financial newsletter.

He was Chief Executive Officer of the American Bureau of Economic Research, Inc., a publisher of newsletters and books on various investment topics, from 1982 to 1987. He was one of the founders of Adopting Children Together Inc., the largest adoption support group in Texas. He currently serves on the board of directors of the International Reconciliation Coalition and the International Children’s Relief Fund. He is also a member of the Knights of Malta, and has served on the Executive Committee of the Republican Party of Texas.

He is a frequent contributor to numerous publications, and guest on TV and radio shows as well as quoted widely in the press.

Thomas Fischer  had a great interview with John during the seminar which you can see here.

John’s speech was important because discipline is the glue that holds all investing theory together.

I believe that there are basically three types of investors… disciplined long term value seeking investors…  disciplined short term traders… and losers.

Non disciplined investors always lose in the long run.

You can read this entire report as a Multi Currency Subscriber.

More on Value Investing

Merri and I are going through the process now of searching for  and seeking to understand value in Florida real estate.  Merri has been keeping a value investing diary to help us get our bearings on what the real value of property in Florida might be now.

Let’s share that diary here.

On the Road
by Merri Scott

A number of you have written and asked, “What about the house you were buying Florida?   Any luck?  Any ideas?”

Well, yes, we’ve been on the search and off and on the road now since late March.

Have we bought anything?  No.

Have we found anything interesting?  Absolutely.  Lots of things out there.

Have we seen good prices/deals?  Wonderful prices, unbelievable opportunities.

Have we learned anything?  Yes, yes, yes, we have.

First of all, to recap…why are we buying a home in Florida?  Well, there are a lot of reasons…

1)  Late last October last year, up here in the High Country we experienced a real knock down day after day, week after week of heavy snow and extreme weather.  We aren’t used to that…we usually have great weather through October, very decent weather in November and a lot of sun but truly cold in December.  We can live with this.  But what we experienced last year, we certainly don’t want to repeat.

2) We sold all our holdings in Florida just before the bubble burst and we miss a place near our daughter and her family down there.  We are welcome there but we desire to be more a part of their lives and to have a home there.

3) Gary reminds me that real estate is all he feels comfortable with at this point.  “Where else should anyone invest at this time?” he ruminates.

“Why Florida?” you might ask.  We’ll give you all the reasons in other reports on this…but yes, there are a darn lot of good reasons for Florida.

We started out in late March (came home back early from Ecuador) for a reason.

We had this idea that we wanted to buy waterfront property but not beachfront.

Many reasons for this but the main one is that we love water…here in NC we have so many streams, creeks, waterfalls…we are almost surrounded with the delight of all this water and do enjoy it.

We knew that we would have to pay a premium for being on the water, but were willing.

We started out in late March which is near the end of the dry season in Florida…usually winters are dry and as summer starts there are daily rain showers which cool things off and bring a lot of water back into the system.

The only real times we would be in resident would be during the dry season and surely did not want the horror of buying “waterfront” only to find out that the waterfront was way out there somewhere into the distance.  (More or this later).

After all our years of experience in Florida, we also knew that it would be best to look in August at anything in South Florida or anywhere there would be the chance of standing water.  (We experienced this in South Florida years before.)…so we just stuck with our old philosophy, look in March-April for Central Florida and of course we were not looking in South Florida, but if we were look in the late summer.  This way, if we can live with the conditions during those months…then we would be OK.

A lot of you have written, “Haven’t heard from you.  Why haven’t you bought in South Florida?”.  Well, this is not to say, someone else shouldn’t…but we were evacuated 17 times over the years, had a lot of heat distress and high humidity over the years and we just didn’t want to go back there.

How did we choose our area?  Well, we’re still at it!

First of all, we want to be near our family in Lakeland but finally after about 2 weeks of driving around, we decided that we should be north of I-4 and not south.  Why?  Well, we can make it easily in a day’s drive north of I-4 but it gets harder and harder to make it further in one day.  (Despite what some might think about our being travelers, we are not.  We go from one home …with our beloved things in that home…to another.  We don’t do well staying in hotels, motels, resorts of whatever…this is torture to us.)

Having finally realized this parameter, we happily eliminated a lot of territory.

Back on the hunt…we love those sleepy, windy little rivers flowing along the center of the state…nice fishing, tiny docks, not much going on and so so full of nature.

Got out the maps, and started remembering those we loved and plotting!

At this point, we decided against using a realtor because we actually needed more under our belts before we started talking houses.

We have long been in love with the Peace River, the Alafia, the Suwanee, the Withlacoochee and many others, including the larger but beautiful St. Johns.  But of course, we were concerned about flooding in these areas also.
(Little did we know that wasn’t the primary problem!)

The Internet has proven to be fabulous as well as awfully scary.  We haven’t bought real estate for “just ourselves” not for investment in a long time and we had forgotten what that included.

In short order, we found that hey, we didn’t need to worry so much about flooding, as DRAWING OUT WATER.  Many municipalities now have the right to “draw” water from these little as well as large rivers…also found out that even California has bought “water rights” to draw down these rivers and ship the water all the way out there.   YIKES!

We used the Internet and began to find a number of possibilities…taking in mind the water rights.  We were down baby sitting for our kids who were taking a cruise and had some time to look around.  Found THE most delightful house tucked in its own woods on a beloved old friend of ours, the Withlacoochee River.  (No one seemed to have water rights on this one.)  Took our darling grandson there.

