Articles Related to Panama

While continuing with the planting of the trees, the developer's team is also installing the necessary plantation infrastructure. Miles of internal roads have been cut, and miles of fencing have been positioned. The onsite office is up and running, as is the fertilizer factory out back. Lagoons and ponds are being built to provide reservoirs of water. Rocks are being collected from around the property and placed to help protect the trees and to hold in the layers of mulch each tree receives.

As I said, the operation is impressive.

As the early investors are seeing their trees planted, the risk for new investors is being reduced week by week, even day by day. This work of clearing and planting will continue regardless of the rate of sales of future hectares. The developer is moving full steam ahead on all fronts.

One of those fronts is the plan for intercropping among the mango trees. After considering various options, the developer has begun planting certain grasses. This intercropping will provide additional long-term revenue for investors; moreover, it will bring cash flows forward.

The intercropping revenue is a bonus. The main revenue from the plantation, of course, will come from the mangos. The cash flow projections over 20 years are for an IRR of 17.04% per year. That's an excellent annualized return by any account.

Those return projections are based on current, local mango prices in Panama. If the developer is able to open up his export market into North America, the returns will likely be much better than the projections.

Implementation risk is the big one for any undertaking like this. In my mind, that risk has been all but eliminated. Of course, there are other risks, including, as with any agricultural project, pests, fire, and drought.

The pest risk in this case is mitigated by the type of mango the trees being planted will grow. It's a proprietary cultivar with a thicker skin and slightly less sweet pulp. The thick skin makes it more difficult for insects to get to the meat of the fruit. As well, though, insects don't really try to get at these mangos; they just aren't as interested in this mango fruit as they are in other readily available options.

Fire is a risk for any trees. In this case, the distance between the trees creates a natural fire break. Additionally, humidity levels in Panama don't support high fire risk most of the year. I'd rate the fire risk in this case as negligible. 

Water, of course, is important to any agricultural undertaking. Panama is a tropical location that gets plenty of rain. Still, during the trees' early years, ample water supply is critical. I mentioned the lagoons and ponds being established on the property. In addition, the plantation is bordered by a river that runs year-round, and other smaller seasonal rivers run throughout it. Water supply isn't a concern, and mango tree roots go deep, meaning that, once a tree is full grown, the risk from drought is virtually eliminated.

Country and currency risk are low in Panama. This is a stable democracy that uses the U.S. dollar. You're making the investment in dollars, and your returns will be paid out in dollars. You have currency risk only if your home currency isn't the dollar. 

Another benefit of Panama is the tax incentives it offers for agricultural activities. A plantation with gross annual revenues of less than US$300,000 operates tax-free. Invest to keep the size of your plantation(s) under that figure, and Panama taxes aren't a concern.

While implementation of the plantation is well under way and most of the risk has been eliminated, the cost of investing remains low. A 1-hectare investment costs US$36,500. 

Again the IRR projections are for 17.04% per year. Intercropping revenue starts in year two, but the real cash returns come from the mangos, which should begin producing after four years. The trees should reach full production levels in year five.

If you've been watching this opportunity from the sidelines, I'd say that this is the ideal time to get in. Price increases surely must be on the horizon.

You can get in touch for more information here.

Lief Simon 

P.S. At our 2015 Global Property Summit, taking place March 18–20, 2015, we'll be looking at more than 15 specific profit opportunities. This particular mango opportunity will be one of them. You can read all the details of this once-a-year event here. Or, if you've got questions, Conference DirectorLauren Williamson is standing by to help you out. 



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Argentina

Argentina thrives on crisis, and it can seem that this country is always entering or exiting a financial meltdown, making it hard to know when to get in or out. 

The most recent crisis here has been building for some time. Argentine contacts on the ground tell me that 2015 will begin the window of buying opportunity. As one puts it, "Argentina is right now walking into a new investment phase."

Another says: "The time to be putting money into Argentina will begin May 2015..."

I timed Argentina's last major crisis, in 2001, and helped investors who took my advice to as much as double their money in two years (myself included). I'm looking forward to the next buying opportunity in this country, and you should be, too.

