The beginning is Waterford, Ireland, where Lief and I, newlyweds, launched our joint adventures overseas 15 years ago. We didn't choose Ireland ourselves. It was chosen for us by my employer at the time. However, after seven years as full-time residents, raising a family (my 8-year-old daughter Kaitlin moved to Ireland with us, and our son Jackson was born in Waterford), building a business, renovating an old Irish country house, and making friends we treasure still today, Ireland grew on us. I'd include it on any list of the best places to retire abroad--and, indeed, we intend to spend time in Ireland again, starting this summer. Real estate values in this country are at a low that's too low to ignore. We're planning an extended family stay in the country this July, during which we hope to find a little Irish cottage that will allow us to take another personal position in a place we want to include as part of our long-term plan (a place where Lief and I can spend time in retirement and that we can leave behind for the kids and grandkids to enjoy when we're no longer around).
Why Ireland? It's legitimately one of the most beautiful corners of this planet, a spit of land where Mother Nature outdid herself. It's also quiet, peaceful, traditional, safe, and a world apart. The older and more sentimental I grow, the more I appreciate what this country of castles, gardens, and centuries of colorful history has to offer.
After seven years in Ireland, we moved the family to Paris, France. Why Paris? The honest answer is because it's Paris. The rationale at the time was a request from Kaitlin, who asked if she could spend a year "studying abroad" in the city. Why send Kaitlin to Paris on her own, I asked Lief. Why not go with her...all of us? We were in the fortunate position to be able to engineer this. My business partner at the time was flexible, and a new office in Paris could make sense for the business anyway (I argued).
Kaitlin's year abroad in the City of Light stretched into three. She graduated from high school then returned to the States for college. The rest of us stayed on in Paris for another year before making the decision to relocate back across the Pond to Panama.
It's not that we wanted to leave Paris; it's that we wanted to start a new business. While I'd say that Paris is the best place in the world to live, I'd also suggest that France is one of the most maddening places in the world to run a business. Our experience doing business there and in a dozen other places around the globe by this time had taught us that. It had also shown us that, on the other hand, Panama was tops in this regard, a tax haven where it's possible to live and run a business tax-free (even if you're an American). That's a big deal. A big enough deal to get us on a plane.
We bid au revoir to Paris but not farewell. We decided to hold on to the apartment we'd purchased to be our home while living in the city with our kids. Our time here convinced us, if ever there'd been any doubt, that Paris is a place we would like to be able to return to always, the spot, in fact, where, when we're too old to continue moving around the way we have been, we hope to settle in for the ultimate long haul. We've rented out our apartment on the rue du Verneuil these past four-and-a-half years we've been in Panama City, happy to know that it's still there, waiting for us, whenever we're ready to return to it.
Now, here's a secret that you may have guessed already: Panama City is not part of our long-term plan. As I said, Panama City is the best place in the world to do what we're doing right now--building a business. In this city, we have been able to piece together an eclectic and effective team unlike any I've worked with anywhere else. We've got German marketers, Irish editors, American writers, Panamanian designers and programmers...
"Where are these people coming from?" I asked Lief as we were dressing for the office this morning. "I'm more amazed each day. Whoever would have believed we'd be able to find so many smart, hard-working, well-educated, open-minded, English-speaking kids...here in Panama City? Not me. What are they all doing here?"
Neither Lief nor I has an answer to that question (though we suspect it has something to do with the state of job markets for recent college grads in the United States, Ireland, and beyond), but we do count our blessings, every day. What we're managing to create here in Panama City is proving remarkable.
That is not to say that the experience of living in Panama City is one I would describe as pleasant. Panama City is an assault on the senses--busy, crowded, dirty, noisy, congested, hot, humid--and life here can be a challenge.
But, as I try to point out often, Panama City isn't Panama, and, while Panama City is not a place where we aspire to hang our hats long term, the Pacific coast of this country is. That's why, about six years ago, we purchased a piece of oceanfront land, on the west coast of this country's Azuero Peninsula. In the community we're building at Los Islotes, we intend also to build a home that, again, will feature as part of our eventual retirement plan and, also, our legacy for our kids.
