Woulda', Shoulda', Coulda'

May 6, 2008

Paris, France

PLUS:

n  World's Best Beachfront Buy #7...

n  Like an Unarmed Theodore Roosevelt on the Plains of the Serengeti...

n  Seven Tips for Surviving China...

n  What Time Is It?...and Other Important Questions for the Innocent Abroad...

n  The Coming Exodus--Twenty-million Americans Can't Be Wrong...

AND:

n  The World's Two Most Affordable Retirement Havens--Live Well on as Little as $660 Per Month...

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Dear Overseas Opportunity Letter Reader,

"Seven years ago, when we first came to Paris," remarked a friend Sunday afternoon, "we intended to buy an apartment."

She and I were seated on the green, grassy point of the Ile de la Cite. Our husbands were off buying ice creams for the children, who were racing around the garden paths, chasing a ball and each other. It was the first officially warm, sunny spring-like Sunday in Paris this season.

"I did some research and found a 100-meter apartment on the rue des Archives, in the Marais, selling for the equivalent of 200,000 euro. Two-thousand euro a square meter. In the Marais. I can't imagine what that apartment would go for today. Maybe 6,000 euro? Maybe 7,000. I try not to think about it.

"Because, in addition to the appreciation in value, there's been the currency gain.

"We didn't buy that apartment, because a friend told us the Paris market was at a top. Didn't make sense to purchase, he advised. Better to rent...

"Today, we look at prices and shake our heads. Could it make any sense to buy now?"

We almost didn't buy in Ireland 10 years ago for the same reason. The Irish property market seemed at a top. Could it go any higher?

We decided we didn't care. We needed a place to live, and I wanted an old house to renovate and some land around for gardens and animals.

So we took the plunge, paying what we believed was far too much for a house that, it turned out, needed far more work than we'd bargained for.

Still, six years later, we sold it for three times what we had in it. And we took payment in euro.

We've kept those proceeds in euro ever since, investing them on this side of the Pond, meaning that, on the one hand, we've welcomed the long slide, during this period, of the U.S. dollar.

On the other hand, all these years we've been living in euro-land, we've been earning our living in Greenbacks. And, as the dollar shrinks in value month by month, our local expenses don't.

Should we have fled Paris a year or 18 months ago, when it was clear that the dollar was in for a long and maybe not-so-gradual decline?

Should my friend and her husband not buy an apartment in Paris today because prices are up, in some neighborhoods, three-fold from what they were when they began shopping?

I won't try to answer those questions, because I can't. Who knows? Surely not me.

An attendee at a conference in Panama City years ago asked me how I could be so confident in my recommendation of Panama as a good place to think about investing time and money. What if things didn't play out as I was predicting they would, he wanted to know. What if the market turned south on me?

I couldn't be certain that Panama would develop in the ways I was suggesting it would develop for that gentleman and his fellow conference attendees, of course. I could only detail for them what I believed and what I foresaw, given my experience, my research, and my years of scouting.

But that wasn't the point, as I tried to explain.

"Organize your affairs so it doesn't matter," I told that would-be investor.

"I believe the time is ripe for a serious capital investment in Panama right now," I explained, "and I'm investing myself.

"But I'm investing elsewhere, too, and so should you.

"Spread your time and your money around. Diversify by region, by market, by type of investment, and by currency."

I know...talk about stating the obvious. But sometimes it doesn't hurt to remind ourselves of the fundamentals.

Markets move up and down. So do regions and so do currencies.

When it comes to real estate investing, you can try to time short-term ins and outs. If you've got the inclination and the stomach to watch that closely and to administer that intensively.

But, again to state the obvious, buying and selling real estate isn't like buying and selling stocks. You can't call your broker and buy Uruguay while you sell Nicaragua short.

Every purchase and every sale is costly. Researching the history of ownership, determining the best way to structure ownership, covering the related holding costs, calculating an exit strategy and the related tax hits...plus, along the way, paying fees to agents, attorneys, notaries, finders, accountants...

Even a "short-term" real estate investment is a long-term commitment.

Frankly, for me, the longer term the better. I prefer to buy because I want to hold. Because I like the place. Because I believe it has some intrinsic value. And because I look forward to opportunities to make use of it.

The old farmhouse in Istria, Croatia, we bought two years ago is worth at least 50% more than what we paid. Plus, we imported dollars to make the euro purchase, so, again, we've got the currency gain to compound the capital appreciation. Should we sell?

If we were treating these investments like stock buys, the answer could be yes. We got in at a good time, both in terms of the asset value and of the currency. How much longer should we ride?

