#317 – The Gringo Advantage and Expat Opportunities in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wonder Hello there all you expat wannabes I'm Johnny Mueller and you're listening to the expat files living in Latin America the show that tells you just what it's like to live Work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Now here's something I think a lot of you guys and gals are going to be interested in on this show We like to talk about how that gringo advantage works for you in having a business down here in Latin America And we talk about just how strong that gringo advantage is off the tourist trail, of course

[00:46] But you know, there are touristy destinations down here that aren't gringoized. Oh sure There's a few gringo stomping around in any faraway place That's got something to offer but for the moment let's talk about those low volume tourist places the ones that are not well known by gringos and because of that not so Frenzy meaning much more laid-back and obviously much less expensive than places like Costa Rica Basically, I'm talking about places that have tourists But the vast majority of them are not speaking English and that's one good sign that you're not on the gringo tourist trail So let's talk about that Latin American tourist trail in regards to gringo business startups in those places So once again, I repeat when you're on the middle class upper middle class or wealthy Latin American tourist trail

[01:32] That's a whole different story And if you start a business in one of those areas your gringo advantage will be alive and well even if you get into a business that looks like it shouldn't have a chance under normal circumstances and you'd be surprised at just How many gringos and first-world people go against that conventional gringo business advice? That's a given especially in first-world tourist destinations like Costa Rica and Panama and they start businesses that are in uphill battle All the way like hotels bed and breakfast restaurants bars, etc But surprisingly enough somehow and I've seen this quite often quite a high percentage of these guys seem to beat the odds And remember, I'm not talking about the gringo tourist trail I'm talking strictly about the Latin tourist trail Especially if you're the only gringo in the neighborhood with such a business and your competition no matter how much there is of it

[02:21] Are the mediocre locals who have no idea about customer service and are not into the details Which brings me to an interesting email? I just received and I'll paraphrase it a bit here and add my comments Of course and it's entitled the gringo advantage plus a bad idea equals a great big question mark and In this case since we're talking about a bad business idea in a Latin tourist area a bad idea can actually become a success And here's a case in this email that it's a bit more complicated Since the mix of tourists in the place he's talking about Granada Nicaragua is of course mostly Latin tourists But also lately an influx of first-world eco tourism to the fact is a lot of disgruntled

[03:06] Gringos are spilling into Nicaragua now because it's a lot cheaper than their original Destination a lot less crowded a lot less dangerous and more laid-back their original destination Of course being Costa Rica right next door to Nicaragua It turns out that so many gringos and first-world expats who've set up shop in Costa Rica for years are now flooding into Nicaragua that even international living is pushing it now But again, I'm getting ahead of myself now if you do happen to visit Granada, Nicaragua, which is a very cool town You'll see mostly Latin tourists because it is a tourist town and a steady stream of first-world eco tourists And whether you know it or not first-world eco tourists are a different breed of tourists all together They're much more educated and worldly than your average Disneyland or Vegas tourist They've been to all the big-time high-profile tourist destinations in the world and they're most often laid-back quiet sometimes

[03:56] Introspective and definitely the adventurous type since you find them trudging through places that are on the u.s. State departments hit list that's hit with an s and they pride themselves on having a very small impact That is a very small tourist footprint, too The fact is if you talk to these guys to a person they'll tell you they just don't like high-volume first-world tourist sites like Cancun and Costa Rica they've been there done that and are sick of it for a lot of reasons Which I don't even have to go into here because you know them already So the question is what if a gringo expat tries to set up a business in one of these places? Well, I'll tell you if there's enough of these guys and gals around at a tourist destination They're the ones that can actually end up being your marketing client target Meaning the locals even the upscale locals aren't your target at all

[04:45] For example, if there's quite a few equal tourists around they're gonna want organic non-gmo Vegetarian restaurants and they'll need camping and backpacking Outfitters too that means portable stoves portable water purifiers hiking gear pup tents mini solar battery chargers Not to mention street bikes and mountain bikes and kayaks and all the gear that takes But I'm getting a little ahead of myself here. So let me get on with this email. He starts with the usual. Hey Johnny I just came across your podcast a few days ago And as I listen that first time I got quite a kick out of the results You shared from that study in Spain about how few non student adults read your conclusion Quote that it's not a good idea to open a bookstore in any country

