Offshore Real Estate Investments

[Jill]

I see a lot of great posts here about real estate investments. And I see a lot of great posts in the asset protection sub-forum. But I don't recall seeing a lot of threads about offshore real estate investments. While the asset protection aspect fascinates me, I'm actually just as excited about the opportunities for passive income, as well as appreciation possibilities.

Any of you guys looking at/involved in this?

Moreso than anytime in history (of the US anyway) people are expatriating due to various motivations, primarily cost of living and punitive taxation/regulation. But regardless of the reasons, it seems to me that real estate in formerly less-developed destinations is a great opportunity!!! $45k in my home market, Dallas (one of the cheapest real estate markets in the country), will get me a run-down 2-1 foreclosure in a questionable part of town. But it will get me a beach-front condo in Uruguay or Brazil or a huge building lot in an ocean-view gated community in Costa Rica or such. I don't purport to have even a majority of the answers here. But what am I missing?

I know that this could be 20 different threads. . . (and I hope it WILL be) . . . But I'm excited about stuff I'm seeing in panama, costa rica, Belize, Nicaragua, brazil, Columbia, Uruguay, and several others. I may not want to live in Uruguay, but thousands of south Americans flee to the beachesnther every summer for vacay and pay silly prices to rent beach-front properties!

So what do you guys think?

 

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[sswift]

I think its def a thread topic! let me know how it goes! I have yet to master US REI so im trying my best here (and its difficult) not to go on a google search binge for south African RE.

 

[andviv]

Panama is going through a condo craze, as far as I know.

Cartagena, Colombia, is experiencing similar growth.

I've heard of a community formed by americans that moved to the Ecuadorian beaches; they use the dollar over there and the RE prices for beach front properties are very decent as well, and the flight is not totally crazy.

 

[Luke12321]

Costa Rica has a .25% property tax? Pretty sweet if so. I was just searching around a bit on google. Personally, I would be a bit hesitant to invest in a single unit (condo, house, whatever) but would be more attracted to buying an entire complex through a partnership with other investors. (Of course, ideally with someone with offshore REI experience)

Just looking into the future, I can say that I think the younger generation is going to be more willing to move than ever. If things get even rougher and they near retirement, I personally think they could be looking for a vacation/retirement spot to ride off into the sunset in.

I look forward to learning more on this topic and thanks for bringing it up Jill.

 

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[randallg99]

I personally like Panama and if it weren't for my close family ties I think I would be living there now.

The Panamanian bond rating was just last week elevated to investment grade status.
Panama Debt Rating Raised to Investment Grade by S&P (Update1) - Bloomberg.com

this is a post from 2 and a half years ago and I am still bullish for long term prospects. If there is one thing I would add is that the medicine tourism has skyrocketed beyond anyone's expectations thus further driving the economy.

http://www.thefastlanetomillions.co...-foreign-real-estate-investing.html#post14559

this is not in any shape or form a solicitation for investments or home sales but just a response to a couple of people who wanted to know more about my investments in Panama... I am sure others here have either looked and/or bought foreign real estate and I for one would like to hear their experiences.

I originally met with someone who was a mutual friend through 2 different friends from 2 different periods of my life... this was comforting in itself, knowing that I had knowledge of his history. He contacted me knowing my real estate investment status... This was also a period in my life I wanted to create a divergence in my investments since they were mostly equities, retail businesses and local real estate. After some conversation, I was convinced to visit Panama with him and spent 5 nights. We had a lot of fun at night and during the day it was intense with facts, figures, interviews and note taking.... a deposit was formed to buy 2.5 kilometers of beach front property for $6mil USD. (Just for reference: several hundred feet on the NJ shore can suck up 6mil pretty fast) The end result was I one of the first investors who participated with his group and I invested in this project long before there was even a prospectus. I invested in this person's character and in his drive to make the project succeed.

