Taxes "There are few profitable investments left in Argentina...." - New York Times

[earlyretirement]

Pretty good article in the New York Times.

http://www.nytimes.com/2012/09/16/r...into-condos-in-miami.html?_r=1&pagewanted=all

These Argentines are buying up real estate in Florida like crazy! Mad rush to get their cash out of the country.

 

[Chesse]

It just boggles the mind what the government is doing here. Lift restrictions on businesses from harsh labor laws and prejudiced courts and heavy taxes and bureaucratic burden, open markets, kill corruption and Argentina has a powerhouse of investment capital.

Things have gotten so bad that many Argentinos don't even want to, or can't, invest in property in their own country. All that money that is being kept in the country by the harsh currency restrictions is just sitting there, unable to be used, doing nothing to advance the economy.

What a shame.

 

[earlyretirement]

It just boggles the mind what the government is doing here. Lift restrictions on businesses from harsh labor laws and prejudiced courts and heavy taxes and bureaucratic burden, open markets, kill corruption and Argentina has a powerhouse of investment capital.

Things have gotten so bad that many Argentinos don't even want to, or can't, invest in property in their own country. All that money that is being kept in the country by the harsh currency restrictions is just sitting there, unable to be used, doing nothing to advance the economy.

What a shame.

Exactly! Even the Argentineans that want to invest in real estate in Argentina can't easily do it now. It's a shame. I just hope all these Argentinos that are buying in the USA aren't buying under their own names because CFK will most likely come after them.

 

[TrophyCs]

I feel sorry for the Argentine people still believing in US economy...I left US precisely because is nose diving economically and even a small condo purchase involved going through a nonsense of papers, taxes and regulations...let alone the fact that the majority arent even concrete made! I travelled around..I found that Ecuador was the best place to invest in concrete forever lasting brick made properties. The southamerican region is growing fast, Ecuador is doing really good so I was lucky to do so...Ecuador currency is US$, its properties are priced also in US$ and way lower for high end units compared to many other places, taxes are incredibly low, no inflation, no countless paperwork required and investment support my legal permanent status. It is a win-win thing. Oh, that is without mentioning the weather!! so good by the ocean...I love it.

 

[TrophyCs]

Please open your eyes...It is THE NEW YORK TIMES, twisting info again...they try everything to boost the economy as US keeps borrowing from China to meet the Fiscal budget. Their own wealthy people is leaving, emptying the banks. They even had to create an "exit tax" or HIRE Tax (google up) to make it legal to keep 30% of outgoing funds as use for future tax payments. The wealthy leaves and many even renounce citizenship to avoid the Gov to go after them overseas...very sorry for the Argentine investing there.

 

[BradMC]

Hey, whatever it takes to recover the value of my POS condo in West Palm, I'm all for it. Let the Argentinian demand floodgates open (and since most of my neighbors will be Argentine, it's a good thing I learned castellano

 

[earlyretirement]

Hey, whatever it takes to recover the value of my POS condo in West Palm, I'm all for it. Let the Argentinian demand floodgates open (and since most of my neighbors will be Argentine, it's a good thing I learned castellano

Well, I don't necessarily think Florida is the best place to buy real estate in the USA. Yeah, it's dirt cheap compared to the peak bubble years but I'd never want to own in Florida for the most part.

You have expensive hurricane insurance plus the possibility of a major hurricane doing severe damage to your property. Also, many buildings just have INSANE HOA fees. I looked at a few buildings were it was 1 bedroom and 1 bathroom and a small unit and the HOA fees were over $1,000 US a month!

Many buildings have people that aren't paying their HOA fees and the buildings are falling apart. Yeah, you can find some cheap stuff there but you have to be really careful.

I do think there are some good buys in the USA in desirable areas where rental yields are pretty good. But the key is separating buying as a total investment vs. buying to also use. I'm not sure how much these Argentineans are actually using their flats in Florida but I know several that own there and they go back and forth all the time.

I'd rather own in NYC vs. Miami or Florida any day of the week however as NYC should always do fairly well over the long run.

Absolutely I'd rather own real estate in the USA at these levels and prices vs. buying in Buenos Aires.

Noelle, your post would have been much better if it was many years ago during the bubble but real estate in many parts of the USA have already started rebounding. I'm not saying there isn't more pain ahead but over the long run in the next decade or so, you will see prices in desirable cities surpassing peak prices in the USA.

