Addison:

Welcome to the Wiggin Sessions, Surviving and Thriving in the Post Pandemic Economy. Do you think that's actually true, Ronan?

Ronan:

Absolutely.

Addison:

I don't think we're post yet.

Ronan:

I just heard thriving. We're thriving, Addison.

Addison:

Okay. We have Ronan with us. When was the last time we talked to him? Like three months ago, but Ronan runs Real Estate Trend Alert and there's a lot of stuff going on in the retail market in real estate globally. Welcome, Ronan.

Ronan:

Thanks, Addison. Lovely to see you as always.

Addison:

Where are you now?

Ronan:

Addison, I am in Cork, Ireland and I am in my childhood bedroom, would you believe?

Addison:

That's where you grew up?

Ronan:

Literally, this is where I grew up. We were really poor back then, so we didn't have the bay window. So this has been knocked in since and we definitely didn't have double glazing.

Addison:

The double glazing looks nice.

Ronan:

Yeah, and the greenery is lovely. I'm back in Cork, my hometown for the summer, where I like to spend all of my summers. My home in Cork is on the other side of town, but that's it, a little home in a golf resort that's attached to a hotel and the hotel life. I went out this afternoon, so I did what all good Irish boys do and I made a bolt for home. Bolt for dinner and to catch up with you.

Addison:

And get some corn beef and hash maybe.

Ronan:

Lovely, lovely, stuffed pork with apple sauce and roast potatoes. I still have my tea here. I think the interesting thing for me about coming back to Cork is I start drinking black breakfast tea again, which I never do anywhere else but it's the go-to drink here.

Addison:

Well, I like it when I go there too. And you have some in your hand.

Ronan:

I do.

Addison:

All right. So let's talk about your travels lately because they sound interesting. The pandemic has thrown a wrench into things. And the last time we talked it sounded like things were sorting themselves out but let's catch up. It sounds like it got more complicated.

Ronan:

Yeah, I guess the last time we spoke I was in Cabo, Los Cabos in Mexico, my base for the winter. From there I went to Portugal. So just the top level, Addison, to remind you, your viewers and listeners how I organize myself. So I spend my winters in Los Cabos in Mexico, spring and fall in Portugal. And then I'm back in Ireland for the summer when we get long summer evenings like this. My beat is traveling the globe in search of real estate opportunities for profit. I guess it's just been a phenomenally interesting and just bizarre time. I've stepped up from the dinner table here chatting with my sister who's house hunting at the moment, and it is just an absolute friggin nightmare. Zero inventory prices going through the roof. You would think we're in some kind of economic fragility, values are just soaring. In some instances in touristy parts of Ireland, prices have doubled since pre pandemic levels. So it's a surreal, complex and nuanced environment that I'm operating in that varies significantly from market to market.

Addison:

We actually started that last conversation that we had with Ireland, but I'd like to go through the other places that you've been to. What do you attribute to the market rising in Ireland? Because I'm here in Baltimore and we've made Baltimore our home for a variety of reasons. Mostly the diversity that we enjoy here. But the prices have been just going crazy. And so it sounds like maybe the same thing. Do you think that there's a pandemic involvement with that or is it Fed spending? Is it the Euro trying to compete with dollars? How do you process?

Ronan:

Addison:

And that's still going on is what you're saying.

Ronan:

Basically you've got a multinational sector which is tech and pharma heavy. Just literally seven minutes down the road from me Apple has a presence that creates more profits than the GDP of half the countries on earth. We have a huge multinational sector here that provides lots of well-paying jobs, those have surged ahead. And then you've also had this remote working trend. You've had lots and lots of people relocating from places like London. So for example, there's a very pretty town called Kinsale that's just half an hour west of Cork City. Mutual friends of ours compare it to Annapolis. It's that kind of dark vibe. It's 10 minutes from Cork airport. Prices there have, again, at the high-end of the market have doubled since COVID. Lots of people are relocating from London. You're 10 minutes from Cork airport, easy to get to London. And again, all of this, mortgage rates are falling.