Before choosing Panama, I have been all over Europe, many Carribean islands, and Central America. In each country and vicinity, I had always inquired about real estate ownership. The problems were consistent throughout many of the countries- foreigners are not allowed to own land, or the taxes were prohibitive, or perhaps the process was terribly tedious, or just different laws and systems made it very uncomfortable to do business because the security of law systems. People are probably not aware of this, but in France, you can be held guilty until proven innocent and you can be held even for suspicion... Even in Panama, the deed-title system was non-existent just up until this year and this at first concerned me. It is for this reason that I absolutely, positively do not like Mexico for real estate ownership because you don't get to own the land unless you are in fact Mexican...

Since I do not trust governments in general- laws in USA are even passed on a dime's notice- and other gov'ts tend to call the shots as needed at anyone's expense, it was imperative that I went with as stable a country as possible. Panama's history is that of stability minus the Noriega years, but in general, the laws are upheld, the courts practice due process and the police are not corrupt. This starkly contrasts many of Panama's neighbors' police and law systems.

So a quick rundown of the existing project- several hundred hectares along the beach with approvals finally certified by the government this past month for several hundred homes and town homes. Next in the project is a development for a marina which will be built to accomodate yachts up to 150 ft. And this project just very recently sold a third of its equity for 15 mil USD of which the funds will be used to develop this marina without any need to raise or borrow funds. So to say we are making money with this project is a vast understatement.

Original projections were to sell moderately priced homes at about $150-200 per meter. Now they are conservatively projected for high end, 2000 sq ft homes, at $500 per meter. The Master Plan looks like something right out of a high end Florida yacht club.

Important factors that made Panama appealing to me:

1. taxes - American citizens are not taxed for any income. Many of the real estate taxes are abated. This will probably change within a generation, but fact remains it is easy to make a living.

2. economy - it is a vastly growing economy mostly due to young population and the canal expansion. Estimates to become the largest tax free zone in the world are rumored... (it's already 2nd largest behind Hong Kong)

3. infrastructure - Americans occupied a large part of panama city for many years after building the canal and had only recently left... plumbing, water systems, electricity, phones, cable, all very similar to American infrastructure. This was a major problem in many of the other societies I considered around the world. New developments still did not have running water after 1 year of completion in a couple of areas I visited elsewhere in the world.

4. roads - highways, bridges and even toll booths are taken for granted... some of the latest technology around the world in bridge construction can be found with the beautiful spans in Panama... Interestingly enough, the road system was in itself was the most discouraging part of Costa Rica. I couldn't drive for 10 minutes anywhere in the country without risking breaking off an axle in a crater or hitting a cow...

5. hospitals - most advanced in Central America. Life expectancy is very consistent with US.

6. schools - literacy rate is higher than in US and just about all of Latin America. Many Latin American leaders were educated in Panama and the university system is highly regarded

7. politics - stable government is scrutinzed by world powers due to importance of canal. Due to economic strength, Chavez was basically laughed out of Panama.

8. weather - Panama is located outside the hurricane belt and the weather is consistent year to year.... the rainy season ends in November every year.

9. banking - Unknown to many people, and even shocking to me when I saw a different bank high rise on every corner in Panama City, Panama has one of the largest banking systems in the world and has for a century. The banking secrecy laws has attracted a lot of wealthy people and companies to work and invest in Panama.

10. accessibility - nonstop flights from Newark, NJ daily get me there in 5 hours and a 1 stop flight from Phila gets me there by 1pm (but 7.5 hrs)

Hope this answers questions... after proofing it, I think I made myself the tourist/economic minister for Panama.... and to be perfectly honest, if it were not for the principal of this project, I would have never have considered Panama.

Currently, we are in pursuit of more property in a very remote area that will take a few years to cultivate.

let me know if you have questions-

 

[LesG]

Personally I'd stay away from beachfront properties.
The sea level WILL rise. It's just a matter of when.

 

[hatterasguy]

Like anything you need to do your homework, stuff that looks good on paper from 3k miles away may not look so good when you get their.

