New Year's Day 2010
Chicago, Illinois
PLUS:
- In Defense Of Cuenca, Ecuador...
- Comparing International Health Insurance Options...
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New Year, New Life, New World
2010 is your chance. 2010 is your year.
This is a great big world bursting with opportunity. Seize it.
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Where should you be thinking about heading this New Year 2010?
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Dear Live and Invest Overseas Reader,
"Falling markets over the past 18-plus months have created crisis buy opportunities," writes resident global real estate investing expert Lief Simon, "for personal use and for investment. New Year 2010 is a year for action. I'll present specific opportunities starting next week.
"Meantime...invest in a piece of real estate in another country? How do you get started?
"First, you ask yourself why you're buying--for investment or for personal use. The answer may not be clear-cut. And the best case is when you find a piece of real estate that holds out the potential for an investment return (in the form of capital appreciation and/or a yield from rental) and that also happens to lie in a place where you want to spend time.
"State your objectives and exit strategy expectations clearly for yourself and for anyone else buying with you. Every decision you make related to the eventual purchase is affected by the property's intended use. If you're buying straight up for profit, things are simplified, as every decision is based on the numbers. If you're buying for personal use, on the other hand, even part-time, you'll make your choices based on many things, including some that can't be quantified in a spreadsheet.
"Now that you understand why you're buying, you need to decide where you want to buy what. I'm personally excited about the opportunities I see on offer as we enter 2010 and, again, will introduce you to them in coming days. How will I determine where I'll put my own money this New Year? I make all my buy decisions after passing every opportunity through the following filters:
- Path of Progress. This is a key factor when buying for investment but important if you're buying a retirement or second home overseas, as well. What infrastructure improvements are planned? A new airport, new train station, new highway, new hospital, etc., can mean a new universe of potential buyers...which is good news if you're buying as an investor looking to develop or to flip. These things, though, also translate to better living.
- Inventory Supply and Demand. In Panama City, right now, for example, a glut of high-rise condos is coming online. These units were launched and sold pre-construction over the past two-plus years. Now they're being delivered...and their volume is one reason Panama's capital market continues to soften.
- Costs of Acquisition. Remember that they go beyond agent commissions. Depending on the market, they can also include: legal fees, notary fees, registration fees, title insurance (we strongly recommend it), and transfer taxes (sometimes called "stamp duty"). In Ireland, for example, stamp duty can be as much as 9% of the purchase price.
- Carrying Costs. Including: maintenance (a house on the beach requires a lot of it, for example); a caretaker (if you won't be in residence full-time yourself); property taxes (not every country charges them, and, in some countries, they're negligible); income taxes (if you'll be earning rental income); capital gains taxes (when you eventually resell...again, not every country charges them); other local taxes; property management expense (you'll need a property manager if you intend to rent); rental management expense (separate from property management and, again, necessary unless you're going to manage all the details of your rental investment yourself...something I don't advise); and homeowner's association/building/condo fees.
- Economic Outlook. Critical if you're buying for investment, but you don't want to ignore the market climate even if you're buying purely for personal use. Markets move up and down...and then up again. At what point in this cycle is the market where you're thinking about buying right now? In which direction is it moving?
- Opportunity for Diversification. In terms of market, type of investment, type of property, and currency.
- Budget and Cash Flow. Everything follows from this. Be clear on not only how much capital you have but also how much you want to put into any particular investment. Make this determination before you start shopping, and don't forget to include the total costs of acquisition in your calculations."
Kathleen Peddicord
P.S. Lief Simon has more than 12 years experience and an impressive track record buying and selling real estate around the world for profit. That's why I was delighted last month when he agreed, after months of resistance, to work with us this New Year to produce a private global real estate investing service.
Why the reluctance? Lief knows better than anyone how much time and travel is involved with making a serious go of this. The scouting, the research, the on-the-ground time is considerable, more than Lief believed he'd be able to commit to.
Finally, however, Lief has agreed to reprioritize his current projects to make time to return to this beat. Details of the service he will provide are being finalized, and we'll get them to you as quickly as we can. As Lief explains, 2010 is positioned to be a year of big opportunity. He's keen to get started helping you to exploit as much of it as you can as soon as possible.
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2010 Conference
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During this limited-time New Member enrollment period, you can arrange to pay for your membership in installments.
If accepted as a New Member, you are invited to join us for our timely and comprehensive Panama event this February, and every Panama event we hold during your lifetime, as our guest. Like every other Panama Circle Member, you're also invited to bring a friend with you free.
This couldn't be easier. And the opportunities in Panama right now couldn't be bigger.
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"Kathleen, I have to give you a second opinion on your statement that
Ecuador is inexpensive because there's not much to spend money on." My experience in
Cuenca, Ecuador, was that there was plenty to spend money on...it just didn't cost much.
"Cuenca residents enjoy theater, orchestra, and high-quality shows, including international performances. There are plenty of fine restaurants these days, and the number seems to grow each month. The town of just under 500,000 has a modern, new shopping mall, a number of new movie venues, plenty of bars and night clubs, and several supermarkets where you can get all your favorite items.
"My cable TV cost US$25 per month. Broadband was another US$25, and it was never once out of service in the five-and-a-half years I lived there. The bus still costs only 25 cents, and gas is only US$1.49 a gallon. The retiree benefits program, in my opinion, is second to none.
"To top it off, we had pleasant weather all year, with no oppressive heat and humidity, no rainy season, and no bugs.
"It's true that if you settle in a small Ecuadorian town, you won't have much to do. But you can live a high-quality lifestyle on a low budget in Cuenca and not feel that you're missing out on life's nicer amenities. And at 3 hours 50 minutes from Miami, it's not all that far away.
"I consider it more that just cheap. I think it's a great value."
-- Christian MacDonald, Latin America Correspondent
"Kathleen, I am curious about your
health coverage during your two weeks in the United States.
"I am considering a move to Mexico later this year and am trying to work out the health care situation. I have purchased your report '
Top Health Insurance Options for the Retiree Abroad' and have checked the cost of BUPA and HTH. HTH provides coverage for trips back to the States, but, for my wife and me, that option is an additional US$600 per month over the cost of the Mexico coverage. With BUPA, it's an extra US$16,000 per year for coverage in the States. That's quite a premium to pay for 30 days visiting family and friends each year.
"So I'm wondering, do you have coverage while you are in the States?
"Also, I note that you say that the cost of your BUPA insurance for your family of three of you is about US$200 per month. I am 60 and my wife is 55, and BUPA quotes us US$10,000 per year for coverage outside the U.S. only and US$26,000 per year if U.S. coverage is included. That's for a US$3,400 deductible. I know you are younger, but do you have any other ideas as to why my quote is so much more than yours?"
-- Keith R., United States
It's difficult to compare international health insurance policies, as there are so many variables. We purchased our Bupa policy in Ireland. This is an important point to remember. Your quote from Bupa will vary depending on the country from which you base your coverage.
Furthermore, ours is a higher-deductible policy (with an annual deductible of US$5,000). And, because it's based in Ireland, if we were to suffer serious illness or accident elsewhere, including in the United States, we'd likely have to be transported back to Ireland for at least part of the care.
As you've discovered, including the United States in your policy's coverage increases the cost, sometimes dramatically. You can get around this by buying a policy that excludes the States and then investing in travel insurance for emergency coverage during the specific periods you'll be Stateside. This should work out considerably less costly.