Addison:

How much of that do you attribute to the pandemic itself? Because people are in a way just stuck there, the ones that are already there. But then there's constraints on travel and stuff like that.

Ronan:

In terms of the impact of the pandemic, we've got a pharmaceutical sector and a tech sector that's been a huge beneficiary from the pandemic. We've got beautiful countryside, open spaces, empty rural hinterlands and nice small towns that have been a big beneficiary. And then the sectors of the economy that have been negatively impacted, tourism and entertainment and all that. I guess they've been very heavily sheltered by government payments, government stipends. I really don't know how this is all working, but those businesses seem to have been remodeling. Many of them are re-emerging now with fancier experiences. Retail in Ireland has been hit very hard, a lot of the dinosaurs that I guess we're going out of business anyway, that's been accelerated. So just here in Cork, Gap closed a couple of weeks ago, Debenhams which is a major UK department store chain, they're gone. On the high street in terms of retail, there's a bit of scarring, but other than that, everyone seems to be busy. Everyone seems to have money.

Addison:

I'm just laughing because how does that compare? You're talking to us from your childhood room, so how does it compare it to when you were growing up?

Ronan:

It's very interesting. When I came back and spent a summer in Ireland a few years ago, I reconnected with my home golf club and joined the team. It was just weird to me because growing up, people in our golf club here did normal jobs. They were accountants for the gas utility or they were teachers or civil servants or they worked in a bank. Now the people are doing these really specialized multinational, international things. Working in tech, working in pharma, trading derivatives for this little component that goes into a computer. Completely different.

Addison:

If you think about it, it's much like yourself, right?

Ronan:

Yeah, absolutely. Ireland has just undergone this massive transformation from the time when I first went into university to today. When I first went into university, there was the full expectation of immigration being needed. And since then we've just changed that we've just become this net attractor of people from right across the world.

Addison:

I still think, and we talked about this before, but I still think that's a factor of the taxation policy that was put in place.

Ronan:

Yeah, without doubt. This is another very interesting one because of course that's under attack now with this recent global tax initiative. But no one here seems to be that worried about this either. It's very interesting because lots of my contacts from across the world are saying, "Everyone's freaking out in Ireland because Ireland is going to lose its advantage." I don't know, either hubris has crept in or they know something we don't know, but no one seems to be that worried about it.

Addison:

In a way, as long as the money is being printed.

Ronan:

Yeah.

Addison:

As long as you can afford your tax bill and your mortgage, people don't give a shit really.

Ronan:

Yeah, absolutely. I think it's very interesting, Addison, because growing up through this type of economic transformation that just drove real estate values through the roof, it's given me a very good grounding for stepping out and going to a Panama, going to a Portugal, going to other places and just seeing these similar trends unfold and just seeing how they can just drive real estate values through the roof. Panama's an interesting one because Panama over the past two decades it's sucking in all these multinationals, and has a very welcoming tax policy. It's attracting people, businesses and mobile stuff are being sucked into an environment that like Ireland is very safe, very stable, transparent, and has general trust in institutions. And it's a great platform if you're mobile and if you're doing business within their region.

Addison:

That's part of what I wanted to talk about when we were setting up to have the conversation today. You set up, I think there were five, I'm going to say there's five different locales that you're interested in. And also I've been getting your texts and I'm like, "Man, the deals you were coming up with are amazing." So let me frame that question in a different way. We were already talking about how the pandemic has changed the economy, but how has it specifically changed your agenda? Because you gave me six different locations that you're looking at and then followed your texts, you've been putting out deals probably once a month at least. Let's talk about that a little bit.

