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Offshore
Real Estate - What Does That Mean? - Page Two
Very Exciting
Real Estate Profits In The First Two Decades Of This Century
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As we've said, the movement towards
international real estate has already begun. Countries like Belize,
Panama, Costa Rica along with much of the Caribbean are getting an influx
of buyers. But so are unlikely places like Thailand, Ireland and the Czech
Republic.
There have always been institutional
buyers that purchased property in external nations for industrial and commercial
use, but the new type of buyer now entering the market in larger and larger
number consists of independents; small businesses, individuals and families.
An entirely new breed of offshore investors who are seeking greener pastures
abroad as well as a profit in international real estate.
The buyers are not all Americans,
which indicates that a worldwide trend is in the making. In the case
of the Dominican Republic there has been a large influx of Italians and
Germans. They are opening dive shops, restaurants, resorts, hotels,
or simply grabbing up the best real estate and re-selling it to other newcomers.
In the Dominican Republic's Zona Colonial, four hundred year old buildings
are being renovated and the entire area is becoming a magnificent tourist
attraction. Costa Rica also has a large percentage of European expatriates
as does Cartagena in Colombia, a place where we didn't meet one American
among the hundreds of expats that I encountered.
None of this is to imply that we
are too late. On the contrary we are precisely at the very beginning of
an socioeconomic evolution that is inevitable. As more and more people
realize that they can finally live where they want to live, and that the
entire world is at their disposal, there will be a mass migration
that will blanket the world. The first ones in the door stand to make the
best profits. As in all things, analysis and timing are crucial.
Going to nations that have not yet developed a just recognition of human
rights and those nations without a transparent legal system can be problematic
and risky. But not unduly so.
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| Our friend Jacques is living in
an apartment just like this on Boca Grande Peninsula in Cartagena, Colombia.
The price on this type of apartment was/is $50,000 full price. The
rent was/is $500 per month. Ocean & bay view. When, and if, Colombia
solves its current problems this property will jump to $500,000 - Not a
bad profit... |
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| It is probably important to remember
that there is a cyclical fluctuation in the degree of risk we take in some
of the world's furthest and most primitive backwaters, ...yes, cyclical
risk. But cyclical risk has always been a part of human affairs, so its
no stranger really. Living in Los Angeles or San Francisco can be very
dangerous, yes? So risk is a matter of perception. There are
relatively few people who spend any degree of time looking for first opportunities;
most people wait until the opportunity is obvious and the price has gone
up. Risk is a function of price but risk can certainly be a matter
of perception. |
| Real risk, perceived risk and relative
risk has flowed like a river through much of human history, slightly chaotic
in nature and a little bit dangerous, no? But so are currency fluctuations
and exchange controls as often as not. It must be remembered that
even chaos follows a certain pattern as dynamic as planned obsolescence
and as predictable as the lottery. Yet somebody has to win despite the
risk of loss, so risk hasn't stopped the ticket buyers. Timing is like
a lottery. War zones are transitory. After the war is like
after the rain. If you are the first one in and the first buyer you
stand to gain a considerable fortune for your courage. Unless the cease-fire
is broken. And there are other risks. The only thing worst than getting
shot is losing your money. Some who bought in Cuba after the Cuban
revolution at rock-bottom prices are still holding their deeds. |
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Expatriates, and moneyed
newcomers to some nations are often treated with a higher degree of respect
and privilege than the average citizens of those nations. It can
be a disconcerting phenomena, but it is a fact of reality. Americans
with their high degree of egalitarianism often feel uncomfortable in nations
where they are treated as first class citizens while the locals are still
treated as second class citizens. However, the very presence of foreigners
can help a nation to 'clean up' its act. Almost everyone knows where the
bread is buttered, and socioeconomic evolution can have a very positive
effect on more primitive nations and help usher them into the modern world.
The higher the risk the higher
the potential profit.
Risk is a function of price but risk
can certainly be a matter of perception. [See sidebar.] Note that we are
certainly not recommending that the reader invest in nations where their
money may be at risk, but we are pointing out that the best profits will
occur in the more risky nations. Many Europeans and Canadians are
currently investing in Cuba and in Venezuela. We don't necessary
think it is a bad risk, but there is obviously risk involved. It
is our observation that there are no bargains in Cuba. The Cuban
government is selling high value beach resort concessions for high dollar
prices. There may soon be housing available in Cuba for individual
buyers. It would be a splendid place to retire, but we wouldn't count
on making a large profit out of any real estate investments inside Cuba.