Heck I'm having enough trouble building in towns a few miles away.

 

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[BPA]

Personally I'd stay away from beachfront properties.
The sea level WILL rise. It's just a matter of when.

For the last century the average sea level rise has been 1.8mm per year, the worst case scenario predictions put sea level rise for the current century at an average of 5.9mm per year with most hovering around the 2 to 2.5mm mark. I wouldn't say this is cause to completely write off beach front property....

 

[LesG]

For the last century the average sea level rise has been 1.8mm per year, the worst case scenario predictions put sea level rise for the current century at an average of 5.9mm per year with most hovering around the 2 to 2.5mm mark. I wouldn't say this is cause to completely write off beach front property....

One of us is at a minority of belief. RealClimate: How much future sea level rise? More evidence from models and ice sheet observations.

Guess that is why that say pass performance is no guarantee of future results.
I just goobled sea level rise predictions 2050 and this one at the top says 5 Meters in 40 years. I've heard worst in documentaries. Later.

 

[Jill]

Yeah, I don't want this thread to devolve into a global warming debate. So let's assume that any prospective investment property would be sufficiently set back from and/or elevated from the high tide line. K? Sooo, moving on....

Like anything you need to do your homework, stuff that looks good on paper from 3k miles away may not look so good when you get their.

Heck I'm having enough trouble building in towns a few miles away.

Of course I would want to see them first, Hatteras. In fact, in the name of due diligence, I think my research and analysis would probably REQUIRE me to visit a number of these beach locations, don't you?! :smxB:

I find places like Columbia and Nicaragua and Uruguay interesting because public perception has kept the demand, and therefore prices, pretty low. I like Belize because they speak English, and it's a short flight from the US. The capital gains and income tax rates in all these locations are extremely low or non-existent. So if you wanted to buy several in different places when you find good deals, then you could buy them all, rent them out as vacation rentals, then decide later which one to keep for yourself. By doing this, you could even use your self-directed IRA to buy them, as long as you didn't use them for personal use until retirement age.). Panama is one of the most advanced of the Central American locales, but has already run up a bit in price. Then of course there's Costa Rico, which frankly, is not much cheaper than real estate in Dallas (if you want a gated community near the beach). But, they just completed the highway to access the southern part of the country this spring. So I think it's still pretty cheap there.

Any of you guys already have investments away from home?

 

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[LagunaLauren]

I met a developer who is planning on creating resorts in Costa Rica. I also have a friend who bought a beachfront vacation home there. Costa Rica could have strong possibilities. My neighbor is a doctor from Columbia. He always talks about how incredibly dangerous it is, so I would probably shy away from there.

Personally, I don't have an interest in investing in Latin American RE for investment purposes. I would have concerns about stability, economy, government, laws etc. not my thing, but not to say there aren't opportunities there.

 

[Jill]

. . . My neighbor is a doctor from Columbia. He always talks about how incredibly dangerous it is, so I would probably shy away from there.

Has he been back there in the last couple of years? I was talking to Andviv (who is from Columbia) about this, and he agrees with a recent newsletter I read from The Sovereign Man that is it MUCH better, and that this very stigma is what has kept the prices low. I'd be curious to hear his perspective on this point of view.

Personally, I don't have an interest in investing in Latin American RE for investment purposes. I would have concerns about stability, economy, government, laws etc. not my thing, but not to say there aren't opportunities there.

I would definitely share your concerns on a handful of the places I mentioned, such as Nicuaragua, Columbia and even Panama. But I think the US has seen LOT more instability in the last 200 years than either Belize or Costa Rica has. It seems that neither is a particularly strategic piece of land for anything related to politics or trade, so everyone leaves them alone!

Any of you guys know anything about the history of stabity/politics/warfare in those two countries that should concern me?

