Articles Related to Brazil



Good luck finding this level of sophistication and infrastructure anywhere else in Ecuador outside Quito (which we also would not recommend as a place to live).

Why Not Boquete?

Boquete has long been heralded by many (starting, in fact, with us, more than 15 years ago) as one of the world's top retirement havens. However, we decided not to include this Panamanian mountain town in our 2014 Index for two reasons.

First, the cost of living in Boquete continues to rise.

Second, you have other better choices elsewhere now, which we wanted to feature instead. We limit our Index to 21 destinations. This is an arbitrary restriction that forces some hard choices. The truth is, as more places worldwide become more appealing for the would-be retiree, other places, including some well-known, like Boquete, become less so. Boquete is still a great turn-key choice for overseas retirement, but we'd say it no longer belongs on a short list of the world's top 21 choices.

One big draw of Boquete is its large and growing expat community. If the idea of retiring to a place where many others like you have already paved the way and stand ready to welcome you to their ranks, you have other more affordable choices, including Cuenca and Chiang Mai, for example, both of which offer super-cheap, high-quality lifestyles (and both of which are included in our Index this year).

Puerto Vallarta and Barcelona are two other expat-friendly options featured in our 2014 survey. The cost of living is higher in Puerto Vallarta and Barcelona than in Cuenca and Chiang Mai...and higher than in Boquete. However, the cost of living isn't unreasonable for the quality of life available for purchase. The quaint mountain town of Boquete just can't compete for lifestyle with chic, cosmopolitan Barcelona or Pacific oceanside Vallarta.

Why Not Uruguay?

Uruguay has gotten expensive, too expensive for the lifestyle on offer, and it's likely to become more expensive still.

Uruguayans are used to the devaluation of their peso. They refer to appreciation as atraso cambiario, "the exchange rate is running late." Because of this phenomenon, prices for many big-ticket items in Uruguay (including real estate, cars, and even high local salaries) are quoted in U.S. dollars.

Why Not Brazil?

High crime rates keep much of Brazil off our radar and out of our survey. That said, south from Ceara to Natal, you can enjoy super-cheap coastal buys in safety.

Further, the bureaucracy, red tape, and corruption at all levels involved with getting anything done in this country are significant downsides to life here. The country doesn't make establishing residency easy and offers no retiree benefits program.

Also, Brazilians speak Portuguese, which, for most of us, is not as easy to muddle through as Spanish, French, or Italian.

Why Not Ajijic, Chapala, San Miguel de Allende, Or Merida?

Mexico offers many well-publicized options for the foreign retiree. Why did we choose Puerto Vallarta over the rest of the choices for our 2014 Retire Overseas Index? Because if offers the best option anywhere for the retiree looking for developed Pacific coastal living on a budget.

Nicaragua, Panama, Costa Rica, and Ecuador all also offer Pacific coast options, but none is anywhere near as fully appointed as Puerto Vallarta, which offers marinas, country clubs, golf courses, shopping, and fine dining. Yet, you could retire here on a budget of as little as US$1,910 per month, which is more than an average budget for other countries with Pacific coastlines in our Index but a very reasonable amount given the lifestyle on offer.

Why Not New Zealand?

We like New Zealand as a part-time retirement spot, but we didn't include it in our survey this year because it's just not a realistic full-time option for the typical retiree. The truth is, New Zealand (like Australia) isn't overly keen on the idea of foreign retirees and doesn't make it easy for the retiree to establish residency. In fact, in most cases, it's not possible.

Why Not Costa Rica?

About three decades ago, Costa Rica decided to make a business of the foreign retiree. The Costa Ricans invested in a formal and successful advertising campaign, targeting Americans primarily. Tens of thousands of would-be retirees from the States took up the invitation and relocated to this beautiful land of hills and rainforests.

The benefits Costa Rica offered retirees who became resident were terrific, including the original pensionado program against which others were measured for decades. In addition, way back when Costa Rica made a name for itself as a top retirement choice, the cost of everything from groceries and eating out to prime coastal property was super cheap. Fast forward a couple of decades, and, thanks to investors and speculators, Costa Rica wasn't so cheap anymore, neither its cost of living nor its beachfront real estate. And, while prices had risen dramatically, the infrastructure hadn't kept pace. Retirees were happy to overlook falling bridges and unpaved roads when prices were low. Harder to rationalize putting up with failing infrastructure in the face of appreciating costs.

