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.
Their coconut water products are not marketed aggressively in the United States by either Coke or Pepsi, because neither group can get enough supply. They sell all that they are able to produce even without making any serious investment in promotion.
Coconut water alone has enough of a market to make investing in plantations of coconuts a good idea, but it's only the beginning of the investment opportunity. In addition, there's the oil, which, like the nut itself, has many potential uses, key among them biofuel. Brazil is energy self-sufficient. It produces all the energy it needs from products within its borders, both fossil fuels, like oil and natural gas, and biofuels, from coconuts and other crops. Biofuel from coconut oil is more efficient than biofuel from corn, making it a more interesting option, and Brazil is at the forefront of efforts to use coconut oil for fuel. More than 50% of the cars in Brazil run on bioethanol, and 90% of new cars in Brazil are designed to burn biofuel. Meantime, coconut oil can also be used for cooking and pharmaceuticals.
A coconut also has a husk, which also can be used as a biofuel (I visited a coconut processing plant in Brazil that uses the husks from the coconuts it's processing to run the generator that powers the entire plant). Coconut husks also can be made into stuffing for mattresses and furniture. Then you have the meat, which is used for foodstuffs, including coconut milk when pressed a certain way, and the shell. You may never have seen a coconut shell, because it hides beneath the husk, but it, too, has value, as an animal feed.
With all these potential revenue streams, the investor in a coconut plantation can feel comfortable that, when his nuts are ready for harvest, he'll find a market. If folks are drinking less coconut water, maybe cosmetic companies are shopping for more oil. If biofuel prices are down, maybe pharmaceutical prices are up.
Owning a couple of hectares of coconut trees could be a very profitable concept. At the same time, owning a couple of random hectares of any kind of tree doesn't make much investment sense. For this kind of investment to work, you need trees that are managed professionally by an outfit that has both experience growing and harvesting the crop in question and access to a ready market for the end product. Unless you're ready to invest a lot time in understanding the industry and running the farm, owning a plantation of your own is certainly an ambitious and probably a silly idea. The more sensible option, as with teak, is to invest in a managed plantation where you own the land. This way, you have direct ownership, while benefiting from the management company's economies of scale and expertise.
Over the years, I've looked at several tree investment opportunities. In the case of coconuts, I believe the best ones are grown in Brazil, specifically in Fortaleza, thanks to this region's soil and climate. Fortaleza has long stretches of the kind of sandy soil that coconut trees like and favorable annual rainfall levels. Plus, unlike the Philippines and India, two other big coconut-growing locales, this part of the world is out of any treacherous storm zone, so the trees aren't exposed to damaging winds.
Despite this, there are few coconut plantations in Brazil, making this a growth market. The country has the infrastructure to process coconuts for all their various uses, and one group in particular packages a coconut plantation investment opportunity on Brazil's northern coast specifically for the small individual foreign investor.
The investment is fully turn-key, completely managed for you. The developer's management group plants the trees and manages the ongoing harvesting as well as the sale of the coconuts to processing plants. They also take care of all administration and paperwork associated with investing in Brazil, including to do with getting money in and out of this country, even paying local Brazil taxes. Then they send you your profits on a bi-annual basis.
The minimum investment requirement is US$60,000, which buys you 2 hectares of land in a managed plantation. The projected annualized return, net of all costs and expenses, including, again, Brazilian income tax, is about 15%.
That net return figure is based on the first coconuts being sold in year three, as it takes three years in the ground before trees begin to produce. Once the trees are fully producing, the net annual yield on your original investment is projected at 35%. That's impressive.
The trees produce for 60 years, but production declines after 40 years, so the management company is planning a tree replacement program. They will switch out older trees for new ones so that production is not interrupted.
The management company takes 30% of the revenue after direct crop-care expenses are deducted. This aligns their interest with yours, as the more money they make, the more money you make.
Few property opportunities available right now have the potential for double-digit returns. A net annualized lifetime ROI of 15% and a net annual ROI of 35% once the trees are producing fully? These are numbers to get excited about. The only way to beat them would be to do a large project on your own.
