[Tail Gunner]

(09-12-2017 03:32 PM)Australia Sucks Wrote:  

Tail Gunner I think people need to differentiate between gross yields and net yields. Some expenses for property are relatively fixed costs. Whether you own $100,000 property or $1,000,000 property, a plumber coming to fix a broken pipe will still generally cost you the same money. Also things like property manager fees and strata fees, etc do generally have scale advantages. You also have to look at vacancy rates, etc. Also you have to consider in high yielding places if you are more likely to get dodgy tenants who trash the place or pay the rent late, etc. For example a 4% gross yield in a high end prime property might give you for example a 2.5% net yield, whereas a 6% gross yield in a non-prime location (which may have less capital growth) might give you a 3% net yield, so the difference is not as much as it first appears.

When you say 8-10% yields are you talking gross or net yields? What are the rental markets (vacancies, etc), tenant quality and tenant laws, capital controls, respect for private property, currency risks, transaction costs, financing/borrowing costs, etc in the countries you speak of? In many developing countries everyone (property manager, tenants, maintenance guy, etc) will fuck you over if they know you are not in the country keeping an eye on the property so there is that to consider as well. One huge advantage developed economies generally have is the low mortgage rates and low deposit requirements (for those looking to leverage into property) compared to developing economies where its typically difficult and expensive to borrow. I remember recently on Rooshv there was a property thread about investing in property in the U.K. and the o.p. was borrowing the majority of the purchase price at 2.5%!! Try and get an 80% LVR mortgage loan at 2.5% interest rates in a developing country.

I will point out that the O.P. was not clear if he has $600,000 in cash or is looking to borrow part of that money.

There is also liquidity to consider. Even in developing countries in tier one cities (e.g. capital cities, tourist cities, etc) yield are generally not going to be super high. The 8%-10%+ yields are generally found in second tier cities which in developing economies might be an illiquid market. What if you need to sell?

I am not saying you cannot make more money buying property in developing countries. I am just saying people need to do deeper research as things are not always as attractive as headline numbers suggest.

p.s. that nomad capitalist article was from 2015. I suspect the rental yields would now be somewhat lower in most of the countries listed in the article.

1) Everything that I discussed is net yields, exclusive of income taxes. You are right, gross yields mean little -- which is why I do not use them.

2) All your concerns are legitimate, but I am not here to offer a tutorial. There are workarounds for all these issues -- and once you figure it out, you now have a working template. For example, having a trustworthy local manager is essential. So, you do that first. If you plan to be an absentee landlord and cannot find a trustworthy local manager, do not invest in that country. Move on to the next.

https://www.overseaspropertyalert.com/se...as-rental/

3) If the OP does not have $600k cash, then fine. Other people who have some cash seem interested in the discussion.

4) Some of your suppositions are incorrect. In developing countries, in tier one cities (e.g., capital cities) the yields are generally high, because foreign corporations are pumping in both investment capital and employees to expand their market base. The influx of foreign nationals creates a demand for housing, only a fraction of which is typically up to Western standards. This limited supply raises the price of rents.

BTW: As a general rule, you should almost always rent to foreigners, because they are transitory (usually staying just for a few years) and do not have the legal rights often afforded to the locals (who may cease paying rent and then never leave your property). Of course, there are exceptions.

All of this information is available for those willing to do the research. I am just trying to open a few eyes to get people to think outside-the-box.

[Hypno]

Brazil and Argentina are highly volatile politically and have long histories of hyperinflations and capital controls. Capital controls are usually meant to prevent money leaving the country. They generally don't bar new investment but only a fool would bring new money in without an ability to take it back out.

managing property in these countries sucessfully over the long term is like 3D chess. Its possible but if you think you have an advantage because the yield looks higher realize that you are playing checkers.

there used to be a site called escapefromamerica.com, also efam.com, that had some decent articles. Tended to skew towards their advertisers but still some good info. Not sure how much of the old articles are archived on that site but this was something I looked at heavily about 15-17 years ago.

Most people with 600K in those countries are looking at ways to get it into the U.S.