I'm also looking at places on the periphery of Tuscany, and the region directly to the north, Emilia Romagna. Very beautiful, hilly countryside, that just oozes with history, culture and commerce. I would personally find it much more cozy to retire there, personally (hour from skiing the alps, hour from the Med, but you can still have your villa on the hillside with your vineyard out back . . . ) but as with the US, I'm actually more concerned about the overall economy of the EU right now than I am with Central and even South America. While the Euro/$ exchange rate makes an investment there more appealing than anytime in the last 6 years, I would still be very anxious about it.

Then, there's New Zealand, which seems to have exploded to the top of EVERYONE's list here lately . . .

Sigh. So much to think about as I head to my pool float for the afternoon . . . :coolgleamA:

 

[hatterasguy]

A few years ago offshore stuff really excited me, but the more I looked into it the less I liked it.

First you can make just as much money closer to home, distance still equals hassel and can create problems.


Secondly a lot of those country's have some very tricky laws, that you really, really need to know. I forget the country, but I remember in one builders were just taking land and building on it, than selling the condo's to foreigners. This worked until the original owners came back and claimed the land with the condo's. According to that country's laws its within their rights to do this. They don't exactly have "title" like we do here. Lots of little stuff like that, and you can't always trust a local lawyer to help you.

Like I said before its an eye opening experiance for me because I'm looking at projects in other towns of CT. Just going to another town creates a bunch of different issues.

I just don't feel the gain is worth the additional risk.

 

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[LagunaLauren]

Hey Jill-My doctor friend goes back to Columbia several times a year. He still has family there. He says every time he goes back he's on guard and feels unsafe. I'm really not up on laws, government, economy of any countries south of us. Not my cup of tea. I'm right there with ya, though on a villa in Tuscany! Maybe we can be neighbors!!

 

[Jill]

I just saw your response today for some reason, LL. Interesting feedback on Columbia. Good to know.

I guess part of the reason I find South and Central America to be interesting prospects is that there don't seem to be the millions of recent Carleton Sheets graduates clamoring for all the same deals like you do Stateside. You also don't have to compete as much with the ultra sharp, well-connected types like the Laguna Laurens of the world!! Most people just don't really ever even consider investing offshore, either out of fear or (as in your case) disinterest.

But we'd love to be your neighbors in Italy!!!!

 

[GlobalWealth]

Since it hasn't been mentioned yet, foreign real estate is one of only 2 asset classes that you don't need to report to the IRS and the Treasury as a US citizen. The other is precious metals.

It is a good way to diversify your asset holdings without the intrusive eye of big brother looking over your shoulder.

Randall mentioned the medical tourism. I have a friend who is developing a project in Costa Rica for this purpose. He has already built a hotel, restaurant and spa. He is in process of building houses and medical facilities. This is going to be a huge trend in the future.

With the cost of healthcare rising in the US, and continuing to do so now, more and more people are going to look elsewhere for healthcare. Americans arrogantly believe that their own medical system is the only good system in the world, but this just isn't true. I have been to the doctor a few times in Estonia and the care is very cheap and very good. Recently we got braces for my daughter and the cost was about 1/4 the cost in the US and the care was excellent. This is a trend that will continue.

I am travelling to Argentina, Uruguay and possibly Chile in Dec/Jan to determine if I want to live there. If so, I am moving to one of those places and can guarantee I will be investing locally. I am also planning (still in planning phase, hoping it works out) a motorcycle trip from NC to Tierra del Fuego early next year. I will be visiting many places along the way and investigating opportunities along the way.

 

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[Chitown]

Global,

Your colleague in Costa Rica...is he a local or someone who went down and immersed himself in the environment and built a network.

Thanks.

 

[GlobalWealth]

Global,

Your colleague in Costa Rica...is he a local or someone who went down and immersed himself in the environment and built a network.

Thanks.

A bit of both. He is from the area, but lived in many places around the world before going back and starting this project. He is a very educated and well connected guy.