More to the point right now--as I believe the Croatia market still has some upside to be seen, but I'd say we're in for a correction in Buenos Aires--should we sell our apartment in that city?

Again, if these were stock positions, it'd be time to close out in BA. Take the capital gains and put them into a euro buy.

We won't do that, though, because I bought that little apartment overlooking the park in Barrio Norte because I liked it. Because I look forward to returning to it. Because Buenos Aires figures in our long-term plans.

The BA property market may see a fall...and two or three years from now I may have to admit that our apartment there is worth less than we paid for it. I recognize that's a possibility. But I won't mind. I'll still look forward to future visits to the city of Malbec and tango.

Lief takes a more cut-and-dry, bottom-line point of view. He's happy to accommodate my long-term positions. Meantime, he's continually placing us in and out of shorter ones.

As I said, it's possible to be a get-in-and-get-out real estate investor. But you've got to pay attention, you can't afford to overlook anything in your calculations (like transfer fees or stamp duties), and you've got to be forever on the move, on the ground in the markets where you're actively invested. No amount of Internet research can substitute for it if you're timing your plays.

Kathleen Peddicord

P.S. I know of only one kind of real estate investment I'd make without getting on a plane to see the property in question before signing the contract to buy. They call it a "hard-money loan." I wrote to you about it briefly last week (see "Global Real Estate Profits Made Easy").

ALSO RIGHT NOW:

Forgotten Natal, one of the seven best beach buys in the world today.

In response to my picks last week for the "Six Best Beachfront Buys You Could Make Right Now," a friend tells me I may have overlooked one:

"If I were going to name the best places to buy beachfront today," he writes, "I think I'd include Natal, Brazil.

"No crystal ball, just an instinct...partly based on the fact that big developers are moving in with high-end projects, both resort and residential, particularly around Ponta Negra.

"And partly based on the fact that Natal is nice. Nicer than other Brazilian beach towns. I see Natal as different from elsewhere along this country's long coast. It calls to me.

"I've visited only briefly, but I can't get the place out of my mind. The beach is sheltered from the wind (important on this coast), and the waterfront scene is charming. I urge everyone I know who goes to Brazil to put Natal on their agenda, but, as far as I know, none of them has.

"It remains largely ignored...except, again, by those developers who seem to believe they're on to something. I'd agree..."

Twenty-million Americans are preparing to exit. Most are headed south. They're bringing their energy, their enthusiasm, their education, their experience, and their disposable income with them...

New Global Initiatives says 20-million Americans are headed overseas.

The marketing research group conducted a first-of-its-kind two-year study and concluded that 20-million Americans are preparing for new lives in foreign locales for, as the researchers put it, "more than two years for reasons other than the requirements of the military, the government, or a job."

Why, the researchers ask? It's the cost of living, Sherlock. The cost of living, the cost of real estate, the cost of health care...

Americans nearing retirement age, and, even, Americans nowhere yet near retirement age, long ago realized that pensions and Social Security aren't the answer if the question is, How are you going to pay for your U.S. retirement?

Longtime friend Gary Scott puts it this way: Would-be retirees in the U.S. right now have five options:

1.     Keep working.

2.     Move to a less expensive part of the United States.

3.     Dramatically reduce your standard of living.

4.     Die.

5.     Export your retirement.

I don't know about you, but, for me, option #5 stands out.

All you've got to do is to look a little beyond the comfortable. When you do, you'll see that, with even a modest nest egg, you can live well...heck, you can live better. You can do what may right now, from where you're sitting, seem impossible: You can enrich and improve the quality of your life, while reducing your cost of living.

Read the full findings of New Global Initiative's survey here: http://www.ngiweb.com/emigration.htm

In charming, colonial Cuenca, Ecuador, you could retire in comfort and style on as little as $660 per month...

Speaking of the cost of living in retirement, a new reader wrote last week to say, "OK, you've got my attention. You're telling me I could retire overseas today and live well on less than $1,500 per month. I've got Social Security income of $1,700 a month, so I'm ready. But I need to know, specifically, where to look..."

Specifically: Cuenca, Ecuador, and Atlantida, Uruguay.

Ecuador is the world's cheapest place to retire. You could live in this beautiful, safe country on as little a $660 per month if you own your own home or on as little as $1,240 if you rent.

World's second-cheapest place to retire overseas? Uruguay, where you could live comfortably on $,1038 per month if you purchase a home, on $1,555 if you choose instead to rent one.

