Investing In Belize with Will Mitchell and Guest Co-Host Mike Powell

Episode 296: Investing In Belize with Will Mitchell and Guest Co-Host Mike Powell

 

Belize is a small country on the Eastern coast of Central America that has been one of the highest recipients of tourism growth in the region over the past several years. Real estate investor, developer, and agent Will Mitchell gives more information about investing in Belize. Will tells why should we consider investing in Belize as he shares the advantages like ownership rights, secure banking system, and lower tax rates, to name a few. He also gets to share his book, The Investors Guide to Belize Real Estate, wherein he chronicles the experiences and specialties of industry experts. If you’re looking for something that still has a lot of room for growth, consider Belize as your next investment project. It is poised to be the next emerging area within the Caribbean.

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We have Will Mitchell who is going to talk to us about investing in Belize. He’s written a book about it. He’s over there actively doing it and he’s even owner financing in Belize. We’ve got a lot to learn from Will Mitchell. I also got to have my partner, Mike Powell, on with us because he’s very interested as I am in offshore investing or overseas investing. What do you call it?

International investing.

Tell us a little bit about your history, who you are, where you came from and how did you figure out that you could proliferate in a different country?

I’m originally from Canada but being a younger guy, I started out in real estate in Canada. I worked for a company called Mainstreet Equity Corp. It is the second largest multifamily company in Canada. I worked there for a few years. I learned a lot of stuff from the CEO of that company. I wanted to look abroad and look at different markets where I could find opportunities. Being a young guy and not having ties, I said, “Why not get out of the cold of Canada?” I went to Belize.

It’s a beautiful place. I have not been there myself, but I’ve planned to go there several times and things happened. I also thought about during the recession if I was going to do some things internationally for tax reasons or for business reasons and Belize was really high on my radar. Let’s talk about why Belize. Where do you start with that? People are saying to do this in Panama and in a lot of different places. There’s a lady named Jackie who has International Living Magazine and I’ve followed her a little bit. She’s the one that first got me intrigued by the benefits of investing from other countries or in other countries. Why Belize?

When you’re looking at an international market, you’re looking at investing abroad, the first place you want to start is ownership rights. If I’m buying a property, is this going to be suddenly I’m going to have to go through some corporation and have directors that are locals to that country on the corporation or is there any funny business with the ownership rights? Belize checks every box there, full foreign ownership and key simple title. You can have your name on the title, you can have your company’s name on the title. We’re contrasting that to other countries in the region. Most countries based in the region are on Napoleonic Civil Law. This legal system is one where it’s a two-tier ownership structure where foreigners and locals do not have the same ownership rights. Belize is a British common law country and that’s why it’s full foreign ownership. Another key reason before the main points is it’s an English-speaking country. I’m not sure about you guys, do you speak any languages other than English?

We speak enough Spanish to get thrown in jail and we don’t know enough to get out. That’s my understanding of Mexico. I love to buy some stuff because I live in San Antonio, Texas and Mexico is our backyard. The problem is it’s a 99-year lease and you can never own it. If they really want to, they’ll take your rights in a heartbeat or bring you over and introduce you to the mordida. The mordida, that’s the bite and they want a bite of your apple if you’re going to play on their turf. Is there a particular part of Belize that you like?

I know you guys are based out of Texas. When you look at Texas or where I’m from, Alberta, there are key industries that drive the real estate market. In Alberta’s case, it’s the oil industry. When the oil industry is strong, people are moving to Alberta and the economy’s growing. The real estate market grows with that. When we’re looking at Belize, the key driver is tourism. We’ve been one of the highest recipients of tourism growth in the region over the past several years, which is huge for us. As a real estate investor, those people that are coming down, they’re renting our units. It’s pretty key for us to have people that are going and actually rent through these things because that’s where the return is generated.

