Algarve Foreclosure Plays, Luxury Demand, and Why I Still Love Lagos

In this episode of Notes From the Field, Ronan McMahon checks in from the central Algarve after more than three weeks on the ground in Portugal, sharing what he’s seeing across Lagos, the Golden Triangle, the eastern Algarve, and beyond.

From booming luxury demand and bank foreclosure plays to strong rental fundamentals and overlooked opportunities on the edges of the market, Ronan explains why the Algarve remains one of Europe’s most resilient real estate stories—and where he believes the smartest opportunities still lie.

Episode Description

Broadcasting from a villa between Quinta do Lago and Vale do Lobo, Ronan uses this dispatch to reflect on what has become increasingly clear over his weeks on the ground: the Algarve remains one of the most stable, attractive, and opportunity-rich property markets anywhere on his beat.

He begins with the central Algarve, where the luxury market continues to strengthen. In Europe’s premier resort belt, high-end villas, luxury communities, and premium rental properties are holding firm or moving higher, supported by wealthy international buyers and a market that remains surprisingly robust despite global uncertainty. Ronan also shares a behind-the-scenes look at a bank foreclosure opportunity he recently uncovered—one that shows how deep discounts can still emerge, even in a blue-chip market, if you’re willing to do the detective work.

He then turns back to Lagos, where his conviction continues to rise. After spending more than a week there, Ronan describes it as one of the Algarve’s most complete lifestyle markets: historic, walkable, scenic, livable, and increasingly attractive not just for vacationers, but for remote workers, lifestyle buyers, and long-stay residents. In his view, the rental story there remains exceptionally strong, and access to the right developer and the right inventory continues to be the biggest edge.

Ronan also notes that while the Algarve is not a “new” discovery story in the way some emerging markets are, there is still money to be made—especially by working around the edges of the obvious market. That means repossessions, overlooked inventory, unfinished projects, and high-quality properties where the bank or seller simply has the pricing wrong.

He closes with a broader reflection on Portugal’s market diversity: while the Algarve remains his most blue-chip play, the Silver Coast and other parts of Portugal continue to intrigue him as more emerging, more under-the-radar stories that may offer a different kind of upside.

In This Episode

Ronan covers:

• What extended time on the ground has revealed about Portugal’s current market
• Why Lagos continues to stand out as a top work-from-home and lifestyle destination
• How the Algarve rental market has remained stronger than many expected
• Why the best Algarve opportunities often sit just off the obvious path
• How bank foreclosure inventory can still create major discounts
• A real example of a foreclosure deal that could be cash-flow positive from day one
• Why the central Algarve remains deeply attractive to affluent international buyers
• What makes the Golden Triangle so resilient
• Why the eastern Algarve and the Silver Coast are also on his radar
• How Ronan thinks about flipping versus holding in high-demand rental markets

Key Takeaway

The Algarve may be mature, but it is far from played out. In a strong, active, blue-chip market, the biggest wins often come not from chasing obvious listings—but from finding the overlooked, misunderstood, or badly priced opportunities sitting just outside the spotlight.