(Venezuela is a different story) There are other uses for Cuba which we
will address in a future article in this magazine. For the best information
on investing in Cuba read Dr. Louis Sola's "Cuban Capitalism - How To Invest
In Cuba - A Complete Guide" - [ See Resources ] |
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Holding
Title to Foreign Real Estate
Holding title
to foreign real estate depends on the specific nation where the real estate
is located. It is always best to hold title to any real estate in
the name of an international corporation. Not all nations will allow
this, but a substantial number of nations will. The process is relatively
simple. The purchaser forms an offshore corporation, [IBC,] and then
purchases the real estate as a property of the company. In this manner
you are not personally listed as the holder of title, thereby making it
difficult for anyone to confiscate your property. Should you choose
to sell your property at a later date, you can simply transfer title of
the corporation to the purchaser, [the corporation itself may be formed
in Nevis, St. Lucia, Panama, Luxembourg or any other offshore jurisdiction.]
If you transfer ownership of the IBC rather than go through a conventional
real estate transaction, then no one knows that the property has changed
hands except for the principals involved. The IBC still owns the
property, but someone else now owns the IBC. Without a record of the property
changing hands there are no transferring fees, no taxation. Protection
and privacy is thus enhanced. I suggest that a separate corporation be
used for each property. The use of individual corporations for each
property increases the initial cost, but an IBC costs only a few hundred
dollars. When the time comes to sell, one may opt to sell each property
separately, or to sell one property and not the other. Transferring the
ownership of one corporation is simpler and more straightforward than trying
to divide a corporation into a number of separate parts for separate properties.
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| Where
to go - What to buy
Locations are
like romances. We strongly suggest that investors buy in a place
where they want to live. As mentioned in the article about real estate
in Rio de Janeiro if an investment into real estate does not produce timely
profits one always has the luxury of living in or utilizing what one has
purchased. Especially if it's a place like Rio de Janeiro, Prague, Bangkok
or Budapest, where one can enjoy an enhanced lifestyle. In this way, even
if the market remains flat for several years, or, heaven forbid, drops
in value, one still has the opportunity to pleasurably utilize what
one has purchased. Still, it is clear that some locations are preferable
to others, and that some locations will rise more dramatically and/or provide
a wider degree of security. What are the guidelines? |
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Budapest Cafe With A View
Of The Danube
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Absolutely
every investment in the world entails a degree of risk. Investing
is gambling, some gambles are closer to a sure thing than others, but all
gambles are gambles by definition. This is why we recommend seeking
out real estate in a place where you wish to relocate, if you don't make
an overnight profit you are at least living in a place where you want to
be. If a location is close to a sure thing, the price will reflect
that factor, the initial prices will be higher and the price rises will
usually be slower. But not always. Panama and Belize are pretty close
to a sure thing. Price rises in Belize have been significant in prime
areas, but it remains very difficult to define prime areas. When
the book, Escape From America was published in 1995, it was possible to
buy an island in Belize for $20, 000 - At the time no one knew where Belize
was, it was a total unknown. Today almost everyone with half a brain
knows where Belize is and there has been an influx of buyers from around
the world. Those seeking a beachfront lot and a laidback lifestyle will
do well to consider Belize. Belize is the sort of place where you
can build what you want and live how you want without big brother looking
over your shoulder. On the negative side you won't find the Cuban
ballet there, nor will Luciano Pavarotti show up at the opera house. ...There
is no opera house, but there is a fish market and it is probable that it
okay to go barefoot the rest of your life in Belize without missing an
appointment.
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| Is this
possible, or is it probable? - Is
the U.S. government going to shut the doors locking Americans in?
Write legislation that could prevent Americans from leaving? Make America
a prison? It would be a very bad policy and to try to do so would cause
a panic that could inspire a stampede. Nonetheless expatriates and those
considering becoming expatriates are advised not to delay in taking the
precaution of getting a second passport. Don't wait for the last
minute rush. If things turn bad they could turn bad overnight. Whatever
name is placed on such a form of legislation it's intent would be to stop
'flight capital' [an outflow of US capital due to lack of confidence] and
a potential brain drain. From the article- IRS Loses
Bid To Track Overseas Tax-Dodgers - [see resources at the end of this article
on residency & second passports.] |
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Profits
will continue to be made in Belize real estate and if laid back
is your sort of lifestyle you should catch the next plane to Belize. We
know of two tour groups that are oriented to relocating to Belize and we'll
mention them in resources at the end of this article.
If you're more
prone to having your cake and eating it too, Panama is an excellent choice.
Panama is where we have our offices and we owe a good deal of our success
to being located in Panama. The infrastructure is excellent in Panama.
The infrastructure in Belize is primitive. [see resources.] There
is less crime in Panama than there is in Belize, and Belize has hurricanes,
Panama does not. In Panama, the language is Spanish, in Belize English.
We'd take an island in either spot, but it is a thousand times easier for
us to run our business in Panama than it would be in Belize and for us
that is the deciding factor. |
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Each of these
nations can more or less be considered a sure thing, if not in the traditional
sense at least in the modern world where environmental concerns and a low
population density are issues to consider. People are now leaving
America in droves and I expect the trend to continue until it reaches a
stampede.
Making Money
- Some Recommendations & Suggestions - Go
the next page -
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