With this being said, we focused on the island of Ambergris Caye because 70% of the overnight tourism arrivals go to Ambergris Caye at some point on their trip. When you look at Belize, there are three ways people can come to the country. They can either come by land, some are driving through. Generally, they don’t have a big impact on our real estate market. It’s a local traveler maybe going from Guatemala and Mexico and they’ll stop in Belize for a night. The second way would be a boat. There are cruise ships coming in and those passengers, they dock in Belize, get off the boat, buy a couple of knickknacks and they get back on the boat then leave. They don’t have a real impact on the real estate market either. The ones that really impact the market are the overnight arrivals by planes. They land and stay an average of five to seven days and a certain percentage of those people, which has been growing and growing, invest in the real estate market and get a second home. That’s our real driver and why we focus on the island of Ambergris Caye.

In Ambergris Caye, do they have a shipping dock, a cruise ship can dock there?

There is no cruise ship dock. The island actually has the second largest barrier reef in the Western hemisphere 400 yards off the coast. Literally, when you’re sitting on the beach, you can see the waves crashing against that reef and it’s very hard for a cruise ship to get in. The water depth behind the reefs is about six to eight feet deep. On the other side, it’s 1,000 to 3,000 feet deep. They can go along that reef, they just can’t enter the island. All of our travelers come by air.

 

I’m not so sure that’s a bad thing because those cruise ship ports, as soon as they make a dock, it’s over. My favorite place to go in Mexico was Playa del Carmen. As soon as they announced they’re putting in a cruise ship dock there, that place was voted into not what it was. It was a nice fishing port town that I’d love to go to because it was quiet. There wasn’t a bunch of honkers trying to sell me stuff every ten feet and all of a sudden, everything is in three storeys and glass. It used to be mom and pop businesses and now it’s conglomerates. You see the gap, you see all these national and global chain stores. That’s not what I want to go to a country for a lot of times or most of the time. It’s like call it paradise, kiss it goodbye.

When those things hit, there’s a huge impact on the reason why people like to go and that’s the exact reason why people love Belize.

Tell me if it’s true in Belize or not, when they set up those cruise ship docks, the cruise ship owns all the storefronts and leases it to the jewelry guy, to the clothing guy, to the ice cream guy. You’re not really getting an authentic feel at that point. You’re just in the trap.

That’s the master plan with those guys. They know all the details and they’re going to lay it out. They’re smooth operators. They know they’re going to put these little kiosks there. You’re 100% right there.

They speak English there. They’ve got full ownership. Tell us what are some of the differences? Do you know the United States’ owner finance criteria more or less? It’s different in every state, too. How does it compare to owner financing in the states?

First, let me give a little bit of history about why we look for owner financing. It gives us the ability to leverage ourselves into more deals, but we actually have some unique circumstances in Belize that are really important to note with our banking system. When someone deposits a dollar into the Belize banking system, the banks are required to maintain a 24% reserve. $0.24 in that dollar can’t be lended out. There are two effects to this. One, it’s extremely expensive for them to loan money. The rates are very high. The down payments are very high and it’s not favorable for real estate investors like ourselves who are looking to get low interest. When you contrast that to the US which has a fractional reserve system, they can lend up with a $10 out for every $1 deposited. It’s a lot cheaper to get bank financing in the US and Canada.

The flip side of that coin is that we have a very secure banking system. We’ve never had a bank failure in the history of Belize. There are pros and cons, but with regards to the seller financing, oftentimes people will look for an interest rate anywhere from 4% to 10% 30-year amortizations. They can piece together any type of the other because it’s so common in our market now that a lot of sellers and buyers, it’s in their language. It’s something they’re discussing while they’re making the deal happen.

In the United States, at least in Texas, we can go to the Savings and Mortgage and Loan Commission and we can learn the rules for owner financing and what we have to do. Where do you go in Belize to comprehend what’s allowed and what’s not allowed or is it just a gunslinger country?

At this point, it’s being figured out as we go. There are benefits and downsides to all these things. The other thing in Belize is that we don’t really have a traditional MLS. A lot of the deals that people are finding are more discussion with other real estate agents in the market.

I love that because that means for a go-getter who knows how to market, they’ll always try to look. There are more deals out there.

You find the best deals that way. It’s the inefficiencies in the market where we can make the most money and the best return.

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Wealth comes from chaos.

I’m living in the chaos.

Can you owner finance in Canada?

