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In a recent issue the Offshore Real Estate Quarterly we mentioned real estate in Rio de Janeiro where real estate prices are now priced at only 25% of their actual value. The causes for the bargain prices of real estate in Rio de Janeiro are based on temporary conditions that will inevitably correct themselves, and when prices climb back to their true market value some investors are going to make a whole lot of money. That article elicited so much email that we couldn't answer it all. We wrote the article because we love Rio, evidently we hit a nerve. So many readers agreed with our assessment that we was buried in email for months. Real estate, no matter where it is, has remained one of the preferred investments for longer than any other investment in the world. Real estate has actual intrinsic value. [i.e. It's value is real, it is not based on fad or fancy.] As long as there are human beings there will be a need for real estate, and while real estate can fluctuate in price, it's core value keeps it from being a mere 'craze' or 'fad' for any continuous period of time. When it is overvalued it will fall back to it's true value, when it is undervalued, it will eventually rise to it's true value, ...but it will never fall to absolute zero except in unique areas and under unique conditions - - such as areas subject to natural or man made disasters or to areas that become crime-ridden slums. ..and yes, there are reasons why real estate rises in value and falls in value that are government caused. People vote with their actions and lately, with their feet. When a place becomes intolerable, people leave. The reasons cited by most people for getting our of the USA are: oppressive Federal legislation, a lack of morality in government, a lack of privacy, racial tensions, bad schools, and usurious taxation. But the most stated reason for leaving the USA is a disgust with the rising level of crime and violence in America. Social Disasters Of course America is not the only place with crime problems, many foreign cities have crime problems. Rio de Janeiro is a case in point. The crime in Rio is down from what it was a few years ago, but there is still enough crime to issue a caveat to the reader. Rio has crime and Rio is not unlike other high-density global centers, there is pollution, poverty, and crowding. The difference between Rio and other high-density global centers is that Rio is one of the most exciting, beautiful cities on earth. Rio remains environmentally beautiful despite its population density, which is a rather odd anomaly of sorts. [ See photo below. ] If prices in Rio are now 25% of their actual value, then where will the prices go when Brazil straightens out its currency problems? That is anyone's guess, so we'll give you our guess. If you buy an ocean front condo in Rio de Janeiro today for $85,000 - - it may be worth $500,000 in three years and $85,000 again in ten. What you need to ask yourself when
purchasing a property in Rio de Janeiro, is, "do I really want to live
here no matter if the property goes up or if the property goes down in
value?" If you can answer that in the affirmative, then you should
definitely go to Rio and check out the properties. It is one of the
most exciting and beautiful cities in the world.
It is our opinion that Rio is simply too diverse, too wealthy and too luxurious to ever fall below a certain point. No matter what happens to Rio de Janeiro and Brazil, Rio de Janeiro will always be a special place. It may be problematic, but it will never be a loser. [ See the article: Exciting Real Estate Opportunities In Rio de Janeiro, Brazil. ] And there places that are losers. It is not impossible to determine a given location's negative factors. Take the case of an area in the USA, that is on it's way to becoming a slum. In the USA there are usually no supporting factors to revive an area that is slum-bound. It's a downward slippery slide into oblivion. We believe that America's urban blight is to a large extent government caused, and it is, in our opinion a situation that will continue to worsen with more an more American cities dying. (Something that was pointed out by international investment guru Bill Bonner in his article about the demise of Baltimore entitled "Even The Rats Have Left." - See resources at the end of this article.) The factors that allow Baltimore to descend straight into hell are factors that have no counterpart in Rio. Rio has its own set of problems, but they are totally unlike the problems that Baltimore faces. Racism in America, in my opinion, is a wound that will never heal. Brazil is one of the least racists nations on earth. We often wonder Americans never seem to notice or find it odd that Brazil has no enemies, no wars, despite the fact that it is one of the largest nations on earth and surrounded by nations that speak a different language. We leave that observation for our American readers to ponder. We enjoy being in Rio, we wouldn't go to Baltimore for a million dollars. Natural Disasters Human nature being what it is means that social disasters are often easy to predict, but it is just the opposite when trying to predict natural disasters. Yet, it is only the timing of a natural disaster we can't predict, we can almost always predict the potential location of a natural disaster. If we want to invest overseas we are obviously going to avoid areas that are running out of water, are severely polluted, or are in danger of constant flooding. Let's compare two areas, one that experiences natural