Transcript

SPEAKER_00 0:16

Hello, and welcome to your notes from the field. Good morning. Well, it's it's good morning as I record this. I've my fresh coffee. I'm looking out my terrace to the swimming pool and to the pine forests beyond. It's an absolutely beautiful warm October morning here in the here in the central Algarve. So on Wednesday I upstix from Lagos. I had spent seven seven stroke eight full days in Lagos, and I moved to the the central Algarve. So I'm um I'm renting a villa just outside and between Quinta de Lago and Val de Lobo. So I'm right in the let's call it the the the ritzy heart of of the Algarve. So um lots of luxury cars and sports cars and luxury SUVs and you know 10 to 15 million dollar villas dotted around here. So this is the the heart of the of the ritzy Algarve. But um you know just be before I kind of drill in, drill down on some early stage opportunities I found here, um a couple of general observations about traveling in Portugal at the moment, and then also what um what I found in Algar in Lagos. So first of all, knock on wood and all of that, just the the whole experience of traveling in Portugal for the past three and a half weeks now has been absolutely absolutely fabulous. Everything is open, but very few things are packed. Um up in the north, in Porto in particular, you know, it it's it's a big tourist town. It was it was very quiet, which you know meant a lovely experience spending time there. The hotels up north were running at about, I'd say, less than 20% occupancy, and maybe 20% of what you'd expect us to pay. So I got to stay in amazingly beautiful hotels for a fraction of what you'd expect. Um public transport, I just took one train. I took the like five, six-hour train from from Porto down to Albufera on the Algarve. That was just a dreamy experience as as well. I booked a first class ticket. Strangely enough, the first class ticket was 9 euro cheaper than the um was 9 euro cheaper than the economy ticket, and I couldn't understand how any of the pricing worked because it looked very odd. My ticket was 77 euros and my wife's was 45. Um I I couldn't understand how it worked at all. Um because the it we seemed to be undercharged or something, but anyway, for for less than 60 euros each, we traveled by train the full length of Portugal in first class carriage, which was practically empty. Um, and the train in general and the the kind of the whole experience of getting in and out of the stations was also very, very calm and very distant and very very comfortable. Um here here here on the Algarve, things are you know, basically everything is open, things are things are busy, not things are vibrant, feel vibrant, although not nearly as busy as you'd you'd normally expect. And I think that's mostly locals and expats who are living here. I think the the actual number of tourists um is is is way, way down. But there's still a very, very big expat community living here from right across Europe and the world. And also there's a there's a growing number of people who've escaped places like Ireland and the UK and Scandinavia. They're escaping winters and they're escaping lockdown, and they're coming here and doing work from home. So that big that big trend is really, really kicking in. People are getting really, really tired in parts of northern Europe of this kind of game of whack-a-mole with with with restrictions. Um so Lagosh is as anticipated emerging as a kind of a work from home destination. And that makes absolute sense to me. I was absolutely charmed by my my my week there, where you know I I just got to really for the first time over an extended period of time experience what it's like living there and spending time. And it's it's it's a wonderful place. You have you have sea views from quite a few apartments, which personally is is important to me. You have you can easily walk to beach, walk to Old Town, walk to convenient shopping, walk to marina, and also Uber is widely available, you know, so you can bounce around for two, three, four, two, three, four euros. So it's really easy to get around without a car, which is which is really convenient. Um and the the the the old town is charming. Um I enjoyed spending time in the marina, the the beaches are fabulous. It's just that really, really nice vibe of a mix between a historic town, a beach town, a normal functioning town. So it's not all it's not all tourists and it's not all transient in that way. So it feels like uh like it like a charming beach town. So um so I'm as excited as ever about our opportunity there. Um there's a couple of developers who have projects at an advanced stage that I'm feeling very enthusiastic about. And in theory, they've agreed Rita member only pricing and and terms. So that will those deals will take shape over the next kind of three to six months as the developers get their final permits and and and get ready to get ready to launch. But the the the rental market is the the the the the the the rental market there I expect will um will just bounce back like a like a spring. You know, the the the the rental market, you know, it's it's it's stayed okay, you know, even in this this kind of covet era. It's it's down significantly, obviously, but it you know, this isn't a tourist destination where where things have gone to zero far be it, you know, up up north certainly there was a much more sign of kind of lack of people. Um, but down here, you know, just as I've always said, it's just got that, it's just so attractive and so accessible to to so many people. And you know, when I think back to the various times I've I've been here and there's just been accommodation shortages. So overall, in terms of certainly in the in the peak times, it it it operates from a position of um of accommodation shortages. Um so in interesting times, um very little distress. I came here hoping to maybe find some distressed opportunities. There's some UK sellers are are feeling distressed because they've they're feeling on uncertainty about what's going to happen with with Brexit. Um some of them just want out, but in general, the market feels very very strong and and very stable. So it's a it's a market that for us to get those kind of Rita advantage and really, really excited Rita deals, we really need to kind of look around the edges where we're we're we're looking for the most overlooked or