You can in Canada. A lot of the guys who started doing this are guys from Texas coming down from Canada, investing in the Belize real estate market. They set the framework for the way people do this now in Belize.

Leave it to Texans to be out on the frontier fighting all the unknowns. Have you done some owner finance deals yourself there? Can you give us a case study? Tell us a couple.

Let me give you a couple of deals. One deal that I did and I’m working on with a partner of mine. In Belize, they have these Mennonite guys that do amazing work in construction. These guys, they drive this horse-drawn carriages and stuff but they’re some of the best builders. We secured a piece of land in an area called Secret Beach on Ambergris Caye. It was seller financing, a 30-year amortization, 7% interest, 10% down on that lot.

How big was the lot and how much did you pay?

The lot was 60×75. It was a smaller parcel and we paid $30,000 for that. We put 10% down on that deal.

Is it on a beach?

It’s off the beach and all the beaches are public access. It’s a 66-foot beach called the Queen’s Beach. From an investment perspective, for someone like myself, instead of paying ten times the price, I’ll find something on the main road going down to the beach where I know I’m going to capitalize on the same traffic and my return spikes up significantly higher. I’m not saying I wouldn’t invest in the beach, but it’s something to keep in mind. For a real estate investor, it makes sense for us to go maybe a second off the beach or the third off the beach. Obviously, if you find a good deal on the beach, I would never say to avoid it but in that particular case, that was a deal that we did to secure the land with $3,000 down. There are a lot of deals like that on the market.

What did you do after that? You bought it and paid 30,000 with 3,000 down. Did you finance it for how many years at 7%?

 

Thirty years at 7%. It’s fully open so we can pay at any time. What we’ve done is secure a parcel along the main road and basically did simple wood kiosks. We’re not talking anything fancy, it’s about 200-square feet commercial kiosks and we leased those things out for $500.

What is a kiosk over there?

It’s like what we’re talking about with the cruise ships. When people get off the cruise ship, they see all these little tiny shops.

It’s a shop shack and they open it up. You’ve got these little vendors that you’re leasing space to $500 a month.

I’ve got little vendors that are leasing space.

How many of those kiosks could you get on that thing?

We have four but we could fit probably four more and do a little diamond shape with them.

Let’s say eight, that’s $4,000 a month and you bought this land for $3,000 down and your payments are $290 maybe.

The kiosks were about $4,000 per unit. On my YouTube channel, you can see these little kiosks that we’ve done. You can see the businesses in them.

You built the kiosks for about $4,000 per unit. In eight units, that’s $32,000 plus the $3,000 down. You got $35,000 invested and a payment of $300. For $35,000, you bring in $4,000 a month and your net is potentially $3,700 on this. Do you have any ongoing bills or insurance? What are the other costs for those kiosks?

There are insurance and property taxes as well. The property taxes compared to the US and Canada are extremely low. On that specific property, the taxes are $75 once per year in April. It’s very low compared to what people are used to in the US. Insurance payments are quite comparable. In the book, we have some examples of that and this is one of the better deals we’ve done in this market. It’s not like every deal has the type of returns this deal has but, there are a lot of deals with vendor financing. If you have a little bit of ingenuity and can piece it together, there are a lot of opportunities with these types of deals.

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I appreciate your transparency and being honest because I don’t like it when people give the highest, best upsides and don’t tell us anything about the downside. You’ve got some insurance and some property taxes to add to this. The total bill counting the payment, the insurance and taxes are let’s say $1,000. You’re still netting $3,000 a month on a $35,000 investment. That’s close to over 25% rate of return and you’re the full-fledged owner at some point.

It’s a 90% return and over 100% return on that one investment.

This is living proof that you don’t have to be really good at math to be successful. We make the margin so big that your mistakes don’t matter.

Oftentimes, the one thing that I have learned from a lot of my mentor is it’s not the smartest guys that do the best. It’s the guys that take action, actually pull the trigger, and go into different markets and invest. That’s key.

Will’s giving away this little report, it’s called Five Biggest Mistakes People Make When Investing in Belize. You want to get that absolutely free. Go to our website, 1000houses.com/Belize. You can also check out Will Mitchell’s book in there. He wrote a book called Investors Guide to Belize Real Estate and he’s going to give away the first 30 pages of that book, too. Go to the website if you are interested in this.

