International Real Estate Investing Profits
How To Pocket Global Real Estate Investment Profits In The Current Climate
Oct. 5, 2009
Panama City, Panama
PLUS:
- Do You Need An Offshore Trust Or Bank Account? Weighing The Costs And The Benefits Of International Asset Planning...
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Cash In Now On The New Panama!
From Third World Hub of the Americas to pivotal First-World center of commerce, travel, banking, and tourism....
New President Ricardo Martinelli has big plans for transforming this little country...and he's pushing ahead quick!
Panama is a land of opportunity, and Martinelli's Plan is about realizing as much of it as quick as possible. We're benefiting every day from the many advantages of living and doing business in this land of peace, prosperity, and growth.
Here's how you can, too
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Kathleen is feeling a little under the weather today. She leaves us, though, with a classique, an essay originally published last June.
Dear Overseas Opportunity Letter Reader,
"It seems the whole world is watching and waiting for the 'best' deal before making a real estate buy right now," writes resident global real estate investing expert Lief Simon.
"With few exceptions, global real estate markets have slowed or stalled. The speculators are mostly out of the game. Investors and the end-users (people looking to buy a place to live) are in the market but moving slowly. They are shopping, circling like sharks in some cases, waiting out the sellers. They're watching for absolute collapse.
"This is all healthy and part of the long-term cycles of global property markets. The trick is not to wait so long that you miss out altogether.
"A reader wrote this week to say that he likes Uruguay. He's been shopping in this country for four years and knows it well. It's a buyer's market right now, he explains. Great deals everywhere for the picking. Still he isn't buying. Still he's watching.
"I met another reader years ago at a conference in the Dominican Republic. He was very upbeat on the real estate market potential of that country. He'd been researching the opportunities for two years, but he hadn't yet made a move. He was waiting for 'the' deal and was paralyzed by the fear of making a move only to have another, better buy surface later. As we got to know each other better over the course of the conference, it came out that, before the Dominican Republic, he had been looking in Costa Rica. After four years of research on the ground in that country, he'd finally decided that the market had passed him by. Prices had risen too far.
"In both cases, had this reader bought something within the first months of his research, he could have been in and out, bought and sold, and realized healthy profits, in less time than he ultimately invested in research. In the two years from the time when the gentleman had begun scouting the Dominican Republic and our meeting, the market had risen 20% to 25% a year. He had, in fact, arrived in the country precisely at the beginning of a boom cycle, but he'd missed out entirely because he wanted the best deal.
"It's going to be a while before most real estate markets see anything like 20% to 25% annual appreciation across the board again. That does not mean this is not a time to buy. Many good deals are currently available if you focus your search and, critically, if you're willing to act.
"True distressed sales don't generally make it to the Internet. This isn't the place to shop. The real deals are circulated by word-of-mouth. You have to be in a position to get the word at the right time. You've got to be connected on the ground. I call it being 'in a market'--having contacts that keep you informed of what's really going on, well beyond the Internet or real estate agent radar.
"A colleague in Panama recently made a smokin' distress purchase. He bought a house in an established community for a 40% discount to current market pricing. At that price, he isn't worried about a further slide in the marketplace. He's gotten a good enough deal that it doesn't matter.
"And he has a plan. He intends to invest a little in rehab and believes that he'll then be able to flip the place for as much as two times what he paid. Meantime, he plans to live in the place.
"My friend was positioned in the market and connected on the ground. As a result, he was able to be in the right place at the right time, and then, very important, he was willing to make a move.
"This is how you invest in real estate. Bouncing into a country for a whirlwind tour of a few developments isn't going to provide you with the best investment opportunities. You can find a great second home that way, but if you're serious about buying for investment, you've got to take a different approach entirely. Buying for profit and buying for personal use are two different agendas.
"If you're buying for profit, you have to invest the time to get to know a market well enough to be able to judge when a true opportunity comes your way. You have to do your homework, and then you have to trust your judgment and let yourself take action. This is no guarantee that you'll get the best deal, but it is a strategy for making money over the long haul.
"Generally speaking, I believe you can find worthwhile real estate investment opportunities in almost any market if you look hard enough and if you understand the market fundamentals at work. The days of abundance of opportunity are over. But that is not to say it's not possible in the current market climate to be an active and a successful real estate investor.
"Here's where you should be focusing your search right now:
"In Panama. Distressed sales in the city aren't common yet, but I believe will become so over the next six months. This is the time to be positioning yourself in the market and getting comfortable with the fundamentals at work. Rental yields remain very good, so if you're looking for cash flow rather than a buy-and-flip opportunity, investing in a well-priced apartment in a good location for rental is a great play.
"Outside Panama City, the big opportunity right now is to bank land. From mountain and river property to beachfront and lots in struggling beachfront developments, you can find land in all price ranges with medium- to long-term appreciation potential.
"In the Philippines. Here rental yields are also high. Sales slowed but may already be picking up again. Resort rentals are a great opportunity. Land speculation makes sense, as well.
"Property in the Philippines is priced for the Filipino market. Foreigners can't hold real estate directly (with the exception of condos). However, there is talk about the government planning to change this. If that happens, beachfront property in certain areas will see a big boost. Look at Cebu and Boracay for the resort rentals. Almost everywhere you can find beachfront lots that qualify as cheap.