disasters, and one that seldom experiences natural disasters. California, a place that has historically been a real estate hot spot, has more than its share of natural disasters; floods, earthquakes, forest fires, etc. By way of contrast, Panama has almost no natural disasters, no floods, no earthquakes, no tornados, no hurricanes. California has a population of around 35 million souls. Its land mass is 163,707 square miles which gives it a population density of around 225 people per square mile, making it fairly densely populated. (Actually it is much more densely populated in the south than in the north.) Panama has a population of around 2,882,329 with a land mass of 30,185 square miles, which gives it a population density of only 95 people per square mile. [See: "As its population soars, California's environment approaches a crisis" in resources.] Panama has a plurality of water, California has a water crisis. California has a great deal of crime. There is more crime in Los Angeles in one day then there is in Panama in a single year. Based on these observations do we think that real estate in Panama is a better investment than real estate in California? Yes. Plus the purchase prices in Panama are cheaper, and the upward potential many times greater, allowing a larger yield per dollar invested. But the fact that Panama is a better investment is just beginning to be realized by the international community. We have our main offices in Panama, so we write about Panama often, but there are dozens of other places in the world besides Panama that are also bargains; we have and will continue to write about those locations in this magazine. We think offshore real estate is the wave to catch if you're interested in being ahead of the crowd The first ones in on a trend are usually the most successful. Is offshore real estate at the beginning of a long term trend? We are beginning to see more and more articles in the investment journals about international real estate and real estate in general. International real estate has many advantages over real estate in the USA, and one or two disadvantages. We feel that the advantages far outweigh the disadvantages. We strongly believe that purchasing foreign real estate can be viewed as a sort of triple play. Consider these attributes: [1] Offshore real estate can appreciate more dynamically than U.S. real estate because the purchase price is often significantly lower, (and this despite the fact that we can now carry on some type of commerce from anywhere on the globe,) [2] offshore real estate can act as a safe haven in the event that things go awry in the USA, [very probable, if not already fait accompli,] [3] offshore real estate allow Americans to legally expatriate their money to an offshore haven, [4] offshore real estate can be a summer home and/or [5] more in keeping with the theme of this website and this article, it can also be a dynamic place to live and be the beginning of a new more fulfilling life. We've asked the question before, we'll ask it again, "If we can now carry on some type of commerce from anywhere in the world and if a ranch in Argentina and / or beach house in the Dominican Republic is going for ten cents on the dollar of what a similar property would go for in the USA, then how long is going to take your neighbor to realize the very same thing?" For the first time in human history we can live where we want to live, and in doing so, working there, rather than choosing where we have to live because of our work But the rub to the above statement we can't find similar properties in the USA to what we can find overseas, because there are no properties in the USA similar to the bargains and the ambiance we can find offshore. Caribbean beachfront is something pretty special and there are still some great bargains out there. I think it is safe to say that we can forget beachfront in the USA unless we are extremely rich, (..and willing to put up with so many laws and restrictions regarding living there that it isn't any fun to live there.) As for romantic country land, whatever wilderness in the USA that hasn't been taken over by right wing paramilitaries is filled with people so stupid that even the tree huggers can't get along with them. (Actually those are three groups with a great deal in common. They ought to start a political party. Huggers, Muggers and Buggers.) Consider the nuevo rich from New York and California who've bought five million dollar ranches in Montana and Wyoming... five million dollar cabins in Aspen, and can't stand to be there. Cultural depravation can be worst than sensory deprivation. Now we know that we just insulted
a cherished American institution and lost half of our readers. If
you're still hanging on, and if you maybe think that what we're saying
has a slight degree of truth, then let us give you a bit of advice: Don't
invest in American land, do seek an overseas haven where prices are lower,
crime is lower, ambiance is higher, and the future is greater. You
won't be alone, because from my perspective it is fairly clear that the
stampede towards international real estate has already begun. The rules
of the game have changed and more and more people are becoming aware of
it. Our website is a case in point. Out of the over three and a half
billion or so websites on the internet, we are in the top 6,000. [ See
Resources ] Why would that be? Our traffic is increasing exponentially
and the number of international real estate sales that we am aware of has
reached a level we wouldn't have believed possible five short years ago.