 

[LagunaLauren]

I guess part of the reason I find South and Central America to be interesting prospects is that there don't seem to be the millions of recent Carleton Sheets graduates clamoring for all the same deals like you do Stateside. You also don't have to compete as much with the ultra sharp, well-connected types like the Laguna Laurens of the world!! Most people just don't really ever even consider investing offshore, either out of fear or (as in your case) disinterest.

But we'd love to be your neighbors in Italy!!!!

I agree that there could be huge opportunities in South America for exactly the reasons you cited. Personally, I've never looked into it.

Thanks for the complimentary, yet grossly exaggerated "ultra sharp, well-connected types like the Laguna Laurens" comment...:smug2:

I'm serious about the Italy thing. How about you get a home in Italy and we'll get a home in Monaco or Nice, France and we'll share!? xo

 

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[kwerner]

I am travelling to Argentina, Uruguay and possibly Chile in Dec/Jan to determine if I want to live there. If so, I am moving to one of those places and can guarantee I will be investing locally. I am also planning (still in planning phase, hoping it works out) a motorcycle trip from NC to Tierra del Fuego early next year. I will be visiting many places along the way and investigating opportunities along the way.

Hey Bobby -

Just out of curiosity, were you able to travel to the above mentioned countries and if so, did you make a decision on living there? Thanks.

 

[GlobalWealth]

Just out of curiosity, were you able to travel to the above mentioned countries and if so, did you make a decision on living there? Thanks.

No, I didn't make the trip. It is now planned for this summer. I am still trying to sell my house in NC. If it sells by June, then the plan is to live for the summer (their winter) in Uruguay.

 

[Jill]

Hey K ~ I just saw your note for some reason! I'm still looking at South and Central America. In fact, barring anything unforseen, I'm getting ready to pull the trigger (FINALLY) on a couple different investments down there.

After a year of researching (since my initial post), I'm still looking at Nicaragua, Southern Costa Rica, Northeastern Brazil and coastal Ecuador, all for different reasons. I still like Belize and Uruguay and even a few pockets of Mexico. If you have any questions about any in particular, let me know. My goal is to spread my currency and market risk to other areas outside of the US. And these areas (Brazil in particular) seem to have some real growth potential over the next few years. I can't see living in Brazil personally (as I don't speak Portugese and it's a 10 hour flight from Dallas!) But I think it's the safest investment bet, of those I'm looking at.

Financing is much more difficult (and costly) to get than here at home. But I think you'll find that since the economy has been pretty thin here (where many of their investment dollars originate), it has made developers and sellers more likely to provide financing themselves.

 

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[Tony71]

This is an interesting topic, I'm in the real estate marker have several rentals but also looking overseas. I have heard Brazil is a good investment, my friends have gone there and loved it, also have a friend from there and he has told me there are good investments there too.

Keep us posted as what you invest in over there.

Thanks!

 

[CEBenz]

Hey K ~ I just saw your note for some reason! I'm still looking at South and Central America. In fact, barring anything unforseen, I'm getting ready to pull the trigger (FINALLY) on a couple different investments down there.

After a year of researching (since my initial post), I'm still looking at Nicaragua, Southern Costa Rica, Northeastern Brazil and coastal Ecuador, all for different reasons. I still like Belize and Uruguay and even a few pockets of Mexico. If you have any questions about any in particular, let me know. My goal is to spread my currency and market risk to other areas outside of the US. And these areas (Brazil in particular) seem to have some real growth potential over the next few years. I can't see living in Brazil personally (as I don't speak Portugese and it's a 10 hour flight from Dallas!) But I think it's the safest investment bet, of those I'm looking at.

Financing is much more difficult (and costly) to get than here at home. But I think you'll find that since the economy has been pretty thin here (where many of their investment dollars originate), it has made developers and sellers more likely to provide financing themselves.

You will of course hold a fastlane conference there next winter right? Hmm maybe call it caipirinhas and pancakes in Brazil?