Growth Markets

Panama City

I've been recommending Panama City for rental investment for 10 years. In that time, I've earned cash flow of 15% per year net and more myself and have helped many, many other investors do the same.

Post-2008, pundits who claimed they knew proclaimed that this market, like so many other markets around the world at the time, would collapse. I ignored them and continued recommending Panama City for rental property investment.

Though the market softened, no collapse came, and I, as well as those who took my advice, continued earning excellent annual yields.

What do I think of Panama City for rental investment today? I'm more bullish on this proven market than ever and am looking to invest further myself. This market offers some of the most stable rental yields available anywhere in the world thanks to its unique flexibility. You can rent short-term or long-term...to business men, retirees, or tourists...to expats or locals. 

The key is buying in the right part of town depending on which market you want to target. At the Global Property Summit in March, I will show you what and where to buy to generate the greatest possible yields while at the same time positioning yourself for what I predict is going to be excellent capital appreciation over the coming 5 to 10 years.

Medellin

Medellin, Colombia, has been one of my favorite rental investment markets for the past six years and here, again, I'm more bullish on this market's prospects looking ahead to 2015 than ever. 

In addition, I have identified an emerging neighborhood of this city that is poised to offer better-than-ever returns. This area is a focus of the local city planners, who are investing in important infrastructure improvements, and, as a result, is drawing increased attention from foreign investors, travelers, and property buyers. What began as the initiative of a few local entrepreneurs is expanding into one of the world's best rental investment opportunities today.

Meantime, the U.S. dollar is at a five-year high against the Colombia peso. The time to act in this market is right now. My Colombia contacts have the details for where and how at my March 2015 Global Property Summit.

Istanbul

An exploding local demand is fueling a housing boom in this beautiful and historic megacity. Half the population of Turkey is younger than 30 years old, and the country sees 350,000 weddings a year. All these new couples want places of their own to live, and, thanks to the strong and expanding economy, more of these young couples than ever can afford places of their own.

Still, right now, the starting market price in Istanbul is US$1,000 a square meter, making this city a global bargain. You can get into a rental with as little as US$50,000, and less than US$25,000 down buys you pre-construction yields of up to 15% per year.

My Istanbul contacts will be in Panama with me for the 2015 Global Property Summit to share all the details.

Profits From Agriculture

Productive land is the ultimate hard asset, with the potential for long-term even legacy yield. At my 2015 Global Property Summit, we'll look at:

Timber In Panama

Historically, timber has enjoyed the best risk-to-reward ratio of any investment sector, producing an annualized ROI of 12% to 15% per year every year since they started keeping records of investment risk versus return. It's the long-held secret of the world's wealthiest people.

I like Panama for timber. The country has some of the world's best zones for many kinds of timber, including teak. And, as this is the hub of the Americas, easy access to markets both north and south ensures outlets for your harvests. 

At my March 2015 Global Property Summit, I'll introduce you to the best current opportunities to position yourself for long-term growth from timber in Panama, including a chance to earn up to 11.62% from a hardwoods investment that also qualifies you for residency in Panama, one of the world's leading offshore and retirement havens. The best part of this opportunity is the buy-in cost, which is just US$15,200.

Agriculture In Panama

Panama also offers the opportunity right now to cash in on the globally exploding demand for one agricultural product in particular. I'm working with local contacts to prepare a special presentation on this opportunity specifically as it's one of the best agricultural investments I've identified in six years of searching.

Agriculture In Paraguay

Paraguay is the world's 10th-largest exporter of wheat, eighth-largest beef exporter, seventh-largest exporter of corn, sixth-largest producer of soy, fifth-largest exporter of chia and soy flour, and fourth-largest exporter of yucca flour and soy oil. 

This country has the third-largest barge fleet in the world (after the United States and China) and is the third-biggest exporter worldwide of yerba mate. It's the second-biggest stevia producer and exporter in the world and the world's #1 exporter of organic sugar.

GDP and GDP per capita are both expanding, and inflation is historically a one-digit number and has not surpassed 5% in recent years. 

Paraguay qualifies right now as a "blue ocean" market, an investment arena awash with opportunity, especially agricultural investment opportunity. My correspondents from the scene will have the details for March 2015 Global Property Summit attendees.