We asked correspondent Christian MacDonald, who has lived in both Cuenca, Ecuador, and Montevideo, Uruguay, to do the math for us. No one we know has a sharper pencil. That is to say, you can trust Christian's ciphering. Take a look at his detailed monthly budgets for both countries (along with his recommendations for where, specifically, the foreign retiree would do best to think about settling in) here:

Retire to Ecuador on $660 Per Month

Retire to Uruguay on $1,038 Per Month

Prices are way down, and the tourist hoards are staying home, meaning you can have the plains of Kenya all to yourself right now. Here's your chance to indulge your Indiana Jones fantasies largely undisturbed.

Lief has a big birthday coming up this summer. Friend Vivian Lewis has given me an idea for what to get him:

"Benefit from the bargain of a lifetime to go on safari old-style this autumn," Vivian wrote last week. "In your solar topee, with a knowledgeable guide, you will be relatively untroubled by tourist hordes.

"Kenya has emerged from a botched election and a near civil war between the dominant Kikuyu tribe of President Mbeki and other tribes (among them Luos, the tribe to which Barack Obama's father and the new Prime Minister Raila Odinga belong).

"During the troubles, international arrivals to Kenya plummeted. The power-sharing deal means peace, as there will jobs and perquisites to go around. But you've got to be quick to make bookings for the autumn safari season before the mobs return.

"Prices are way down, and there won't be many others stalking the lions and elephants in the great game parks of Kenya this year. Which means the experience will be more authentic and exciting than it's been for decades. Imagine yourself as an unarmed Theodore Roosevelt...

"Here are some people desperately waiting for your business in Kenya right now:

"1.) In the Masai Mara game park. stay at Kichwa Tembo in a luxury tent or go even more up-market at the posh Bateleur Camp, where each lodge has its own butler.

"Either way you will be in one of the great game parks of Africa, the Kenyan part of the Serengeti Plain. Try to see the big 5: lions, cheetahs, elephants, rhinos, hippos, and the elusive leopard. Masai warriors will come to visit, dance, and sell you necklaces and trinkets made by their womenfolk. If you have any cows, they will take them away, because the Masai believe that all cows belong to them. (Better leave your cows at home.)

"2.) In Nairobi, stay at a boutique hotel like the Macushla House (macushla@africaonline.co.ke) or at the House of Waine (mail@houseofwaine.co.ke). Both are house-and-garden-style villas with glorious decor, fabulous meals, and gardens with swimming pools located in the quiet suburb of Karen.

"Karen was named after Karen Blixen, a Danish writer who, under the pseudonym Isak Dinesen, wrote the great pastoral elegy of the 20th century, Out of Africa. Her house is in the Ngong foothills. (The coffee plantation is gone, along with Robert Redford, who played her lover, with a jarring American accent, in the movie.) Baroness Blixen's home is full of furniture and photos of her tragic life at the start of the 20th century and well worth a visit.

"Nearby, visit the Nairobi Giraffe Center and feed and frolic with an endangered species, the Rothschild Giraffe (which is not richer than other giraffes save in the number of bumps on its head). The center has special feeding and viewing platforms to take humans up to the level of giraffe's head. It's great fun for young and old.

"There even is a wilderness in Nairobi itself where you can go on a mini-safari (but no lions or elephants, because there is no room).

"3.) Head off for some non-animal fun in Mombasa on the reef-protected Indian Ocean 'Swahili Coast,' where the new government's tourism minister comes from. Sea, sand, and sun await.

"From there fly off to a perfect island getaway, Lame Island, where there is only one car (for the high commissioner). This is a Unesco Heritage Site, a remnant of the traffic from the Persian Gulf to the African coast in search of white and black treasure (ivory and slaves). From this dark business sprung the Swahili culture, a mélange of Islam and Africa with its own written language, now the lingua franca of east Africa.

"For Kenyan safari-planning help, visit the Kenya Tourist Board website. Or try a recommended local travel agency, Private Wilderness, which we used. Reach them by e-mail at: info@privatewilderness.com."

Even experienced travelers need to prepare for a sojourn in China...

From veteran traveler Paul Lewis, just returned from three weeks in China, seven tips to help you survive a similar trip:

1.) The air is filthy and hard to breath. Walking around wearing a mask may sound like an extreme caution, but many Chinese people do it. Take with you any decongestant pills or sprays you use at home because you will need them.