Ronan:

I guess one standout payment in terms of the pandemic and our deal flow has been Panama, which established this incredibly generous tax incentive scheme for folks to invest in tourism infrastructure. Panama over the past two decades has been extremely successful at attracting financial services, and attracting old sorts of other multinationals, but their tourism industry has lagged. So just around when the pandemic hit their new airport doubled in their capacity and had just been open. They're looking to fill that airport. They're looking to develop a much bigger tourism industry and to do this, they've created these amazing incentives for developers and investors to create tourism infrastructure and that tourism infrastructure includes apartments and homes that are made available for short-term rental to vacationers.

Addison:

So you can earn income that way, but can you go there right now?

Ronan:

Yes, you can go to Panama now. Panama was closed for a long time, Panama is now open. Addison, the only place in terms of my movements that hasn't been opened for me has been the US.

Addison:

When we were talking about it, I was like, "What?"

Ronan:

This is just so weird. I've booked flights, et cetera, to fly to New York on the 22nd of October, contacts and colleagues were coming from different places. We were going to be meeting in New York for two or three days. And then from there I was going on to Panama. And then I realized non-Americans can't fly from Europe to the US at the moment. Now, I can fly from Mexico to the US, Mexico where COVID is rampant at the moment, but there are a number of countries that you can't fly to from the US. Countries like China, India, Brazil.

Addison:

France.

Ronan:

No, there's Iran.

Addison:

Canada.

Ronan:

Everywhere.

Addison:

I'm making a joke about Canada because as we were talking, they just opened yesterday.

Ronan:

Oh, did they?

Addison:

Yeah. I just thought it was funny.

Ronan:

It's a really weird thing. I had taken the view that New York would re-emerge as destinations for tourism, destinations for meetups like this. And that's been my experience. So I put out a text, I was there saying, "Geez, guys, I might not be able to make this." And within 30 seconds it was like, "Why don't we do it in Panama? You're going to Panama anyway, we can all just go to Panama. It's easy for everyone and maybe the weather will be nicer by the end of October." We're all just so mobile now there is just no reason to be that New York would have this great draw unless there was some amazing vibrancy. So it hit me saying that this idea of these cities becoming destinations for this type of thing, it might not quite play out like that.

Addison:

Yeah. All right. So why don't we go over. I like your agenda here.

Ronan:

Yeah.

Addison:

Ireland, Portugal, Spain, Riviera, Playa Del Carmen, Tulum, Panama, and Cabo.

Ronan:

These are my movements, Addison, over the next three months and each place I'll be traveling to and spending time for very specific reasons. From Ireland, I go to Portugal and Portugal is extremely interesting in terms of opportunity at the moment.

Addison:

It's in the Algarve?

Ronan:

I'm an investor for profit in the Algarve, and then where I live and where I spend time is on the silver coast, north of Lisbon. Portugal has come up with these incredibly attractive residency packages. I'm a Portugal resident, they have a tax program for people who fall into different buckets and where you can pay tax rates that range from zero to 20%, which would be versus the 50 to 55 I'd pay in Ireland. So it's extremely attractive for me and many other people in a similar situation to base themselves in Portugal. And then you have in the Algarve, you have this surging tourist demand. You have this in places like Lagos on the western edge of the Algarve you have growing demand. It's been, well, I won't say inundated, but...

Addison:

It's the farther tip, right?

Ronan:

It's the farther tip, Addison, but the piece of land is so small, you're still only talking an hour and 20 minutes from Faro airport, which is the major international airport in the Algarve. It's a beautiful historic city. It's a very, very interesting place because in one small city, you've got a historic core, you've got a modern marina area. You've got long, wide sandy beaches. And then you've got these amazing coves and cliffs that are quintessential of the Algarve.

Addison:

I bet you have a lot of English and Irish tourists.

Ronan:

You have quite a few. I don't want to say anything derogatory about those Irish and English, but it's classy in a way that there aren't that many English and Irish pubs. So it's classy and low key and there's a very big hotel shortage and very big demand for short term residency.

Addison:

Has that also been impacted by the pandemic? Because that's an issue in the US.

Ronan:

Hotels are decimated.

Addison:

Don't want to work anymore.

