Investing for Profit or Buying for Lifestyle?

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A case is often made that investing in real estate for profit in the form of capital growth and investing to enjoy a lifestyle are extremes that don't overlap.

In Central America, the argument goes like this:

Profiting from capital growth requires finding locations with low current demand (and subsequently low prices) but where it is reasonable to expect that demand will grow. Perhaps a new highway is being built, tourist numbers are on the rise or a major hotel is about to break ground. As services and amenities are lacking, these locations are not good targets for lifestyle property.

Lifestyle investing is about seeking out more established residential destinations with good quality infrastructure, reliable services and diverse amenities. Places where investors can build new relationships and become part of a thriving community. As "lifestyle factors" are already factored into property prices, the potential for capital growth is reduced.

Two different agendas, right?

Well, not necessarily.
 
Research a few properties in Central America and you may find this to be an oversimplification. Take a look at this listing for example: It's clearly a lifestyle buy. Who doesn't want to spend time in a full service luxury resort? But as it's located close to a developing tourism town attracting more visitors each year and is attractively priced for an ocean view property, it also holds the potential for good investment returns and rental income.

Instead of trying to choose between an area that will deliver capital growth and one that will deliver a lifestyle, it's worth seeing if you can find investment opportunities that deliver both. So rather than thinking about extremes that don't overlap, perhaps it's better to think in terms of a profit/lifestyle continuum, recognizing that areas can move across this continuum over time (and also that priorities can change).

In Central America some of the best "profit plus lifestyle" opportunities can be found in prime tourism areas that are highly desirable but still not fully on the map as primary vacation destinations--locations that are on an upward development path, with a good standard or infrastructure and amenity, but where it's still possible to benefit from early in prices. 

If you find the right property in one of these locations you can use it as place to visit on vacation. Rent it out when you are not visiting to generate cash flow and, over time, it could grow on your balance sheet.  And if Central America is in your plan for retirement, when the time is right, you can move into the property and live in it year round.

Combining a profit and lifestyle agenda. Meeting your personal and investment goals. That's one of the big opportunities that investing in real estate overseas offers.

What's your agenda?

Claudia Gonella is co-founder of Reveal Real Estate, a listing site connecting buyers looking for property in Nicaragua, Belize, Panama and Costa Rica directly with sellers who have listed their property for sale.  She has been living and investing in Central America for over a decade and writes regularly on how the property market is evolving in the region.