misunderstood opportunities because they're this this isn't a this isn't a this isn't a new hotspot that's going to be projected into the into the international conscience, conscious, you know, this is a place that that's here and has arrived several decades ago. And I guess one of the one of the areas where there is where where opportunity still pops up and where opportunity can be really, really exciting, is in that overhang distressed inventory from the last crisis. So the last crisis, the great financial crisis, it kind of ripped through Portugal probably late 2009, 2010, and 10. So it was it was relatively late in in arriving here. And at that point, there was there was lots and lots of completed and unsold inventory. So this could have been everything from one-off villas to apartment complexes to standalone homes. And and then there was also some on unfinished, unfinished inventory. And in fact, the the villa that I'm talking to you from is one of those one such villa that kind of sat incomplete until um my contact down here, Chris White, with with some partners, um, renovated a row of five of them and turned them into these fabulous, fabulous, spacious homes. But the the the play and the the idea that I've been digging at here here in the in the central Algarve is this bank foreclosure inventory. Um it's it's stuff that's just been on the bank's books now in in many cases for 12 or 13 years. It takes an absolute eternity to get through the bureaucracy of the banks, the bureaucracy of the legal, the legal process, the will to sell. It's just it's just a sur it's just surreal, you know. And that this is this is not unique to Portugal, it's common across um across across most of Europe, just the the the slow moving wheels of dealing with foreclosures um for for a whole variety of reasons, whether they were legal or you know the banks not wanting to be seen to being vultures and kicking people out of their homes. Um but there's deals deals pop up and um deals pop up and they're offered frequently directly directly from the banks. Um so by way of by way of example, two days ago um I was meeting I was meeting um I was meeting the bank about my own mortgage for my property up north. Um some other contacts joined us for lunch and we were kind of shooting the breeze with some of the senior bank people, and they just mentioned it just came up in conversation that they'd just got their hands on five repossessed condos in one of the most um in one of the most prestigious communities in in all of the Algarve. And they were like casual, casual, and like, you know, the the whole thing is just surreal because they just they just don't recognize what they have or they don't even really seem to care or get in any way, you know, emotional about it. And when it gets to this point, banks will frequently offer 100% finance on these, on these, on these repossessions. So they do nothing with them, they do nothing with them, they do nothing with them, and then they say, right, we'll just we'll basically just give them away to someone who'll take on whatever the the outstanding the outstanding mortgage from from the previous party was. And the so we we we got word about these uh about these bank foreclosures um straight in the car over to over to the the resort, which was just like seven minutes away from from where our meeting was. And what we found is just this this oasis, well, it's just this super high-end condo community within the overall super luxury master planned resort. Um this bank we're we're offering five of these, five of these, five of these condos at um at this kind of bank repossession um terms. We visited them all. They they're they're a mixed bag. You know, again, just the way this all works is is just surreal. You know, the bank literally just gave us this huge bag of keys, so we're we're left to fend for ourselves. Like they this is why this is what creates the opportunity. It was just so much like kind of detective work to even figure out which condos they were they they they were talking about. And what was really interesting is once we got in there, we we said, oh, this must be it because the garden is completely overgrown, and you can see the kitchen has been ripped out, etc. etc. And then we'd find this wasn't one of the the the the apartments. So what what we've kind of deduced through detective work is that these five are the first and that there's going to be more to come because there's certainly very apparent signs that that there's a lot more, that there's a lot more in this community that that that that have been abandoned. And um, you know, the the the community in general is is looking fabulous. There's no evidence of distress with with the neighbors, and then you just see these random um condos where the ground floor units have these big gardens and everything is completely unovergrown. But the the the numbers when we when we got in of the five, you know, it it was a mixed bag. Two looked like a a really, really compelling deal. Three were just a bit weird and didn't look like that great a deal. But let me give you the kind of the headline on on how the the the most attractive one looked. So the most attractive one had an asking of about 400 and had a had an asking of about 400 of about 450 grand. Um it's in need of it's uh an apartment of about 1400 square feet over two levels and with uh with with a root with a roof terrace, also has about three different terraces, so you get morning light, evening light. Um so this this 450, this condo tarted up like in in pristine shape. I'd expect to sell for you know somewhere in the region of of 570 or so. So already there's there's there's there's that kind of 120 grand potential below market. Now it it needs some work, it needs the the kitchen to be redone, um the the the ceiling in in the hall area, someone has clearly knocked through, you know, all the usual stuff you need to do, an engineer would need to go through that and make sure that that's not a leak problem and all the electricals are but are in good shape. So all that aside, we are excuse me, all that aside, from the get-go, it looks like a potential 120 grand um um discount. Now we have no idea, excuse me, we have no idea if that those prices are firm with these bank repossessions. Sometimes they can be sometimes they can be absolutely firm, other times they can be highly negotiable. So