Gary had been having a long discussion with him re “natural” and “real”.  He was a bit turned around in his mind about the comparison for instance of Sea World (yes, they do have real animals there) and nature.  We made quite a drive for a 6 year old up to this remote area with this fabulous house. (looked at it from all angles, inside and out, and yes, we COULD live with this one!)

I was beginning to think…wow, this is a bit easy…first house, first area we’ve chosen and a greatly reduced price…we’ll just buy it right now!

Garren and Ma (our hound dog) jumped immediately out of the car with great joy.  A beautiful surrounding, old mature oaks, a real sleepy time down south look with a stunningly beautiful, well designed and built all natural house.  Everyone looking excited and happy!

ecuador-value-investing

Here is Garren at our farm learning about nature and farm safety!

There was a long boardwalk as an entry with some cypress trees (whose feet must be wet) always signifying to us high water in the summers or at least standing water.  We nodded “That’s OK” to each other and proceeded.

Garren leaped up to the front door which opened in a lovely two story lodge like atmosphere…a clerestory window view out, a local mounted bear, turkey and deer…and declared, “This is real nature isn’t it, Poppa?”

We didn’t think the house was quite big enough but the land was good, the setting beautiful, the distance to Lakeland OK, and truly it was a house built in nature with nature.  And it was way way below our budget.

To cap it all, Gary glanced out and saw his dream “Look a wonderful old oak with a rope draped over the river where we can swing out and jump right in!”  Fabulous.

Then we all of us strolled out to the river…and there wasn’t one.  It was a very deep, wide ditch with about 3” of water left.

So very sad.  So very disturbing.

Since then the house has dropped from $77,000…according to the latest listing data.

We thanked our lucky stars that we were looking in early April and not summer when the banks might be full.  And we knew right then that we were going to have to do our homework, and that no, it wasn’t going to be that easy.

I’ll continue next week with amazing finds.

Merri

Because Merri has a lot of experience in real estate and we know a lot about Florida, we thought it might be easy to make this purchase.  She was a licensed Florida real estate broker and her first sale was a $1.4 million on the beach in Ft. Myers… in the late 70s… when a million dollars still meant something.  She went on to hold a NASD license which entitles her to be a stock broker, a syndicator of projects, a developer of large communities, etc.

But were we right?  No. Experience of the past today just isn’t enough.

You have to look, compare and think to find value now.

Tomorrow’s message provides an Ecuador value investing tip and why buyers must beware there.

Until then may all your values be good!

Gary

We hope you’ll join us to learn more business and investing opportunities globally as well as Ecuador.

July 4-8 Ecuador Export Tour

July 8-9 Imbabura Real Estate Tour
July 10-13 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course

Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador

Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

Ecuador Real Estate & Value


Cotacachi & Ecuador real estate offer great value.

Here are delegates looking at Cotacachi houses on our last Imbabura real estate tour.

Ecuador-Crafts

One benefit of our Ecuador real estate tours in Cotacachi and on the coast is that we are often able to talk builders into lowering their prices for our delegates since we do not accept commissions.

In fact this no commission reputation means that sometimes we do not even have to act.  We attract many new sellers who want to try us first in the hopes they can reduce their selling costs.

This means we help our delegates gain better selection, lower prices and objective opinions.

Because we do not care whether delegates buy or not or what they buy, we have no reason to slant or opinions.

We are paid regardless for conducting the tour.  This assures that our only goal is helping the delegate… not the seller.

For example, delegates who purchased these PrimaVera condos received a 2% discount…worth an extra $1,000.

ecuador-real-estate

It’s little wonder that these condos are almost all owned by our readers and delegates.

These were viewed on our last tour and are of excellent construction.

Ecuador-Crafts

In the case of these houses, the price was dropped from $54,000 to $46,900.

These four particular houses are good for older buyers with health concerns as they are extremely near the Cotacachi hospital.

This is an experienced builder. Here are two of his earlier built houses.

Ecuador-Crafts

He is starting a new project near by… 20 homes and town houses on a small river (we would call it a creek in the US)… near here which is just a couple of minutes walk from…

ecuador-real-estate

this Cotacachi plaza.

ecuador-real-estate

If you are a Ecuador Living premium subscriber (paid) and have an interest in these homes, let me know for more details.

If you are not an Ecuador Living subscriber, you can learn how to subscribe here.

This is a time of incredible opportunity because markets always tend to rise to high and fall to low.  In 2005, 2006 and into 2007, US real estate and global equity prices rose way too high.

Now through 2007, 2008 and into 2009; the economic corrections have been fixing this.  During this stabilization, a time will come when due to market panic real estate and equity prices will fall too low.

The way to reap a fortune from this down turn is to be able to spot value.

Do not however make the error of thinking that just because a price of something has dropped dramatically that it is a good value.

Take of example the price of gold.  Was it a good long term value when it had dropped from almost $700 an ounce to barely $300 an ounce  in the early 1980s?   The long term chart from http://goldprice.org/30-year-gold-price-history.html below suggests not.

The price over the next 15 years fell much lower and today 25 years later has only increased 200%… an average of 8% per annum simple return… not much better than inflation.

ecuador-real-estate

We need better ways to determine value than just looking at recent high prices.

I am grappling with these value thoughts as I search Florida real estate at this time.

Certainly Florida real estate prices have dropped.

A Times magazine article, “The Hope in America’s Foreclosure Capital” by Nancy Gibbs shows how change and big problems are creating opportunity. (a link to the full article is at the end of this message).