[Svoboda]

(09-13-2017 05:12 AM)Hypno Wrote:  

Brazil and Argentina are highly volatile politically and have long histories of hyperinflations and capital controls. Capital controls are usually meant to prevent money leaving the country. They generally don't bar new investment but only a fool would bring new money in without an ability to take it back out.

managing property in these countries sucessfully over the long term is like 3D chess. Its possible but if you think you have an advantage because the yield looks higher realize that you are playing checkers.

there used to be a site called escapefromamerica.com, also efam.com, that had some decent articles. Tended to skew towards their advertisers but still some good info. Not sure how much of the old articles are archived on that site but this was something I looked at heavily about 15-17 years ago.

Most people with 600K in those countries are looking at ways to get it into the U.S.

That's the part that surprised me. It seems like there are capital controls on money coming in (check the link in earlier posts).

[Tail Gunner]

(09-13-2017 01:41 PM)Svoboda Wrote:  

(09-13-2017 05:12 AM)Hypno Wrote:  

Brazil and Argentina are highly volatile politically and have long histories of hyperinflations and capital controls. Capital controls are usually meant to prevent money leaving the country. They generally don't bar new investment but only a fool would bring new money in without an ability to take it back out.

managing property in these countries sucessfully over the long term is like 3D chess. Its possible but if you think you have an advantage because the yield looks higher realize that you are playing checkers.

there used to be a site called escapefromamerica.com, also efam.com, that had some decent articles. Tended to skew towards their advertisers but still some good info. Not sure how much of the old articles are archived on that site but this was something I looked at heavily about 15-17 years ago.

Most people with 600K in those countries are looking at ways to get it into the U.S.

That's the part that surprised me. It seems like there are capital controls on money coming in (check the link in earlier posts).

Yes, there are many types of capital controls. If you think about it, even those nations (many of which are located in Southeast Asia) that do not allow foreigners to own land, impose a form of capital control (because they restrict what you can do with your own capital). This is not nearly as egregious, however, as countries that restrict or tax the movement of capital into or out of their boundaries.

Either way, restricting the movement of funds into or out of a country is a big red flag because it exposes the anti-capitalist thinking of the government. It also places your capital at risk. How do you know that some future law will not trap your funds in-country? How do you know that some new retroactive tax will not destroy all your profits? Will you be able to liquidate your investments before such laws take effect, without having to sell at fire-sale prices -- when every other investor will likely be doing the same thing at the same time? So, why invest in a country that has a history of capital controls, when you can invest elsewhere -- unless the investment opportunity is so lucrative that you are willing to take the extra risk.

Of course, there are investors who successfully navigate places such as Argentina, buying when the Kirchner-clones get ousted and selling just before the next socialist takes power. IMO, you need to live in-country for this type of investment (or know a well-trusted advisor who lives there) to gauge the ever-volatile sentiment of the voting public.

By artificially depressing interest rates, the U.S. and other western nations distort the free market and artificially inflate asset prices, as investors seek higher yields -- and, as a result, accept higher (and, in my view, unacceptable) risks. I have no intent of playing that game, either. There are plenty of free-market countries left in the world without capital controls.

[Tail Gunner]

(09-13-2017 05:12 AM)Hypno Wrote:  

there used to be a site called escapefromamerica.com, also efam.com, that had some decent articles. Tended to skew towards their advertisers but still some good info. Not sure how much of the old articles are archived on that site but this was something I looked at heavily about 15-17 years ago.

The problem with most of these "services" is that they provide all the positive aspects of moving offshore without exposing any of the problems. "Live on the beach in X country for $300 a month." Yes, you could live there for $300 a month -- in a hut on a beach infested with biting insects with no electricity and no indoor plumbing.

It is best to read articles by people who objectively provide both the good and bad aspects of investing in a particular location -- and who have actually done it themselves. Just to cite an example. You notice that he cites the negatives (modest rents) as well as the positives (high historical capital appreciation).

https://eletters.overseaspropertyalert.c...x=fd9abb28

[Hypno]

In 1998 money flowed into asia and then out quickly. It resulted in a devastating collapse. So a lot of those countries imposed caps on money coming in. These controls are usually focussed on liquid money, like stock and bond investments. And are more common in the smaller SE Asian countries.

But you are missing the point. The big issue is getting your money out.

The even bigger issue is you are likely to get screwed countless ways while its there. You'll pay the gringo price. Taxes, repairs, maintainance, security. Then the value of the currency may collapsse, political regimes might change, etc.

Margarita Island - part of Venezuela - is a nice place. I know two lawyers who got married and took their honeymoon there. I was looking at buying a place there during TARP in the U.S. If I had pulled the trigger I would have lost my shirt, if not my life.