"In Uruguay. Another good place to shop for a rental buy. Yields are strong in Montevideo (in both the main city and the old city) and in Punta del Este. You can find distress sales, but as Uruguay, like most countries in this part of the world, is a cash market, most sellers don't 'need' to sell. In other words, this isn't a market where I'd continue to wait and watch. In Uruguay, I'd buy."
Kathleen Peddicord
P.S. Lief Simon and the 12 fellow global real estate pros from around the world he has invited to join him in Panama City next month will continue this conversation in depth during Lief's Third Annual Global Real Estate Profits Summit.
You'll have a chance at that event to speak with Lief and his team personally regarding your own global property investment plans.
Go here now for full details of what Lief has planned and to register online. Or contact Conference Director Sofia Hogan with your questions (be sure to ask about any discounts you may be eligible for) by e-mail at Events@LiveandInvestOverseas.com or by phone at 1-888-627-8834 (from outside of the U.S. dial +1-443-599-1221).
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Attend Next Month's Global Real Estate
Profits Summit--Free
Every Panama Circle Member is invited to attend Lief Simon's Global Real Estate Profits Summit in Panama City next month as our guest--and to bring a guest free, too. This is but the beginning of the value of membership in this special circle.
And, right now, for only five more days, you can reap all the rewards and enjoy all the benefits of full-fledged Panama Circle membership without paying full price--at least not all at once, up front.
For the first time ever, during this limited-time New Member enrollment period, you can arrange to pay for your membership in installments stretched over 18 months.
If accepted as a New Member, you and a guest are invited to join us for next month's Global Real Estate Profits Summit as our guest.
This couldn't be easier. And the opportunities in Panama right now couldn't be bigger.
Full details here
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"I have been researching the idea of living overseas for years. I am 64, my husband is 61, and we want to retire to Ecuador, we think.
"Meanwhile, we both have demanding, full-time jobs that we can't afford to lose unless we leave this expensive place.
"I am convinced we need to get some dollars into foreign currency and that we need an offshore account. It also seems that we need proper financial guidance with regard to trusts, etc., so we don't have to reveal everything we own.
"We own a large home, which we need to sell if we leave, and we have three pets, which means we can't just sell and leave.
"I need someone to point me in the right direction and to tell me where to start. I'm feeling a good bit of urgency over the financial conditions in the United States right now. If you can help me, thank you."
-- June H., United States
I wonder if things are as complicated as they seem. It can help to try to simplify the issues and then to address them one by one.
You've done your research, and you're thinking Ecuador is for you. Great! If you're ready to make the move, put your house up for sale and decide what you want to do with your pets. You could bring them with you to Ecuador.
If you use proceeds from the sale of your home in the States to buy a new one in Ecuador (and therefore have no rent or mortgage), you could live comfortably in this country on as little as US$700 a month. If you choose not to reinvest the money from the sale of your U.S. property into a new piece of real estate in Ecuador but, rather, to invest it somehow, then add US$400 to US$500 a month to your budget for rent. Then build out your budget from there. You could spend more, of course, but, as our editors have reported often, Ecuador is one of the world's most affordable places to live right now and even a modest retirement budget can buy you a comfortable lifestyle.
Now...the currency diversification and the international tax and asset planning. These things are separate from your overseas retirement dreams and should be considered that way. You could pack up and move to Ecuador next week and never move your U.S. dollars into another currency or form a trust. I don't know your situation, so I can't say if either of these things would have benefit for you. If they would, though, again, that's a separate issue from your retirement plan.
Yes, you'll need a bank account wherever you end up relocating--in Ecuador, if that's where you choose--out of which to pay local expenses. This shouldn't be a big deal to organize in Ecuador.
Do you need an "offshore" account beyond a local checking account in the country where you eventually retire? Again, I couldn't say without knowing more about your situation, but I wouldn't let that question interfere at all with your relocation plans.
Resident tax- and asset-planning expert Chris Rusch explains further:
"International planning is complex and costly and not for everyone. A medical doctor or an investment banker, someone with high visibility and big liability for litigation, might do well to move some money out of the United States and find that the benefits outweigh the costs. On the other hand, a retired senior citizen living on a pension probably has no need for international asset protection.
"That said, I'll try to estimate the costs and benefits, so you can decide if this kind of financial planning is worthwhile in your case.
"The most efficient option is a simple offshore corporation and bank account. This allows you to move your cash outside the reach of U.S. creditors quickly and without great expense. The cost is usually around US$3,500 to US$4,500.
"The problem with an offshore company and account is that they do not address estate planning. What happens when you die? How can your heirs get to the money? Rather than leaving this to chance, you might set up an offshore trust. This combines asset protection and estate planning in one package. The costs range from US$10,000 to US$15,000, with the average being US$12,500. I generally recommend this only when the client will be protecting at least US$100,000. Really, an offshore trust only makes sense when you have significantly more than that to protect.
"One important comment on asset protection: While it may provide some privacy, secrecy is not the ultimate goal. Even if a creditor is able to find your assets, your structure should protect those assets from attack."
For more information on international asset protection, see Chris' website. |