The article says:

This is how empires rise and fall, pulling our fortunes along with them. Start with virgin territory: back in 1957, the Rosen brothers of Baltimore flew over Cape Coral, Fla., in a plane, liked what they saw, paid $678,000 for the farmland and started dredging 400 miles (640 km) of canals, which is more than Venice can claim. It was a peaceful place for old people — Cape Coma, folks called it, until about five years ago, when the gold rush began.  Numbers made no sense; people got drunk and reckless. And then they got crushed. Cape Coral–Fort Myers, once the third fastest growing metro area in the country, last year became the foreclosure capital of America.

Marc Joseph grew up here, the Realtor son of a Realtor dad. He watched the market go mad and had his revelation: now is the moment to get back in — and stake your claim. At 41, he did not expect to be driving around Cape Coral in an old church bus that he bought off Craigslist, painted dollar green and emblazoned with the motto “ForeclosureToursRUs.com.” But most people had no idea how to buy a house from a bank, and many were too scared to try, so he decided to lead tours of the new economic frontier. He is a revivalist for this apocalyptic age, living an American story as old as the pilgrims and the 49ers and every pioneer who ever saw opportunity where everyone else saw only ruin.

It’s gotten so bad that the courts have had to hire extra judges to handle the 1,000 foreclosures a day — that works out to roughly one every 30 seconds.

The speculators are back — but they’ve changed; he has investors up North who are buying houses sight unseen, for cash. (The conditions? No mold, no Chinese drywall.) And then there are the newly pissed off and liberated: the guy in his 40s who’s tired of watching his IRA shrivel, who calls and says, “I’m coming down,” who wants six houses at $50,000 each, nice flat homes that he can rent to people who are sick of shoveling snow or climbing stairs. That’s less than the land used to sell for; it’s as if you get the house for free.

“You have to play fair, put in a decent price.” And then, just maybe, there will be rewards for the patient and prudent. “Someone else’s loss,” he says, “is another’s blessing.”

The greedy got punished, the new prospectors say. But maybe this is just how the life cycle has to work to restore balance to the world. Painted on the side of the green bus is a house being sprinkled with a watering can (“Watch your investment grow!”) and a tree with dollar bills hanging on it. Anything can grow here in all this hope and sunshine, if you bury your fear deep enough.

Merri and I have started our search.  You can see the deeper clues that led us back to Florida as a place to invest here.

Now we are combining these clues with our experience and logic to find value… that works for us… in our particular situation because all value is relative.

We’ll report what we discover… but three facts are clear:

#1: Some Florida real estate offers value.

#2: Ecuador real estate still offers value as well.

#3:  Diversification remains important.

Until next message, I hope you find good value in every part of your life.

Gary

Join our Ecuador real estate tour this May and save.

I cannot be in two places at once but I can make to possible for you to gain all the information I know and see what I am talking about for yourself by visiting Ecuador.

For example we have three Ecuador tours scheduled for May 2009.

Ecuador Coastal Real Estate Tour May 16-17

Imbabura-Cotacachi Real Estate Tour May 20-21

Ecuador Amazon Herbal Tour May 22-24

Merri and I will not be on these three tours and we do want to meet you. So to make sure we can meet, we will let you attend these either one of the May real estate tours free if you enroll in one of our three International Made EZ  courses, in July, October or November.

You get two courses for the price of one.  Enroll in any of these courses that Merri and I will conduct below and choose either May real estate tour free.

July 24-26 IBEZ North Carolina + Tangled Web

Oct. 9-11 IBEZ North Carolina + Tangled Web

Nov. 6-8  IBEZ Cotacachi + Tangled Web

There is no need to  hurry either. If you are not sure about attending two tours,  sign up and attend the real tour now… then we’ll knock the tour fee off our IBEZ Cotacachi + Tangled Web course fee later.

You can also still take advantage three course discount as well.

For example, if you choose to attend all three of the May tours… both real estate and the Amazon herbal tours, then you can attend our July, October or November course free.

You can enroll in one, two or three of these courses below

Ecuador Coastal Real Estate Tour May 16-17. $499 Enroll here.   $749 For a couple.

Imbabura-Cotacachi Real Estate Tour May 20-21.  $499 Enroll here.  $749 For a couple.

Ecuador Amazon Herbal Tour May 22-24.  $399 Enroll here. $499 For a couple.

Take Two for One. Attend any of the three courses below and select any one of the tours above free.

July 24-26 IBEZ North Carolina + Tangled Web

Oct. 9-11 IBEZ North Carolina + Tangled Web

Nov. 6-8  IBEZ Cotacachi + Tangled Web

Or sign up for two or three of the May 2009 tours and attend any of the IBEZ Cotacachi + Tangled Web FREE.

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

Learn about our July 2009 Ecuador export tour 2-4-1 deal here.

You can read  the entire article “The Hope in America’s Foreclosure Capital”at www.time.com/time/magazine/article/0,9171,1889164,00.html

Cotacachi Real Estate For Sale


Cotacachi and Ecuador real estate prices are becoming higher. Construction material, cement, steel and wood have been skyrocketing in cost.  Plus new duties imposed on imports such as pipe are raising material costs.

Our recent Cotacachi real estate tour looked at a number of Prima Vera II – to IV condos for sale from  $46,500 to $54,500. Here is one of the four new Prima Vera blocks.  This is Prima Vera III.

cotacachi real estate

Bulding costs have forced the developer to raise prices on each building.  The units are identical but each block has a higher price.

Here are the prices now for these Prima Vera units.