Ronan:

Yeah. In the Algarve it's just been amazing. I just spent the morning looking at data from a short term rentals management company, looking at year on year comparisons of occupancy. And in Lagos, for example, the type of short-term rental that was maybe getting 40 weeks occupancy in pre pandemic, last year was getting just down a bit, maybe about 35 weeks occupancy. Which is just staggering when you consider hotels dropped to close to zero or were closed. So that sector of quality short-term rentals remained incredibly robust even when we had all this. Very encouraging. Plus again, it's all this, not to bang on about it too much, but it's just all an acceleration of what was happening anyway. More people moving for remote work, more retirees, more fluidity, more flexibility.

Addison:

Do you see that persisting? Let's say the economy and the tourist economy reopens the way that, I guess the common idea is that people take it's just the economy is going to open back up. Do you see that trend of people moving to remote locations because we know how to do it now?

Ronan:

Yeah, I firmly believe that that genie is out of the bottle and it's not going back. There's a machine trying to push it back, we're inundated with it.

Addison:

I’m sure a bunch of real estate owners in New York City that would prefer that people don't move to the Algarve?

Ronan:

Exactly. Without doubt, there will be some gravitation back to offices and a lot of people will go back to work. But it just takes such a tiny percentage of people to move from office based to the Lagos of the world, to just completely transform the dynamic of those real estate markets.

Addison:

All right. So this is a question I wanted to ask you just while reading and getting your texts and stuff like that. Isn't this the way the world used to work before we all moved to cities? We used to live in these country towns and they're beautiful places to live. I grew up in New Hampshire. Right now we live in Baltimore, but we used to spend time in this place called Havre de Grace which is right on a river. It's a beautiful, small town. During the pandemic anyway, people migrated to these smaller places and the real estate prices have been going through the roof in places that you would want to spend time, it feels like a reversion to the mean.

Ronan:

Absolutely. You go to a town in the French countryside and you've the winemaker's house and the cheesemaker's house and the priest's house. Those kinds of jobs are gone or changed, but now we can be back in these places writing The Daily Reckoning, or writing our Real Estate letter. The genie is out of the bottle because it sucks to sit in traffic for an hour and a half every day. I think the genie is out of the bottle because it just doesn't make sense for everyone, whether you're a morning person or a night owl, to go to an office and sit at your desk for X amount of time. Again, Addison, I'm not saying a chunk of our business here, we feel very strongly that everyone involved in that needs to be in the office. Whether it's a customer care team or whether it's the sales team, these are groups that need the energy and the vibrancy and feeding off each other.

Addison:

Also just in our own business, there's a cultural thing that you have to cultivate, bring people in and explain what we do.

Ronan:

That's the huge challenge I see from this new way of working. It's interesting because I feel like it's almost like another thing that puts these debt laden, skill limited newcomers to the workforce. It's such a big disadvantage.

Addison:

I worry about what they're going to find when they try to get jobs and stuff. Or just even if I try to... We've been talking about starting small businesses, if we do start smaller businesses, what kind of help are we going to find? Literally in the last two years we destroyed the economy.

Ronan:

Yeah.

Addison:

Maybe a good question to ask is, what does that do to global real estate prices? Our family has property in Nicaragua at the ranch... You're going around visiting different condo projects. You're also looking at raw land. I think that we even visited some raw land together in Nicaragua. How has it changed in the last year?

Ronan:

Addison:

Well, I've been enjoying the texts that you have been sending out and you can just correct me if I'm wrong. But I feel like the number of texts that are offering new deals has increased over the last two to three months. It feels like the deal flow.

Ronan:

Yeah, absolutely. When COVID hit, it was challenging and it was interesting, but a lot of the bigger projects got paused, let's wait and see. Then what we were able to do is, with these developers that we trust in and that we believe in and we've observed over time the quality of their work, we were able to say, "Why don't you do something that's relatively low risk, like a smaller community." Our group will by and large have it fully allocated in a matter of hours. So there's very strong uptake in that because these developers want to do something that's extremely low risk. They want to keep their infrastructure going, but they don't want to be necessarily starting a 500 to 700 unit project because maybe the first 30% of units move quickly, but who knows what could be around the next corner?

