Going Offshore In Panama

An international tax attorney who has built a successful practice in California, our friend is a single guy in his late 30s. His life Stateside is fully appointed. He's got the condo, the car, the toys, the girlfriends. He dines out four or five nights a week and takes frequent vacations.

A couple of years ago, though, our friend had two realizations.

First, he realized he was bored. His life in California couldn't be more comfortable, and his practice continued to expand, but it had all grown very predictable.

Second, as an international tax pro, our friend recognized that his own affairs were not nearly as tax-efficient as they could be.

The answer to realizing maximum tax efficiency, our friend knew, was to set himself up offshore.

Our friend also knew, from his decade-plus in the business, that Panama qualifies right now as the world's top tax and doing-business jurisdiction. In the past two years, therefore, our friend has worked toward setting up a mirror practice in Panama City.

During this period, he has divided his time between Panama and California, spending two weeks in each place each month. Thanks to ever-advancing technologies, the set-up is transparent to his clients.

Now, two years later, he's nearly ready to flip the switch. He's rented and furnished an apartment in a neighborhood where he can walk to restaurants, bars, nightclubs, and casinos whenever the whim strikes. He's established an office base and hired a couple of employees. He's started the paperwork for a reforestation visa. He's shopping for a car...

And he's found friends, connections, and, yes, a new girlfriend that mean the difference between relocating and making a new life.

By re-establishing himself in Panama, our friend has achieved his financial objectives.

And, as a bonus, he's reinvented his lifestyle. He's found a nest and feathered it with all the comforts and conveniences of his life back in California.

But, down here in the Hub of the Americas, he's discovering, the day-to-day is anything but predictable. Here in this Tropical paradise, our friend's new life is shaping up to be a little less polished, much more interesting, super business-friendly, and delightfully tax-free.

Kathleen Peddicord

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This Is Your Final Call

Uncle Sam is working quietly, behind the scenes, to put obstacles in place that will make it more difficult for you to broaden your horizons overseas. And much more difficult for you to be in the driver's seat of your own future.

It's not just the banking arena that's under threat.

In 2008, changes to the Veterans Act allowed for an "exit tax" on U.S. citizens who choose to leave the country and end their citizenship.

What other countries have done this in the past? Nazi Germany. Communist Russia. Apartheid South Africa...

This is your civil liberty at stake. How long before you just won't be able to get your assets out of the States?

I'm not an alarmist. I'm a pragmatist. And, as a pragmatic investor, I've seen the writing on the wall for some time. I've worked all these years and with an added sense of urgency more recently to take control of my own life, my own financial future, and, most important to me now, the future of my family.

Now I'd like to offer you a chance to do the same.

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P.S. What else this week?

• Health insurance to cover you in your new country of residence is one of the most important issues you must address as you plan for your retirement overseas. Bottom line, you have three options: an international policy, a local policy, or no policy at all. An international health insurance policy has an important downside: It's more expensive than a local one. Local medical insurance can cost less than US$100 a month. In some countries, depending on your age, less than US$50 a month...


• ''Who knew that a single mother,'' writes new Belize Correspondent Macarena Rose, ''happily raising eight kids (two biological and six adopted) in Florida, could pull up stakes and follow a hunch to a new life in a new land? Who could have predicted that the results of this experience would be a wealth of warm friendships and a profound sense of connectedness to a new country and a new community...plus a thriving new business?
  
  ''In short, that's my story of a journey that began seven years ago and that continues today. I took a chance on life, and the reward has been an extraordinary transformation.
  
  ''How does one get from there to here? The path is different for everyone, of course. I know that many outwardly crave challenge and excitement in their lives and are looking to make dramatic changes. That was not me. I was a mom in Florida, content with the status quo. My life with eight children seemed already an adventure.
  
  ''Then I discovered this Caribbean paradise where English is the native language. I was infatuated from the day a friend told me about the warm, welcoming inhabitants, the natural beauty of the land, the heavenly beaches, and the delightful surf.
  
  ''Maybe what appealed to me most was the promise of leaving all the day-to-day stresses of life far behind and living at a slower pace. Living in Belize, I discovered, I didn't need my Blackberry!
  
  ''Once I was introduced to the idea, I let my imagination go, and I began daydreaming about this culturally diverse place where you can live your life intimately connected to your neighbors. I think many of us fantasize about finding a place with that kind of small-town feeling, and that's just what you find throughout Belize..."
  
  
• This month's issue of the Overseas Retirement Letter, focused on Maceió, Brazil, a very affordable at-the-beach retirement destination, was fulfilled to subscribers Wednesday. (If you're an ORL subscriber, please let us know right away if you didn't receive this current issue.)
  
  As Contributing Editor Christian MacDonald puts it in his report, ''Maceió is the perfect blend. It offers laid-back seaside living and an exciting and vibrant beachfront scene. In other words, it has the beauty, excitement, and energy of some of its larger cousins to the north, without their big-city crime, poverty, or annoyances.''
  
  Christian, who has seen a lot of Brazil, puts Maceió at the top of his list of retirement choices in this country.
  