[05:31] Now as it happens, I was going through my back stock of books from my semi-new almost three years I guess it's not really new anymore bookstore that I own here in Granada, Nicaragua And it is true that if you look at the literacy rates for the country and the region which by the way I contend are extremely optimistic numbers Compared to the reality that opening a bookstore like this would seem like an insane endeavor Just like you said in your podcast now if you factor in how many of these Latins actually read things look pretty grim It certainly wasn't my intention to open a bookstore I was looking for surf when I got held up in Granada What I mean by that is I got held up with some work that necessitated that I stay in one place for a few days

[06:20] Though actually I was held up in the masked man sense of the word to during those few days Well as it turned out I finished the books I had with me and couldn't find anything else and saw an opening a business opening as well as countless other Opportunities and I went for it the bookstore that is fortunately for me It turned out to be a less crazy idea than it would seem on paper What I mean is it worked for me then he says by the way I've listened to all of the iTunes accessible episodes of the expat files and I'm guessing you're in Central America But it sounds like you pretty much make the rounds I hope when you're coming through Granada next that you'll stop in and say hello at my bookstore. I'm really enjoying the podcast I also got a big kick out of your telling the story of Jimmy Coco

[07:06] In fact, we sell his products in the bookstore and we use his Coco at home Great stuff, then he signs off. Keep it up Johnny Troy Oh, and by the way, I should mention here for those of you who might happen to be in the Granada, Nicaragua area The bookstore is called Luca Libro loosely translated as the book fight whatever that means and like I said, it's in Granada, Nicaragua one block east of the Central Park a half a block north on Avenida Cervantes then Troy mentions that you shouldn't look for the street sign because there isn't one Typical Latin America, you know, and of course, he's on Facebook and he's got a website So if you're really interested, just drop me a line and I'll send them off to you And here's my first reaction to this first

[07:52] It's absolute proof that you have to actually be down here looking around with boots on the ground to see the opportunities Because remember what Troy said in his email just three or so days into his adventure in Granada He saw a definite need for a bookstore and a few other business opportunities, too Three days imagine that now you might be surprised but I'm not I've heard that story a number of times not about the bookstore But about other businesses in so many other Latin towns like that So again Granada is not exactly on the high-volume tourist trail at all It just happens to be a nice quaint colonial little city a lot like Antigua Guatemala only smaller much smaller With its own very beautiful historic colonial buildings still intact However me I personally much prefer Antigua why because it's in the Altiplano and it's got that spring-like weather all year round and

[08:43] Granada Nicaragua can be very hot meaning it would be very tough having a chocolate candy shop there You'd spend a fortune on air conditioning But if you're an Antigua, you have no air conditioning bill just thought I'd give you a little comparison there Anyway, I personally know a lot about Bookstores in Latin America since I used to spend a lot of time searching those places out In fact, one of the first things I do when I got to a new town was to ask around for the English bookstore And since I was nearly always off the gringo tourist trail I'd rarely find a decent one and of course that was before Kindle or any kind of ebooks Recently little by little I've ditched my pulp paper library It's just too heavy to haul around and for the last couple years. I've done exclusively ebooks myself now related to this

[09:29] I know a couple of guys who own bookstores in tourist towns that are not gringo tourist towns Latin tourist towns who like Troy Is figured out in Granada? There's enough of a steady trickle of eco gringo tourists to keep the place going in fact the bookstore owners down here Tell me their clients are almost exclusively those type of gringos and though they have a Spanish section in their bookstore It's the eco tourist gringos that keep the place open and another thing I found out about Bookstores in Latin America almost none of them make a go of it completely by selling books They need to have something else to sell a lot of something else And by the way, nearly all of them buy and trade used books, too So a gringo walks in with his copy of the latest Stephen King and he gets a two or three dollar credit on the purchase of A newer used book in the same bookstore

[10:14] but what gringo bookstore owners have found is that they need to have more to draw on the customers like a small coffee shop lunch counter a couple of internet stations with Skype car or bike rental a small tourist agency or even a cigar bar Something other than just plain old books. In fact about a year and a half ago I was in such a bookstore talking to the gringo owner and I said look when are you guys gonna start renting or selling ebooks? I said to the guy, let's face it sooner or later No one's gonna want traditional paper books anymore And your eco tourism clients will be the first to figure that out and a lot of them have already for one They're bulky and heavy. I mean, come on. You have to kill trees to make books, right? And don't give me that recycle bit either You still have to kill plants and trees But this guy was an old hippie a kind of a Luddite gringo who came down 30 years ago