[Tail Gunner]

(09-14-2017 05:20 AM)Hypno Wrote:  

But you are missing the point. The big issue is getting your money out.

The even bigger issue is you are likely to get screwed countless ways while its there. You'll pay the gringo price. Taxes, repairs, maintainance, security. Then the value of the currency may collapsse, political regimes might change, etc.

From My Post #10:

Quote:

Where I would differ from your suggestion is that I would never place all my eggs in one basket, especially in a corrupt place such as Brazil that has a history of capital controls. In concept, I have no problem with a small portion of my investment funds in Brazil, but I would never place all my money there.

We have already established that capital controls are bad. We have already established that it is probably not wise to place most of your money in a country that has a past history of capital controls. Most of the countries on earth do not have capital controls. So, why are people still talking about capital controls?

Looking at 50-100 properties, which you must do anyhow to find the best available yield, identifies the real prices from the Gringo prices. So does hiring an local assistant to scan local listings and contact sellers. The seller will disclose the true price to your local assistant, who they believe is the potential buyer.

Your manager (how many times do I need to say it?) handles the taxes, repairs, maintainance, security -- and obtaining tennants. Your manager also avoids the countless ways that you can (otherwise) get screwed. That is their job.

Diversification mitigates currency risk, regime change, and almost any other risk. Or simply invest in countries that use the U.S. dollar as their own currency, including Ecuador, Panama, and El Salvador. No currency risk by simply doing a little thinking. Imagine that.

This is a textbook example of how western culture programs people not to think outside-the-box. Real Debbie Downer hamster-thinking here.

[Hypno]

You can't mortgage properties 80/20 in the third world, so its pretty tough to diversify with an investment this size.

Also, buying in dollar countries doesn't eliminate political risk - you probably can't sell that house in El Salvador.

[Tail Gunner]

(09-14-2017 06:54 PM)Hypno Wrote:  

You can't mortgage properties 80/20 in the third world, so its pretty tough to diversify with an investment this size.

Also, buying in dollar countries doesn't eliminate political risk - you probably can't sell that house in El Salvador.

With $600k you can easily invest in a minimum of four or five apartment units in four or five different countries. That is the very definition of being diversified.

Thanks for proving my point about your accentuating the negative and ignoring the positive. If you think that El Salvador is too unstable, then invest in Panama -- which is probably the most stable nation in Latin America.

No currency risk in Panama and the Panama Canal Treaty allows the U.S. to protect the Canal, including the use of military force. If you think that it is unsafe to invest in Panama, then you are right -- you should not invest anywhere outside the U.S., because you do not have the investor's temperament to do so.

That is not a criticism. There is an old adage that you should never invest in anything that does not allow you to sleep at night. Different investors have different temperaments and different risk tolerances and you must find the types of investments that work for you -- and allow you to sleep at night.

[Incubus]

Good points

Some points that were made are "out of country" no brain investments which causes me suspicion.

Let's establish one thing ...can playboyphil...leave the country (assuming USA citizenship but I assume nothing) if he can't leave the country (maybe a criminal record)

I think with IRMA and all that damage in Florida/Caribbean (along with Harvey) there may be some real estate opportunities

Silly me I already looked into "disasters" (maybe I wasn't the only bottom feeder) and the result was ...property prices go up from lack of available/livable commercial buildings or housing!!!!!!!! (go figure)...so investors/speculators should wait till things (properties/new zoning bylaws) iron out.

Go to Hawaii PlayboyPhill it's always overlooked, reasonably priced, good airport hub IMO

[RoastBeefCurtains4Me]

Somehow everybody started talking about the best way to invest a $600K nestegg. If someone says their budget for real estate is $xxx, I assume this is the max they can afford including downpayment and a mortgage. The OP is probably counting on some income from the property to help cover the mortgage.

I'll toss in downtown Denver in the mix. It's a large, highly walkable district, with many college girls. It's a big city, with all the sports, music, museums, art galleries, restaurants, and bars, and it is close to the mountains. $600k is still enough for a really nice place downtown

[Putin Closes]

(09-11-2017 11:55 PM)Tail Gunner Wrote:  

(09-08-2017 02:18 PM)playboyphil Wrote:  

My budget is $600k. My needs are:

• Diversity. I like non-white fit chicks. White towns with good international universities are ok.
• Walkability. I love downtown Los Angeles because I could do laps any day of the week and have a solid 10% open-to-close ratio. When I scaled my efforts I'd be getting laid multiple times per week. I need someplace where I can do laps.
• Rentability. Target property profile is a detached single or multiunit with >4 bedrooms that I can rent out individually.
  