Prima Vera II

cotacachi-real-estate

Prima Vera IV & V

cotacachi-real-estate

Prima Vera IV & V

There are 13 units left here at the old prices.  Learn here how to view the pricing and receive a 2% discount on the purchase as an Ecuador Living subscriber.

While viewing these condos we talked to American owner Bill Daily about the cost of living in Cotacachi.  He and his wife live in a Prima Vera III first floor unit.

Here is Bill and his wife Jo.

Cotacachi-tax

This is their condo…with a comfortable view balcony

Cotacachi-tax

Two bedrooms.

Cotacachi-tax

One bedroom is used as an office…

Cotacachi-tax

plus a full kitchen.

Cotacachi-tax

Here is their living room.

Cotacachi-tax

We asked Bill about utility costs and he told us that property taxes were $38…a year.

Propane is $2.50 for 20 gallon bottle for cooking, heating and hot water.  They use about $5…a month.

Water is $6 a month, electricity $20 a month….broadband $49…condo fees $100…so in all there basics are about $185 a month.

Until next message,  good living wherever you are.

Gary

Join us in Cotacachi in March when our courses focus on health and wealth.

Merri, our webmaster and I have created a new course on how to build a web business with a webmaster.  Here is a special offer on this new course.

You can enroll in this special course for $299. However if you sign up for all three courses in March 2009, I

March 8-9 Imbabura Real Estate Tour

March 10-15 Ecuador Import Export Expedition

March 16-19 Ecuador Coastal Real Estate Tour

Bob Shane will be at our March course and will be available to provide health balancing.

Get our web based course FREE if you join us in Ecuador this February or March.

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two

Future 2009 courses

May 29-31  JGAM Global Asset Strategy Seminar

June 12-14 Shamanic Mingo Tour
June 16-17 Imbabura Real Estate Tour
June 18-21 Ecuador Coastal Real Estate Tour

July 3-6 Ecuador Import Export Expedition
July 8-9 Imbabura Real Estate Tour
July 10-13 Ecuador Coastal Real Estate Tour

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Ecuador Air Fare Excerpts


There is good news on Ecuador air fares. Right now Lan which has regular flights to Ecuador is offering some Guayaquil and Quito air fare special deals. We’ll look at these air  fares in a moment.

We are certainly very happy to be here after reading this report from Richard Goebel, our manager at our North Carolina farm.

Ecuador-air-fare

It was cold this AM.  -4 degrees and with the wind chill -20 degrees F. I broke up a fight between a hawk, a chicken and the rooster. Only feathers lost.
though the small black chicken is gone. Plus we lost two mallards last night or one male and a female. The cold is bringing out the predators. Another exciting day on the farm. Your friend Richard

We were happy to learn that the little black chicken was found. She ran off when the hawk came and is now sleeping in the pump house with our cat Alice.

Before looking at that Ecuador air fare war remember you can get fresh Ecuador valentine roses shipped to your home.

Second,  here is an excerpt from Yesterday’s password protected multi currency courses that shows why  Ecuador may be a good bet now and why using the special February low cost Ecuador air fare may be wise.

The multi currency excerpt begins when a reader asks:

Why not just keep your money in gold/silver?  All fiat currency will crash sooner or later.

Here is my reply.

Re gold. I’ll have a friend who is one if the world’s gold experts do a feature password protected lesson on the state of gold shortly.  I have often thought of just buying gold myself and forgetting all this work of keeping up.  If for no other reason this has such simplicity. However, though history shows that gold always adjusts for inflation eventually… history also shows that gold can have huge price swings that may last for decades.

I know one client who cashed out his portfolio and just bought  gold about 30 years ago when the price was $860 an ounce.  So we have to ask, when is sooner or later?
I know another client who bought a lot of gold and then had it confiscated when he tried to cross a border with it.  His crime… just having  a lot of gold as far as we can tell.

Plus if you live outside of a major city how often do you have to run to a metropolis to sell some gold?    How about the security risks?

I have a little more faith in the resiliency of mankind every day.  Sometimes when we have more turmoil than expected, it is hard to see how things can get better. Yet in every decade, the 60s, 70s, 80s and 90s, there has been a crash and after the crash, a recovery.

I am not a gold bug  or real estate or share bug.   I am a VALUE BUG.  I like value and find it exceedingly hard to know gold’s real value.

I also like diversification and have created a hedge for each potential situation…for things to get better or worse.  So I have some gold. have some equities…but not all that much.

It will be interesting to see how everything unfolds.  For now I’ll not buy too many Amero futures or blocks of gold.   Nothing to date suggests to me that this downturn is any different than any others.

I do keep some gold socked away. I do live on a farm where I can feed myself in case of an extreme global currency dislocation.  The farm however is a lifestyle situation and makes no comment on my belief on global affairs.

I have not abandoned my core belief that there are four ways to fight inflation and currency turmoil.  My portfolio is based on these beliefs.

History suggests that we can always succeed in:
#1: Our own business.
#2: Real estate
#3: Commodities
#4: Equities (ownership of other people’s business)

You can read this entire password protected lesson as a multi currency subscriber.

Now the low Ecuador air fare. Here is an excerpt from today’s password protected Ecuador Living report.

Lan Ecuador seems to be starting an Ecuador air fare war.  For example their site says, if you fly down Saturday February 7, 2009 on flight EL517, you leave Miami  at  5:10pm  and arrive  in Quito at  9:20pm.

You can attend our Beyond Logic and International Business Made EZ courses, then return Monday February 16, on flight XL516 leaving Quito at 9:20 am and reaching Miami at 1:25. The entire fare INCLUDING TAX  is only $421.51.