Farmland In Uruguay

Uruguay is a breadbasket country that is also the world's most turn-key market for productive farmland, the world's oldest asset class and one that is going to continue to become more attractive over the coming decade as the world's population continues to expand. We're looking at more than 9 billion people on this planet by the middle of this century, a sobering reality that is translating to a global race for farmland, with some countries (including Brazil, for example) imposing restrictions on foreign ownership of productive land.

Not so in Uruguay, which welcomes foreign investors. Nearly 95% of the land in this country is farmable. At the March 2015 Global Property Summit, my Uruguay investment pros will introduce you to current opportunities to position yourself to profit from an ultimate hard-asset investment in this market, including agricultural, cattle, sheep, forestry, and vineyard buys.

Isn't global property investing a jet-set strategy?

No.

I've identified six opportunities with buy-ins of US$50,000 or less to showcase at my 2015 Global Property Summit, including one double-digit yield opportunity for less than US$20,000 and another for US$25,000 that could earn you up to 22% per year.

Lief Simon

P.S. The first 25 who register are invited to accompany me on a private property-viewing tour in Panama City

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The other main attraction of life in this part of Panama is the market, where locally grown organic produce is available for a pennies on the dollar compared with U.S. prices and a bargain compared with costs in Panama City, too. Every day local farmers arrive before sunrise with their fruits and vegetables.

This is the only place in the country where you find a traditional farmer's market operating every day. You could shop for your organic produce at the market each morning, or you could arrange to have it delivered to your home. One such to-your-door supplier is the Biodiversity Corner run by Tomas Garcia and Michael Ducharme.

The hot springs and the organic produce market have contributed to El Valle's development as a healing center. Today there are spas and yoga and wellness centers around town, including Yoguini Spa, Crater Valley Adventure Spa, Cariguana Spa, and, best known, the spa at Los Mandarinos.

The most typical mode of transport in El Valle town is the bicycle. However, don't worry if the hilly terrain makes the idea of cycling intimidating. Consider instead a golf cart, which has become the preferred means of getting around among foreign retirees settling here.

When you want to travel farther, to the beach, for example, which is a half-hour away, or to Panama City for shopping or big-city distractions, you can take advantage of frequent, reliable, and affordable bus service. A one-way ticket to Panama City is US$4. You can't argue with the cost, but you must be careful when it comes to timetables. Arrival and departure times can be unpredictable and random. Sometimes buses turn up or leave when they are full, not according to any schedule. Best to ignore printed schedules, if you can find them, and rely on local advice.

Life in El Valle would not suit every retiree. This beautiful but remote enclave appeals to those interested in serene and healthy living as part of a predominately local (that is, not expat) community. You'd find many ways to spend your time and many opportunities for making friends, but you'd need to speak at least a little Spanish to take advantage of them.

Kathleen Peddicord

P.S. El Valle de Anton is the featured destination for this month's Panama Letter, in subscribers' e-mailboxes over the weekend.

If you're not yet a Panama Letter subscriber, get on board here now.

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Maybe you've noticed that there are no foreign franchises, including no fast-food franchises, operating here in Belize City. That's a remarkable thing in today's world...until you remember that historically Belize City just hasn't been home to enough population to support a lot of trade. I understand that McDonald's is finally planning to open its first restaurant here. I wish them luck.

Some countries restrict foreign investment in retail activities. A non-Panamanian can't open a shop in Panama, for example, where retail is "protected." Professions such as doctors and lawyers are also restricted to Panamanian citizens.

One way to choose where to locate your business would be based on incentives. Many countries have free trade zones, for example, where you can bring stuff in, process it, and then export it tax-free. Panama has the Colon Free Trade Zone. Belize has several established zones but also allows you to set up your own free trade zone if you want. If you wanted to start some business that needed to be in a particular part of Belize (because of localized supply of materials or labor, for example), you could apply to establish your own free trade zone in that spot. Same in Nicaragua. In fact, if your interest is export—that is, an operation where you're not selling locally but would be creating jobs—you'll find that most countries offer benefits to help.

