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| Why Invest
In Chile? A North American In Chile |
| February
2005 |
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| Why invest
in Chile? |
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| That is a
question I have been asked many times because Chile is not even mentioned
in most conversations about South America. Brazil you think of beautiful
beaches and the beautiful people that live there. Peru you think of mysteries
from the long lost past. Ecuador makes you think of beautiful weather and
inexpensive prices on land and exports. Argentina cheap land, good fishing
and a very corrupt government. Columbia, well, you don't even think about
it. Venezuela another hero of the little people and probably a nightmare
for everyone else. |
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| But Chile,
what's there? |
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| I would say
a vibrant free market economy, and a place where with a little money and
elbow grease you can make a life for yourself in the sun, be respected
for doing so, and not have it taxed away into thin air when you're done. |
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| Chile
has been the fastest growing economy in the Western Hemisphere for the
last six years running and there really is no indication that trend will
change in the near future. |
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| A government
that understands businessmen and women are the backbone of a vibrant economy.
There are problems for sure when doing business in Chile, sometimes you
feel like you're going nuts as you try to get things done. But the beauty
of Chile is that the government listens when business talks and trys to
fix problems that slow business. |
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| Chile has
a commodity-based economy whose primary exports are minerals, food, and
timber as well as a world-class wine producing sector - all of these important
exports keep Chile in a strong economic position world-wide as there is
an ever increasing demand for commodies. |
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| Tourism is
now becoming a large part of the Chilean economy; Chile has natural beauty
that can rival any country in the world, and it has great recreational
possibilities as well: my son has been rafting, kayaking, fly fishing,
hiking, and horseback riding. There are wind sports galore or you can just
choose to relax and take in the natural beauty of the magnificent Chilean
coast on a cruise ship; this is very popular way of enjoying Chile's beauty. |
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| I have started
two businesses in Chile with my friend and partner Andy Grimberg and feel
very good about the future of our endeavors. |
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| This is a
different world for sure, but once you understand some things about the
way the business culture works in Chile, and you show yourself to be a
fair and honest person, many possibilities can open up to you. It is still
a culture of large families and when you help someone from a family, such
as giving them a job or helping them in some other way, you will have earned
much good will and, in the future, everyone in the family you've helped
will be willing to give you a hand. This has helped resolve many problems
for me especially when I have needed help in getting something done in
another part of the country. Seems there is always a friend of a friend
who is more than willing to help you. |
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| When the people
in the town where I am building a hotel, realized that my partner Andy,
and I, wanted to use local help and employ people from the neighborhood
to do the construction work, our good will was paid back by the community
ten-fold.
On the first
piece of property I bought in town, I offered a much lower price than the
seller was asking, guessing we would meet somewhere in the middle. But
the seller accepted my offer; I was not aware he was in such desperate
need of cash, feeling great about my good fortune soon came to an end when
I discovered his blight, then a buyer from Spain offered him 18,000 dollars
more than I had, but we had closed the deal the day before: he had our
down payment. |
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| Andy and I
could just feel the sickness in the heart of the seller, so we went to
him and gave him the asking price. That act of compassion has paid us back
100 times over as the whole town knows what we did, and, so now, we are
known as good people to deal with. |
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| People want
us to be in on everything now, they even asked Andy to run for Mayor. Which
he respectfully declined knowing full well that would be the road to insanity:
trying to undo a whole city of Latin madness would have been madness. |
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| The new Mayor
has become our friend and many doors have opened because of our investment
in the community. There are problems in many areas that people in small
town governments have no idea how to take care of; if you are a problem
solver you can make a good living just connecting the right people in order
to solve problems. We are in the process of solving one of the cities largest
problems, with no cost to us other than phone calls which is going to pay
us back monthly as long as the problem is solved. |
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| Places to
invest with good returns never seem to stop appearing; I am fully invested
in Chile now except for my home in Montana which is for sale at this very
moment, the increase in value on a home in Montana per year is nothing
compared to the returns on capital investment I have experienced in Chile. |
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| In the process
of research I have discovered even not so well thought out situations often
pay back a return you would never dream of in the States. |
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| Would you
like to build rentals and get 50% of your money back in the first year?
It's possible, as a matter of fact, it's is very likely you will, and if
you're in the right place at the right time you can do even better. But
a 25% return is a no brainer. |
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| This country
is growing. Just follow the expansion and you will do fine. |
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| Personally,
I find it very easy to fail in the States, you really need to pay attention
or you're going to get your head handed to you. In Chile, if you have even
a modest amount of money to invest you are in a strong position. |
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| 100,000 dollars
won't do much for you in the States but I know a single mom with two children
that came here from LA and has leveraged that small amount to point where
she is now building herself a beautiful home overlooking the Pacific ocean,
and living a life she could only dream about in the States. |
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| Another friend
in Chile that cannot hear or speak owns the nicest seafood restaurant in
Puerto Montt; every time I see him I am moved by his strength to overcome
such odds, but I also know it is because he is in Chile, where hard work
pays off. |
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| He is Known
as El Apa which is the name of his restaurant in the Angelmo Market on
the waterfront in Puerto Montt. If you are ever In Puerto Montt you should
visit this great place for dinner. |
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| Rentals is
close as you can get to a sure thing, but buying land and properties has
been very lucrative in all the places I've bought. |
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| I did my homework
on where the expansion is going, but it was no secret; anyone can do it.
I do not profess to be a real estate wizard but if I had returns in the
States that I have had in Chile there would be people knocking down my
door begging me to invest their money. |
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| I have never
been into complicated business ventures; I've always kept things very simple.