  Does that mean Maceió qualifies as the world's top retirement haven right now?
  
  Well, maybe. If your agenda is all about an affordable retirement oceanside...


• Panama City continues to remake its skyline, with all the ongoing construction, but also, more and more, with beautification projects like the Cinta Costera, the coastal beltway completed two years ago that transformed the Panama City panorama. More recently, an initiative by Union Fenosa, the national provider of electricity, plans to take city power lines underground.
  
  Great idea. Right now, Panama City streets are sometimes criss-crossed by masses of electrical lines, with the odd shoe or Whopper wrapper caught amongst them...

ALSO From Global Real Estate Investing Guru Lief Simon:

I've recently been elected to the board of directors for the owners association of a building in Panama City where I own an investment property. When they approached me about the idea of running for the position, I said, sure. It seemed like it might be fun.

Fun probably isn't the word. Maintaining a 27-story building is a lot of work. Everyone has his pet peeves and grievances. We listen to them all, meantime spending not an insignificant number of hours each week trying to keep all things in the building functioning, maintained, and constantly improving.

The board president works probably 80 hours a month at this. I hope he's having fun. And I hope all the owners in the building appreciate his efforts. Because, looking around the city, I can tell you that not all condo owners are lucky enough to have someone like him.

One building I know, where a friend has invested, has no working elevators. A recent advertisement for an apartment for sale on the 14th floor of this building tried to make the best of the situation. The ad read, "No need for a gym membership when you live here."

The price was attractive and reflected the lack of elevator access. The problem is that, eventually, the elevator will have to be replaced. This will trigger a special assessment on all owners in the building.

This isn't uncommon. If the cash flow from the regular monthly building fees isn't enough to cover both the costs of operating the building and of required maintenance and necessary improvements, well, the money has to come from somewhere.

Or not. And this is the risk. If owners aren't organized and working together, under leadership like that of the guy currently serving as president of the building where I'm serving on the owners board, then, likely, you'll never be able to get the consensus you need to execute special capital calls.

You'll never be able to get the agreement you'll need to increase the amount of the monthly building fees.

You'll never be able to obtain the required consensus for investing in repairs or improvements.

The bottom line result is that the public areas and amenities in the building will deteriorate.

I make this point because the condo market is growing ever-more-competitive here in Panama City. If you bought a condo in this town as a rental investment or if you're shopping with the thought of buying one now, this is an important point that may not occur to you.

Don't only shop location, building, and price per square meter. Shop building management, as well. Ask about the building association and to see the related documents, including minutes from recent association meetings and financial statements for the building fund.

Years ago, shopping for our first rental apartment investment in Paris, a friend made a recommendation that I probably didn't appreciate enough at the time.

"Try to find out if any big improvements are planned for the building within the next year or two," he told me. "Are they going to add an elevator? Clean the building façade? Relay the cobblestones in the courtyard? Fix a leaking roof?"

Why? Because these are extraordinary expenses. That will have to be paid for by a capital call on all owners. To avoid surprises in your first years as an owner, try to find out what kinds of works are being discussed.

In France, the syndic, or building management association, is a legal entity with a lot of teeth. If your syndic tells you that you have to pony up an additional 2,000, 5,000, or even 10,000 euro to cover repairs or improvements to the building, you have no choice but to comply.

Well, you can choose not to comply, but the consequences are severe. In Panama, on the other hand, building associations are haphazard and mismanaged. Sometimes they exist in name only. If the owners don't pay their monthly building fees, what are the building managers going to do?

In any given building in Panama City, you have a percentage, sometimes significant, of absentee owners. Foreigners who bought the unit as a speculation or a rental investment. They're in the States or Canada or Germany or Venezuela. How is the typical ad-hoc and mismanaged management team in Panama going to chase them down for their US$150 a month?

We're seeing the result of this reality in many buildings right now. Broken elevators, faulty plumbing, ill-maintained swimming pools, uncleaned social areas...

What's your rental apartment worth when the building where it's located is falling down around it? What's your rental return going to be long-term?

At the building where I'm serving on the board, we've set a goal: We're going to make our building the most appealing in the city overall. It's going to be the building that people talk about. We're going to maintain all current amenities at a high level and add new ones every year.

This is how we hope to retain our foothold (and our impressive annual yields to date) as this Panama City rentals market grows ever more competitive.

Thanks to the building management team and, especially, president, we've got the support of all owners. We've got a good amount of capital set aside for improvements over the coming 12 months. And we've got nearly 100% pay-up each month for building fees.

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You Are Not Responsible For Getting Yourself Into This Mess...

But you are the only person who can get yourself out.

Right now -- and for the next 12 months -- only you can:

Stop the government squeezing more from your hard-earned cash...
Safeguard your assets and actually grow your wealth (even in tough economic times)...
Guarantee a prosperous future -- for you and your family -- and allow yourself the freedom you were born to enjoy...

Because today, I'd like to send you FIVE FREE AUDIO PRESENTATIONS designed to make it possible for you to rise above this economic meltdown and set yourself on a path to financial and personal freedom.

Read here for complete details.

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