Plus right now Lan let’s travelers bring a third suitcase to Ecuador FREE!

This is a good time to visit Ecuador because the price of oil is low and Ecuador’s oil dominates what happens in Ecuador.

This low oil price and two other important factors canhelp Ecuador real estate prices rise.

When Ecuador’s currency was the sucre, it crashed in 1999.  Real estate prices simply rose as the sucre fell.  The instability caused b the currency collapse created some great real estate bargains because Ecuadorians rushed out of the sucre into property.

Now the low oil price can boost real estate again…plus there are two other boosts.

The first real estate boost come in the form of Cholo Boys. This is the name for Ecuadorians who left Ecuador during its 1999 economic plight… manly to Italy and Spain. They earn there, return and invest in real estate.  Now they are returning to Ecuador. Even Ecuadorans in the US are returning to Ecador…beause life here is good.

The other upwards pressure on Ecuador real estate is the Nort American expat market. Hoards of gringos are coming down for a warmer and easier low cost lifestyle.  I know. Our hotel is full almost all the time now.

All of this buying pressure turns Ecuador real estate into an international commodity. This makes the prie of real estate ere less vulnerable to local economic declines.

I believe this enough that I bought an extra unit at Vistazul when I heard the news that Correa might default on Ecuador bonds.   I own more condos there than anyone else and may buy more…six condos and an apartment in the hotel itself…plus two of my daughters each (on my advice) bought a condo.  Plus I just made an offer on more property in Cotacachi.

Due to the drop in the price of oil, President Correa recently said that he plans to restrict imports to help stem the outflow of dollars and offset the tumble in oil, the country’s biggest export.  He cannot afford to do it and as a trained economist he knows this.

Oil prices are now lower than in 1999, when adjusted for inflation.    The low oil price in the 1990s helped push Ecuador into default and caused a couple dozen banks to fail. This was when the country dropped its currency, the sucre, in favor of the dollar.

Correa plans to revise investment plans and trim spending on public-sector salaries and pension plans to help cope with the global economic slump.   He is cutting back on minimum wage raises and  subsidies  for the poor.

In short, times may become tougher in Ecuador. This means those who have money to invest will find the greatest value!

Visa Change,

When you come down be sure to check visa rles. Recently the visa attorney we refer readers to told us  that there are new Ecuador visa regulations. He said there is a lot of confusion as two government agencies wrestle with each other for control over immigration.

Many people do not need a visa if they are staying less than six months (180 days) a year. When Americans, Canadians and British enter Ecuador, they are automatically given a 90 day T-3 visa. This is the visa that Merri and I always use.

This T-3 visa is non-renewable.  You must leave by the expiry date.

Be careful about this.  In the past there was just a modest fine.  If you stayed over your due date you could pay a small amount extra when you left.   This is no longer true.   The fine is $200…but there is another catch we just learned.

We talked to a friend who overstayed his 90 days and paid  the $ 200 fine when he left in December. He flew back last week, was stopped at the airport and deported back to the United States because he did not know this rule!

You can learn the new rule and read a password protected, complete report about how to get visas as an Ecuador Living subscriber.

Plus the Ecuador Living report shows  how to have Social Security give you a letter of proof so you can have an Ecuador residence visa.

Learn about being an Ecuador Living subscriber.

Until next message, good Ecuador Living to you.

Gary

Last week we began tracking how fast the municipality gets work done here.  We saw day one of a dirt road where construction was obviously about to come.

Day two.  The action had begun.

cotacachi-real-estate

Day three and the first phase of the road is almost done.

Ecuador-social-security

Day four its even more complete.

cotacachi-real-estate

Day seven (Sunday there was no work) and the road is fully paved.

ecuador-air-fare-wars

Plus the intersecting road is well under way as well.

Ecuador-air-fare-wars

See in Sunday’s update how I was caught in this parade when I went out to take the latest road shots.

Ecuador-air-fare-wars

We’ll have a dozen shots like the picture below.

Join us in Ecuador this February.

Feb 9-11 Beyond Logic Keys to More Wealth & Better Health

Feb. 13-15 International Business & Investing Made EZ

Feb. 16-17 Imbabura Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one$1,349 for two

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one$1,799 for two

Ecuador-air-fare-wars

Ecuador Economic Corrections


Ecuador economic corrections create fear. People retract…shrink and stop doing what they should and…they are wrong.

People in downturns follow the 80% rule. 80% of the people act incorrectly 80% of the time.

We can take advantage of this and use the current economic correction to get ahead.

I know from experience.

Merri and I were sitting at our Hacienda, Rosaspamba, in Ecuador. The time was November 2000. White mists rose over jagged peaks and a huge, multicolored bird suddenly burst from the brush.

I had been bringing investors to Ecuador to show them ways to invest in this economy while it was in ruins. Ecuador had done so many things badly.

There was graft, corruption, political hassles, discrimination and lies that all helped lead the Ecuador economy into shambles. Ecuador had been the first to default on Brady Bonds.

All bank accounts had been frozen.

Two Presidents in a row had been impeached within a couple of years and the public had been demonstrating again and again in the streets.

The worse it got, the more I had advised investors to come with me. The more property I bought myself.

Real estate prices skyrocketed up.

The economy has gained from higher oil prices. (Ecuador is the second largest oil producer in South America.) The new President is looking very capable (perhaps even a little honest) and there has been optimism.

The country dollarized after the economic debacle in 2000.

Real estate prices have risen dramatically. I am hearing stories from investors on how much money they have made in just the past year.