the only way, um the only way you know to to what extent they're they're they're firm or not is to excuse me, is to make an offer. So I've gone ahead and made an offer of 350, 350,000 euros on that one, which I thought was the the best apartment for the money, and um I'm gonna see what's gonna happen. And my thinking here is my thinking here is that there's probably more distressed inventory than just the five. So um I'm gonna try and go ahead and make a deal on this one and then see if the bank is is open to to negotiate Rita member pricing on the rest. It's really interesting because these banks just don't they just don't pay broker commissions or they pay such a tiny broker commission that no one wants to deal with them. The whole thing is just absolute insanity, it just makes no sense. You know, they'll they'll sometimes sell a property for 15% less than it could be worth, 15 to 20% less than it could be worth to save uh an extra 3% commission to a broker. But it's that insanity that's creating the opportunity. But let me just kind of give you the top line on so the play here would be to go in, tart it up. If if let's say I can get it for um get it for under 400, let's let's say I can get in, buy it for 380, have it tarted up for uh for another 20, all in for um all in for for 400, you know, that puts that would put put put me a good 150 grand or so below market um that kind of advantage that we look for in Rita that you're you're you're making money the the the the the the the moment you buy. But the beauty about this play is you're you're into it for none of your own money except for closing costs and except for those kind of tarting up. So in this case, you're probably going to be looking at, you know, maybe all in 50 to 60 grand to cover um to cover the the improvements, to cover the minor cosmetic fixes, to pay your closing costs. And but immediately you would be cash flowing positive because this would just be as super blue chip a rental as as you can find. So I'd figure somewhere in the region of maybe 48 to 55 grand a year in rental income. So let's just use the lower end of the range and say 4,000 a month in gross rental income. The full costs of ownership, the mortgage, the HOA, the property tax would come in at about 1,600 euros. Euros per month. So you can cash flow positive right out the right out the gate with these. And the the strategy is to go in, create a strong rental stream, get bookings, and then resell it. So resell it as a as a second home for someone that will more than pay for itself, even at that much higher valuation, nudging up towards 600 or so. And um, so this is cool. So I I just wanted to bring you behind the curtain of what's happening there. Um I I expect to get some kind of clarity next week on on whether my offer will be accepted or how how how high we'll have to go to get it. Um here. But um as soon as as soon as I get that clarity, um I'll I'll I'll took a look I took a bunch of videos, so I think it's going to make for a for a very interesting case study, and hopefully we'll get access to a bunch of other foreclosure, foreclosure inventory there. So very exciting. Um to summarize, go in and put no money down except your closing costs, tart it up, hopefully be in a position where you're 150,000 euros ahead, where the amount of your mortgage is 150,000 euros less than the revised value, and then generate that super strong positive cash-flowing rental income with a view to selling on as soon as someone comes knocking on your door and pays that full sticker price. So this would be one in terms of my strategy, you know, some of the some of the properties I flip, I flip as soon as I as soon as I double my money, you know, I kind of go into properties if I'm looking for a quick exit, and I say, as soon as someone comes along, and if I'm into a deal for for 50 grand, as soon as they offer me 50 grand more than than I paid, boom, I'm done. I'm walking away with doubling my money. This this type of deal would be a I'd I'd take another strategy. I would only be looking to sell when I get paid top dollar because just the the rental income is so strong. This is so blue chip, it is just one of one of these assets that I'd that I'd happily keep keep forever. Um so that's it. Just wanted to bring you behind the the curtain of what's been going on here in the Algarve. I also just had a fun couple of days um in the east, in um in Cabanas, in Tavira. Overall, um I've you know it's just been wonderful spending time here. So just my my perception of it as being just a great place to spend time has been you know elevated even further because I've never had such an extended period of time here. And um, and I'm heading off up north, back up north to the silver coast now, where uh where I'm just gonna be kind of finalizing the details on my own apartment purchase up north there, where I bought a um a beachfront apartment where from my terrace I can hear and see the waves crash and it's um it's beautiful and it's empty and it's isolated up there. It's um it's a very different proposition to the Algarve. Um certainly that the rental income up north is nothing at all like um like or north of Lisbon is nothing at all like like what it's here. But I'm also spending some time with some developers and big landowners up there because again, up to the last crisis, there was there were a lot of things happening um or slated to happen up along that silver coast. So a lot of things that kind of got put on the long finger a decade ago are are are starting to happen again. So I'm excited about that part of Portugal as a more emerging as a more emerging destination. But uh but for now the Algarve is as blue chip as as you can get, blue chip in good times, blue chip in crisis times like we're like like we're we're in now, and there's a a lot of money that can be made by looking around the edges, by looking at the opportunities that that kind that that few people are few people are looking at. Um so it's it's it's it's an active busy market, so it's a place where you particularly need to go a bit off the beaten track in terms of thinking and strategy to to to bag those super home run investment opportunities. But if you're just looking for a a really nice condo that you know generates 30 or 40 grand a year in rental income, absolutely you can you can do that all day here in in places like Lagosh.