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

[earlyretirement]

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.

If you can find a reputable broker that is only charging 2% to safely wire funds out of Argentina I'd jump on that. It's a great deal. Most of the bigger reputable known brokers are charging much more than that right now.

 

[TevorCC]

Certainly, my earlier mention of a 30% discount might have been an exaggeration, but there is a significant discrepancy, and it's notable "through the central bank."

For those unfamiliar with property transactions in Argentina, it's crucial to abandon the notion of a clean, safe, low-risk bank cheque exchange process common in more developed regions. Here, the process involves handling real cash, and the imagery of greenbacks being counted almost evokes the presence of cocaine crystals. Be prepared to arrive at the exchange with a suitcase laden with greenbacks, potentially requiring the transportation of substantial sums through the streets of Buenos Aires. Despite exchanges taking place in what may be deemed secure locations, the associated risks should not be underestimated.

Caution is advised on every level.

 

[earlyretirement]

Certainly, my earlier mention of a 30% discount might have been an exaggeration, but there is a significant discrepancy, and it's notable "through the central bank."

For those unfamiliar with property transactions in Argentina, it's crucial to abandon the notion of a clean, safe, low-risk bank cheque exchange process common in more developed regions. Here, the process involves handling real cash, and the imagery of greenbacks being counted almost evokes the presence of cocaine crystals. Be prepared to arrive at the exchange with a suitcase laden with greenbacks, potentially requiring the transportation of substantial sums through the streets of Buenos Aires. Despite exchanges taking place in what may be deemed secure locations, the associated risks should not be underestimated.

Caution is advised on every level.

I agree with Trevor that you must Beware and be careful on every level. However, the other part is exaggerated and not sure what the part about "you can almost see the cocaine crystals glistening on the greenbacks as they're being counted by the buyer" was referring to. That part seemed odd.

If you're doing everything in white you just set up an account with a reputable firm like Banco Piano or one of the other long standing and reputable banks in town. You don't have to carry any cash at all. You just do the closing there at the bank and yes it is in cash but they just bring it out and count it out on the table.

And if you do have to transport money there are legitimate money transfer firms (the money exchange firms can recommend safe ones to use) that will insure the delivery. It does cost a few hundred dollars but you by no means would need to carry the cash yourself in the street.

I do agree the system is totally crazy and antiquated. But it is what it is. You just have to find the best way to do it without taking undo risk.

 

[TevorCC]

I agree with Trevor that you must Beware and be careful on every level. However, the other part is exaggerated and not sure what the part about "you can almost see the cocaine crystals glistening on the greenbacks as they're being counted by the buyer" was referring to. That part seemed odd.

If you're doing everything in white you just set up an account with a reputable firm like Banco Piano or one of the other long standing and reputable banks in town. You don't have to carry any cash at all. You just do the closing there at the bank and yes it is in cash but they just bring it out and count it out on the table.

And if you do have to transport money there are legitimate money transfer firms (the money exchange firms can recommend safe ones to use) that will insure the delivery. It does cost a few hundred dollars but you by no means would need to carry the cash yourself in the street.

I do agree the system is totally crazy and antiquated. But it is what it is. You just have to find the best way to do it without taking undo risk.

My 'cocaine crystals' statement refers to the 'crudeness' of the transaction... it's unrefined, complicated and highly risky. Sorry, it does come across as a bit abstract/obscure/strange but it stems from this article: http://www.guardian.co.uk/world/2009/aug/17/cocaine-dollar-bills-currency-us

 

[earlyretirement]

My 'cocaine crystals' statement refers to the 'crudeness' of the transaction... it's unrefined, complicated and highly risky. Sorry, it does come across as a bit abstract/obscure/strange but it stems from this article: http://www.guardian.co.uk/world/2009/aug/17/cocaine-dollar-bills-currency-us

Absolutely the transactions can be crude and complicated. NO doubt about it and I 100% agree with you. However, they don't have to be highly risky if you structure it properly.

 

[RichardES]

Everybody has a different idea of what a high price is, and what a good deal is- but if you can buy a 2 bedroom in Palacio Salvo for $130k US, I sure dont consider that to be "higher that BA".
An equivalent apartment in an equivalent building and location in BA could easily be double or triple that.
In fact, I dont think you could buy an apartment in a building like Palacio Salvo in any city in the world for anywhere near that little money.

http://realestate.totaluruguay.com/...alacio_Salvo_as_seen_from_Plaza_Independencia

Meanwhile, in Buenos Aires, the 14th floor of Edificio Kavanagh is for sale- for a measly 3.6 Million dollars.
http://www.bastay.com/buenos-aires-real-estate/edificio-kavanagh-14th-floor-reduced-in-price-3-6m

 

[earlyretirement]

Everybody has a different idea of what a high price is, and what a good deal is- but if you can buy a 2 bedroom in Palacio Salvo for $130k US, I sure dont consider that to be "higher that BA".
An equivalent apartment in an equivalent building and location in BA could easily be double or triple that.
In fact, I dont think you could buy an apartment in a building like Palacio Salvo in any city in the world for anywhere near that little money.

http://realestate.totaluruguay.com/...alacio_Salvo_as_seen_from_Plaza_Independencia

Meanwhile, in Buenos Aires, the 14th floor of Edificio Kavanagh is for sale- for a measly 3.6 Million dollars.
http://www.bastay.com/buenos-aires-real-estate/edificio-kavanagh-14th-floor-reduced-in-price-3-6m

I totally agree that real estate in Buenos Aires is much more expensive than in Montevideo.

