Nov. 6, 2009
Berlin, Germany
PLUS:
- "US$11-A-Night Hotels? This Kind Of Exaggeration Destroys Your Credibility"...
- "Any Suggestions For Those Of Us Who Prefer To Rent Rather Than Buy?"...
AND: Isn't Casco Viejo Unsafe?...
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Asia Now
This is the best time in our lifetimes to consider Asia. This beautiful and exotic region is more open today than ever, and it's possible for Westerners to travel almost anywhere they'd want to go. At the same time, Asia is fast-changing, and you have now a window to experience it before the face of this ancient land of emperors and adventurers is too dramatically altered.
But perhaps the best reason to take a good look at this part of the world right now is that it hides the world's most affordable retirement havens...the cheapest places on earth to live well.
Intrepid Correspondents Paul and Vicki Terhorst have been tempting me with tales of comfortable US$11-a-night hotels and tasty, filling lunches for 50 cents for the past year-and-a-half, as they have been on the ground, scouting the opportunities.
The verdict? See Asia now.
Paul tells you more here.
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Dear Live and Invest Overseas Reader,
"I spent almost two decades at CNN," writes Correspondent Vivian Lewis, "first covering economics and business news, then traveling the world, covering world affairs in the days when founder Ted Turner still owned the network. Turner, the visionary billionaire, had banned the word 'foreign' from our lexicon. We could not say the F-word on the air or in internal communications. He was serious about it. We could be fined US$50 for violating a rule aimed at nudging us to do away with the 'Us and Them' view of the world.
"Still, there was no getting away from global divisions. Everywhere I landed with my trusted American passport in hand, I would carry a pile of U.S. dollars to pay our bills in war zones, revolutions, and at presidential summits. Everyone preferred muscular dollars.
"Then I arrived to Bosnia in the mid-90s. When I tried to place greenbacks in my Bosnian driver's hand, he drew back and looked up at me. 'Don't you have Deutsche Marks?' he asked. This was one war zone where the people did not want American money.
"One of my European colleagues gleefully explained this as a sign that America's role as the most important economy in the world would soon end. America looked less omnipotent (although it was America that stopped that Balkan slaughter).
"Only a few years ago, the relative decline of American power and perhaps of its economic influence fueled a new topic. 'Decoupling' became the hot subject among financial cognoscenti. The American economy was slowing, but investors wanted to believe that the United States could go into recession and the rest of the world, decoupled from America, would continue to prosper. As it happened, Wall Street went into freefall, and a deep recession washed over the globe.
"A few days ago, Warren Buffett, an American legend, announced his biggest purchase ever. His Berkshire Hathaway is buying railway operator Burlington Northern Santa Fe for US$44 billion. He called the deal 'an all-in wager on the economic future of the United States.'
"But, then, a few savvy observers noted that Burlington's routes put it in an ideal position to ship large quantities of cheap American coal to booming China. (It can also help bring Asian goods to American consumers, the opposite side of the equation.)
"America remains by far the world's largest economy, representing still 25% of world GDP. But there is no question other economies are growing faster. Expect 'decoupling' to re-enter the debate after the recession fades.
"For the foreseeable future, world exporters will find it difficult to make hefty profits when American consumers stop spending. Regardless what happens to the behemoth that is the U.S. economy, it is good news for everyone if the global middle class expands, good if the poor in China and India become consumers, if they become part of 'Us' the people who keep the global economy moving.
"Ted had a point."
Kathleen Peddicord
P.S. Vivian (whose investment advisory service has been ranked second top-performing newsletter portfolio by
Hulbert's Financial Digest for the past decade) writes daily at
www.global-investing.com.
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"Is this yours?" our neighbor Matt asked when we answered his knock on the door last night. He held out a key on an Eiffel Tower key chain.
"Yes, but...how...where..." Lief stammered as he struggled to understand how Matt came to possess his key to our front door.
Behind Matt on the sidewalk, a group of 8- and 9-year-old children giggled and whispered.
"They brought the key over to me," Matt explained, pointing to the gaggle of gigglers on his heels. They were walking down the street and noticed it hanging from your door. They knocked but got no answer, then came over to see if I was home. I guess you must have left it in the lock when you came home tonight?"
Indeed, that is precisely what had happened. Lief, in a rush and carrying a load of groceries, had left the key in the door.
"I gave them each 50 cents and thanked them for being so honest," Matt explained.
"Ask them to wait a minute," I suggested and ran upstairs to grab a bag of leftover Halloween candy from the
kitchen.
"Give them this," I offered. "And thank them again."
When we tell people--foreigners or Panamanians, residents or visitors, anyone who knows anything about Panama City--where we live, they raise their eyebrows and ask solemnly, "But is that safe?"
We live in Casco Viejo, on a street that marks one edge of the rejuvenated
quartier. Beyond us lies the ungentrified
barrio, the no-go zone.
We're careful, we keep our wits about us, and we give Jack instructions for coming and going. But, no, we don't feel unsafe, especially now that we've discovered how well our neighbors are looking out for us.
"'US$11-a-night hotels and tasty, filling lunches for 50 cents...'
"Come on. Let's get real. This type of exaggeration destroys your credibility.
"In no place does today's dollar buy a worthy hotel room and lunch for those prices. And anyone saying so doesn't know what he's talking about.
"Probably some gluttonous American Baby Boomer couple spinning tales just to fleece consumers in hopes of supporting their own worthless retirement. Same story from pretty much a whole generation.
