• If You're Shopping With U.S. Dollars, You've Got More Buying Power Than You've Had In Two Years...
• The Secret Is Your Rental Manager...
• People Will Always Come To Paris...
• Proposed Changes To Costa Rica's Foreign Retiree Laws Aren't Good News For Pensionados, Current Or Future...
• The French Are As Engaged As The Americans, It Seems, This Election Night...

• Four Steps To A New Life In Safe, Affordable Uruguay...

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How Are You Going to Be Able to Afford to Retire?
 
Seeking and building a new life abroad is not only the most sensible way to approach retirement in the current global market climate...

It's not only the best (maybe the only) way to assure
yourself that your retirement funds will carry you all
the way through retirement...comfortably and even in style...

It's not only the best way to make sure you're able to sleep at night...that you're not kept awake at 3 a.m. by money and budget concerns...

It's also the start of the greatest adventure of your life. The most fun you'll ever have.

The New Retirement Revolution
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Dear Overseas Opportunity Letter Reader,

Your U.S. dollars have more buying power in euro-land right now than they've had in two years.

And the market in Paris, for both sales and rentals, is soft, down, and falling.

Ah, ha, I can hear you thinking to yourself, dear reader. And you're right:

This is the time to buy or to rent in the City of Light.

"By all means," agreed our French friends over lunch today, who themselves are shopping for bigger apartments to rent and to own, "this is a buyer's market."

These past few days, we've been addressing the Paris rentals market from the other side. We're not looking right now to rent a place...we're looking to rent out the place we own.

When we took our leave of this city four months ago, we decided not to rent out our apartment. We wanted to be able to return for visits as often as our schedules allowed.

Meantime, we've been paying the monthly syndic (building) fee, the local taxes (taxe de habitation and the taxe fonciere), the insurance, the electric bill, the phone bill, the wireless fee...

Paris is one of the most expensive places in the world to carry a real estate asset, so, we've decided (that is, Lief has decided and I've agreed) that we should find a renter.

The way we see it, this isn't any old rental...this is our Paris home. And we don't want any old renter. We want someone who'll appreciate the place as much as we do.

OK, that's not going to happen. But I think we've found the next best thing: a rental management agent who seems to respect the apartment almost as though it were his own.

Abdy Jouadi just left. His agency, Paristay.com, specializes in high-end and executive rentals in the 5th, 6th, and 7th arrondissements. Even given the current down market, Abdy thinks he can find us a renter "in three to four weeks, maximum"...and at a very appealing rate.

Our conversation with Abdy reminded us that a Paris apartment can be one of the best long-term real estate investments you ever make. Because it's versatile. You can use it yourself and, if you enjoy Paris, yield an incalculable return. And then, whenever you decide you're ready, you can arrange to find someone who'll pay you for the chance to enjoy it for a few weeks or a few months himself.

Paris sees more tourists than any other place on earth, and it's hard to imagine this changing anytime soon. Good times and bad...bull markets and bear...people come to Paris.

"I had a client in October who came to town for a month while her kitchen in Los Angeles was being remodeled," explained a friend over lunch today. "She rented an apartment in Paris for four weeks, an apartment in Rome for two, and another in London for two more."

My friend works for a custom tour agency. "Here in Paris," she continued, "I organized personalized shopping days for her. I don't think the current global market downturn has affected her. People with her kind of money ride this stuff out...and, no matter market cycles, come to Paris."

They come to Paris...and they need a place to stay.

So, when you buy a Paris pied-a-terre of your own, buy first what you like. This is my first rule of real estate investing: Buy what you like.

Then, here in Paris, buy what will rent easily, global market conditions notwithstanding.

An apartment in the 1st, 5th, 6th, 7th, or 8th arrondissement of this city will always find a renter.

Furthermore, as our new friend Abdy explained to us today, the more bedrooms the better.

Typically, investors choose studios or one-bedrooms. Which means there's no shortage of those. So, if you've got a two- or, better, a three-bedroom apartment, you can command super-premium pricing. A three-bedroom furnished apartment in a prime neighborhood can yield as much as 100% more than a one-bedroom unfurnished over the long term.

That's the second secret Abdy shared with us today: Furnish your place. An investment not only in furniture, but also in décor ("classe," the French call it) can really help to better your yield.

What kind of return can you hope for? You're not going to get rich off a Paris apartment rental, but, with the right rental manager, you should be able to yield 4% to 6% net (assuming no mortgage) on a short-term, less if you rent long-term (three months to a year at a time).

For a short-term rental, you'll pay rental management fees of 25% to 30%.

As I've mentioned, though, if you use a company that specializes in corporate rentals for transient executives, as we are, you pay no fee for them finding you a renter. However, you'll still need a management company—someone to be on call for emergencies and repairs, someone to keep an inventory of apartment contents for you and to check it after every tenant vacates, someone to make sure the local bills are paid, someone to meet new renters, someone to keep track of the keys, etc. This should cost you about 10% of the monthly rent.

