Plus: Crooked Lawyer In Colombia, And Investments Under $25k
Buying real estate overseas is fundamentally about diversification. This is true whether you buy for investment or for retirement and argues in favor of buying for retirement rather than renting. Buying your new retirement residence overseas means moving money out of the United States and putting it into another market and, potentially, another currency.
Moving all your money out of the States and into a new retirement residence overseas doesn’t alone bring you the diversification you should be seeking right now. However, using some of your capital to purchase a retirement residence in the place where you want to live and putting other of your capital to work in another market (that perhaps uses a different currency) gets you not only diversification but also what amounts to a rent-free retirement.
Another advantage of buying your retirement residence overseas rather than renting it is that it helps you to “take the plunge.” It allows you to move your life forward, unequivocally, embracing the new adventure. Many who rent before they buy do so to be able to maintain a property back home, “just in case.” While this can be sensible, it’s also an anchor, a drag. It can divide your attention and keep you looking backward instead of ahead to your new life. Keeping one foot on the pier and the other on the departing boat can land you in the drink. You may remain only partially committed, which will be a handicap.
The bottom line for the retiree-buyer is to follow your instincts, not only with regards to what to buy overseas but also when answering the question, should you buy at all? You know yourself, your motivations and preferences, and how well you’ve researched your chosen destination. You know your level of commitment, your level of readiness, and your tolerance for risk.
If you decide that you do, in fact, want to buy real estate for personal use in retirement (rather than renting), here are 10 questions to ask yourself as you shop:
1.) How much space will you need? Do you want an apartment or a house? One bedroom or two? (You probably won’t need more than two.) Two levels or only one? A guest room or even a guest house? Will you have guests often, for example? Will you want them to be able to stay with you, or would you prefer if they came and went from a hotel nearby?…
2.) Do you want a front yard, a back garden, or a swimming pool? All of these things require care and maintenance…
3.) Do you want to be in the heart of downtown or out in the country?…
4.) Do you want a turnkey, a renovation project, or something in-between?…
5.) Do you like the idea of living in a gated community, or would you prefer a more integrated setting, such as a neighborhood where you could become part of the local community? This is a key consideration. Going local means you have to learn the local language (if you don’t speak it already). Or perhaps you’d prefer to be off on your own with undeveloped acres between you and your nearest neighbor. In this type of rural setting you will need to build your own in-case-of-emergency infrastructure…
6.) Consider traffic patterns and transportation. Where you base yourself determines whether you’ll need to invest in a car, which is an important budget consideration…
7.) Consider the convenience factor. How far is it to shopping, restaurants, nightlife, parking, and the nearest medical facility?…
8.) Do you want a furnished home? You may have no choice but to buy unfurnished (unless you buy, say, from another expat who’s interested in selling his place including all contents). Buying unfurnished means you’ll need to purchase furniture locally or ship your household goods from home…
9.) What’s your budget? This is the most practical guideline of all, of course. Be clear on your finances before you start shopping, and, if your budget is strict, don’t be tempted to consider properties outside your price point. You’ll only be disappointing yourself unnecessarily…
10.) Finally, ask yourself what kind of view you’d like from your bedroom window each morning. This can be the most important and telling question of all, for it forces you to think very specifically about what’s important to you.
Editorial Director, Global Property Advisor
I am planning to move to Colombia. Some friends have applied for a pension visa there through a lawyer. The lawyer connected them to a security broker. My friends sent money to the security broker several times and recently got an accounting from the lawyer for his fees. It appears that every time my friends sent new money to the security broker, the lawyer charged them 6% to file a “Form 4”. In addition, the security broker charged them 2% for the investment. That is 8%.
I can see the commission for the security broker but 6% for the lawyer for all monies brought into Columbia! That sounds outrageous!
Please send me your feedback as I am hesitant about moving to Colombia and paying these huge fees just to bring money into that country.
That lawyer is nothing more than a common thief… a high-end thief.
Completing the Form 4 is about three minutes’ work, regardless of the size of the transfer. A lawyer who charges a percentage is bordering on criminal.
I paid 200,000 pesos (US$65) for a lawyer to complete a Form 4 and deliver it to the broker, the first few times. Since then, I fill them out myself, for free.
After doing a bit of polling this week, the highest price I found was around US$125. The price Gigi’s friend paid could amount to US$12,000 on an apartment purchase… that’s pretty steep for three minutes’ work.
We’ve asked Gigi to find out the lawyer’s name, so we can pass it along.
I also spoke with Angela Sanchez of Alianza Valores. She tells me that the 2% broker’s fee was very high; not as egregious as the lawyer’s fee, but certainly above market rates.
We really appreciate it when readers take the time to report this sort of thing.
I’m looking forward to reading the Overseas Property Alert—thanks for making it available.
I looked at the lime plantation opportunity in Panama, but it is still a bit too large of an investment for me as an individual.
I hope you will also be looking for agricultural opportunities for small timers like me; maybe something in the US$10k to US$20k range?
I checked with our property guru Lief Simon who has a wide range of contacts for these kinds of investments. Lief tells me that the lowest point of entry right now is for the Panama teak project, where parcels start at US$15,500, and ownership makes you eligible for a visa.
Next up (in the agro arena) would be the Nicaragua teak project, where parcels start at US$26,500.
Aside from agriculture, I’ve recently written about a property investment in Colombia, where shares start at US$25,000. You can read that article here.
Have a question? You can write to Lee here.