[11:02] And he just didn't see the point in having ebooks and you know a while ago when I first mentioned that to him I didn't know anybody who had a Kindle down here either But nowadays there are at least 20 different ebook readers not to mention palm devices that can read ebooks People are slowly but surely switching over to him So anyway, my advice to anybody who's got a traditional old bookstore your next value-added component has got to be ebooks And funny enough just a few weeks ago I was talking about this very Subject at a coffee shop to an echo tourist type guy who actually did bring his Kindle down Backpacking through Central America with that thing and guess what else he had with him a solar charger for that thing See what I mean about echo tourists. They need that stuff Anyway being that he hadn't been down here long Maybe about a month and a half when I mentioned that ebook idea to him

[11:49] He said you mean you'd go into a bookstore and order your ebooks right off of Amazon there Well, I can do that from a Wi-Fi in a hotel or a cafe internet I said no No, you don't get it you stock like ten thousand or twenty thousand ebooks on the hard drive on your computer in your bookstore And you just sell the downloads for a buck or two apiece to which he said of course That means you got to buy all those books first and load them on your computer, right? And by the way, I was with expat Eddie at the time and he broke out laughing and said man Obviously you haven't been in Latin America too long Have you then Eddie pointed to the building right across the street from the coffee bar and said to the guy You know what that building is over there That's the police station and right next door the courthouse and you see that little kiosk on the corner right between those two buildings Well, if you walk over there, you can buy the very latest in pirated music pirated DVDs and pirated software

[12:40] And you could buy reprogrammed stolen smartphones, too And I'll bet you they have a few kindles with no serial numbers on them either 25 cents and a dollar That's the going rate then Eddie said by the way I'd hide that kindle a little better if I were you why'd you buy a white one? When it comes to tech stuff when you're in Latin America, you should always go with the neutral colors Then the guy said you mean they're selling pirated stuff right out in the open right next to the courthouse in the police station Then Eddie laughed again and said man You're really a babe in the woods that kiosk over there with the pirated stuff is sitting on the best real estate in town Their best customers are the cops the lawyers the businessmen and the politicians Just have a look at that place for a few minutes and watch the suits come up and buy stuff You think they're buying Doritos and gummy bears? Nope. They're checking out the latest DVDs pirated

[13:30] Of course at a buck apiece three for 250 then Eddie winked Adam and said hey, man, this is Latin America You'll figure it out now as a disclaimer here. I'm not advocating you come down here and buy pirated stuff But the fact is there are many situations down here when you want to rent a movie and you really can't find anything But the pirated ones and yes, you've probably seen news up in the first world about the war against pirating Well, it's just a show for the media that no one really takes seriously down here Yeah, they bust a few warehouses once or twice a year and the cops and the politicians get a photo op But after work the cops and the politicians are back on the streets buying pirated stuff for themselves their wives their kids and their girlfriends Too just like the so-called war on drugs. It's lost now. I'm not sure how they handle pirating up in the first world

[14:17] I guess they're pretty strict about it But down here the war on pirating was lost before they even announced the first battle and I'll bet you a Bitcoin that there isn't a single judge Policeman or politician in all of Latin America whose house isn't loaded with pirated DVDs and clothes and software and stuff All right I don't want to stray too far here now since we've been talking a lot about Nicaragua in this show and last week's show too You might think since I highlighted that very nasty article about water pollution and garbage in general in Nicaragua that I don't recommend the place Well, you'd be wrong. I really do recommend Nicaragua for those who like hot weather for one thing. It's very inexpensive It's got a pretty low crime rate. It's got some very beautiful cities and scenery except Managua the capital That's another it hole with an S and basically you only have to go there to fly in and out

[15:06] Anyway, it's also got a very small population for its size So there's plenty of room and believe me there's some very good business opportunities there, too And your gringo advantage is in full gear except I should mention close to the Costa Rican border that's a place where hordes of disgruntled gringos who've had it with expensive gringo saturated and Increasingly dangerous Costa Rica are slipping on through and testing the waters in Nicaragua and a great many of them are loving it and staying there That is if they have any capital or wealth left after being clipped by Costa Rican attorneys real estate agents Not to mention the government and all the insincere jaded locals that you eventually realize or maybe not Are only looking at you a supposedly wealthy gringo as a dollar sign not as a person

[15:53] So as you might have figured where hordes of gringos come Prices and land values soar as well as the number of ripoff artists But so far the contamination of the gringo effect is only seen close to the Costa Rica and Nicaraguan border And though it's spreading it'll take some time and what I said last week about Nicaragua and all the water pollution problems and garbage Disposal problems. Well, you know that applies to everywhere in Latin America except maybe for Chile That's one country that has a pretty good handle on environmental issues for a Latin American country But it's just so damn first world expensive But with the high taxes and big brother moving in I just don't recommend it unless you just want to go on a nice Vacation or you have a ton of money and don't mind being fingerprinted and caught on camera more and more