Worse, after working so hard to woo American and European retirees, Costa Rica seemed to change its mind. The Costa Ricans didn't eliminate their famous pensionado program; they simply eliminated most of the tax breaks it had promised, as part of a deficit-reduction austerity package. And they didn't grandfather in existing pensionados. So those who'd chosen Costa Rica for the retiree benefits it offered were surprised and disappointed to find that those benefits existed no more. Now the Costa Rican government is considering a further pensionado program adjustment. They're talking about increasing, maybe substantially, the minimum monthly income requirement to qualify. And, again, if the change is made, existing pensioandos won't be grandfathered in. To renew your status, you'd have to qualify under the new requirements.

Kathleen Peddicord

P.S. Our 2014 Retire Overseas Index is featured, in full, in this month's issue of our Overseas Retirement Letter. If you're not yet an ORL subscriber, become one now to receive this bumper special annual edition, hot-off-the-virtual-presses.

Or you can purchase a copy of the Index on its own here.

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I'm speaking of local housing. In this case, the developer is targeting the housing shortage for working-class people in Brazil, tapping into a program offered by the Brazilian government that helps to help put people into decent housing.

 

 

The government program is called Minha Casa, Minha Vida, which is Portuguese for My House, My Life. The total current housing deficit in this part of the market (low- to middle-income) is 8 million homes. The developer I'm in contact with is intending to build 40,000 such units over the next five years.

In other words, the scope of the market is big, and the opportunity to participate over the next five years is great. However, the investment timeframe for your investment can be as short as one year.

Here's how it works. The developer is building homes in projects that are approved for the Minha Casa, Minha Vida program. That approval gives buyers access to preferred lending rates that are government-subsidized. It also allows buyers to get grants from the government for the down payment. These buyers come to the developer pre-approved and ready to buy, meaning the sales side of the equation is taken care of.

The developer needs investors to fund construction. They already own the land and have the construction permits in hand. Investor money funds the construction of the houses, and the investor's return comes from the resale of the houses to the end users.

The investor is essentially pre-buying a housing unit that the developer will resell for him at a guaranteed rate of return. In fact, the developer not only locks in a fixed return for the investor, he also takes on the currency risk, as the houses are sold in Brazilian reais. The developer can do this partially because the timeline for the investment is only one year. From the time investor funds are received, the developer has 90 days to start construction of the specific house the investor has bought. Construction time is between six and eight months.

This is a completely turn-key investment, and your returns are fixed in your original investment currency (the developer will write contracts in U.S. dollars, Canadian dollars, British pounds, euro, Singapore dollars, or Hong Kong dollars). Whatever currency you invest in originally, that's the currency your return is paid out in, at a fixed rate of 15% at the end of one year. It's that simple.

The developer not only takes on the currency risk with the real, but he also has removed all the barriers individual usually face when investing in Brazil. The investment funds are held in escrow with an attorney and released only as construction of the unit progresses. You as the investor have the house as collateral should something happen to the developer during construction. If the developer doesn't sell the house and pay back the investment plus the 15% by the end of the investment term, then you can take possession of the house yourself and sell it through a local agent. Obviously, that's not the goal, but the security of the house is there for you.

As the developer has already completed three developments to date (amounting to more than 1,000 units completed and another 800 currently under construction), the necessary systems are in place, and the risk of them not fulfilling is minimal.

With everything that is in place, why does the developer need investors? Why not go to a local bank in Brazil for a construction loan? The simple answer is that it would cost more money and the developer wouldn't have as much control over his business if he worked with a local bank for funding. Interest rates in Brazil are fairly high, and, more important, banks tend to withhold the full amount of a construction draw even for simple things outstanding on the punch list. One broken window in a batch of 20 houses could stall a bank payment in this country for months. The developer wants to avoid those kinds of bureaucratic issues.

With more than 1,000 investors already in place (many invested in more than one unit and/or have renewed their investments after the first ones closed), the developer still needs more investors to reach production goals for the Minha Casa, Minha Vida housing program. This is the opportunity for you.

You can participate starting at US$37,000. That's a fixed U.S. dollar price, and the figure that the 15% fixed return will be paid on. Assuming the timeline targets are all met along the way, your capital and profit should be paid out at the end of 12 months equating to a 15% annualized return.

Jump in for six units at a time, and the developer will increase the fixed return to 17%, as his administrative costs go down.

I like Brazil as an investment market, but it's a difficult market for the small investor to take advantage of successfully. Between the language and the bureaucracy, the learning curve for an individual investor isn't small.

That's why I like this offer. The developer has packaged everything to minimize the headaches and the risks for you the investor, leaving you with an opportunity to take advantage of the demand the growing Brazilian local housing market is creating without having to invest the time and effort to figure out how to navigate this marketplace on your own.

For more information, get in touch here.

Lief Simon

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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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