I want to touch on with the book, too. When you’re looking to invest in real estate, the key things are the people you have around you, your real estate team. The book wasn’t just me that wrote it. I actually leveraged the experience of experts in their specific fields. We had bankers, architects, developers, lawyers, all come in and give their expertise and we put all of that in this book. Instead of taking my experience, I figured, “Let’s get the most qualified guys and put it all into one book for people who are interested.”

How is the crime in Belize? Is it dangerous? Safe? What’s the take on it?

When you look and see the headlines coming out of the US, sometimes they’ll see something about a major crime in Belize. A key thing to note, 91% of the violent crimes in Belize take place on the South side of Belize. We’re on the island of Ambergris Caye which is about twelve miles away on an island. You would have to take a plane and when we’re looking at the landscape of crime in Ambergris Caye, the biggest thing we have is someone getting drunk and borrowing your golf cart or your bike or something. It’s very safe compared to Belize City. In comparison, to give people some perspective, when you’re in Beverly Hills, you’re only about 30 miles away from Compton. As we all know, those are very different landscapes. Belize is a small country with a population of about 370,000. When some major crime happens, it’s very easy to skew the data. You guys are based out of San Antonio. What’s the population of San Antonio?

1.7 million to 2 million depending on the surrounding areas.

When you’re looking at San Antonio versus Belize, they have 370,000 people only. When we have a major issue on the South side of Belize City, it affects the whole country and puts a bad light on it. When the reality is the kids at lunch on the island we’re on, they literally just go around the island. You’ll see expats all over. It’s a very close-knit community. The Belizean people are some of the nicest people in the world. There are so many Texans in Belize. There are direct flights from Houston and Dallas and the flight is about two hours long. The island compared to the city, it’s like two different worlds.

I had my vacation and we go to Mexico. Everyone’s talking about how Mexico is dangerous. If you look at a lot of that crime, 98% is at 2:00 AM trying to find a hooker while you’re high on cocaine. That’s when those people are having these troubles. Don’t do that crap and you won’t be one of those statistics. There’s a 98% chance it won’t be you getting stabbed, robbed or killed. Is that the same thing? Even those crimes down there are happening at 3:00 AM and bad things going on.

You don’t want to be wandering Belize at 3:00 AM. Personally, I tend to avoid it completely. Me and my buddies, we go out for beers on the island and go around and we never have any issues but most of the stuff does happen at that time. When guys get drunk, that’s when bad things happen in San Antonio or in Belize.

Mike, I’m excited about this. I really do want to go to Belize and check this out.

I’m excited. I ordered his book while you were talking to him. This is really neat what you’ve got going on.

If we go down there, can we meet up with you sometime?

Not only will we meet up, but I will also try to show you the equivalent of Texas hospitality in Belize and we can grab some beers. I’ll show you guys around. We actually do a monthly investors’ tour where real estate investors come down and we show them firsthand. We bring in amazing guest speakers.

Can I be one of the guest speakers? I know owner financing. I don’t know about Belize though. I might not be a good fit but I can talk about owner financing. Mike and I would love to come down and talk about that. It will give us an excuse to go down there but we don’t really need much of an excuse, do we, Mike? When you first go down there, are you saying that we should stay at Ambergris Caye?

When you’re first going down, it depends what you’re looking for. As someone who actually was actively interested in investing in real estate, I would say don’t even bother going to other places because 70% of the tourism arrival is going to Ambergris Caye. Obviously, if you want a good return, you need tenants and people who are going to rent from you.

Can you do Airbnb there?

You can do Airbnb there and most of that is another key contrast. I’m sure a lot of the investment properties in Texas are monthly rentals. In our specific case, the returns are much higher on a nightly rental. Aside from the commercial project that I did, most people are renting on a nightly basis. They’re renting through Airbnb and Vrbo. When you’re renting on a nightly basis, you’re going to have a much higher return.

What’s the taxation ramifications? If I’m an American citizen but I have an Airbnb or I have one of these kiosks down there and I’m making money, is there any tax advantages?