Not sure that is the best comparison as that one in the Kavanaugh building is an entire floor and quite large. I've actually been in that apartment and it's quite cheesy! I actually met the owner of that property and he's quite a character!

But I have to say the guy has horrible taste in decor. That is one of the most beautiful buildings in Buenos Aires and just a classic building and the owner put in all kind of funky disco lights and other things. Totally whacky guy...

 

[earlyretirement]

I totally agree that real estate in Buenos Aires is much more expensive than in Montevideo.

Not sure that is the best comparison as that one in the Kavanaugh building is an entire floor and quite large. I've actually been in that apartment and it's quite cheesy! I actually met the owner of that property and he's quite a character!

But I have to say the guy has horrible taste in decor. That is one of the most beautiful buildings in Buenos Aires and just a classic building and the owner put in all kind of funky disco lights and other things. Totally whacky guy...

Here is one of the photos of the living room with the neon red and green lights!

http://www.buenosairesluxury.com/the-living-room.asp

When I was there, this guy was showing me the red and green NEON lights like it was something cool or something. I had to really struggle not to start laughing out loud! It was so hard to contain myself from telling him it was a disgrace to do something like this with such a beautiful property in one of the most classical buildings in Buenos Aires.

 

[MDirtBoy]

I'll let someone else tackle the math corrections. However, if buyer and seller have accounts outside of Argentina it's a non-issue.

 

[earlyretirement]

I'll let someone else tackle the math corrections. However, if buyer and seller have accounts outside of Argentina it's a non-issue.

Exactly. I'm selling a small apartment in Palermo and I've negotiated the buyer to pay me $20,000 of the boleto in cash, which my wife and I will carry back with us on the plane. The balance of the boleto will be wired to our bank in the USA.

Then at the closing the buyer is wiring us directly to our USA account in dollars.

It's not going to cost us a cent to get the funds for either the boleto or the escritura. You just have to get creative with with how you get paid.

Most of the transactions are happening that way now. I have several friends that sold recently and they all are getting paid that way.

 

[Camerer]

So what happens when they want to re-sell the property? The Argentine legal financial trail of how much it was sold for, how much bought for and where the funds (legally) came from..

seems you might still be able to "get away with it" now... but what if the Gov gets more wise... trying to get every penny from every transaction. Maybe ..just maybe not the best place (public forum) to discuss your ways around the system?

 

[earlyretirement]

So what happens when they want to re-sell the property? The Argentine legal financial trail of how much it was sold for, how much bought for and where the funds (legally) came from..

It's not my problem worrying about how/what the buyer will do in the future. Or how they will justify bringing in the funds. That will be their problem.

MANY people are doing transactions like this so me posting or not posting about it isn't going to change too much.

I'm fairly sure the government knows people are doing this. They aren't stupid...they just act like they are...

seems you might still be able to "get away with it" now... but what if the Gov gets more wise... trying to get every penny from every transaction. Maybe ..just maybe not the best place (public forum) to discuss your ways around the system?

Remember on the escritura (title deed) it says the buyer paid in cash at the closing. And sellers just make the buyer wire the funds first so there isn't any risk on the seller's side. But the buyer has to really trust the seller in this kind of situation.

But as far as the government is concerned, IMHO, they shouldn't care because they will be making 2.5% stamp taxes (between the buyer and seller) and 1.5% transfer taxes by the seller. Plus the 21% IVA on the realtor's fee plus the 21% IVA on the escribano's fee.

But the seller really won't care what happens to the potential buyer or how they declare they got the funds into the country, etc. That is their problem.

 

[Camerer]

While the seller may not be concerned, a seasoned buyer would undoubtedly contemplate these factors. Drawing from my extensive experience in buying and selling numerous properties across different countries, each with its unique circumstances and laws, the risk-to-profit ratio appears to be a straightforward decision. Reflecting on a decision a couple of years ago to consider investing in Argentina, opting against it stands out as one of the best choices I've made.

 

[earlyretirement]

While the seller may not be concerned, a seasoned buyer would undoubtedly contemplate these factors. Drawing from my extensive experience in buying and selling numerous properties across different countries, each with its unique circumstances and laws, the risk-to-profit ratio appears to be a straightforward decision. Reflecting on a decision a couple of years ago to consider investing in Argentina, opting against it stands out as one of the best choices I've made.

Oh no doubt cbphoto. I'm not disagreeing with you at all. I also own real estate in 5 different countries and I always take the time to do everything the right way. That always avoids problems when you go to sell. So definitely I agree with what you are saying.

I agree the risk/reward ratio for real estate Argentina at today's prices (or even a few years ago) isn't for everyone. You have to have really thick skin to deal with all the problems in Argentina.

From all the insane taxes and fees, to internet/cable/phone going out sometimes for days/weeks at a time. Electricity or gas problems, water leak problems from neighbors, 30% yearly inflation, and many other potential problems.

No way I would continue owning real estate there if my in-laws didn't live there and watch over my properties. Without having someone trustworthy watching over your property in Argentina, you can really get screwed.

I have some very close friends that have their apartments managed in Buenos Aires by a large company and they were shocked to learn that their bills haven't been paid in months! In a few properties the electricity and gas were even shut off for non payment. Another client said that his condo bills weren't paid in 3 months!

The key is having someone trustworthy or things can go very very wrong in Argentina. Totally agree with you!!