Remember: Foreigners can finance in France. You could buy an apartment in Paris with as little as 20% down. If you're buying to rent, you won't cash flow with an 80% mortgage. However, you could borrow up to say, 60% of the purchase price and make enough through rental fees to cover the mortgage, the management fee, and other expenses from day one.

The catch with a French mortgage (as in much of the world) is life insurance. It's required. And, in France, you can only buy life insurance that will cover you up to age 70 or 75, meaning you can take a mortgage that extends only to that age.

France Home Finance can tell you more.

Kathleen Peddicord

P.S. This decision to rent out our apartment in Paris has been made nearly overnight. We took a close look at the cost of carrying the place, considered realistically how often we'd be able to get back here to use it, and realized that not renting was silly.

On the other hand, renting means clearing out all our personal belongings in the next five days, before we return to Panama. In Paris, we've discovered in the past 24 hours, this isn't such a big deal. We've found an off-site storage facility (www.boxplus.fr ...with English-speaking staff)...that has put us in touch with movers who say they can pack and deliver to the storage unit all the things we'd like to take out of the apartment before the renters move in...and they can do it before the week's end.

P.P.S. I don't mean to over-simplify. We've had near-disastrous experiences as landlords in Paris in the past. The key, as I've explained before, is the rental manager. I have a good feeling about Abdy...

P.P.P.S. "Who are you voting for?" has been the question from every French friend we've spoken with these past few days. The French are watching the U.S. elections as closely as the Americans, it seems. If the vote were to take place in this country, there'd be no question: It'd be President Obama for 2009. The real winner won't be announced until after I'm asleep tonight, so I'll await news in the morning...

All the tax and management benefits of a French leaseback...plus up to six months personal use each year.

Leaseback Light
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When we visited Costa Rica last summer, we had the sense that the Costa Ricans didn't really want us or our kind hanging around. Everything about getting in and out of the country and every encounter we had with the locals gave us the impression that, while they were happy to enjoy our custom...they were maybe happier to see us go.

Today, our Costa Rica Correspondent David Stubbs reinforces our impression. He reports that the Arias administration has proposed a new immigration law that would increase the financial requirements for pensionados in this country from US$1,000 to US$2,000...and for rentistas from US$1,000 to US$5,000 a month!

Furthermore, if the proposed changes go through, they'll apply not only to new pensionado and rentista retirees...but to existing ones, as well.

Nobody'd be grandfathered.

Even foreign retirees living in the country already would have to provide proof of the new levels of income to be permitted to renew their residency status.

Plus, should the new legislation pass, all foreigners in Costa Rica would also be required to join the Caja Costarricense de Seguro Social, the national social security system, meaning they'd have to pay for medical coverage this way...even if they have medical insurance otherwise.

If this new legislation passes, pensionados and rentistas in this country will move on; many will have no choice. And would-be retirees considering their options (like you, dear reader) will do well to take Costa Rica off their list.

We'll keep you posted.

"I am a retired physician, planning to retire in Uruguay. I need advice, information about the cost of living, medical care, taxes, etc. Can you help?"

-- Gabriel C., Italy

Start with the Uruguay Country Page on our website, which includes basic statistics and other general information.

Next, review our current and complete monthly Uruguay Budget. You can live well and comfortable in this country on as little as US$1,038 per month.

Our preferred Uruguay attorney is Juan Fischer. He's the man to contact for help with all issues related to residency, real estate purchase, incorporation, taxes, banking, and visas.

Step #3: Read past issues featuring Uruguay in general and Juan's advice in particular here:

"Retire In Style To The Switzerland Of South America"

"Become A Resident--It's Easy"

"The Panama Of South America"

Roving Latin America Editor Christian MacDonald last month filed a comprehensive report on living in La Barra, Uruguay, which he has identified as the top choice in this country for a sophisticated seaside retirement. This report is available to subscribers to our Overseas Retirement Letter. A one-year subscription is available right now for US$36.

Editor-in-chief of the Overseas Retirement Letter Lynn Mulvihill promises more Uruguay coverage in coming months. "Uruguay is one of the world's top choices right now," Lynn explains. "We'll be giving it more virtual ink."

Finally, if you're considering Uruguay, the best thing to do is to get on a plane and take a trip down there to get the lay of the land firsthand. And, right now, as a reader of these dispatches, you can spend up to seven days in the country free.

Friend and developer David James, the man behind the premier American-style retirement community in all Uruguay, has extended an open invitation for Live and Invest Overseas readers to come down to take a look for themselves as his guest. David's offering a seven-night stay in Montevideo gratis for any reader interested in seeing what he's building out on this country Gold Coast. David's Sugarloaf community is just outside Punta del Este.