As far as Noelle you mentioning "a lot of nonsense of papers, taxes and regulations of buying in the USA". That couldn't be further from the truth. Buying real estate in the USA is a very simple process for the most part. As well paying for it (if you're paying all cash like these Porteños are) is very easy and simple and just a matter of sending funds to the Escrow company.

Compare that with buying real estate in Argentina. It's like night and day. Where did you buy Noelle where you had a lot of papers, taxes and regulations? Yes, there is documentation when buying but the process couldn't be easier in the USA.

I'm in no way, shape or form advocating for investing in the USA. I'm just giving facts.

 

[bwyonsea]

Please open your eyes...It is THE NEW YORK TIMES, twisting info again...they try everything to boost the economy as US keeps borrowing from China to meet the Fiscal budget. Their own wealthy people is leaving, emptying the banks. They even had to create an "exit tax" or HIRE Tax (google up) to make it legal to keep 30% of outgoing funds as use for future tax payments. The wealthy leaves and many even renounce citizenship to avoid the Gov to go after them overseas...very sorry for the Argentine investing there.

Sure, but those Argentines who are buying there doesn´t live there or make the money there, they just enjoy Miami. Regards

 

[TrophyCs]

Sure, but those Argentines who are buying there doesn´t live there or make the money there, they just enjoy Miami. Regards

Absolutely, It is just that the trend was on investments more than tourism but I see your point now...thanks!

 

[ZoeSio]

Absolutely, It is just that the trend was on investments more than tourism but I see your point now...thanks!

They're also guaranteed a 6% return on their investment in rental income for the next 3 years. That's a pretty decent offer for no work...

 

[TrophyCs]

They're also guaranteed a 6% return on their investment in rental income for the next 3 years. That's a pretty decent offer for no work...

That is just a projection,...again, it is the New York Times. They want to sell a good market for the election but the numbers show ongoing unemployment increase and record people actually leaving the country. Ever wonder why there are so many empty apts for sale in first place?? If people cant work they cant rent...

 

[earlyretirement]

That is just a projection,...again, it is the New York Times. They want to sell a good market for the election but the numbers show ongoing unemployment increase and record people actually leaving the country. Ever wonder why there are so many empty apts for sale in first place?? If people cant work they cant rent...

Yes, I'd never trust anything just written in ANY newspaper. However, it is possible to get over 6% net cash flow in plenty of markets.

I do agree with you that the actual unemployment rate in the USA is MUCH higher than the USA claims, especially when you count in underemployment or people that just gave up on finding jobs.

But the economy is tough in many places around the world. Most places right now are experiencing some pain, especially Europe.

Again, I'd have no interest in Miami or most places in Florida. But there are plenty of markets where you can net over 6%.

No one is arguing that the USA has it's fair share of problems. I think the key point of the article was that many Argentines are buying real estate in the USA vs. the alternative of keeping their money in Argentina.

That is the point you need to take from the article. Certainly no one is saying there might not be better places around the world to invest in real estate.

But I agree with the article it's better for these locals to get their cash out of Argentina. I think that is plain wise considering everything going on.

Also, many locals simply can't invest their cash in real estate in Argentina anymore. Many of these locals never declared this cash/asset they have and in many cases AFIP is seeing how much they declared in the past.

So even if many of these people wanted to keep their money in Argentina in real estate they can't anymore.

 

[TrophyCs]

I know folks...I am sorry I sound negative I am just realistic though...I wouldnt invest in BA nor in USA now. US is deep in debt and heading and each day China buys up more of the US bond debt. US is just printing money to circulate through the economy to support the presidential momentum by at the end they are driving themselves off the cliff.
I almost bought in Arg back in 2006 but thank God the closing didnt go through...I would have gotten stuck with depreciating pesos.
Early retirement: I was going to buy in Boston, MA but only with mortgage application, property insurance, formal appraisal report and detailed finantials...the only good was its proximity to Harvard but buying in Argentina was easier afterall... I bought in Ecuador where the currency is also US$, using only signed sale agreement, proof of paid taxes and evidence of no existing mortgages. The closing went smooth in three days. Oh btw for more investment info CDs are up to 8% income interest! Given the instability in the rest of the world I feel safe and feel blessed to have made the best of my bucks in a country with a growing economy...just my personal experience...