Addison:

So with the pool that you put together, you're able to actually approach the contractors and the developers and propose things, that's new to me.

Ronan:

Yeah, these are people who we will have had relationships with.

Addison:

That's what I mean. Now you can be like, "Hey man."

Ronan:

Exactly. For example, last year in Tulum a new project called Natal. We were talking to this developer and we still are about a much bigger scale thing. And everyone said, "This feels risky for the environmental trend. We don't really know what's around the corner. Why don't you do something that's more bite-sized chunks?" We understand their numbers, we understand what's under the bonnet of their business. So we can expect pricing that's in line with a fair margin for the developer and an excellent deal for the RETA member.

Addison:

That's awesome. I think one of the best things we could do right now is just that... And we'll put it at the bottom of the video, but let's get people on your texts because that's the way I've been following you. We do have the email that goes out.

Ronan:

That would be great because if you guys do the texting we're a bit slow on that.

Addison:

Well, it's working for me.

Ronan:

Yeah. I know about the International Living published version of if. We haven't been texting yet, so there you go. That's my testimonial now.

Addison:

Yeah, maybe you should do that too. Because the way it works for me is the text comes out and then I read the text and then I click on it and it goes right to the email. It's usually you who's written it and then I go, "Oh man, that's awesome."

Ronan:

I think it's very interesting how I consume as well. All the people I like to follow, I'll see their emails coming into my inbox and that will trigger something in me. But I'll generally go to a website and look at it on my iPad because my iPad is for reading, I don't get any email on it. So I often find myself texting links to myself because I don't want email on my iPad. I don't want slack on my iPad. Let me tell you a good story about the impact of the pandemic on things. When things started shuttering down, we within my team had this little Slack group called “property porn” and we would put up these cool little properties.

Addison:

I’m going to steal that phrase, by the way.

Ronan:

It's trademarked. So our “property porn” channel featured these really dreamy and inexpensive properties all around the world. So we had a lot of dreamy properties under a hundred grand price point. And then we also had a category that were more like dream mansions that were maybe $500,000, but you're getting a palace in the Italian countryside. I thought to myself, "Geez! I should start putting these up on Instagram." Myself and my wife one Saturday evening, there was a lull in the conversation or there was nothing on TV. So we said, "Why don't we set up an Instagram account to put some of those pictures up there?" So I chugged along and then we were in Mexico and my wife's Mexican and I remember after the first couple of weeks we had posted, I'm complete social media novice, so her niece and her nephew were there and I was like, "Please, will you like that post because we only have seven likes."

Ronan:

Addison, then something happened and the world went mad. And in a couple of months we just shopped about 250,000 followers, there was just this surge of interest in property porn. It's an interesting thing, I think there's a combination of people locked in their houses, people with an itch.

Addison:

Also, I really think, and I've seen this in our readership that people are just reevaluating their lives.

Ronan:

Absolutely.

Addison:

I'm doing the same thing. It's totally natural when the world seems like it's, do you like this phrase? Cattywampus.

Ronan:

I've never heard of it. Go on and explain.

Addison:

It just means that all with the hell. So it's all cattywampus. When that happens, it's a total natural reaction to react, to be like, "What's our life all about?" One of the major assets that you own in your life is property and it could be one or two or three, we have three, but I'm reevaluating that right now. And I think that a lot of people that talk to you are reevaluating. They might be looking for rental property in Panama or they might be interested in changing their lives a little bit so that they could move to Portugal or something like that. Just a change and they have enough capital to imagine what that's going to be like. And then you have all these places that you can look at. And I literally think that's what you mean by property porn.