Another business incentive to consider is residency. Many countries offer residency visas to anyone interested in starting a business, thereby creating jobs, in the country. Colombia, for example, has an attractive and affordable start-a-business, get-a-visa program. The minimum investment requirement is only US$33,300. Panama has a business investor visa, too, but it, by comparison, requires you to invest at least US$160,000 and to employ at least three Panamanians.

Tourism-based businesses are often incentivized, and many countries have government agencies that are specifically focused on developing foreign investment in tourist-related activities—hotels, dive shops, whatever. In Nicaragua, for example, the group is ProNicaragua. The incentives are typically to do with taxes—a ten-year tax exemption, say, giving you a nice window during which you can reinvest proceeds in growing your business without having to skim anything off the top to pay your tax bill.

Kathleen and I left the States years ago to start a business in Waterford, Ireland. Why Waterford? Because that was one of three markets the Irish Development Agency (IDA) was focused on developing. By agreeing to base our business in Waterford, we qualified for both a reduced rate of corporate tax and cash incentives for every Irish employee we hired up to 15.

Those were nice perks, and definitely they were the reasons we chose Waterford. However, we had targeted Ireland based on bigger-picture agendas. We wanted to be in Europe, for personal reasons, and we identified Ireland as a low-cost place to operate the kind of business we intended to operate. Our first years running our publishing business in Ireland, our labor cost was less than half what it would have been in the States.

The easiest kind of business to operate offshore is a one-man (or -woman) virtual show. A consultant or a writer, for example, can run his business from the beach in Panama, the mountains of Argentina, or a country village in France.

If you intend a virtual business that requires staff, then, as with a bricks-and-mortar operation, some places make more sense than others and some places don't make sense at all. We don't recommend starting or basing a business in France, period, unless you just really want to live in France. As a doing-business choice, this country belongs at the bottom of any list (thanks to the cost of doing business, the labor laws, the bureaucracy, and the taxes).

Panama is perhaps the best place in the world to base a virtual business that requires staff. That's why we're in Panama City right now. When we decided to launch the Live and Invest Overseas business seven years ago, we knew we'd have to move from France. We chose to relocate to Panama because of its affordable English-speaking labor force, its business infrastructure (banking, Internet, etc.), and its jurisdictional approach to taxation. Organize your operation correctly, and you can run a business in Panama tax-free.

Once you've decided where to base your offshore business, your next challenge is to develop the infrastructure it will require. Where will you bank? How will you move money around to where it needs to be? How will you process orders? How will you and your staff get paid? The answers to these questions differ depending on what kind of business you want to operate and in what country you decide to base it.

Again, we chose Panama in part because we knew it provides the kind of infrastructure we'd need. Open up a Panama corporation, and you'll be able to open a Panama bank account to support without much trouble.

One key piece of the infrastructure we require for our business in Panama is a merchant account. When we launched the business, we weren't able to get one; however, after a couple of years and a track record, we were finally approved.

What did we do in the meantime? We used PayPal. We worried initially that this might limit our ability to sell. Would our customers find it odd that the only way they could purchase from us was through PayPal? Maybe it reduced our trade some; we'll never know. But it meant we were able to be in business and to build the track record, again, that we needed to be approved eventually for a merchant account.

The other big-picture item you need to address is employees. If I had to name just one reason why we chose to build our business in Panama rather than Europe, it'd be employees. Labor laws around the world favor the employee over the employer much more so than they do in the United States, and nowhere is this truer than in France. In the United States, you can operate on a hire-at-will, fire-at-will basis. As one U.S. attorney we used to work with put it, "You can fire someone because you don't like the color of his tie."

Try that in France. You can't fire a guy in France even if you've got video footage of him stealing from you.

Things are a little better for the employer in Panama. We've had to fire several people over the past six years, and, in each case, we were able to do it with minimal wear and tear. Bottom line, you pay them off.

The other thing to know about employees in some countries is that you pay them for 13 months of work every year. In Panama, for example, everybody gets one month of vacation each year...and a "13th-month" bonus equal to one month's pay. You just factor it into your cost of doing business...

