Understanding Offshore Corporations, Trusts, IBCs, And Other...

Offshore Structures—What Do You Need, How Much Is Too Much?

Sept. 25, 2014, Panama City, Panama: When deciding what offshore corporations, trusts, IBCs, or other structures you need, less is more and simpler is better.

Dear Live and Invest Overseas Reader,

A consulting client came into our office yesterday to ask me some questions about how to structure property investments he's making in Panama and Colombia. This client has been working with attorneys in both of these countries as well as in the country where he set up his LLC, but he wanted to make sure he's fitting all the pieces together as advantageously as possible in the context of his big-picture goals.

"In the context of his big-picture goals" is the critical phrase here. No single entity or set of entities fits every situation. What you find, though, is that whatever advisor you work with has his or her individual experiences and advises based on what he or she is familiar with.

Most Panamanian attorneys, for example, will advise you to put any property purchase into a corporation. Because that's what they do in Panama, both locals and foreigners. Historically, this has been to avoid capital gains tax, which is not imposed on the sale of company shares. You could set up a single-purpose corporation to hold a piece of property, then, when you wanted to sell that piece of property, you were in fact selling the company that owns it...meaning no capital gains tax issue.

Panama changed the relevant tax rule years ago, but people in this country still put real estate they buy into Panama corporations. There are other reasons why using a Panama corporation to hold your Panama real estate can be a good idea, but you should understand them before taking a Panamanian attorney's blind recommendation. Don't let custom dictate how you organize your affairs. Question the reasons why you're being advised to do whatever you're being advised to do, in Panama or anywhere.

The client who came in to meet with me yesterday had been advised by his Colombian attorney that, if he wants to have the title for the property he's investing in in that country issued in the name of his offshore LLC, he'll need to have the LLC documents officially translated and apostilled. That is mostly accurate. I confirmed with my attorney in Colombia that, yes, the LLC documentation must be officially translated but only the certificate of formation...not all 20 pages of the articles of formation. That difference saves money and time on the translation.


How To Find The Best Options For Diversifying Your Life And...

Give Up Chasing Your "Best" Options Overseas...That's Not The Point

Sept. 24, 2014, Panama City, Panama: Here’s how to make a plan for diversifying your life and your assets offshore.

Dear Live and Invest Overseas Reader,

A friend is pursuing multiple residency options concurrently. He's in different stages of trying to establish residency in several different countries with an eye to eventually obtaining citizenship in each one, as well. He figures that at least one of the applications won't work out. Plus, each comes with different timelines and requirements, and these things are always changing, so he has decided that the best strategy is to cast a wide net.

Setting up legal residency in several places at once takes time and a bit of money. The attorney and government fees add up. However, my friend has decided that, for him, the peace of mind that he'll have with the options he's putting in place for himself will be well worth the cost.

I see another plus in this unconventional approach: It has saved my friend from having to worry about making a single "best" choice. He's pursuing various good options at once.

Waiting for the "best" choice has slowed down and fouled up many people I've known over the years, and not only when it comes to deciding where to establish residency. I met a real estate investor at a conference about eight years ago, for example, who started the conversation by telling me he'd been looking at making a real estate investment in Costa Rica for a few years. At the time, Costa Rica was off my radar, so I asked him what he'd found...what had he invested in or what was he thinking of buying?

He told me that, although he'd been looking for four years, he hadn't bought a single property. He had come across good deals, but, in each case, he wasn't sure that what was before him was the "best" deal, so he passed...and kept looking. Eventually, he'd decided that all the "best" deals were gone...he'd missed them. So he'd moved on to the Dominican Republic, which is where I met him.

At the time I made this gentleman's acquaintance, he had been shopping in the DR for a couple of years already...but he hadn't bought anything in that country either.

The irony of the situation was that, had the guy invested in anything—I mean any piece of property he'd come across when he'd landed in the country two years earlier—he would have realized a gain of at least 25% by the time I met him, probably more.


How To Find A Rental In Cuenca, Ecuador

How To Rent In Cuenca For US$300 Per Month

Sept. 23, 2014, Quito, Ecuador: Here’s what you need to know to find and negotiate a rental apartment in Cuenca, Ecuador.

Dear Live and Invest Overseas Reader,

"When we first started our property management office, we had six rental properties that were rented maybe 25% of the year," explained Graciela Quinde, owner of Rentals Cuenca in Cuenca, Ecuador, to the group convened in Quito for last week's Live and Invest in Ecuador Conference.

"Now I manage between 30 and 50 rentals," Graciela continued, "and they are occupied 90% of the year, some 100% of the time. And my company is not the only one managing rentals in Cuenca today. The rental market in this city is booming. More turn-key properties intended for the foreign client are available than ever before. Still, supply is lagging demand."

The good news for the renter in Cuenca is that, despite the growing demand and despite property values appreciating at a rate of about 10% per year for the past seven years, rents remain low in this city, though they are edging up.

The would-be renter in Cuenca has more support than ever. Typically, the world over, a property manager manages a rental property for the owner. In Cuenca, though, Graciela's company offers a service for the renter, as well.