So far the only cities that seem possible are Austin, Philly, and maybe San Diego. Los Angeles, SF, or Seattle would be incredible but they're out of my price range as I'm looking for cash flow with this money. Thoughts?

People need to learn to think outside the box. In many parts of the world, rental yields are double those found in the U.S. In many parts of the world, CD rates are literally five to ten times those found in the financially repressed U.S. (in U.S. dollars, without currency risks). Earn ten to fifteen percent annually on your money and you can live almost anywhere in the world, including the U.S. It takes research (including boots on the ground research), persistence, some educated risk taking, and acting outside your comfort zone, but the results are worth certainly it. Why beg for scraps in financially repressed social-welfare-state economies when the free market still beckons in much of the world?

There's a reason why there's a high interest on your money. All you have to do is take a quick look at the Mongolian Tugri to USD swing to see why they are offering such obscene amounts. No free lunch. But really OP should take the boring approach, suburbia with lots of corporate workers is always a safe choice, and the tenants are less apt to abuse your place.

[Tail Gunner]

(09-17-2017 11:32 PM)Putin Closes Wrote:  

(09-11-2017 11:55 PM)Tail Gunner Wrote:  

(09-08-2017 02:18 PM)playboyphil Wrote:  

My budget is $600k. My needs are:

• Diversity. I like non-white fit chicks. White towns with good international universities are ok.
• Walkability. I love downtown Los Angeles because I could do laps any day of the week and have a solid 10% open-to-close ratio. When I scaled my efforts I'd be getting laid multiple times per week. I need someplace where I can do laps.
• Rentability. Target property profile is a detached single or multiunit with >4 bedrooms that I can rent out individually.
  

So far the only cities that seem possible are Austin, Philly, and maybe San Diego. Los Angeles, SF, or Seattle would be incredible but they're out of my price range as I'm looking for cash flow with this money. Thoughts?

People need to learn to think outside the box. In many parts of the world, rental yields are double those found in the U.S. In many parts of the world, CD rates are literally five to ten times those found in the financially repressed U.S. (in U.S. dollars, without currency risks). Earn ten to fifteen percent annually on your money and you can live almost anywhere in the world, including the U.S. It takes research (including boots on the ground research), persistence, some educated risk taking, and acting outside your comfort zone, but the results are worth certainly it. Why beg for scraps in financially repressed social-welfare-state economies when the free market still beckons in much of the world?

There's a reason why there's a high interest on your money. All you have to do is take a quick look at the Mongolian Tugri to USD swing to see why they are offering such obscene amounts. No free lunch. But really OP should take the boring approach, suburbia with lots of corporate workers is always a safe choice, and the tenants are less apt to abuse your place.

Nope, yields on U.S. dollars range from about 3% to over 10% in various foreign banks. You are correct that foreign banks offer "obscene amounts" of interest (up to 20% or so) on local currencies. I was clearly talking about U.S. dollars. I expressly stated "in U.S. dollars, without currency risks." Foreign banks need U.S. dollars and are willing to pay true market interest rates to get them. That is the free market working.

This article explains the law of supply and demand as to why banks in other nations provide higher interest rates for U.S. dollars. Even a communist country such as Vietnam must bow to market forces:

Quote:

Dollar interest rate 10 times higher than world’s
Hanoi Times English

While the 3-month term dollar deposit interest rate o­n the international market stays at 0.25-0.35 percent per annum, many commercial banks in Vietnam have continued raising rates, standing now at 4.5-4.6 percent.
* * *
Since the dong/dollar exchange rate has become more stable and businesses now need dong, they tend to sell dollars to banks. As a result, dollar deposits have decreased so hiking interest rates is meant to lure more dollar capital.
* * *
He added that it is not really absurd that dollar interest rates in Vietnam continue rising, citing the dong interest rate. According to Vu, with dong interest rates now high at 13-15 percent per annum, businesses are open to loans in dollars at 6-7 percent. Therefore, deposit interest rates can hover around 4-5 percent and explains why banks do not intend to ease dollar interest rates."

http://en.baomoi.com/Info/Dollar-interes.../63521.epi

[treypound]

what did you end up doing?