One of the many reasons I like this opportunity is because it generates cash flow relatively quickly and for the very long term. Unlike a timber investment, for example, you don't have to wait for one big harvest many years down the road to see your return.
For more information, you can get in touch here.
P.S. I've detailed for you this week three of the best current productive land investment opportunities in the world--farmland in Uruguay, teak in Panama, and managed coconut plantations in Brazil. I've also invited representatives for each of these diversification opportunities to join us in Panama City next week for our final Offshore Summit of this year.
We scheduled this event so that attendees would have time to make plans in the wake of yesterday's U.S. presidential election and in anticipation of year-end tax and banking changes. A handful of seats remain available in the room. Details are here.Continue Reading:
To help investors engaged in active discussions, therefore, the principals put together an investigation tour for this month (May 24 to 27).
They designed the trip to be similar to the one Kathie and I made with them when doing our due diligence last year. One day you visit the plantation, where more than 20 hectares of trees are already in production and plantings are under way on the first section of new dwarf coconut trees. Then you go over to the nearby processing plant to see how they use all the various parts of the coconut to create the different end products they're then able to sell.
The processing plant is a critical piece, very important to the projected returns. To state the obvious, if you don't have a market for the coconuts, then you have no revenues. There are several processing plants in the vicinity of the plantations, one of which in particular is interested in buying every coconut these guys can grow.
On the second day, you visit Cohibra, the outfit that is providing the baby trees for planting and that has been engaged to manage both the planting and the harvesting of the coconuts. This company has more than 30 years' experience researching and growing better coconut trees. The new specially engineered hybrid coconuts, for example, that will be planted for the current plantation offering come from this group.
At Cohibra, you'll see the nursery, the cross pollination lab, and the irrigation and fertilization infrastructure that will be installed at the developer's plantation. Cohibra brings a level of sophistication to the operation. They'll be responsible for making sure the growing process maximizes coconut production.
As I mentioned, the trip this month was initially put together for people already engaged in active discussions about making an investment. However, we've worked with the developer to expand the invitation. Now, the trip is available to anyone interested in looking more closely at the opportunity. At this point, they can still accommodate a handful of additional people.
This isn't a tour, per se (not designed for sightseeing), but it is all-inclusive. You're responsible for getting yourself to Fortaleza, the jumping-off point for the program. Once there, everything (hotel, transportation, meals, etc.) is included in the single fee of US$750 per person or US$1,000 for a couple traveling together.
If you decide, after viewing the plantation, etc., to buy two or more units, the developer will rebate the cost of your tour from your purchase price. If you decide for some reason not to buy after having toured the operation, you'll at least have had a unique experience in Brazil and an interesting lesson in coconut agriculture. However, I'd bet that, if you're seriously thinking about making a productive land investment, you'll be so impressed by what has been put together here that you'll want to get involved.
For more details on the trip and to reserve a place, please inquire here.
P.S. Remember that Americans need a visa to travel to Brazil. This can take less than a week. The visa you receive will be multiple-entry good for five years, so you'll be able to travel back to visit your coconut trees as they mature without having to get another one.
P.P.S. If you're not able to make these May dates, the developer plans another such expedition later this year. Note that the cost of the investment likely will be higher by then.Continuing Reading:
Kathleen Peddicord'sNew Book
An Expert Guide To The Advantages And The Challenges of Investing In Real Estate Overseas..." Learn More
Sign up to receive free dailydispatches from the "Guru of Overseas Retirement and Opportunities"
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.
Sign up for the Overseas Opportunity Letter
Receive our editor's latest research reports...absolutely FREE!
The Best Places For Living And Investing in the World for 2014
Receive a FREE copy of
The Six Cheapest Havens
To Retire In 2014
Discover the six best places in the world right now to live better and retire well...on as little as US$700 a month!
“We will not share or rent your email address to or with anyone else, period!”
Hey, I'm already a reader of Kathleen's e-letter. I don't need to see this popup ever again.