We are trying to make you aware of the value of international real estate
and the fact that it is becoming one of the best investments you can make.
If we're right, then you stand to make yourself rich, if we're wrong, you'll
end up with an excellent piece of property at an excellent price in a better
place than you find yourself now. If you think there is a possibility
that we're right, then read on... if you'd rather invest in America because
you believe there is a future there, then buy yourself a gun and head for
the American country-side. You'll need the gun to survive. It's part
of the tradition. What we write isn't for everyone. It may
or may not be for you. It is certainly not sugar-coated.
Panama is becoming one of the safe havens of choice for those seeking a home away from home. It's welcoming attitude towards business and foreigners is legendary. (We could and have, as we've said, name a half dozen other nations where such values exist for investment into foreign real estate and we will continue to do so in future issues of our magazines.. .
The principals of this website are founded on the perception that we now live in a borderless world and that with each passing day the concept of deterritorialization becomes more a part of objective reality. As we've written elsewhere, two things have ushered us into a world without borders... the end of the cold war and the advent of the world wide web of global communications & commerce. Today it doesn't make a great deal of difference where in the world we are located, we can carry on some types of commerce from anywhere; from an island in the middle of the Caribbean or a sheep ranch in the the Australian outback. A game of global musical chairs has begun, and we are now changing places with people willing to go to America to work for a wage we no longer consider attractive, while we begin to move further afield in search of greener pastures. Many of us are now looking for what might be called a 'life.' Tomorrow, it will make a great deal of difference where we live. But certainly not in the same sense as we now perceive it. Tomorrow we will live where the best real estate exists, where the least crime and repression exists, where population pressures have not decimated the environment and where business is encouraged and not hindered by legislation. We will live there regardless of that place's global location or it's former political posture. The question I asked a few paragraphs back bears asking again, ...if we can now buy a ranch in Panama (or Argentina, or New Zealand, or name your spot,) for ten cents on the dollar of what a similar property inside the United States would cost us, and if we can carry on commerce from anywhere we locate, then how long do you imagine it's going to take your neighbor to realize the very same thing? As Douglas Casey put it, "...those folks who buy that ranch in Argentina today are going to have grandchildren who will realize that they were a genius." Is there anyone reading these words who doesn't recognize that we will soon be living on one planet without borders? Stop and think about the inevitable. Recognizing the direction of socioeconomic inevitability doesn't require as much effort and foresight as does the ability not to be concrete-bound by the past, especially when we do our current thinking. Markets come and markets go, but the desire to make an exciting profit lives on. The world's markets are made up of every human being on the earth as each tries to better their own existence by seeking out what they want and how they want to go about attaining what they want. Few markets are perpetual, and in the marketplace certain trends are created by changing situations that are part of our ever-evolving world. It is no longer required for anyone to imagine that we live in a global economy, because imagination has nothing to do with it. We live in a world with a global economy. The cultural, economic and strategic interests of nations no longer neatly stop at a line drawn in the sand... nor do they any longer precisely overlap. The nation-state has ended. Tomorrow is on it's way, making foreign real estate one of the most inevitable investments for individuals capable of breaking free from rigid thinking. There is always a lag time in such changes. There will be those who will go on staring at the NASDAQ, the gold market, or whatever it was that was there yesterday, like a dog starting at an empty food bowl. "Hey, wasn't there food in there a minute ago? Surely there will be food there again." We call such investors 'pointers,' after the dog of the same name. The gold boom of the 70's spawned a bunch of pointers. These sly dogs have been writing about gold and preparing themselves for the next gold boom every day since the gold boom ended. That was thirty ago. Some day gold will go up again, but it will have nothing to do with the last boom, it will be a situation caused by current [or future,] market conditions, not the conditions of thirty years ago. That market has passed and it's over, along with tulip trading and over-borrowed dot.com's; now it's time to find where the next market is, where it's going to go and how we can be there ahead of the herd. We firmly believe that the next
boom market is going to be in offshore real estate. Go
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