[16:38] But since we're talking about doing business this time in Nicaragua I have yet another very interesting email coming from a gringo doing business there Now I have to preface this one by saying that this email comes from one of my newer friends a guy that took my expat Wisdom seminar about a year ago And here's this kind of a strange situation in that he lives in Texas most of the time and he flies into Nicaragua once or twice a month to keep an eye on his two fledgling businesses one a chartered fishing boat that he owns and docks Down there and to a small local independent and fast-food restaurant now his two businesses are located in another place I highly recommend for those of you who are considering Nicaragua the town of San Juan del Sur Which is kind of considered the busiest beach spot in Nicaragua?

[17:23] And it's on the southwestern coast and when I say the busiest that's kind of a misnomer because it's only about 18 to 20,000 people in the whole place and growing because little by little it's catching on and for a number of strong reasons Not the least of which is that they've got pretty good surfing there not to mention It's not polished glitzy and expensive in other words even your basic first world fast-food joints haven't hit there yet And that says a lot believe me It's small and not nearly overrun with gringos enough to be too developed and expensive and three you can enjoy that pristine beach life if that's what you're looking for But that's not for me except what I'm on vacation a couple of weeks of hot beach Sun is about all I can handle a year I like the LC Plano, but that's me however if you were into beach bombing it This is the perfect place some people I should say a lot of people just love that lifestyle and by the way

[18:14] I know this phrase might be overused But I have to say it's pretty much exactly like Costa Rican beach towns used to be like 25 or 30 years ago till all the gringos rushed in and you know what happened next now I'm hesitant to use the words getting in on the ground floor because like one wise investment guy once told me He says anyone who uses that term getting in on the ground floor in a business sense Has already missed the boat on the ground floor deals by a few years since like that old wise I'll told me you don't even know you're on the ground floor because there aren't any floors built yet But that aside I know Central America and all these areas pretty well And when I talk about the beach town of San Juan del Sur Nicaragua It is like Costa Rica was about 25 or 30 years ago now

[19:00] You might say what does Johnny know about Costa Rica 25 or 30 years ago when he only came down a little over 20 years ago well I've mentioned a number of times that I've been down here in Latin America over 20 years and when I say that I mean 20 years of a continuous Latin American living and in all that time I've been back to the States grand total of less than 10 days and that was maybe 15 years ago back when first world life was much freer simpler and easier What I mean is before 9-11 and you know when I tell that story people say to me Wow Johnny only 10 days in 20 years You must have really had an important reason for that trip In fact most people guess that I went back for a wedding or a tragedy in the family or something like that But in reality it was nothing that serious. I laugh about it now because the reason that I went back wouldn't hold water today

[19:49] The fact is I went back because I had a list of things I could not buy down here in Latin America for love or money I mean, basically 15 or 18 years ago was before Amazon was shipping around the world before Craigslist or any of that organized internet stuff Oh, yeah back then you could buy things and get them shipped all over the first world But not to Latin America not without a great deal of hassle Anyway, there'd be ground charges and freight charges and air charges and adwana charges and import duties, etc Etc, not to mention things shipped from the first world tended to go missing just ask any long-term expat He's had that experience. Believe me At least they did back then before UPS and FedEx got here and back then my shipping experiences weren't very good either I think I sent for two packages and one of them got here

[20:37] Okay, though it took about a month and a half and the other one Well, you could see it was open and crushed. It was a shipment of vitamins and supplements and yes things were missing I can just picture the guy from the adwana who swiped my green stuff from Gary Nall I wonder what his wife and kids said at the dinner table at night and they open up that stuff and tried to eat it Or fertilize the plants with it or whatever in that respect Gringos who are educated and tuned in live in a different universe than the average Latin person And by the way, the average Latin person has about a sixth grade education Remember which perfectly qualifies him for a government job high-level or otherwise, but that's another story So 15 years or so ago I went back to the States for 10 days just to get a bunch of stuff including Musical equipment all of which these days is available in every medium and large city throughout Latin America

[21:27] And at pretty much the prices you pay up in the first world, too But I digress as usual, but you still might be asking what does Johnny know about Costa Rica way back when? 25 or even 30 years ago in reality the first few times that I was down to Central America I went to Costa Rica because I had a couple of friends and contacts there and that all started back in 1985 about 28 years ago So I was there in person so I know exactly what it was like back then in the beach towns They really were a lot like San Juan del Sur Nicaragua is right now sleepy laid back cheap and a lot of fun Let's talk about the business side of being in a town like that now for those of you expat wannabes and gonna bees Who are looking for a business opportunity with very little capital investment?

