Monday, November 6, 2017

A Reassessment of Real Estate Guru Ronan McMahon: Real Math vs. "Ronan Math"


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. It seems that Ronan touts troubled real estate projects, almost as if he was being paid to do it. (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, and the price of land has been declining for years.)


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 more than 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 asking 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.


Real Math vs. Ronan Math 

This brings to mind his constantly deceptive proofs of price appreciation of his previous buy recommendations.  The legitimate method of measuring price appreciation is to measure closed sales prices over a time period and establish a price index or compute percentage increases over a fixed time period. The big real estate brokerages do this in the U.S., and I saw the same process used in France. Although I do not always trust brokers, I have learned to rely on their data. Occasionally, I have seen a realtor enter a false comparable sale into the Multiple Listing Service or LoopNet, but that is not common, so it should not have much effect on price indexes.

"Ronan Math" involves taking the lowest closed sales price in a condominium complex, probably a smaller unit, at the beginning of the time period, and compare it to the highest asking price in the same complex (probably a larger unit) some time later. There is no discussion of today's closed sales. Then he tells the reader that if we had taken his advice, we could have achieved returns over 100%. This is so disingenuous that it mocks the field of Mathematics.


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 nor building permits nor infrastructure nor water 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 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 telemarketing 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.




"Wot? Are you accusing me of bad arithmetic, too?"






44 comments:

siva linga prasad said...
This comment has been removed by a blog administrator.
Anonymous said...

Ok so I just read your other article on Ronan McMahon, left you a comment thanking you, and came here. LOL. Rest assured I WILL NOT TRUST HIM WITH MY MONEY. Thanks once again. Bless you.

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Thank you for the heads up.

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Unknown said...

Helpful post and Objective valuation advice on the international real estate! I have no idea about this type of reading before today. It is such a helpful post. For trusted Orlando real estate agents check The Legacy Team now. Thanks and keep it up!

Parth Patel said...

Thank you very much for this article (and the one from 2013). I am a reader of an individual investment newsletter and they have started advertising about Ronan McMahon. This is May 2018 and they still do the same advertising. $999 per year - fire sale 50% off - $499 and they get you a physical book mailed at your address. The cheesy phrases and highlights on their offer forced me to google it and found your page.

Thank you again :)

Unknown said...

Ronan is now pushing this “unbelievable” condo deal in a Panama City neighborhood called Coco Del Mar. I was intrigued because Panama City appears to be a modern city, compared to the jungle view lots of Lake Arenal, Costa Rica. Anybody have any insights into Ronan’s latest must have find?

Anonymous said...

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Good luck and continue the good fight!

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TomS said...

Vernon,

I found your post and the one from 2013 while doing some due diligence on the claims of Ronan McMahon. I can agree that he is an over the top salesman. Anyone considering investing their assets with anyone should spend considerable time looking into the investment and the people promoting it. Researching the project, location and visiting the location would be the base minimum for me.

That said, considering this guy has been doing this for quite some time and If his recommendations are all bad deals, I would expect to find more negative info online. I understand people who make bad investments are usually too embarrassed to go public. But I still find it odd that there aren’t a bunch of bad reviews, etc. if his deals were that bad.

Today I subscribed to his RETA newsletter. He has several deals he is promoting. I would imagine he has multiple projects all the time.

I wonder why there aren’t more complaints? Are you aware of other unpublished complaints?

Regards,

Tom

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Vernon Martin, MSRE, CFE said...

TS -- As my blog title states, I just provide unbiased advice. When I Google Ronan's name I see complaints, not success stories, from the only third parties who are commenting on him. How many complaints would prove that he is not good? How many complaints were made about Bernie Madoff before he got caught?

The two blog posts about Ronan have attracted almost 20,000 page views, and in 5 years I have heard no dissenting opinions, not even from Ronan. Moreover, my 2013 post has now become my most popular post, and I am guessing that RETA is now being promoted worldwide, which is causing the increase in readership of these posts.

My observations are that successful real estate investors find their best opportunities close to home, because they have the knowledge to act quickly, which I have done myself. They do not wait for an "over-the-top salesman" to alert them to shopworn lots in Tulum and southern Costa Rica.

But take your chances and report back.

Or maybe you're just Ronan's girl friend. on A Reassessment of Real Estate Guru Ronan McMahon: Real Math vs. "Ronan Math"

Anonymous said...

Thanks for your posts. I've been irked with International Living for years. Subscribe to them once and you'll hear from them forever. The real estate promises in particular bother me as people who may not have a lot of money and are thus looking for an inexpensive paradise or a better retirement make up a large part of the targeted market.

In a previous life I was in real estate, including commercial and investment properties, and learned one thing for certain: if there's a deal with a high liklihood of success and high returns, the investors involved will not be telling others about it until they're already invested. In other words, unless they're in your family or are a close friend or business partner, you're not going to hear about the opportunity until the investors will make money from your involvement. They're selling, not advising. And they're primarily interested in making money for themselves. Nothing wrong with that but remember whether or not you make money is not their concern. That doesn't mean you can't make money, too, in the right deal, but the initial investors will make more money because their return comes off the first: they're likely to make a profit even if, in the long run, you lose money.

I searched for Ronan on the net today after yet another offer for his "free book" (except for the $5.97 he asks I pay for postage). I'm pretty sure I received this same pitch long ago and more than once so thought I'd take a look in cyberspace and found your site.

