Almost 5 years ago I published a post that was critical of International Living magazine and their anointed real estate guru, Ronan McMahon, for the bad investment advice being presented. http://www.internationalappraiser.com/2013/02/ronan-mcmahons-real-estate-trend-alert.html I also pointed out a conflict of interest, as IL must serve its advertisers, and certain problematic real estate markets were being continually touted despite declining real estate values. (In my own travels, I have observed that the foreign vacation home/retirement home market has not yet recovered from the global financial crisis 9 years ago.)
Each month, Ronan McMahon writes in IL of another “get rich quick” market, and I have to bite my tongue because I may not have been to that place recently or at all. Nevertheless, in the last 5 years I have received many e-mails about the blog post about him, plus 50 comments published on the post, and no one has ever disputed me, but many have thanked me. I’m still waiting for the comment, “Ronan and Real Estate Trend Alert made me rich!”
Which brings up his latest article in the November 2017 issue of International Living, “Gold in the Hills: Prime Ocean Views No One is Looking For”. The article mostly refers to Nicaragua, where I have not visited yet, but he also refers to Costa Rica as a real estate investment success story. As he specifically refers to “ocean view” land in Costa Rica, I feel the need to offer a dissenting opinion.
My first appraisal of Costa Rican ocean view land was in early 2009, before I started this blog. When I returned in 2012 I was surprised to find that asking prices on ocean view land had declined by 75%, and there were many “se vende” [for sale] signs around. Two years later the prices were even lower, and the only sale I could find was an ocean view parcel that sold at one third of its listing price.
This brings to mind his constant use of deceptive semantics. As an appraiser, my main interest is in finding out what price a property “sold for”. McMahon, though, typically tells us what properties “are selling for”, which is really just what the asking prices are. That is a meaningless statistic in a market with almost no known sales. If the only sale I could find last time was at one third of list price, you can appreciate the sometimes-vast disparity between “sold for” and “selling for”.
The truest statement McMahon made in the article was “There needs to be a finite amount of coast and beach.” My own observations of Costa Rica are that it has an almost infinite amount of ocean view land, owing to its topography and coastlines, and much of this land is for sale.
Magazine articles often use callouts (insets) to reinforce the key points of the article. McMahon uses two callouts in his latest article:
“Make a killing in the medium to long term”
It’s been a long time since I’ve heard of an investor making a killing in Costa Rica. If this is happening, I would expect it be happening in a trendy neighborhood in San Jose, where the real land shortage is.
“The better the views, the more you’ll sell for.”
A view is worth little, though, if it has no access or no building permits or no infrastructure or the grade is too steep for development.
McMahon never discusses such things, though, suggesting that his knowledge of real estate investment is primitive at best. It's almost as if he has never taken a class in real estate.
Each article also recommends buying in a “Path of Progress”. My own observation is that the moment an area is labeled as a “path of progress”, asking prices for land skyrocket and then gradually fall as reality sets in that progress takes longer than expected.
In almost 5 years, no one has e-mailed me or left a comment that my opinion of Ronan McMahon is wrong. His real estate investment advice is consistently bad. I have seen no testimonials to the contrary. Even his arithmetic is bad.
So why does International Living continue to employ him? It is because IL is a sales organization and McMahon is a master bullshitter.
Some of my friends in the real estate sales profession have a favorite film -- Glen Garry Glen Ross -- released in 1992 with such star actors as Al Pacino, Kevin Spacey, Alec Baldwin, Ed Harris and the late Jack Lemmon. All the characters are land salesmen at a Chicago real estate firm, relentlessly pushing land in the faraway states of Arizona and Florida using every sales trick in the book.
The management of the firm sends Alec Baldwin to motivate the salesmen into improving their sales or face termination, with lines such as:
"Only one thing counts in this life -- get them to sign on the line which is dotted."
and the oft-quoted "ABC -- Always Be Closing".
So remember that Ronan McMahon and International Living have an agenda that might be inimical to your interests -- to get you to sign on the line which is dotted.