Has the economy slowed where you are? It does not seem to have done so in Manta, Ecuador. Here are shots I took last week of Manta harbor.

manta-Ecuador-harbor

The harbor is packed!

manta-Ecuador-harbor

Luxury boats as well as cargo.

manta-Ecuador-harbor

The beach is thriving.

manta-Ecuador-harbor

On our recent Ecuador coastal real estate tour we met with Pilar Davila, a real estate broker we have worked with for over a decade now.

manta-Ecuador-harbor

Construction is booming…new condos and luxury hotels like this small beach front accommodation where Pilar is standing are up and coming.

We were inspecting this wonderful small hotel in Manta. The central lounge and swimming pool are absolutely beautiful.

manta-Ecuador-hotel

Overlooking the beach and sea.

manta-Ecuador-hotel

Even the business and internet center is filled with charm.

manta-Ecuador-hotel

Pilar reminded me that Manta property that our real estate tour delegates bought in the late 1990s at $.40 cents a square foot is now selling for $9.00 a square foot. Condos that sold for $79,000 during the 1999 depression are $240,000 now.

Here are lots that our Ecuador coastal real estate delegates bought in the 1990s for $2,500. They are for sale now at $17,500.

crucita-Ecuador-land-for-sale

Ecuador real estate prices are still low compared to the US, Mexico or Panama for example…but sometimes I have a hard time keeping my perspective because they are high compared to what they were ten years ago.

Regardless of how bad things appear, there is always opportunity. The sun always shines somewhere.

For this we should be eternally grateful. When events appear gloomy, we should get excited. There is never as good a time to create wealth as when economic conditions are bad. This is especially important to remember as the U.S. economy (which has been feeding global economic growth) slows.

In the months and years ahead our daily publications, newspapers, TV shows, etc. are likely to give us more than our fair share of doom and gloom. Let this be good news! Be thankful. Bad times are the best for making money. If we focus on serving our community, instead of weeping over what newspapers say, it will help us get ahead.

Until next message, may the sun shine for you.

Gary

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

On our last coastal real estate tour we viewed this luxury hotel front…

bahia-Ecuador-hotel

and back.

bahia-Ecuador-hoyel

Here are delegates working hard at viewing.

Bahia-Ecuador-Hotel

Plus we saw land and a next door house for sale.

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

We also saw this Bahia Coco Bongo Hostal for sale (the owner says she has $110,000 in it).

ecuador-coastal-hostal-lobby

Here delegates view a 15 room hotel for sale, with an asking price of $60,000.

ecuador-real-estate-risk

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

Plus we saw this potential Bed & breakfast. $90,000 asking.

Ecuador-bed-&-breakfasts

Better still join us all year in Ecuador! See our entire schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.

Ecuador Bond Failure


Ecuador bond failure may create profits in two ways.

See below how an Ecuador bond failure might make properties like this hotel (for sale right now) worth more.

ecuador-real-estate-risk

Many readers have sent me a link to the Bloomberg which says: “Ecuador May Default on $30 Million Interest Payment (Update2)” by Lester Pimentel and Daniel Cancel.

There are two important points we can spot by studying this article…one about global investing…the other about living abroad.

First, let me make one other point, the most important point of all. However you invest…wherever you live, do something you love.

For example, here I am working hard leading our latest Ecuador real estate tour. We are looking at a “hotel” for sale by the sea.

ecuador-real-estate-risk

Do you think I am worried about how I am going to retire?

Work hard but enjoy the process! We love looking at places like this Ecuador “hotel” for sale.

The asking price?

You won’t believe it when you see it below.

ecuador-real-estate-risk

The key is to invest in stuff you find interesting…and fun. Find a way to earn and smell the roses at the same time. In this case we are, as we inspect the hotel we smell the bougainvillea and hibiscus.

More on the hotel and price in a moment. Here is point one…about global investing.

The Bloomberg article about Ecuador bond defaults says:

Nov. 14 (Bloomberg) — Ecuador said it may default on a $30 million interest payment as a tumble in oil erodes export receipts, putting President Rafael Correa on the verge of fulfilling a two-year-old threat to repudiate the country’s debt.

Correa will use the 30-day grace period on the bond payment, which is due tomorrow, to analyze legal opinions, Finance Minister Maria Elsa Viteri said at a news conference in Quito.

Ecuador’s finances have come under strain as oil, which accounts for 60 percent of the country’s exports, has plunged 61 percent from a record high in July to $57.23 a barrel.

Ecuador, which last defaulted in 1999, needs an oil price of $95 to cover all the spending in its budget and a price of $76 to avoid depleting its $6.3 billion of foreign reserves, according to Barclays Capital Inc.

“They are burning reserves,” said Eduardo Levy-Yeyati, an emerging-markets analyst at Barclays. “The question is whether they will keep paying if oil prices don’t recover.”

Ecuador’s foreign debt totaled $10 billion as of September, according to Goldman Sachs Group Inc. That’s equal to less than 25 percent of its $44 billion annual gross domestic product.

Correa, who earned his Ph.D. at the University of Illinois at Urbana-Champaign, won a landslide victory in November 2006 after promising to rewrite the constitution and boost spending on the poor. He said in September that he’d suspend debt payments before trimming spending on education and health care.

Correa has done this once before in February 2007. He said he would miss a $135 million bond interest payment but then made it.

Before that payment was made, on February 12, I wrote about buying these bonds:

The point is this speculation may be a good value because the premium you are paid to take the risk is higher than need be.

