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Residency with the Upside of a Hard Asset
April 22, 2008
Paris, France
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"A piece of real estate in a place like
the center of Paris is really the best
long-term investment you can make. These
historic apartments are special, and
there are relatively so few of them. They
will always be sought-after, and they
will hold their value."
-- Frank Laarman, Paris, France,
April 16, 2008
Dear
Overseas Opportunity Letter Reader,
Eighteenth- and 19th-century
apartments in central Paris...and land.
If you're deliberating over what to do
with your investment capital right now
(as is our friend Frank Laarman, who
explained his current thinking over
dinner one evening last week), these are
the two plays to focus on:
Centuries-old bijou real estate in a
brand-name city like Paris...and
productive agricultural land on which to
grow corn, soybeans, wheat, alfalfa,
fruit trees, grape vines...or timber.
This last--timber farming--is on my mind
lately, as, as you may know, an
investment in timber is one of the ways
you can organize full-time residency in
Panama. In fact, after considering the
eight different options for obtaining
legal residency in this country,
reforestation is the one we chose--for
lots of reasons.
First, the capital requirement is
modest--as little as $40,000 per
applicant. You can spend twice as much if
you want to reduce your renewal
obligation. With the $40,000 investment,
you've got to be in the country during
certain periods every year for five years
to renew your visa. Not a big deal for us
right now. With the $80,000 investment,
on the other hand, only one renewal is
required before you're issued a permanent
resident's visa.
Second, the process is straightforward,
at least if you engage professional help.
And I'd suggest that you'd have to be
nuts not to go pro on this.
The reforestation investment and the visa
application are separate things. That is,
you make the reforestation investment
through one of the organizations in this
business (more on this in a
minute)...then you engage an attorney to
manage the visa application process for
you.
In Panama last month, I spent a
remarkably painless morning at the
Department of Immigration, the final step
in the application process for my visa. I
sat comfortably in a chair, out of the
way of the crowds and removed from the
general chaos, while my runner, a nice
young Panamanian girl in the employ of my
Panama attorney, went from window to
window, explaining, cajoling, reviewing
paperwork, obtaining signatures and
stamps, making payments, and, all the
while, smiling prettily. At every window,
she was able to move quickly to the front
of the line and received almost immediate
attention. No one seemed to mind, and
everyone seemed to know her.
On the other hand, the poor souls who'd
opted to brave the experience on their
own stood in line after line and shuffled
back and forth among the clerks, looking
more tired, more confused, and more
demoralized after each encounter with
another representative of Panama City's
immigration and naturalization services.
It's well worth the $1,500 you pay an
attorney to handle the process for you.
My attorney has been obtaining visas for
would-be Panama residents for many years.
As I said, with her help and the
assistance of her staff, an experience
that, under different circumstances,
could qualify as a new level for Dante's
Inferno
was pain-free. My attorney's name is
Rainelda Mata-Kelly, and you can
get in touch with her HERE.
Furthermore, the reforestation residency
option leads to citizenship. After five
years holding a forestry visa, you can
apply for a Panamanian passport.
Finally (and this is perhaps the most
relevant point right now), we chose the
reforestation option from among all the
choices for becoming legal Panama
residents because we like trees, both
generally and financially. We appreciate
hard assets, investments you can see and
touch, even go to visit...from apartments
in central Paris to teak plantations in
the jungles of Panama.
I enjoyed an up-close-and-personal
introduction to the reforestation visa
option a half-dozen years ago when Lief
and I visited the plantation of our
friend Robert Kroesen. It was like a day
at a new Disney theme park: Teak Forest
Adventureland. We donned knee-high boots
and hooded slickers, climbed into
open-topped "quads," and took off in the
rain to off-road it up and down some of
the hills and valleys of Robert's 3,000
hectares of trees.
By the end of the afternoon, we were
covered with mud and grinning like fools.
Robert led us to his plantation house for
steaks before the plane ride back to
Panama City.
In the years since, we've done some
research:
Managed timber has beaten the stock
market over the past 30 years, returning
about 15% a year, while stocks, during
the same period, have returned only, on
average, about 11% annually.
Furthermore, not only is timber a good
way to beat the markets, it's also a
great way to hedge them. Timber operates
blissfully ignorant of things like
NASDAQ, housing bubbles, and Wars on
Terror.
And the demand for this commodity
continues to grow, while the supply,
especially for certain kinds of timber,
like teak, the world's most valuable
hardwood, is limited.
Teak is indigenous to only four countries
in the world (Burma, Thailand, Laos, and
India) and has a very narrow growing
zone. Areas suitable for vigorous growth
are confined to a band around the
equator.
For centuries, the kings of Burma and
Thailand considered teak a royal tree.
Today, Burma, home to the last remaining
natural teak forests, all of which are
the property of the government, is the
largest global exporter of premium teak,
producing about 80% of world supply.
The remaining natural forests are being
logged at a rapid rate. Some predictions
are that Burmese forests could be logged
completely in the next few years, meaning
the growing world demand would have to be
fulfilled by teak plantation production.
And, right now, there aren't a lot of
teak plantations worldwide.
Meantime, our friend Robert's 14-year-old
plantation in Panama's Darien region is
thriving.
If we hadn't decided to move to Panama
and therefore weren't shopping residency
options, we probably still would have
bought some of Robert's teak.
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