The International Land Alliance (OTCMKTS: ILAL) is one of the best ways to revive the ongoing Renaissance on the Baja Peninsula. In many ways, Baja’s opportunity is similar to his Costa Rica decade ago, when the investment boom was just beginning. Baja is basically Costa Rica 2.0, but closer to home. Everyone wants to invest in paradise and go somewhere where the cost of living is sustainable and inflation-proof. These macro factors are pushing investors south of the border in droves. ILAL has a marketing team that can effectively capitalize on this trend. They are developers of residential properties in North Baja. The company is one of the few pure stocks growing in Baja. Reviewing the property reveals a heavily discounted real estate value strategy.
Inflation eroding existing living standards
Like it or not, inflation is here and people need to deal with it. A trip to the grocery store costs a lot more than it did a year ago.These are the things we see, but invisible overheads affect almost every product we consume. forbes, income-generating real estate is one of the greatest hedges against inflation. This is why many wealthy individuals hold a significant portion of their assets in real estate.
Reverse immigration trend
So many Mexican citizens want to go to the United States, the land of opportunity, but it’s hard to believe there’s a trend to the contrary. Tired of inflation and the hustle and bustle of life, American citizens who have finished their careers can find real value in Mexico. They want a safe place and want to experience a sense of community. That’s exactly what the ILAL property provides.
sustainability
One of the key elements integrated into development is the notion of sustainability. The developer has embraced the idea of sustainability and incorporated many real estate techniques into the development. It doesn’t need to be connected to the grid to work. They have their own water, power, and sewers. Investors can think of this as the intersection of technology and real estate.
top project
Located on the Baja Peninsula, this place is the perfect place for climate and ecotourism. There are fishing, seal and whale watching, sea kayaking, snorkeling, surfing, scuba diving, hiking, rappelling and ATV. All projects are currently located within 2.5 hours of the border. What makes all these projects so appealing are the residents. The company has been able to foster a thriving community of residents.
The company may have six projects and valuations totaling over $30.2 million, but GAAP accounting requires reporting the lesser of cost or market value, so they should be reflected on the balance sheet. You can not. Oasis Park is a perfect example of the disconnect between GAAP accounting and valuation. ILAL paid Oasis Park $850,000 for him, but the current valuation puts him at $16 million. Their balance sheet may only reflect the $850,000 they paid, but they’re clearly worth much more than that. GAAP accounting inherently penalizes balance sheets for having foresight and long-term vision to win sizable deals years in advance. 30 miles from) must be handled through a bank trust agreement called a fideicomiso. ILAL has a referral source and actually pays clients these fees.
Housing loan section
There is no construction finance business in Mexico. This is an all-cash business, but ILAL has plans to change that paradigm.Last month, the company announced a $5 million Reg D 506(c) A preferred stock offering used to finance a traditional construction loan that requires a 30% down payment and the remainder must be financed by a 10-year mortgage. In the United States, banks provide this type of financing. In 2020, US banks will $385.72 billion construction loans.
While there is a developed market for financing homes with construction loans, this has not always been the case. At some point in the 70’s and 80’s, construction loans started popping up. There was no firm date for it to start in the US, but ILAL is trying to establish itself in Mexico.
To provide potential residents with even more flexibility, the company has developer funding This is available at Oasis Park Resort properties. This lowers the barriers to entry for owning property in Mexico. Making real estate more affordable should increase sales volume. This funding model in Mexico is a white label program and could very well spread to other parts of Mexico leading to a boom in projects. It is clear that it is overwhelming.
management
Navigating the world of international land purchases requires top-level and experienced managers. ILAL is blessed with two industry veterans. They are deeply invested in the company and the insider owns his 37% of the company. Not only are these managers talented salespeople, they are well entrenched in the market and have extensive sales experience. This slide shows most of the deals leading up to this point.
Roberto Jesus Valdes is the founder and CEO of the International Land Alliance. He founded his company in 2013. Prior to his position as CEO, in 2010 he was Master Planner of Valle de Jatay and Master Developer of both Rancho Tecate Resort and Divino Fractional Wine Resort. His accolades include directorship of DUBCSA – Bajamar Ocean Front Resort Master Developer.
The president of the company is Frank Englande. He is primarily the face of the company as he is responsible for many of the marketing materials that drive Baja’s sales cycle. He has his 30 years of experience in the second home market segment and in the Mexican market he has 20 years of experience. He is also well-educated, earning his MBA from the University of San Diego with an emphasis on entrepreneurship and international business. He also holds a California real estate salesperson license.
marketing
Our sales center is in California. Their market is approximately 40 million Californians seeking a higher quality of life while maintaining their cost of living. We have offices in San Diego, Orange County, and the Bay Area. They take a consultative approach to sales, offering bus tours to properties conveniently located 2.5 hours to Mexico.
targets for comparison
Carlos Slim is a Mexican billionaire who has invested in real estate very close to ILAL. In Marina Azul, there are reports that he invested his $500 million to his $1 billion.
The company hasn’t recorded a profit yet, but it’s at a tipping point in its sales cycle, with sales going “hockey sticks.” Lowering the hurdles to buying property in Mexico will certainly add to the sales cycle.
Financial Analysis – Risk
One of the key risks is that the company’s balance sheet is inadequate. This shortcoming is addressed as a structural issue in GAAP accounting. The brutal reality is that developers tend to use their assets to get loans and buy more assets, but Mexico doesn’t have a secondary market to do this kind of loan. So what the company lacks in balance sheet strength it makes up for in its ability to trade. Currently, the cost of living in the United States is high and real estate prices are skyrocketing. This is an ideal tailwind for a company like ILAL. If that risk environment changes, the company is very likely to permeate its business.
The company has 37 million shares outstanding of which approximately 17 million are free float. According to GAAP, it has total assets of $6 million, but a market capitalization of nearly $5 million. Sales last quarter were negligible, but the sales environment is improving and could surprise investors. The company is also offering his 506c for $5 million. When that offering is full, your business is significantly less risky. It’s hard to find a metric by which to value a company, but market capitalization shouldn’t be discounted too low from his $30 million valuation.
Investment overview
Investors who like the concept of using a US-based company to diversify into international real estate should consider ILAL as an investment. California’s real estate boom has spilled over to Mexico, increasing demand for real estate in Mexico. The medical benefits and ease of medical tourism in Mexico are also attractive factors for ILAL’s target demographic. You get the same quality care at 1/3 the US price. The company is grossly undervalued and is trading at a significant discount to its appraised valuation. It doesn’t have a veteran earnings trajectory, but it’s making great strides in that direction. An investment in ILAL is an initial investment in a future where the company will be profitable and monetize the business at every level of the sales cycle.
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