Readers who read this and bought this bond then (before the payment was made) earned 20% over night.

This time the risk premium is even more! I believe there are two reasons for the current higher potential return.

First, Ecuador is more likely to default this time than last. Correa is under more pressure to fulfill promises he has made now than he was two years ago. He had just started office then. Now he is mid term and people expect him to deliver. He may decide to spend the money on education, etc. instead.

Second, bond markets and especially emerging bond markets have been hit by a huge dose of panic. All bonds are priced lower than normal.

The bond issue in question is a $510 million bond maturing in 2012. Prices for this bond have plunged as low as 14 cents on the dollar. At this price, the bond yields over 100%.

Imagine this. If you were to buy this bond now and Ecuador does not default, each year for over three years, you double your original investment. A $50,000 investment might earn over $150,000 of income during the three years. Then you get your $50,000 back.

ON THE DOWN SIDE though Standard & Poor’s has cut the country’s rating three levels today to CCC-. This translates to basket case. If Ecuador does default, you could end up making no profit and perhaps losing part of your original investment…though it is unlikely you would lose it all.

Point #2:

A reader sent this note “Gary–with Ecuador defaulting on its debt–why would one want to invest in Ecuador?”

This reader has probably never lived abroad and does not understand that living conditions can get better when you live in a country where economic conditions are down. Prices are lower. Labor is easier to find. Everyone is more willing to serve and work hard…if you have money.

Merri and I were living in Ecuador when the sucre collapsed falling from 3,000 sucres per dollar to 24,000 sucres per dollar. Ecuador did default on its bonds then.

So what? All this meant was that food, clothing, shelter, staff, everything local cost about 1/8th as much as it had. Wages were down. Bargains were everywhere!

Merri and I were loved because we stayed. We spent. We provided jobs.

Life can actually be better in hard times…

…especially if you have your income and investments OUT of the depressed country.

There is a caveat. If conditions deteriorate too far, law and order can break down.

Ecuadorians are basically friendly, non violent people so I do not have any great concern about this. This is based on experience. I have lived in places where people were not quite as easy going.

I have lived through law and order breakdowns before, first time…when living in Hong Kong. Poverty created riots and bombs in the streets there in the late 1960s.

That was not fun.

Mind you, Hong Kong real estate prices went on to rise higher than almost anywhere in the world. Those troubled times were among the best for buying real estate…ever.

I saw problems with bombs in public places when I lived in London as well. In February 1991 the provisional IRA managed to actually launch mortars from a van 250 yards from the Prime Minister’s home at Number 10 Downing Street. One shell landed behind the residence and blew out the windows of the war office.

Closer to home, the bathroom door of Merri’s and my London house was jarred off its hinges when an explosive device was used to start a raid on the Iranian Embassy in 1980 after it had been taken over by Iranian Arab separatists. The embassy in South Kensington was near our house .

Did this ruin London?  London real estate prices have since risen to be among the highest in the world and Londoner’s standards of living have skyrocketed.

Problems create opportunity! Economic trouble in a country can create opportunity for those who have money to spend and invest.

Another worry that people have is that the Ecuadorian government will nationalize or confiscate property. There is little history to support this and such a seizure would make little sense.

Such concerns ignore the fact that there are all types of confiscation taking place everywhere…at every level…even in the good old USA.

One family at my last course told me how, for decades, they had been buying property to build low cost housing. They have prepared many of the properties so they followed the zoning ordinances so they could build. Now the municipality has changed rules so they can no longer build.

Taxes are increased. New rules are added and fines levied for non compliance of new zoning ordinances. Costs and problems have risen so dramatically that these developers have had to abandon some of their property to the municipality. After foreclosure the municipality has built the same low cost housing…but obviously less efficiently.

The argument here is not that Ecuador is better than the USA or England or Hong Kong, etc.

The argument here is not that Ecuador has no risk.

The two points are that the perception of risk may be overblown and the premium for taking the risk is high as well.

Plus Ecuador is a great place to be…especially in the winter.

Risk is everywhere.

Ask not, “Where is there no risk?”

Ask instead. “How much is the real risk and how much am I paid to take it?”

Find interesting (for yourself) investments that pay high risk premiums.

Find delightful places where YOU want to be where the cost of living is too low.

Until next message, good global investing and Ecuador living.

Gary

This brings us back to where we started working hard…looking at this hotel for sale. Nine bathrooms, about 15 bedroms.

Ecuador-hotel-for-sale

Here is our latest group inspecting the hotel,which is one block from the Ecuador’s Pacific.

ecuador-real-estate-risk

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

Better still join us all year in Ecuador! See our entire schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.

We’ll view this hotel if it has not sold. It has a huge front porch.

ecuador-real-estate-risk

Large second floor veranda with ocean views.

ecuador-real-estate-risk

Beautiful flowered front yard.

ecuador-real-estate-risk

The building is really rough and needs work…but over 8,000 square feet of building. The asking price is $60,000.

We have sent our Ecuador Living paid subscribers more details on this building on this Ecuador hotel for sale. If you subscribe, you can have this report. See how to subscribe to Ecuador Living here.

Join us for our next Spanish course ad real estate tours.

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

Better still join us all year in Ecuador! See our entire schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.

Multi Currency Risk Premium


Getting a multi currency risk premium is important because the government bail outs that will be announced in the weeks ahead, whatever they will be, will accelerate inflation. Multi currency risk premiums will help beat the price increases which have already been bad enough.

Emerging real estate and emerging bonds (seen below) are two ways to gain some extra multi currency premiums that can help fight this rise in costs.