There is no capital gains tax in Belize and there’s no estate tax. Property taxes are extremely low. Unfortunately, there are two countries in the world where even if you declare non-resident, you’re still taxed on your worldwide income and the USA happens to be one of them. For me, being Canadian when I declared non-resident, I’m only bound to Belize taxes. Americans still have to pay some US taxes on that income but in terms of advantages within Belize, there are so many.

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How’s the income tax in Belize?

Income tax in Belize is based on what type of property you’re looking at. Compared to the US, all the tax rates are extremely low. Anywhere from 5% in that area. We’re not talking about a lot of high tax rates.

You’re buying a lot of stuff through owner financing. Do you ever turn around and sell stuff with owner financing over there or are you mostly acquiring with owner financing?

There are actually a lot of guys in the market who will literally turn down a cash offer because they’re saying, “I’ve got someone who will buy my property 10% interest to fix 10% return over whatever period.” They stick to that model and even if someone came to them and said, “Here’s cash off,” in their eyes, “I’ve got to take that cash and reallocate it and find something that’s going to give me a 6% to 10% return.” You’re giving them a problem as opposed to if they’re selling with seller financing with that 10%.

When they make that 10% loan, are they making it where there’s a penalty for pay off?

No, generally they’ll keep it fully open but if it’s someone who’s investing and trying to set that up to have that fixed return over that period, they might look like a penalty. For me on the properties I’ve sold, I’ve said it’s fully open.

We still have to pay some tax in the United States. Do they have internet and phone on this island?

The internet, we just got upgraded. We now have fiber optics. It’s very comparable to what you guys have. You can watch Netflix, do all that stuff and your phone works everywhere. If you go down the coast of the island at the northernmost point that almost touches Mexico, there’s not a lot of activity up there because it’s a national park. We drove up there and our phones were working crystal clear. We have 4G LTE fiber optic. For me being down here doing business, I need that stuff. Most people on vacation chuck their phones to the side and don’t worry about it, but it’s nice to have the option.

How long is this island?

It’s 24 miles long and three miles wide. It’s shaped like a cigar. People do ask sometimes, “Is it overbuilt? Is there room for growth?” When you look at the region, there are two comparable islands. There’s Roatan, Honduras and Grand Cayman in the Cayman Islands. The population of those two islands respectively is about 55,000. When you look at our island, it’s about 25,000 to 35,000. We still have a lot of room for growth and we’re poised to be the next emerging area within Belize and the Caribbean for that matter.

There are lots of fishing and scuba diving.

 

That’s the one thing we haven’t talked about yet. The fact that literally, you’re in one of the more beautiful areas in the world. We have these amazing white sand inlets. We have the second largest barrier reef in the world. For me, I’ll hop on my boat. You can go snorkeling and it’s like swimming in an aquarium. If you compare it to the Great Barrier Reef, we have more living reefs. You can go reef fishing, even take your boat on the side of the reef, go deep sea fishing. If you want to go into the leeward side of the island, you can do some fly fishing. If you have a spear on your boat and you’re feeling more adventurous, you can throw your spear in the water and do some spearfishing while you’re at it. The fishing is unbeatable.

Mike, how far is it to Belize from Texas and how much does it cost to get there?

It’s about $600 and from Houston, a three-and-a-half-hour flight or so. It’s South of where we go to Mexico.

I’ve got to sell myself to Will now. I’ve written three books. I could talk to your audience down there.

We have a great audience and I’d love to share your stuff, Mitch. I know we’ll definitely be sending this podcast out and anything else we can do with you, let’s make it happen.

Mike, I’m really intrigued about this but is this one of those things we said we’re not going to do or is this something that we’re going to look at anyway?

This is one we look at anyway.

We have this rule “no more new businesses” because you have these great business ideas and you think they’re going to be fine and everything but every business takes everything you’ve got to get it off the ground. Every time we talk about other businesses, we recognize we used to slap each other because we have six businesses and they all play off of each other and a lot of them had been long time standing. They’re all incestuous. It’s like if you have a lumber yard and you’re shaving trees into boards and one of the things you have leftover is sawdust. What do you do with this sawdust? You’re going to have to pay to take it to the dump or you can figure out how to make it into boards then you could sell the boards. We’re trying to take the byproducts of our business and make something out of them. That’s how we ended up with six businesses but they’re all interrelated. How’s Belize going to fit in? Do we need some beach? Is that what it is?