Lief Simon

P.S. Today's essay is excerpted from Lief Simon's "Doing Business Offshore" presentation at last week's Global Asset Protection and Wealth Summit, in Belize City.

The complete audio recording of this talk, as well as every other presentation from the two-and-a-half days of this special event, are being edited and bundled to create our new Wealth Building and Diversification Kit.

You can reserve your copy of this everything-you-need-to-know-to-go-offshore bundle here now pre-release for 50% off the regular price. This discount remains in effect through Sunday, Nov. 2 only.

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Renting Overseas Rule #1:

Think twice before renting new construction or just-completed renovation.

You don't want to be the first person living in a place. It makes you a guinea pig, forced to work out the kinks.

This was our very frustrating experience in our second rented home here in Panama City, in Casco Viejo. The owner hadn't done a punch list after the extensive renovation he'd undertaken just prior to our moving in. We were left, therefore, to discover a long list of things that didn't work and that hadn't been properly addressed (including a roof that leaked in nine places, no hot water in the guest bathroom, and bedroom doors that couldn't be closed because they bumped into the ceiling fans).

We discovered too late that the long-distance owner didn't seem to care whether anything worked or not, leaving us to deal with his incompetent and unresponsive property manager. Thus our third rental...

Renting Overseas Rule #2:

Investigate the reputation of the management company responsible for the property.

Ask around. If the feedback is all negative, consider finding another place to rent.

This also applies to building management in the case of a high-rise apartment building. In Panama City, most new buildings come with loads of amenities (swimming pools, grill areas, children's playrooms, basketball courts, tennis courts, even putt-putt golf). However, if the building administration isn't maintaining the amenities, and you therefore can't use them, what's the point of paying for them (as you will, through your monthly building fees)?

Renting Overseas Rule #3:

Understand what documents you will need to rent.

Depending on where you're moving, the answer could be none. On the other hand, in some markets (France, for example), you're going to have to prepare a complete dossier of paperwork (including, for example, recent bank statements, pay stubs, reference letters, and letters of guaranty) to submit for approval before you'll be able to sign a lease.

In Panama, you generally don't need any documentation to rent. You find a place, sign a lease, pay your deposit, and move in.

In Paris, on the other hand, again, you'll need a folder full of paperwork—unless you rent on the black market. Renting long term on the black market can be more expensive, but it overcomes the dossier hurdle, which, depending on your situation, you may not be able to meet.

Renting Overseas Rule #4:

Understand what deposit you will be required to make.

The general rule is that you'll have to pay the first month's rent plus a deposit equal to one month's rent. Sometimes, the deposit can be one-and-a-half or two months' rent.

Whatever the deposit, don't expect to see it again. Friends in Paris joke that the best way to think about any security deposit you make in that market is to amortize it over the lifetime of your rental. In other words, consider it part of the rent. (I'm speaking about long-term rentals, not short-term tourist stays.)

In Panama, if your landlord is following the law, your deposit will be posted with MIVI (Panama's department of housing). MIVI holds the funds and then releases them at the end of the rental term. If something is to be deducted for damages, the landlord informs MIVI, and the renter (you) are given a chance to sign off on the amount to be withheld for repairs.

Unfortunately, not all landlords do this (many foreign landlords aren't even aware that they're supposed to do this). This means your deposit is at risk.

In the case of our first rental in this country, an apartment in a high-rise, the landlord returned our deposit within a couple of weeks of our moving out. He made no deductions, and we got our deposit back in full.

In the case of the house we rented in Casco Viejo, the property manager refused to return our deposit, citing "damages." However, he refused to tell us what the so-called damages were or to itemize the costs for repairs. He kept the full amount. As he hadn't posted the amount with MIVI but kept it himself, we were out of luck.

Renting Overseas Rule #5:

Use an attorney.

You know to use an attorney when you buy property overseas, but you should also use one when signing a rental agreement in another country. Unless you are very familiar with tenants' rights and the particulars of rental contracts in the country where you're renting, it pays to have someone who is reviewing the documents before you sign. A good attorney will also inform you of any negotiable clauses—that is, any opportunities for you to adjust the terms of the agreement to your benefit.

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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