The three main multi currency investments that fight inflation are:

#1: Commerce. (normally equities but sometimes bonds as shown below).

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

#2: The raw materials required by commerce (commodities).

#3 Real estate (required in commerce for production and consumption).

Some real estate markets offer a better risk premium than others. This is what I like about Ecuador. So few people have been there so the majority of the investment market get it wrong. They misunderstand the politics, the people, the rumors of crime, the entire ambiance of the place. This has kept Ecuador real estate prices low. Prices are beginning to rise but are still low in terms of Latin America where a deluge of US, Canadian and European investors are now arriving.

This is why I have been harping on the $79,000 condos (where Merri and I bought) north of Manta.

Ecuador-beach-condo

I doubt that investors will ever see prices this low again in our life time for the quality of construction and so much green space. There are only 63 units on 12 are that include 5,000 fruit trees and an organic vegetable garden. (This one shown above is of course not quite finished.)

Ecuador-beach-condo-clubhouse

Plus such views like this sunset shot I took.

Ecuador-beach-condo-sunset view

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

However during times (like now) when there is a lot of volatility, some investors need a place to park cash while they wait for the picture to clear.

Where is safe when even money market funds have risk?

The answer is “every type of investment has risk…especially now”. The key is to at least be properly paid for taking it.

Here is a simple fact that can help you spot distortions so you get the maximum bang for your at risk buck.

Industrialized economies seem unable to increase their output at any rate better than about 3% percent a year on a sustained basis. This seems to be a universal standard of human evolution.

This is a huge fact as it means we should not expect major economies to grow faster than about 3%.

This is a baseline that can help us sort out whether an investment has extra or too little risk premium because the baseline for safe savings than should be about the same as industrial growth…3%…if the money supply is keeping pace with the economy.

Bank accounts and government bonds, for example, are perceived as the safest investments (especially if government guaranteed). A look at their long term history shows that they pay about 3%. So if a bank account or government bond pays less…in the long term it’s bad. If it pays more…that’s better. Yet the idea is that bank accounts will not really make money. They will just keep up with growth…at 3%.

Knowing this, rather than wasting time trying to avoid risk…which cannot be done, we can assess risk and what we are paid to take it instead by asking:

#1: How much risk is there in any particular investment?

#2: What perceptions do the market have of the risk?

#3: What risk premium is due?

To get real growth requires taking risk. If an investment appears to be less safe than the safest (that pays 3%) the less safe investment will pay more than 3%. The extra payment is called a risk premium.

Bonds pay more than bank accounts because they are perceived to be less safe. Stocks pay more than bonds because they are perceived even riskier. Emerging market stocks pay more than major market stocks. Emerging market bonds pay more than major markets bonds.

Over the long run, bonds issued in countries and currencies perceived to be stable pay 5% to 7%…if they are issued in their own currencies.

Stocks in major countries should pay 7% to 10% annual return in the stock market as a function of global growth, long term earnings growth plus risk premium (above bank accounts and bonds).

To attain higher growth than 7% to 10% investors must either increase risk, trust luck or spot distortions.

This is good because the market is almost always wrong. Most investors always trying to avoid risk. Most investors dump their wealth into investments that are perceived to be safe. This creates excessive demand and lowers value and actually makes the perception wrong.

Knowing this helps wise investors spot trends created by distortions.

For example, right now short term bonds denominated in Euro issued by major market governments pay about 4.25%. One can increase yield by about 50% by buying emerging government bonds. Here are yields on some short term bonds denominated in euro.

South Africa 2013 6.22%
Philippines 2010 6.19%
Romania 2010 5.16%
Brazil 2012 6.03%
Colombia 2011 6.15%

It is not likely that any of these governments will default on their bonds in this short term…so at a time when equities are very volatile this could be a good place to get out of the US dollar, park cash in euro and still make a bit extra.

We are reviewing five emerging bond portfolios in our online multi currency course this week. You can learn them as a multi currency course subscriber

Until next message, may you get a premium for everything you do.

Gary

I’ll also review these emerging bonds and review my entire portfolio and all this thinking next weekend. October 3-5 in North Carolina at our International Investing and Business Course. Why don’t you join me.

The course was fully booked but we had many late applications and have have moved to a larger meeting room so still have space.

Join me with Thomas Fischer of Denmark’s Jyske Global Asset Management, who was a currency trader for years to review our multi currency portfolio thinking for the year ahead.

To help our subscribers meet and learn, we are giving all delegates at the North Carolina course a FREE year’s subscription to our online multi currency course. This is a $249 value.

This will not be all work-no play. We selected this particular weekend as the most likely to be beautiful with the autumnal leaf change. The colors are glorious.

autumn-gold

Here delegates at a previous course chat during a coffee break.

blue-ridge-leaf-change

Gary

Join us in North Carolina next week end October 3-5 and save $249. Enroll here.

Or join us in November to inspect Ecuador property for sale

Vistazul-Ecuador-beach-condos-model

Our September 17-20 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour was sold out as was our September 28-29 Imbabura Real Estate Tour was sold out.

Our Oct 14-18 Ecuador Import Export Course only has a couple of spaces open.
https://www.garyascott.com/catalog/ecuador-import-and-export-tour

We still have space in November

Join us in Cotacachi at El Meson de las Flores.

cotacachi-daybreak

Nov 7-9 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

See these condos at $46,000 in Cotacachi.

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Dine with delegates at the Vistazul clubhouse.

Ecuador-fishng-view-4

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour