Apartment Rental Is this the right time to buy a flat in Argentina?

[MarianoCc]

Hello everyone,

I'm currently contemplating whether this is an opportune time to consider purchasing a flat in the area. I visit every year, staying for a few months due to personal connections and the ability to work remotely over the internet.

Over the past few years, properties have been notably expensive, exceeding the cost of comparable assets in Amsterdam. I'm curious to know if there's a significant affordability difference when making payments in Euros (as I'm based in Amsterdam, the Netherlands) or potentially in dollars through a bank transaction.

Does the choice between Euro and Dollar payments genuinely impact the affordability of properties?

Cheers

 

[DaveDed]

Negotiating in dollars or euros might give you favorable terms, but the challenge lies in bringing the foreign currency into the country. While there are methods to pay someone outside the country for a property, it's crucial to consult with an experienced escribano to avoid potential issues with AFIP down the line. In the past, wiring money from abroad allowed for the conversion to pesos ARG and then repurchasing the foreign currency at a higher rate to settle the payment. However, the current system automatically converts incoming foreign currency into pesos ARG, eliminating the option to repurchase foreign currency even if wired into Argentina.

 

[MarianoCc]

Certainly, the payment aspect poses practical challenges.

There's an interesting case I came across: an Argentine residing in Spain successfully negotiated a 12% reduction, paying 60,000 euros for a flat in Buenos Aires. What's intriguing is the payment method—he transferred the funds into a bank account held by the owner's brother, who also resides in Spain. The brother retained the money in euros in Spain on behalf of the owner. While it appears to demand a significant level of trust among the three individuals involved, the arrangement proved effective.

 

[TevorCC]

Are you crazy? No, don't do it. This country is not investment friendly so you risk losing a large part or all of your investment when you sell and try to take your money home. They have a sordid history of default and radical/unpredictable political/social policy that would make any intelligent investor run for the hills.

You will be better off renting a fully furnished apartment for a couple of months each year rather than buying. Buy USA blue chip corporate bonds which pay 4.5 percent annually and use the yield to pay for your fully furnished rental in bsas. Just a thought.

 

[MarianoCc]

Looking at the prices at the site duenovende.com.ar: they're still rocket high
as if BsArs is a 1st world city!

 

[earlyretirement]

NO, I would not say now is a good time to buy. I'd wait a year or so and see what happens. There are MANY restrictions and controls going on now and most sellers are trying to sell their places if they can sell them at market rates.

I'd wait to see what the next restriction or control is.

Make no mistake however, properties are still "priced" in dollars and valued in dollars. Not as many transactions now but there are still transactions going on and all they are doing is just having the funds wired to the seller's account abroad.

I wouldn't necessarily say property prices will go down either. But I still think it's wise to wait a year. There isn't anything else safe to invest in Argentina besides real estate or land. So there should always be value in them in good areas.

Also, I think that CFK will eventually do another amnesty program where she allows people to bring back funds into Argentina and pay little to NO taxes if they are buying real estate. Of course this go around I'm not sure she would have many takers.

I'd recommend you wait to see what happens before buying now.

 

[Therek]

Not yet, it's advisable to hold off for now. Some individuals are still holding on to expectations based on pre-economic downturn conditions. However, as the economy inevitably slows down, which is anticipated within the next three years, and signs of desperation become apparent, property prices are likely to experience a significant and drastic decline.

Spain, in particular, seems to be a favorable location for making property purchases at the moment.

 

[earlyretirement]

Well, buying still does make sense for many locals that have tons of cash "under their mattress". (Literally). For these people, they don't feel safe with cash in their homes and they aren't earning anything on it. With them, it's not even a matter of what's going to produce the highest ROI. It's about capital preservation...not capital appreciation or cash flow.

But still locals can get decent cash flow just renting out on longer 2 year leases.

Also, there are many people in and out of Buenos Aires for work constantly that just want their own place vs. paying higher rates for high end hotels or high end apartment rentals. And it's worth it to them to have the same place each time they come into Buenos Aires.

For example, I just got an offer on my apartment in Palermo Soho from a lady from Uruguay that comes into down every month for several weeks on business. In this type of situation it makes sense as well.

But if you're just coming not too often to Buenos Aires, I'd hold off for now and really wait until next year to see if there are any more restrictions or controls.

I don't see property prices going up the next year or so. I see them going down. Not saying they will collapse because I don't believe they will. But there is a much higher chance properties will get cheaper in this kind of restrictive environment vs. go up.

 

[MarianoCc]

Thank you for the insightful responses. I've gathered that now might not be the ideal time to make a purchase. Currently residing in Amsterdam at the age of 47, my financial assets are here. The primary need for a flat in Buenos Aires arises from my frequent visits, although there are occasional gaps of 3 or 4 years between trips. On the flip side, the exorbitant short-term rental prices coupled with subpar quality are disheartening.

Considering all factors, it seems prudent to either maintain my funds in Dutch banks or explore the option of purchasing property in sunny Spain, especially given the favorable price comparison to the current market conditions here.

 

[GeremiasGor]

Wait.
People are selling at half the asking if you have dollars or Euros. But it's going to get better. Fast. Wait

 

[earlyretirement]

Wait.
People are selling at half the asking if you have dollars or Euros. But it's going to get better. Fast. Wait

Huh? This isn't the case at all. I sold my property in dollars and I have many other friends that have also recently sold. They demanded dollars and most of us are getting paid outside of Argentina.

I kind of laugh at the posts that say owners are willing to give huge discounts to get paid in dollars. This just isn't the case.

The true value of properties is in USD and probably always will be no matter what the government says should be accepted.

Am I saying that real estate in Argentina is a good investment today? Absolutely not. Am I saying you can't get your dollars out in dollars? Nope. Because there are ways around getting paid in pesos.

However, real estate is always a good idea if you're in it for the longer term. You can get killed in ANY country trying to flip real estate or hold it short term.

The buy side costs are high in Argentina when you factor in BUYER side realtor's commissions, stamp taxes, legal fees, costs to legally get your money into Argentina. Then on the sales side you have to think about seller side realtor fees, stamp taxes, transfer taxes, cost to get permit from AFIP to sell the property as a non-resident.

All the while owning it you have ABL taxes (which keep going up), annual asset taxes, income tax on rental income, etc.

FAR better places in the world for real estate on investment properties with the option to potentially leverage and interest rates are dirt cheap now in places like the USA.

But if you are living in Buenos Aires for the long-haul or indefinitely or plan to hold long term....buying can make sense.

 

[GeremiasGor]

Thank you for the insightful responses. I've gathered that now might not be the ideal time to make a purchase. Currently residing in Amsterdam at the age of 47, my financial assets are here. The primary need for a flat in Buenos Aires arises from my frequent visits, although there are occasional gaps of 3 or 4 years between trips. On the flip side, the exorbitant short-term rental prices coupled with subpar quality are disheartening.

Considering all factors, it seems prudent to either maintain my funds in Dutch banks or explore the option of purchasing property in sunny Spain, especially given the favorable price comparison to the current market conditions here.

Good idea. i you invest in Argentia you may get screwed. If not on the way in, then surely on the way out.

 

[StiveCosae]

Wait.
People are selling at half the asking if you have dollars or Euros. But it's going to get better. Fast. Wait

Let's put this to a simple test next week. If anyone is walking past a real estate office in CF, just go in and ask to see the properites that could be bought in dollars or Euros for half the listed price.

Then please post the name of the office and any links to the properties that are available at such a deeply discounted price.

 

[earlyretirement]

Let's put this to a simple test next week. If anyone is walking past a real estate office in CF, just go in and ask to see the properites that could be bought in dollars or Euros for half the listed price.

Then please post the name of the office and any links to the properties that are available at such a deeply discounted price.

LOL. EXACTLY Stive! I didn't see your post before when I just posted mine above (and for some reason I don't have the option to edit my post).

But it's laughable when I read in the paper or on internet message boards, people are willing to give 25% to 50% discounts for getting paid in USD. Very funny.

The thing people forget about is unlike the USA or Spain or UK or other places.....real estate in Argentina is NOT leveraged and owners paid cash for them and own them outright.

Unless an owner is absolutely desperate to sell, owners can just sit on them for long periods of time until they find the offer that they like. And in the meantime, just rent them out either short or long term.

The biggest threat to property prices in the future, IMHO is AFIP. Because in some cases they are asking the local buyers to justify the income to purchase and in other cases they aren't. If they keep up the pressure for locals to justify all their income then property prices will go down.

With the vast majority not declaring anywhere close to their true income.....this is the biggest unknown. I've had friends that got offers to purchase their properties in cash with USD but AFIP is asking how they got the income and the deals are falling apart.

Other deals the buyers aren't asked to provide anything.

But owners are NOT discounting huge amounts to get paid in US dollars.... properties have been priced in USD for a LONG time and I don't see that changing anytime soon.

 

[earlyretirement]

Also, I forgot to mention that locals ARE trying to lowball owners and see if owners are motivated or desperate. I met an American ex-pat trying to sell her property. She has a DNI so she doesn't have to apply for a permit to sell.

She has had it for sale for a long time as it's a bigger expensive property. She has only gotten lowball offers from people trying to pick up something cheap. I've heard the same thing with some of my friends. They have all been refusing the lowball offers and just waiting for things to improve with the restrictions/controls.

Most wise owners just tell their listing agents not to even bother them with an offer less than $X. That's what I did. I told my realtor not to even think about accepting a reserva unless it was under a certain amount. And not even to mention it to me as I didn't want to waste my time or energy on it.

That's the way to go unless you are desperate. Sure, there will always be some desperate people (death in family, etc) but most of the time it's different because I've noticed there is a bigger support system in Argentina. If someone loses their job, they can depend on their family for support. Whereas in a place like the USA or UK people are more leveraged and living paycheck to paycheck and don't want to ask their family for support.

Also, even when there is a death in the family in Argentina and property is inherited or passed down. Very rarely does it just pass to one person. In the times I've seen it happen, there have been squabbles in the family (usually between siblings) on price or if they even want to sell.

And they have to have agreement by everyone to sell it. I just haven't seen the desperation to sell in Argentina compared to other places I own real estate.

 

[TechNow]

Also, I forgot to mention that locals ARE trying to lowball owners and see if owners are motivated or desperate. I met an American ex-pat trying to sell her property. She has a DNI so she doesn't have to apply for a permit to sell.

She has had it for sale for a long time as it's a bigger expensive property. She has only gotten lowball offers from people trying to pick up something cheap. I've heard the same thing with some of my friends. They have all been refusing the lowball offers and just waiting for things to improve with the restrictions/controls.

Most wise owners just tell their listing agents not to even bother them with an offer less than $X. That's what I did. I told my realtor not to even think about accepting a reserva unless it was under a certain amount. And not even to mention it to me as I didn't want to waste my time or energy on it.

That's the way to go unless you are desperate. Sure, there will always be some desperate people (death in family, etc) but most of the time it's different because I've noticed there is a bigger support system in Argentina. If someone loses their job, they can depend on their family for support. Whereas in a place like the USA or UK people are more leveraged and living paycheck to paycheck and don't want to ask their family for support.

Also, even when there is a death in the family in Argentina and property is inherited or passed down. Very rarely does it just pass to one person. In the times I've seen it happen, there have been squabbles in the family (usually between siblings) on price or if they even want to sell.

And they have to have agreement by everyone to sell it. I just haven't seen the desperation to sell in Argentina compared to other places I own real estate.

The introduction of dual exchange rates and the emergence of the blue dollar have led to a devaluation of approximately 40% for everything priced in pesos in Argentina, including salaries, services, and consumer goods. However, since property prices have traditionally been denominated in dollars, sellers are reluctant to adjust their property values by the same percentage.

It's anticipated that property prices will undergo a correction. A 40% devaluation can't occur without some impact on property values. Offering to pay in USD may secure you a 10-15% discount from the listed price, but it's unlikely to result in a 50% reduction. From my perspective, a market reactivation would require a price drop of 10-20%.

Presently, we're not in a scenario reminiscent of the desperate sellers seen during 2001/2002. The situation doesn't compel people to sell their properties for immediate financial needs. To witness significant savings, it might be necessary to await a more profound crisis. As of now, we haven't reached that point.

 

[earlyretirement]

The introduction of dual exchange rates and the emergence of the blue dollar have led to a devaluation of approximately 40% for everything priced in pesos in Argentina, including salaries, services, and consumer goods. However, since property prices have traditionally been denominated in dollars, sellers are reluctant to adjust their property values by the same percentage.