[22:17] You really should pay attention to the following email. So let me paraphrase this a little bit, but first let me make a disclaimer I almost always advise against expats opening up restaurants in gringo tourist areas because there's just too much damn gringo competition However, like I've explained in past shows There are certain cases where a gringo restaurant can beat the pants off the local competition so let me get on with this email and you'll get the picture a little better and This one comes like I said from Brandon who came to my expat wisdom seminar about a year ago And who owns two small businesses in Nicaragua by long distance most of the time he lives in Texas He starts out. Hey Johnny. I hope all is well in paradise I've decided to sell my small fast-food restaurant in San Juan del Sur believe me

[23:04] It would be a perfect opportunity for an expat to have a turnkey business Immediately up and running and I said turnkey business not turkey business now Here are a few of the details It's a small fast food type restaurant in the heart of San Juan del Sur And I'm currently the absentee owner and can't devote the time into making it successful Basically, you're buying the location the local employees knowledge the licensing the equipment, etc To have a fully functional food spot overnight I got into this deal with a partner who bailed on me So I've been keeping it afloat to the best of my ability while only visiting once every few months If the place had some kind of a personality and some marketing, there's no doubt. It would be a big success The location is perfect. The food is good. The staff is a hundred percent trustworthy and I'm asking only

[23:55] 9,000 US dollars for the whole thing and I'm willing to negotiate or trade vehicles Bitcoins partial land, etc Now with a little food experience in some gringo work ethic anyone could put the other locally owned fast food places out of business In fact, it's really an expats dream Where else in the world can you buy a fully functional business for less than 10 grand now? Here's the thing. I don't have any monthly numbers on the place Unfortunately for the Nika crew that I have they don't have the ability to keep accurate books Because I only get down to it once every couple of months a friend of mine Has been keeping an eye on the place and I haven't asked him to keep books since he's helping me for free Like I mentioned the buyer is paying for the ease of entering the market

[24:43] Acquiring the equipment with no downtime with the Christmas season kicking up. Now is the perfect time to get in and Of course, I'm trying to keep this simple. No long fancy contracts. No brokers cash only or trade, etc and here are a few more of the details currently there are two employees which is plenty and When the new owner takes over he'll be there all the time So he can be one of those two now as for the competition There are only a few other taco places that compete. It's a fast food So one would walk up order then walk away with the food There are a few bar stools But really nowhere to sit to be waited on and enjoy a meal and I can tell you low cost food is a big deal to backpackers and people just coming through town and

[25:31] That's who our targets are with San Juan del Sur being a low-cost beach town That's the kind of people coming through if the new owner was willing to put on a late night shift They could just clean up with the bar crowd since the place is on the town's main strip Currently it has a very small menu made to order breakfast tacos with homemade tortillas beef and chicken heroes on homemade Pita's and tacos fish chicken or beef. It actually started out as a hero stand But I added all those other items along the way presently My hours are 8 o'clock in the morning to whenever but like I mentioned staying open late would guarantee more sales and the monthly cost To operate right now. It's around a thousand bucks a month including labor utilities rent everything

[26:16] And who are my clients now? Mostly gringos and the occasional Managuan from the capital and the location like I said right on the main strip two blocks off the beach But located right in the middle of town just down the street from the only bar and entertainment joint That's open late into the night now get this if I were there full time I could turn this place around without a doubt but being so far away the place has no real personality Creativity or English speakers on site I have another friend down there who has several restaurants in town And I'm sure he'd act as a consultant for a small fee Until the new owner gets on their feet and gets their bearings if that's what it takes. Thanks much Johnny Brandon Okay, let me just say that I know Brandon. He's a very nice honest guy

[27:04] And you know of course he's committed the biggest mistake in the bar and restaurant business And that is he's not there all the time and from what I can see this is a great deal Because let me tell you a little secret He told me the place is breaking even with him not even being there I guarantee the new owner will make an instant profit just by being there using no gringo tricks at all He says his employees are a hundred percent loyal, but I know latins, and they're only a hundred percent loyal when the boss is there South of the border Down Mexico way you've been listening to the expat files living in Latin America coming to you twice a week from somewhere south of the border Email me the expat files at gmail.com And don't forget to check out expat wisdom calm to sign up for your free reports on Latin America

[27:52] See you next time. No spamos