 

[earlyretirement]

I know folks...I am sorry I sound negative I am just realistic though...I wouldnt invest in BA nor in USA now. US is deep in debt and heading and each day China buys up more of the US bond debt. US is just printing money to circulate through the economy to support the presidential momentum by at the end they are driving themselves off the cliff.
I almost bought in Arg back in 2006 but thank God the closing didnt go through...I would have gotten stuck with depreciating pesos.
Early retirement: I was going to buy in Boston, MA but only with mortgage application, property insurance, formal appraisal report and detailed finantials...the only good was its proximity to Harvard but buying in Argentina was easier afterall... I bought in Ecuador where the currency is also US$, using only signed sale agreement, proof of paid taxes and evidence of no existing mortgages. The closing went smooth in three days. Oh btw for more investment info CDs are up to 8% income interest! Given the instability in the rest of the world I feel safe and feel blessed to have made the best of my bucks in a country with a growing economy...just my personal experience...

Nothing wrong at all with sounding or being negative. I just think it's always good to have accurate information and details.

Absolutely the USA has it's share of problems. No doubt about it. But I'd still rather own hard assets like real estate in desirable areas that are very easy to rent.

Yes, if you are trying to get a loan/mortgage in the USA there is a lot of paperwork. As you mentioned, you have to fill out the mortgage application (which isn't difficult), then show last 2 years taxes, W2 forms, bank account statements for the last few months as well as statements from investment accounts. And they will also run a credit check with all 3 bureaus and get a FICO score. But that's basically it.

I just got approved to buy an investment property. From the time I was sent the list of things to supply to the time I was approved for the loan was literally 5 hours. I sent all of it in PDF format and they had it approved by the end of the day. So it's not always difficult if you're credit worthy.

I'm a bit confused. In Ecuador, did you get a mortgage/loan for the property? Or did you pay cash?

These Argentinos buying in the USA are paying cash so the process couldn't be easier. They don't even have to get their credit checked, fill out any applications or even get an appraisal or inspection if they don't want.

I've closed on properties before in the USA from time my offer was accepted to closing it was only 2 weeks.

I'd love to hear about if a bank in Ecuador is giving a non-resident a mortgage? Is that the case with you? Thanks in advance.

 

[TrophyCs]

Again...anybody reading the small prints and researching market trends knows the economy in US is already in bad shape and heading for worse...I just hope people can still make an income, let alone resale its property..and the HOA are high there. NY has one of the highest price per sqft... an easy rental? when it had a promising future...I decide t diversify a bit by thinking long term.
In Ecuador you can still get a 3000 sqft on the ocean (beach weather all year long) for US$ 275.000...with that money you can hopefully get a studio in NY while here you are buying in a beach resort area, making good income in dollars and in holding your property in a growing economy based mainly in oil exports. Taxes and HOA are still low. In fact there is number of expats coming to retire here which also like me appreciate the laid back healthier lifestyle. That is why say It worked for me at least!!
I purchased in cash, for the price you make a deposit in NY you can actually buy a house in whole here...no more mortgages!!

 

[Mart]

NY apts have a fabulous ROI if you can afford to buy there and there is NO shortage of renters. In general, in my previous world, we actually saw a lot of signs of improvement in the economy and lots and lots of companies making lots of money and hiring. While it's certainly not the most rosy of times, it's probably not as bleak as some would have you believe either.

Lots of decent places around the world to buy of course. I certainly wouldn't have considered Ecuador as a potential buy for a rental property but if it is working - that's great.

If I were buying, I wouldn't be looking at Miami for the reasons Earlyretirement mentioned - lots of hurricane risk and insurance expenses. But I do know quite a few people from here that have bought there for exactly the reasons outlined in the article. They wanted/needed their money out of Argentina, they bought in cash and it couldn't have been easier and they are looking at the apts as either a vacation destination for themselves and/or rental property. No complaints at all from the people I know who bought there so far.

 

[earlyretirement]

Again...anybody reading the small prints and researching market trends knows the economy in US is already in bad shape and heading for worse...I just hope people can still make an income, let alone resale its property..and the HOA are high there. NY has one of the highest price per sqft... an easy rental? when it had a promising future...I decide t diversify a bit by thinking long term.
In Ecuador you can still get a 3000 sqft on the ocean (beach weather all year long) for US$ 275.000...with that money you can hopefully get a studio in NY while here you are buying in a beach resort area, making good income in dollars and in holding your property in a growing economy based mainly in oil exports. Taxes and HOA are still low. In fact there is number of expats coming to retire here which also like me appreciate the laid back healthier lifestyle. That is why say It worked for me at least!!
I purchased in cash, for the price you make a deposit in NY you can actually buy a house in whole here...no more mortgages!!

Thanks for confirming you paid cash. There is a big difference because you made a big point about how much paperwork and hassles of buying in the USA. Yet, if you paid cash (like many are doing now buying in the USA even Americans) it's very simple.