It's anticipated that property prices will undergo a correction. A 40% devaluation can't occur without some impact on property values. Offering to pay in USD may secure you a 10-15% discount from the listed price, but it's unlikely to result in a 50% reduction. From my perspective, a market reactivation would require a price drop of 10-20%.

Presently, we're not in a scenario reminiscent of the desperate sellers seen during 2001/2002. The situation doesn't compel people to sell their properties for immediate financial needs. To witness significant savings, it might be necessary to await a more profound crisis. As of now, we haven't reached that point.

Yes, I agree that prices should come down. But even back before these controls, many times you could negotiate a bit less than a 10% discount off the asking prices.

One thing about Porteños is they typically already inflate the asking prices knowing full well a buyer will be making a lower offer. (It's like a chess game to the locals).

I agree with el expatriado that the time to buy real estate there will be to wait until the real crises (and it is coming). If you want to buy, buy then and there are always more motivated and desperate people during a crises. Even if they are financially stable, you always get a % of the population in any crises, panic and want to "get out". THAT will be the time to buy.

 

[MarianoCc]

It's challenging to pinpoint exactly when the opportune time to buy during a crisis in Argentina will occur—whether it's 1, 3, or 7 years from now remains uncertain. The consensus aligns with the notion that the most favorable buying opportunity arises during a crisis, echoing the trend observed in 2001-2002.

As for the current exchange rate of the euro in the parallel market, I recommend checking recent financial updates or consulting reliable currency exchange sources for the latest information.

 

[TevorCC]

If you have dollars, I've heard that there are capital market brokers who will charge a 2% fee to send your USD $ out! Some charge more but be careful as they're probably splitting the commission with the person/expat who introduces them to you. In first world countries, introduction fees are transparently disclosed but not here.

It's a highly risky process without transparency or legal recourse. If something goes wrong, you will have no chance in hell recovering the money.

 

[earlyretirement]

It's challenging to pinpoint exactly when the opportune time to buy during a crisis in Argentina will occur—whether it's 1, 3, or 7 years from now remains uncertain. The consensus aligns with the notion that the most favorable buying opportunity arises during a crisis, echoing the trend observed in 2001-2002.

As for the current exchange rate of the euro in the parallel market, I recommend checking recent financial updates or consulting reliable currency exchange sources for the latest information.

No one knows for certain when THAT moment will be. My feeling is within 2 years. I seriously doubt you're going to have to wait many more years before the next crises.

Sure, the best moment was right after the crash but realistically it was very good pickings for several years after the crash but things quickly bounced back once the financial system stabilized and people stopped panicking and figured out that real estate was the one true safe investment in this whacky country.

The best thing is to keep plenty of cash on the sidelines and wait for THAT moment to come and be ready to take advantage of the bargains out there. It's typically the same in any crises. Things run in cycles, especially real estate.

As far as comparing Montevideo and Buenos Aires. It's like comparing apples and bananas. Yeah, they are both "fruit" but one is a sleepy little boring town and one is a vibrant and energetic city full of life.

I totally agree that Uruguay is a GREAT place and has a working banking system, the judicial system works and everything works fairly well. Buying a property there is easy with your passport and selling is also easy. When I bought I just used my passport # and easily wired money into the country and it didn't cost me a penny. When I sold the same deal. I didn't have to worry about the wacky things like in Argentina.

But you can't compare the two and anyone that says that comparable real estate there in Montevideo is more expensive than Buenos Aires is deluded. Montevideo is much cheaper than desirable real estate in Buenos Aires.

While I agree that NOW is NOT the time to buy real estate in Argentina, I disagree with statements like Trevorcito that say that real estate investing in Argentina is only for gamblers or people that want to lose their money. That isn't true either.

If you are buying at the right stage of the boom and crash cycles of Argentina you can do ok if you structure everything properly and legally.

You can buy real estate in many parts of the world and probably do better than Argentina if you're buying at today's prices. But the truth is many of the places you will buy are very boring or you'd never want to visit.

Someone mentioned Mongolia and ironically enough I have a good friend that bought an investment property a few years ago. He claims it was a good investment. But you know what? I wouldn't know or care because I would have NO desire to hang out in Mongolia.