The Language of the Deal

Texas broker builds trust and business with wealthy Mexican investors.

August 1, 2000

Adrian A. Arriaga, CCIM
Broker-owner
AAA Real Estate & Investments
McAllen, Texas
956/682-1111
aaare@ccim.vt.com

www.aaare.com

Deals with foreign investors take time: They have to trust you first.

Mexico lies just a few miles away, yet it’s worlds apart from the Texas border town of McAllen, where Adrian A. Arriaga runs his real estate business.

Arriaga’s keen understanding of the cultural differences between Mexico and the United States has inspired Mexican investors to seek him out. Recently, it helped him cinch a $2 million deal on an underperforming retail center. And it’s helped his company’s earnings soar: His goal for 2000 is $1 million in gross closed commissions.

Arriaga’s company, AAA Real Estate & Investments, is a study in how a small company can serve international real estate clients. The company--which employs his wife and son and a secretary--specializes in property management, sales, and leasing, working with national retailers such as Service Merchandise, Pier 1 Imports, and Applebee’s. But the company has made big strides since Arriaga went south of the border in 1982 and began working with Mexican investors. Today he manages about 300,000 square feet of Mexican-owned property, primarily shopping centers. All the properties are located on the U.S. side of the border in the Rio Grande Valley. He has 12 active Mexican clients; others would be in the market, he says, if more good properties were available.

Selling Mexicans on the value of owning U.S. real estate isn’t hard. Because of the stable U.S. economic climate, Mexicans like U.S. properties, Arriaga says, particularly income-producing ones. Money holds its value better here than in Mexico, where inflation runs about 30 percent a year.

“We create wealth by sheltering the investor’s currency in real estate,” says Arriaga.

Arriga’s biggest challenge has been winning Mexicans’ trust. That takes patience--more than you’d need working with a U.S. investor, he says. Mexicans want to get to know you as a person before they trust you, he says. “I often do business at breakfast, lunch, or dinner. It’s not unusual to spend three to four hours at a meal, but working out a deal that way creates confidence.”

One way Arriaga builds confidence is by speaking his customers’ language. His clients, primarily wealthy individuals from Mexico City, are fluent in English and Internet savvy. But they’re more comfortable conversing in Spanish.

Arriaga is of Mexican descent but didn’t grow up speaking Spanish. “The only D I got in college was in Spanish,” says Arriaga, who has bachelor’s and master’s degrees from Texas A&M University.

Although learning Spanish wasn’t a priority in his youth, he made it a priority for his business, visiting Mexico and speaking Spanish as often as he could. Now bilingual, Arriaga writes property reports for his customers in Spanish. But, he cautions, it takes more than a mastery of the language to earn the trust of a Mexican investor.

“You really have to love Mexico if you want to succeed in business with Mexicans,” he says.

Professional titles, such as Arriaga’s CCIM designation, also help create confidence with a wary foreign investor. So does a sharp image. Temperatures in McAllen can soar to 100 degrees, but Arriaga is one of the few local practitioners who always wears a suit and tie. On Fridays he puts on a sport coat--his idea of casual.

Americans who tackle the trust issue may also need to work at educating new Mexican investors about how real estate transactions work here. Example: The recent $2 million sale Arriaga arranged involved a 65,000-square-foot retail center that needed a face-lift and a new marketing plan. The buyer wanted to pay cash for the property because he feared the 20 percent-plus interest rates common in Mexico, he says. “We [Arriga, along with the investor’s attorney and CPA] finally convinced him to put down only 50 percent and to get a low-rate U.S. mortgage, which also gave him a big tax break.”

After the purchase, Arriaga signed two new anchor tenants for the shopping center--Blockbuster Video and Kinko’s. The property now generates an annual return of 23 percent, which has prompted the investor to buy another retail center with upside potential.

A believer in the power of the printed word, Arriaga hands out 10 business cards a day, whether he’s here or in Mexico. He also sends thank-you notes, a practice he considers a lost art.

Maybe so, but it’s an art that hasn’t lost any of its power for Arriaga.

Jane Adler is a Chicago-based freelancer writer.

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