The reason I say that is I sense that someone with a broad business base
could come here and identify many business opportunites that I can't see. |
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| Chile has
large companies and the best jobs are with the large corporations, below
that you have the working class they are for the most part not risk takers:
they invest in land which is what I've done. Again renting is a great income
producer: I rent a place on the east side of Puerto Montt. Thousands of
people live out there along the ocean; it is a very beautiful area. |
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| Something
that would be of incredible value in Chile and would make millions if you
put it together right would be a way for expatriates and foreigners to
borrow money against property. |
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| You could
get 8 to 10 % on your money and have your investment backed by land and
properties that are worth 30 to 40% more than the loan value. Now where
else in the world can you get that kind of return with that kind of protection. |
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| I know we
could use a system such as this for our ventures and we are not the only
business in town with this need. |
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| One of the
services we offer in Chile is finding land for foreigners; they all want
financing and they are not qualified as the banks don't lend to foreigners
even when you are a legal land owner. If you are a citizen and you have
not been in business for at least a year you cannot borrow money no matter
what your asset base may be. That's is one of the maddening issues the
government is promising to fix. |
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| Now before
you throw yours hands in the air and say that's crazy how can anything
get done, realize its because of this stupidity that there are opportunities
in many parts of the Chilean economy. |
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| Another great
reason to invest in Chile are government incentives to do so. In the tenth
region where I am building my hotel, the government is paying us back 20
to 33% of my investment because this area is in such need of this type
of facility. |
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| 20% on my
building cost and 33% on local labor cost as far as I understand it at
this moment. The documents are at our lawyers office at this moment being
turned into something we can digest without all the legal mumbo jumbo that
legal papers are famous for no matter what country they are written in. |
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| I am no expert
on laws in Chile of this kind, but when you are investing in the same direction
as one of these incentive programs the governemnt has already decided that
there is a big need to give incentives in order to fill a gap in the development
of a particular region: your job is to fill that gap. This is a pleasant
surprise we learned about just last week. Thanks to a family member of
a young man we employ that happens to be high up in government. Remember
that I mentioned small favors are valuable. |
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| Now if I've
fired your appetite for Chile, you are proabably saying to yourself, but
it must be a paper nightmare to get legal status in Chile. |
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| Take 15 minutes
and it's free: its called a rout number. That number makes it possible
for you to own property and a business with the same legal rights as any
Chilean citizen. This country is not dumb; they can tax you; your rout
number is a social tracking number: you put it on all major purchases and
that way they can determine if you're working and making money. It's the
IRS all over again. |
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| It's a great
country I didn't say it was perfect. But it is improving all the time,
something even an eternal optimist would not say about the States. |
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| Now for the
hard economic facts of the country I would just go to Chileforsale.com
Website and on the home page there is a Tab that says for buyers click
on that and it has volumes of info. on Chile, some of the information is
old but it is still current concerning legal issues. |
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| The following
statement is my opinion and I should of learned by now not to express it
but here we go. |
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| Another wonderful
reason to invest in Chile is Pinochet did a great job of cleaning the country
up. His methods may have been a little extreme, shooting drug dealers without
a trial is a bit harsh, but, hey, you can walk the streets of Chile at
night and be safe: the police are probably some of the best in the world.
Crime does not pay in Chile. In Argentina the rich live in gated communities
with guards much like some places you see in the States, but not in Chile. |
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| Chile is much
different from other places in Latin America, all you have to do is walk
down the street and look at your neighbor's house: no bars on the windows,
usually a happy dog on the porch, and a family inside. Chile to me is what
the United States will never be again. |
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| One more thing
that should be said about Chile is that English is not widely spoken, unless
you speak Spanish or have a Spanish speaking partner you're going to have
a lot of frustration. I do not speak much Spanish but I work on it daily,
for some it comes fast for me its getting faster. So I am proof it can
be done, but many times I have felt God was smiling on me the day I met
Andy in Puerto Montt. Having a well connected partner is a godsend if you
can find one. I feel partnerships probably have a much better chance of
surviving in Chile than in the States because Latins are not as private
as we Americans. |
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| They mix with
others much more quickly than gringos. |
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| I have had
many dinners and many a good time with someone I have only known for 20
or thirty minutes. One family invited me for the weekend to their vacation
home in Viña del Mar. After only speaking with them 15 minutes,
I did go to their home and we have been friends from that time until today.
Life is not all business; my Latin friends remind me of this all the time
and I cannot think of a better place to keep it all in perspective than
Chile. |
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| The value
of money is something to consider when investing in another country. I
have watched the dollar drop in value against the Chilean currency for
three straight years; the world is waking up to the fact that the US inflation
rate is a lie that anyone with common sense can see. You cannot increase
the money supply by 8% a year for 8 years in a row with only a 3% increase
in GDP without a 5% inflation locked into the economy, I don't care how
you look at the inflation rate. |
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| In ten years
that's 50% of your buying power gone. At that rate you better have plenty
of money if you ever plan on retiring. If you live twenty years after retirement,
your inflated dollar will be worth 20% of what you started with. |
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| With all the
baby-boomers retiring with you its going to make it pretty crowded down
at the dumpster looking for something to sell at the swap meet. |
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| Chile has
reduced its inflation rate for ten years running and it's getting very
close to 0. Little inflation is a law in this country and part of the good
governing practices you find here. |
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| There has
been a war on poverty in Chile and it has been waged by making opportunities
available and destroying policies that crush wealth. The Chilean government
is smarter than the U.S. government; they don't take from the producers
and give it to the nonproducers. |
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| If you have
questions about Chile please feel free to write me; I try to answer every
email I receive. My only request is be specific: general questions are
difficult at best. On the question of buying land ask about price range
and what you want to do with the property. Email Bill@ChileForSale.com
Cell in Chile is 08-2013847 In Montana 406-889-3689 |
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| The following
is the first article that Bill wrote for the magazine: |
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