"Please stay away from these claims. Every time I put faith in your publication, along comes another claim like aforementioned."
-- Nelson C., United States
No hype, no joke, just the facts, plain and simple.
Details here.
"In two years, I will be 70, my wife 68. We are planning to sell our house (US$180,000 market value).
"I have about US$300 in retirement capital currently. Our combined Social Security will generate US$4,000 monthly in 2012.
"I do not believe I am interested in re-buying a home. We would prefer a secure
rental condominium or small house where we could live out our years. We both enjoy excellent health.
"The information I read from your newsletters seems to focus on re-buying. Any suggestions for those of us who do not want to do that?"
-- Paul & Deloris M., United States
While we report on opportunities for purchasing a retirement, second, or investment home in another country often, in fact, we recommend that, unless your agenda is more for profit than for fun, you rent first. And maybe you rent indefinitely, as you're thinking, dear reader.
Your savings and Social Security income combine to create a comfortable retirement nest egg. With the capital and monthly income you describe, you could live well most anywhere, including the cost of rent.
In the "How To Retire Overseas" book I've written for Penguin, I include detailed budgets for each of the 15 featured overseas retirement havens. Your US$4,000 a month in Social Security income alone would buy you and your wife a nice retirement lifestyle in even the most expensive spots on this list (Paris and Buenos Aires), again, including the cost of renting an expat-worthy apartment.
Renting long-term rather than investing in a home of your own has its advantages, and, in the wake of the tumble and even collapse of property markets around the world, maybe you don't want to mess with investing in real estate as part of your retire overseas plans. Renting leaves you mobile and flexible. No maintenance, no repairs, no property taxes, no homeowner headaches.
How do you find a rental in another country?
Word-of-mouth. You can search on the Internet, but, as with property for sale, the rentals you find this way are typically the most expensive, certainly if you search English-language sites. Your chances of getting a better deal are increased if you reference sites in the local language. Still, going this route, you're going to find only those properties for rent by locals with the wherewithal to advertise them on the Net.
You can also source rentals through the local print classifieds. This can be an effective method, a way to penetrate the local market and to gain access to local pricing, if you read and speak the local language fluently. Understanding Spanish well enough to read a rental property listing in a local newspaper in Buenos Aires, for example, isn't enough. You've got to be able to speak Spanish well enough to have a conversation by telephone with the owner to arrange a viewing appointment. Then you've got to feel comfortable enough in your Spanish to meet with him (or her) in person, at the property, to ask your questions, to negotiate the price and other particulars, and, ultimately, to review the rental agreement (which, of course, will be in Spanish if that's the language of the country where you're shopping). I've known many people who've successfully sourced rentals this way and been happy with the results, but I, for example, couldn't do it without help, not in a market where the language is Spanish. Mine isn't good enough.
The most efficient and effective strategy, therefore, certainly if you're not fluent in the local lingo, is to ask around. You can begin this process before you arrive in your new home, but finding a suitable rental in the right location for you at a good price can be a difficult thing to accomplish from afar. I recommend you wait until you're on the ground.
Say you ask around from the comfort of your armchair. One of your sources replies to tell you about a rental in such-and-such neighborhood available for such-and-such price. It sounds great in the e-mail, the best value you've come across. But is it a place you'd want to live? Making that determination without having seen the place yourself is a dangerous thing. Maybe you'd trust your best friend or your significant other to scout and secure a rental on your behalf, but I've known even that to backfire.
It may sound like a non-strategy, but the best approach is simply to make a reservation at a hotel located in the area where you think you'd like to live. Plan to stay up to four or five weeks. It may not take you this long to find a place to live more permanently, but don't be discouraged if it does. We were guests of the Granville Hotel in Waterford, Ireland, for a full eight weeks (we negotiated a discounted long-term rate with the manager) before we finally found the rental cottage that became our first home in that city. Easing into a place this way gives you a chance to get the lay of the land and to take your time considering your options.
Should you engage the help of a rental agent in your search? In most markets, the landlord pays the fee, and, in some, it's split between the owner and the renter. I'd argue that, in a place where the person you eventually rent from is responsible for paying the agent's commission, why not enlist the services of a broker in your search? This may seem to contradict my recommendation to seek out your rental by asking around in the place where you want to rent, but that's not necessarily so. If it costs you nothing, why not have an agent search along with you? You pursue your word-of-mouth strategy, while the agent does his (or her) thing.
The downside is that, even though you're not paying it, the agent is still working for a fee, which is typically based on the monthly rental amount. In other words, the agent isn't going to knock himself out trying to find super-cheap options. He'll work within your parameters, but he'll bring you the options that will earn him a greater commission. You can always politely decline interest, of course.
The other advantage to engaging a broker's help sourcing a rental (in addition to expanding your search basis) is that, in some markets, the agent's job isn't over when the rental agreement is signed. Here in Panama, for example, a rental agent is expected to help you to orchestrate your move, as well. He'll negotiate the terms of the rental; he'll coordinate payment of the security deposit and initial rent (walking you through when, to whom, and how to accomplish this); he'll help you arrange for the installation of telephone and Internet; and he'll help you transfer the electricity account into your name (if that's what you decide to do).
These may sound like small things, but, in a new country, operating in a foreign language, dealing with these issues for the first time, you'd be surprised how complicated they can become and how welcome a little help can be.
Note that even renting abroad can come with complications you may not expect.
Here are 11 things to know before you sign a lease in a foreign country.