I was going to say, if you’re trying to avoid new businesses, don’t come to Belize. It’s an entrepreneur’s paradise. When we’re contrasting to the US, we have such basic business opportunities. I’ll give you guys an example. A few years ago, there wasn’t even a place on the island where you could get a freshly made bagel. A company came in and they did that. In the past years, it expanded to several locations. We’re not talking about Bitcoin or putting rockets to Mars. We’re literally talking about businesses, making fresh bagels, things that American consumers want that we don’t have in the market yet. It’s funny talking about the byproduct of these businesses the same way as us being involved in the market actively. After a couple of months, you have a property management business and all of these things tie into one another. I can totally relate to that. If you’re avoiding new businesses and opportunities, don’t come to Belize because your brain is going to be firing on all cylinders.

We can always partner with someone else. We’ll send them over there.

How much of your time are you spending down there?

Before we had the book, it was almost full-time. Lately, we’ve had a lot of different speaking engagements. We were actually in Houston. We did a presentation there.

Who are you with? Did you go talk with Landon?

We set up our own thing down there. We have it from our following. We reached out to them and saw which cities have the most amount of people who are interested in hearing about this. We sent an email blast out and found out that Houston, we had a pretty big audience. We went down there and did a presentation on that. Next, we’re probably going to go into Dallas. My marketing guys are feeling out which areas are the best.

I have an idea. I don’t know if it’s a good idea, but we can get all the expats in a room and talk about how they can earn 6% to 10% and have the United States Texas real estate as collateral. I’m sure these people that are living there, they depend on an income that they need to feel secure about because they’re retired, we could offer a choice. Even to loan the money for businesses to buy properties in Belize. Buy with OPM, which is the expats’ money and owner finance or lease to the Belizeans and have the business or have their money right there working where they can go visit the shop that they’re financing and raise some private money.

I’m in a really big raising private money mode because our businesses are growing so much. We buy about a hundred houses a year in Texas and I’ve been doing that for 22 years. I’ve been buying a house every four to five days. I do it all with $14 million with the private money and they have the house as security. I average borrowing at 58%. If I am owner financing this house for $100,000, I don’t know how it would be exactly in Belize but our lenders get a lean on that $100,000 house for their $58,000 loan. If they don’t ever get paid, they got a house backing it up. We’ve never given a house back in our career of over 2,000 houses. We could talk about how to raise private money and that could be beneficial to both you and me.

Both you and Mike need to get down and check Belize out. I’m telling you there will be a lot of good brainstorming going on.

Your book, The Investor’s Guide to Belize Real Estate, he’s going to give away 30 pages at 1000houses.com/Belize. If you also get over to that link, you can get the Five Biggest Mistakes People Make When Investing in Belize as little helpful hints. If you decide to do that, you’ve got the five biggest things to watch out for. Anything else you should say, Will?

We covered a lot and nothing’s coming into my mind.

I’m pretty sure I’m going to be visiting you down there. We’ll have to stay in touch. Anything you want to ask, Mike, before we go?

When you come to Dallas, let us know. We’d love to come see you and support you at your event.

That’d be great. I appreciate that, guys. Thank you so much for having me on to talk about these things.

Important Links:

• 1000houses.com/Belize
• 1000houses.com/5Secrets
• 1000houses.com/VAHelp
• 1000houses.com/Pin
• 1000houses.com/100
• 1000houses.com/AOF
• Will Mitchell
• Mainstreet Equity Corp
• International Living Magazine
• YouTube Channel – Will Mitchell
• Vrbo

About Will Mitchell

Will Mitchell is a Canadian real estate investor and the author of The Investor’s Guide to Belize Real Estate. A graduate of the University of Victoria, Will’s real estate expertise, ability to identify value in growth markets, and years of real estate experience in both Canada and Belize offer him a unique ability to recognize opportunities others miss.

 

 

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