The Iran-Contra Affair and Real Estate Investing

Nice destinations are not all equal

For many readers, this might seem like a reference to a history long gone. The Iran-Contra Affair occurred in the 1980s under the Reagan regime.

This involves the Reagan Administration’s mirrored foreign policies toward two seemingly unrelated countries, Nicaragua and Iran. The Administration believed that changes to these countries that occurred in the 1970s threatened U.S. national interests.

In Nicaragua, a socialist movement (the Sandinistas) seized power through a revolution in 1979. The Reagan Administration, fearful of the potential spread of socialism throughout Latin America, eventually backed paramilitaries (the contras) who sought to overthrow this revolutionary regime.

In the end, former guerrilla Daniel Ortega became president of Nicaragua and the US support ended. Since 2007 he is one of the longest-serving presidents in the world and guess what, he was re-elected last week.

Because of the abuses of human rights and the lack of democracy and rule of law, the Government of Nicaragua and the United States maintain only limited cooperation on law enforcement, counter-narcotics, countering migrant flows, and other matters of mutual national interest. Prior to the April 2018 political crisis, significant numbers of private U.S. citizens, including retirees, missionaries, and businesspeople resided in Nicaragua, and there were approximately 441,000 tourist visits to Nicaragua by U.S. citizens in 2017. Because of the ongoing crisis and the COVID-19 pandemic, foreign tourism has decreased substantially, and many private U.S. citizens have left the country.

Photo by Hermes Rivera on Unsplash

So what does all of this have to do with real estate investing?

In 2020 and 2021 together more than 5 million people retired. A lot of them chose to retire even if they weren’t yet 65 years old or older. There are a number of reasons, some of which I have described in previous articles.

A lot of these retirees have substantial retirement savings and many don’t live in locations where it’s particularly nice to retire. Not every place has nice weather like Florida, Arizona, or southern California.

That begs the question: Where would I like to have a second home or place to live, part of the year or permanently? This goes along with a desire to splurge a little.

As we hear and read about galloping inflation it is normal to wonder where locations with nice beaches, tropical temperatures, low cost of living, easy access, etc. can be found?

Developers have discovered this trend as well and have begun to create new offerings. In the last 6 months, my mentoring clients and I reviewed opportunities in:

  • Panama (both high rise at the beach and eco-village in the coffee and cacao growing hills with views of the ocean
  • Belize (both vacation rentals and individual housing developments)
  • El Salvador (tropical eco-villages and digital nomad offerings)
  • Mexico (newly build apartment complexes right on the beach)
  • Thailand (newly build residences for retirees, elder care, and vacationers)
  • Nicaragua (Eco-villages and all-inclusive tourist club developments)

So now you see how Nicaragua came into the picture.

If you ask if Nicaragua is more affordable than other places the answer is “Yes”.

The political situation is always a question, especially when you commit a substantial amount of money to own your own property in a foreign country.

Nicaragua is almost exclusively dependent on remittance money from the many people who left the country in the last 40 years.

All efforts to convince Daniel Ortega to change have basically failed and more recent sanctions have not made a dent. As mentioned above he was just reelected and his wife is now the powerful vice president. Even Ortega will not live forever and things can change when he goes over the rainbow bridge, but that remains to be seen.

If you ask me, as the list above shows, there are many choices. A new find I just learned about from a new great friend is Paraguay. I don’t have any examples or done any research but she told me that she would love to live there in a heartbeat and many successful people from South America (Argentina, Brazil, Chile, Uruguay, etc.) love to vacation in Paraguay.

Photo by Hans Eiskonen on Unsplash

If you are considering or have recently retired and wonder which places to explore for a vacation home or investment residence, there are a lot of choices and all have a lower cost of living than what we find in the US.

If you want to expand your passive income portfolio and explore some investments in these wonderful locations that offer such great weather, access to nature, and tropical fruit, some of the locations mentioned above should be on your list.

In either case, you can leave Nicaragua out of the running and still have great opportunities. If you like some help or referrals, let me know. We are here to support you with these more adventurous options as well as regular passive income investments in the US.

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