Ronan:

Absolutely. Just that vicarious. I'm a fan and an addict. I love sitting in bed Sunday morning, just looking at listings of... Yeah. And then I guess I like it much more when there's an edge, when there's a hacker, where there's an angle, where you can use it to make a lot of money.

Addison:

This is the way I think about it. What if it just pays for itself? A lot of people just do that. They're like, "Okay, I want to live in Portugal in the Algarve for two weeks a year. And the rest of the time I'll just rent it."

Ronan:

Addison, the Algarve as a market is phenomenal in the sense that you could cover the full cost of your 80% loan to value mortgage plus all of your property taxes, plus all of your HOA, all of that for renting for just 10 months, 10 summer months.

Addison:

That literally gives you two months to live there.

Ronan:

Sorry, Addison, 10 summer weeks. I meant 10 summer weeks.

Addison:

That's even better.

Ronan:

The silver coast north of Lagos, I left my home there six weeks ago now. I've already got in eight months worth of total cost of ownership just in those six weeks, eight months of mortgage plus property taxes, plus HOA plus golf club memberships, plus wifi, everything in. So I went to the Algarve just before I came to the luxurious community of Vale do Lobo. I was able to buy no money down 100% mortgage at just about 1% for 410,000 euros. There's an identical condo for sale today in the same community, just a building over for 830,000 euros and it rents for 3,500 euros per week now.

Addison:

And people are renting it?

Ronan:

Addison:

Well, also, the other thing, and this is probably a lesser point, but what I value too, is just reading. I enjoy the armchair. But I like reading about them. I like reading about where you are and stuff like the deals that you find in the ones that you're putting together. It says, "Oh man!" It's really entertaining. So I think that there's a component in front of that too. Even if, like in my situation, if I'm locked into. My daughter's becoming a sophomore in high school when we're locked into our place right now, I still enjoy daydreaming.

Ronan:

The vicarious reads.

Addison:

That's how you started, right?

Ronan:

Yeah, absolutely. I do too. We've got this WhatsApp scouting group where members of my team send in their videos and photos all the time. When I say all the time, I don't mean every other day, I mean 30 minutes. This week I've been telling them that I don't want to watch Netflix tonight, I want to watch what my team is sending me from the road." It just doesn't feel like work. This is the problem I always have, Addison, it's like, what would I do if I gave up my job? I'd probably do the same thing but just not get paid for it.

Addison:

It's funny. I worked at the Cato Institute for a while and I wasn't getting paid very much and this was a long time ago, it was like 30 years ago. But if I was working here and I stopped working, what would I do? I would just do the same thing.

Ronan:

Quick question for you, when you say the economy was ruined in two years, are you thinking lock downs or handouts for not working?

Addison:

Ronan:

I suppose Nicaragua is its own particular difficult case. Nothing is clear.

Addison:

I think that's going to be the case for a while. But in the meantime, the investing phrase we use all the time, the time to buy is when blood is in the streets. Right now it's property value time. You can buy stuff for cheap.

Ronan:

You can buy stuff that's positioned to do extremely well pretty much irrespective of how things shake out. For example, RETA members have been buying two bed, two bath condos, 206 steps from a beautiful beach an hour from Panama City. It's an area that with some new infrastructure improvements is going to be more commutable. You've got tourism growth, you're buying for less than replacement value because you're getting this deep value because of this tax bailout.

Addison:

I think it's a good time to buy. If you have cash, we've always said this for years. If the world looks like shit and you have a pile of cash, this is the time to buy stuff because it's cheap.

Ronan:

Yeah, in the right place selectively. That's correct.

Addison:

All right, man.

Ronan:

It's a pleasure, Addison, as always.

Addison:

Next time in person.

Ronan:

Well, I can't get in.

Addison:

I can't visit you?

Ronan:

You can visit me now but I can't visit you.

Addison:

Or maybe I can just go to Mexico.

Ronan:

That sounds a lot better. Cabo it is in November.

Addison:

Okay, there we go.

Ronan:

Take care, Addison. Bye.

Addison:

Bye.