So you can't compare getting a mortgage in the USA and ""a lot of nonsense of papers, taxes and regulations of buying in the USA" with paying cash in Ecuador.

Because quite frankly those paying to buy cash in the USA don't have any hassles at all. In all honesty, it couldn't be simpler and you don't even have a lot of closing costs like you do in other countries.

You simply can't compare a place like Ecuador where most people will never go or have no desire to go with places like NYC. It's like night and day.

Like Citygirl mentioned, if it works for you great! I always love hearing people finding great places to buy real estate and it producing great cash flow. But you can't dismiss the USA as a horrible place to invest in real estate because quite frankly it isn't.

 

[earlyretirement]

Just for those of you keeping track at home.

Buying a property in the USA with cash entails making an offer. Once that offer is accepted and all conditions of the sale are met, you simply schedule a closing date. A few days before closing, you wire the proceeds to an escrow company. Heck, with docusign, you don't even have to show up to any closing these days! My last cash purchase I didn't even have to show up to closing and the documents were all signed with electronic PDF. Very easy!

In Argentina when I paid cash, I had to first get a CDI number which was a pain as I had to go to the police station, wait a few days for them to show up, then go down to AFIP and stand in line several hours to get my CDI number.

Then I had to go through the process to opening up an account at a money transfer firm there which wasn't the most efficient process either. They did ask to see copies of tax returns in the USA, a resume and some other things.

Let me tell you wiring in the CASH with NO escrow company isn't the best feeling in the world. Then I had to go to closing and actually hand over $100 bills. Very strange and surreal experience.

I'm not speaking at all which is the better investment. I'm just speaking from a pure paperwork/closing process since Noelle mentioned it.

There is no comparison at all as far as the ease and simplicity of buying in the USA with cash compared to other places.

 

[SerchMinm]

For all its current problems, the US is not going to sink, far from it. Immigrants keep pouring in, people rich and poor seek Green Cards. Argentine investors are not stupid. They know this. They choose Miami because it is accessible to BA, an easy overnight flight. CFK has radically changed the panorama and getting money out of Argentina is now a matter of urgency. She's stalled, if not devastated, the BA real estate market. Whatever they think of US foreign policy, Argentine investors know that in the US there is judicial security and respect for law. Policies do not change overnight and even when there is a crisis in financial institutions bank accounts are insured and backed by the US government. These are just facts and accepting them doesn't mean that you have to like Bush, the Republican Party, Wall Street financiers or MacDonald's.

 

[earlyretirement]

For all its current problems, the US is not going to sink, far from it. Immigrants keep pouring in, people rich and poor seek Green Cards. Argentine investors are not stupid. They know this. They choose Miami because it is accessible to BA, an easy overnight flight. CFK has radically changed the panorama and getting money out of Argentina is now a matter of urgency. She's stalled, if not devastated, the BA real estate market. Whatever they think of US foreign policy, Argentine investors know that in the US there is judicial security and respect for law. Policies do not change overnight and even when there is a crisis in financial institutions bank accounts are insured and backed by the US government. These are just facts and accepting them doesn't mean that you have to like Bush, the Republican Party, Wall Street financiers or MacDonald's.

Exactly. The USA has problems but the judicial system there works and property rights will ALWAYS be respected. The same can't be said for Argentina. The judicial system there doesn't exist for the most part. Property rights for now are respected but who knows in the future if the same will be true.

Porteños don't always win with buying US real estate. I personally know MANY Porteños that got KILLED buying in Miami or other places in Florida during the bubble years.

But there is a huge difference buying real estate during the bubble and buying real estate now in the USA. In some prices real estate was 75% lower picking up last year from peak prices.

Sometimes real estate is about timing. During the bubble years it got totally crazy with people buying things with no documentation. These days they scrutinize everything and NO ONE is getting a mortgage unless they are qualified for the most part.

Also, in many markets people are buying with all cash. So there is a huge difference buying real estate during the bubble and buying now.

I'm not a big fan of Miami or Florida real estate but for those that are....there are some properties that sold during the peak at almost $500,000 for a 1 bedroom / 1 bathroom in South Beach that were sold for almost $100,000 last year.

Obviously if you were an Argentina and bought a place like that during the bubble you got crushed. But you can't confuse buying something during the bubble vs. buying now.

I do think that some places real estate will NEVER get back to bubble peak prices (Miami, Las Vegas, Phoenix, etc) but some places in desirable places like Southern California there is almost no inventory and you go to buy and are beat out with all cash offers.

The key is timing but also location, location, location as usual.