"We're dealing with a lot of foreigners," Graciela explained in Quito last week. "A lot of them don't speak Spanish, and they need some hand-holding. We're happy to provide that. We help with things like setting up cable TV and Internet."

Graciela's firm also provides turn-key rentals, furnished and with all utilities already in place. This is a great choice for someone who wants to spend two or three months in Cuenca to try the city on for size before committing to an annual lease.


Etiquette For Traveling, Living, And Retiring In Ecuador

10 Rules For Navigating Your New Life In Ecuador

Sept. 22, 2014, Quito, Ecuador: Here are 10 rules of etiquette for the expat and foreign retiree in Ecuador.

Dear Live and Invest Overseas Reader,

"Let's start with the rules of engagement," began Lee Harrison, addressing attendees at last week's Live and Invest in Ecuador Conference.

"Here are 10 rules for navigating your new life in Ecuador...

"Rule #1: Always start with 'Buenos días' (Good morning).

"People in this part of the world don't jump right into the issue when addressing each other. So, when you get into a taxi, for example, you don't start with, 'Take me to _____.' You start with 'Good morning.' When entering a store, smile at everyone you pass and say good morning or how are you. Then say, 'Do you have any ____?'

"In more personal settings, handshakes and kisses when coming and going are important. Your days of leaving a party by walking out the door saying 'See you all later' are over. When leaving a party, you go around, shake everyone's hand and kiss all the women on the cheek. It's the same thing when arriving somewhere.

"I used to go to the gym every morning. First thing I'd do when I got there was go around and shake hands with everyone else working out. Everyone knew everyone.

"That greeting is something you don't want to bypass, because if you arrive or leave a place without saying hello and goodbye to someone, the assumption is that you're mad at the person.

"Rule #2: Don't come to parties on time.

"The first time I was invited to a party in this country, my hostess told me to 'Come at 7 o'clock.' I came at 7 o'clock. The husband was running down the steps, buckling his pants, and his wife was still in the shower. So 7 o'clock meant 9 o'clock. The second time this couple invited me over, they said, 'Come at 9.' 'Does that mean I come at 11?' I asked. 'No, we tell you the real time,' they told me. 'Everyone else knows better.'

"Many people in this part of the world can't keep commitments. You will learn quick who can and who can't, and you'll learn to work with the people who meet your expectations. Many you'll find will give you their word for an appointment, then simply go somewhere else instead, to another scheduled appointment or to do something that came up or something they just preferred to do instead. Until you adapt to this, you will lose time sitting home waiting for people who don't show.

"Rule #3: Be courteous.

"You get what you give. People who smile and approach others with courtesy get the same thing in return. In my experience, people were nicer to me than to a lot of their fellow Ecuadorians because I was nice to them.


Options For Starting A Business In Ecuador

Entrepreneurs In Ecuador

Sept. 21, 2014, Panama City, Panama: Roberto Ribadeneira explains how he got his import-export business up and running.

Dear Live and Invest Overseas Reader,

Last week in Quito, attendees at our Live and Invest in Ecuador Conference were introduced to opportunities for living, retiring, and investing in this country...as well as top current options for starting a business here.

One of the best business opportunities in Ecuador is import-export...as successful import-export entrepreneur Roberto Ribadeneira explained...

"Our business," Robert began, "started with fresh-cut flowers, but today we export practically everything.

"Our business has grown big, but we didn't start that way. And the opportunity still exists in this country to make money from import-export in a small, low-key way.

"How could you make money exporting flowers from Ecuador, for example? By exporting from here and reselling. Country clubs, golf courses, and hotels always need flowers. Usually they order from flower shops. A dozen roses from a high-end flower shop costs up to US$100. We sell 100 roses, packed and shipped, for US$140.

"You could set up accounts directly with businesses in a particular area. Go in person and offer to ship quality flowers for less cost than the local florists are charging. All you need in each case is the business' address, and we can ship the flowers to them for you. These are sales opportunities that we'd never have access to on our own...and neither would these businesses ever find us on their own. You're acting as the connection point, providing us with direct access and the business with quality flowers at a competitive price. You could earn a good income this way.

"Flowers could be your start, as they were for us. Then, depending on how much time and effort you want to invest, you could expand your import-export business to include other products available at very low costs here in Ecuador. I'm speaking of products made by hand, including leather products—jackets, duffle bags, purses, etc. We can make the designs for you. We had a client from Texas who wanted to design a purse that could fit her gun in a way that made it easily accessible. Now she's started a business. We make these gun-friendly purse designs for her for around US$80. She sells them for US$350 apiece at gun shows.

"Another customer came to us three weeks ago and said he wanted something to carry an iPad. We designed a leather bag that fits an iPad. It even has real cow fur. The design options are limitless.

"We work with small communities. When you place an order, it's not just me making a profit but many others in poor communities. It's their handiwork and their talent that make this business possible. Send me a picture of what you want, and I can find someone to create it. In addition to the people I'm working with around the country earning an income, we help them with health care, better food, and better housing. Every time you buy a handmade product from Ecuador, you're helping a lot of people.

"Every town specializes in something. Cotacachi specializes in leather products, Otovalo is the place for textiles, and San Antonio de Barro is the place for wood.


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Kathleen Peddicord

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter.

Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

Read more here.


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