These are verbatim quotes from the email:

__________________________________
Aug. 21, 2018

From the Publisher of International Living:

Ronan McMahon reveals the closely held formula he's applied time and time again in markets around the world to pocket 100% gains within five years. This time, it could be in as little as 12 months…"— Jackie Flynn, Publisher

... Ronan believes that right now we're at a moment in time when the profit opportunities in real estate overseas are greater than they've been at any time in the last decade—if you know where to look.

And he makes the argument that this level of opportunity for gains—in places you could easily double your money in five years, and possibly within as few as 12 months—will not likely be repeated in your lifetime.

...including a brand new "bonus chapter" only available with this offer. It points you to a specific opportunity in Costa Rica today.


______________________________________

This is a bit about the connection between International Living and Pathfinders. To see the whole article, search for - Market Watch Retire Abroad: Golden Years Go Global
By Missy Sullivan - you should find the link.

For years, developers and brokers say, International Living made a commission on sales it promoted through its publications, website or conferences. Developer Sam Taliaferro, who built Valle Escondido, Panama's first gated community (home values: $250,000 to $5 million), says that for a 10 percent cut of sales, International Living brought couples to the secluded mountain site. Dan Prescher, special projects editor for International Living, says the publication received a percentage of sales from developers like Taliaferro in the past. He says that in a move to give the magazine more editorial independence, starting in 2007 those deals were sent to a newly created company, Pathfinder International. But the companies still do business with each other: Pathfinder says it vets developers who advertise in International Living and speak at its conferences—and that it pays promotional fees to International Living.

Folks, if you want to move to another country, rent a place there for six months or a year, talk to other expats, learn the ups and downs of relocating, and don't pay firms like International Living or Pathfinders for help. You're not likely to get it.

Happy trails.

Vernon Martin, MSRE, CFE said...

A word of warning to those who order highly promoted "free books", just provide your credit card number to pay for shipping and handling. Guess what? They now have your credit card number, and you may actually be paying for an annual subscription to a scammy newsletter or magazine.

If you want more objective advice on living in another country, consult an on-line expat forum. There may be more than rainbows and unicorns when living in another country. For retirees, though, retiring to another country can be a way of stretching a fixed income and enjoying a better lifestyle. Bear in mind, though, that Medicare can only be used in the U.S.

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Unknown said...

Thank you very much for your advice. I was just about to order his free ebook and be caught in his "subscriptions" trap. Gladly and grateful that I found you

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D Tipton said...

True-Ronan McMahon. If you hear the name RUN! We lost 5k on a project. Joined Reta (don't spend the $$$) We were sent an email to "jump" on a deal in Panama City-Santa Marta. We held the condo with 5K. We had 28 days to fly to PC for a few days, get an attorney and review contracts and get the paperwork done. Not enough time. Our due diligence trip to PC was scheduled (by the developer who took our 5k) on the 28th day. We asked for an extension and as told"sure", no problem by George (salesman for Santa Marta in PC). This guy is a liar and huge BSer. We flew to PC and talked about the 28 days again while we were there. According to George at Santa Marta-no problem. We flew back and decided against the investment. George totally turned nasty and said no way you will get your 5k back.. George. RETA and Santa Marta are unprofessional, not anyone to do business with. We called RETA for advice and no answer, no interest. RUN!!

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Mehvish said...

Thank you very much for this article (and the one from 2013). I am a reader of an individual investment newsletter and they have started advertising about Ronan McMahon. This is May 2018 and they still do the same advertising. $999 per year - fire sale 50% off - $499 and they get you a physical book mailed at your address. The cheesy phrases and highlights on their offer forced me to google it and found your page.

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REInvestor2019 said...

I think you are confusing marketing with trickery... anyone knows that if you subscribe using an email address, you will probably get an email from said company. You sound like a bitter man with way too much time on your hands.

Vernon Martin, MSRE, CFE said...

Brilliant. I waited 5 years to talk about him again, but there is no bitterness because I never invested. I even got his latest article recommending Cabo San Lucas and the apartment building owner who wants to sell, just after Cabo San Lucas has been newly declared the murder capital of the world. You really are Ronan's girl friend, aren't you?

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REInvestor2019 said...

Cabo... murder capitol of the world? Where do you get your information?... if places like Tijuana and Caracas exist, I think that title is spoken for. Travel a bit, it works wonders :)

Vernon Martin, MSRE, CFE said...

https://www.tripadvisor.com/ShowTopic-g152515-i84-k11429238-Los_Cabos_murder_capital_of_the_world_Should_we_be_worried-Cabo_San_Lucas_Los_Cabos_Baja_Cal.html

Tell Ronan to supplement "boots on the ground" with reading TripAdvisor.

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Anonymous said...

If you're going to suggest that someone else's grasp of math "mocks the field of mathematics, it's probably better not to advertise your own weak grasp of mathematics by claiming that Costa Rica has an 'almost infinite amount of ocean view land'.

Costa Rica has a lot of ocean view land. It most certainly does *not* have an almost infinite amount. An almost infinite amount of land would include every planet, asteroid and comet in the universe.

Vernon Martin, MSRE, CFE said...

Here's the concept from a view of future sales: How much time would it take to sell every ocean view parcel in Costa Rica? It would be almost infinite, figuratively speaking.

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