2.) Outside hotels, the ladies' toilets are usually Turkish-style holes in the ground without paper. You use them by squatting. Carry a packet of tissues to wipe with and use the hotel toilet strategically before setting out. Little packets of hand wipes you get on airlines let you wash your hands afterward, because running water and towels are also hard to find.

3.) Chinese in China eat in restaurants a lot. There is no need to taxi downtown to dine well; you can take pot luck in the area around your hotel or the museum you are visiting. Try to avoid sitting in a posh private room because the menu will all be in Chinese. In public areas, you can point to food that looks good on other peoples' plates.

Mongolian restaurants are a good idea, because you can select things that are then cooked for you. And you get to pick the sauce.

Tipping is not required, and a small amount is gratefully received.

4.) Don't be afraid to use the subway. It is clean, efficient, and easy to use, with bilingual signs on the ticket machines and direction signs. In Hong Kong, as in London, you have to use your ticket both to get on and to get off.

5.) At the front desk of your hotel are little cards with the hotel address in Chinese. Take several with you when you go out for a walk or a ride.

Taxis await outside the international hotels. The concierge will write the address for you in Chinese to go to sites or offices. Again, tipping is not required. Many Chinese will rush to your aid if you look lost or even if you don't, to practice their English.

6.) China is now well-endowed with self-service supermarkets branded by Carrefour or WalMart or Chinese groups. You can buy gifts (tea or alcohol), necessities like toothpaste (with Chinese writing on it), or even clothing at cheap prices. The most important thing to buy is bottled water, because what comes out of the faucet can kill you.

7.) In department stores, after you have selected your purchase, go to the central cashier to pay, then return with the receipt to pick up the shoes or the belt you bought.      

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Go diving on the Great Barrier Reef...antique shopping in Paris...or take tango lessons in Buenos Aires...

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You have your time...I have my time...and the Argentines definitely have theirs...

"I wanted the 4:30 p.m. bus to Mendoza," writes correspondent Paul Terhorst this week from Argentina, "and, as I boarded, my watch showed it was 4:20. I said to the driver:

"'This is the 4:30 bus to Mendoza, right?'

"The driver replied, 'This is the 3:30 bus to Mendoza.'

"Me: 'But it's already 4:20.'

"The driver, after a few moments of reflection: 'Well, you could say this is the 4:30 bus.'

"Argentina had just switched to daylight savings time. Unlike in the United States, though, or in, say, France or England, in Argentina some people go along with the new time, others don't. The way Argentines look at it, it's a matter of personal choice. You have your time, I have mine. 

"And the bus driver had his. 

"When we arrived at our destination in Mendoza, the monitors in the terminal, like the bus driver, were on old time. However, the buses leaving that terminal ran on new time.

"The next day I was in a wine shop that was about to close for the mid-day siesta. I asked, 'What time do you re-open?' 

"The owner replied, 'Six-thirty.'

"As I was leaving, I noticed the sign on his door. It indicated he intended to re-open at 5:30.

"Last week a friend was scheduled to drop by at 11 a.m. He came at noon. 'When we scheduled the appointment,' he explained, 'we were on old time. So I figured you'd want me to show up on old time.'

"Ridiculous? Absolutely, as far as I'm concerned. I think life becomes simpler if we agree on a common time. But Argentines place no value on simple, no importance on order, efficiency, agreement, or uniformity. None. 

"So it never occurs to an Argentine that, for the sake of simplicity, we should agree on a common time, vocabulary, currency, handwriting, or weights and measures. Simplicity doesn't matter. Argentines value other things, like honor, friendship, and, most important, individuality and personal whim.

"Several years ago, Vicki and I spent the summer on a ranch in Uruguay with several Argentine families. In those days, Uruguayan time was an hour ahead of Argentine time, yet I heard the kids referring to Argentine time.  I found the confusion intolerable and called everyone together. 

"'Let's decide,' I proposed. 'Should we use Uruguayan time? Or should we stay on Argentine time?'

"The kids unanimously chose to stay on Argentine time (that is, another country's time).  Fine. We were all agreed.

"The next morning, someone proposed going to town at 10 a.m. The response from the group?

"'Argentine time...or Uruguayan time?' they wanted to know.

"In only 24 hours, the agreement had fallen apart. I surrendered. Finally, I saw the wisdom in Vicki's way of dealing with things like time in places like Argentina. 

"When invited for dinner, Vicki cheerfully asks, 'American time (that is, roughly on time) or Argentine time (that is, an hour or so late)?' 

"Now, with daylight savings time, she asks: 'American time or Argentine time...new or old?'

"My advice: When in Argentina, tell time like the Argentines."