Paris in springtime...Ireland come summer...and the coast of Panama when it's winter elsewhere--that's the core of our retirement plan.
In addition, we intend to spend a month or two a year in Medellin, Colombia, a city we discovered about three years ago and that has, since, became one of our favorite places to be, thanks to its climate but, more so, for us, thanks to its pretty architecture, parks, and gardens, its walkability, its genteel population, its café culture, its general European undertones, and its affordable cost of enjoying it all.
Istria, too, is on our list of what we'd consider the best place to retire abroad. It's the best of Old World country living, like Tuscany without the crowds. As is Belize, where we've invested in land we intend to farm, in the Cayo. We intend this year to buy more farmland, likely in Uruguay, to round out our long-term property holdings...and the list of places where we really enjoy what the local living has to offer.
P.S. I share these stories and these suggestions in more detail in the book I've just written for Wiley & Sons, called "How To Buy Real Estate Overseas."
One thing I realized, writing that book, is that buying real estate overseas is not so much an investment strategy as it is a lifestyle. The places where you invest in property should be the places where you also want to invest your time and your family's future. When you're able to marry these three agendas, the payoff can be enormous.
"How To Buy Real Estate Overseas" will be in bookstores starting mid-April. However, it's available now on Amazon. You can buy your copy now, of "How to Buy Real Estate Overseas," pre-publication, for US$14.55.Continue Reading:
So it goes. Some places are in up cycles while others are declining. What's the point? The point is that we, as non-ranting global citizens, have the opportunity to move ourselves and our capital to where we believe we and it will best benefit.
Where might that be in 2013? Here's my personal New Year's agenda...
For real estate, I'm looking at Ireland, where we intend to buy a "second home" that could be rented out. Prices in Emerald Isle have fallen significantly since the Celtic Tiger bubble burst so dramatically. We want to take advantage of the opportunity this presents, which is one reason we're planning a 2013 Live and Invest in Europe event in Dublin, Ireland. This will serve as a good vantage point for an all-Europe conference, but it will also give Kathleen and me a chance to spend some time on the ground in Ireland, shopping for property (and reconnecting with old friends in this part of the world).
In this case, I'm not buying with any expectation of capital appreciation anytime soon. That'd be unrealistic for the next 5 to 10 years at least; however, rental yields in this country have regressed back to the mean and are in the 5% to 8% range (they were in the range of 1% to 2% when I lived in Ireland).
This year I also want to make a farmland purchase. For this, I'm looking to Uruguay, which I see as the obvious choice for a big private farm. This country hasn't yet restricted foreign ownership of farmland, as Brazil and Argentina have. You can buy smaller farms in Belize, Panama, and elsewhere, but in Uruguay you can find large tracts of land that can be leased to a farmer if you're not up for becoming a farmer yourself.
I don't trade currencies. I see this as too risky an investment strategy for the individual investor. I buy and sell whatever currencies I need for real estate purchases; that's as invested in currency as I get. In that context, in 2013, I'm planning to take advantage of any currency dips to move money into euro for my purchase in Ireland and into Colombian pesos, as I also intend to buy another apartment in Medellin, this one to use as a rental (no personal use agenda this time, dear wife).
Banking continues to be a complicated mess, especially for us Americans. Just this morning, one reader reported that HSBC in Panama is closing accounts of Americans in the wake of their Justice Department fine last week. I have someone looking into whether that is accurate or not. Either way, HSBC has been slapped hard by several governments, and you can expect them and other banks to focus ever-more aggressively on their know your client rules. They'll also continue asking ever-more questions about every wire transfer you make. I've come to expect this as a regular part of my day.
As banks worldwide continue to try to figure out how to be compliant with the rules being handed down by the IRS in this FATCA era, you can expect all this to get much more complicated and restrictive before it finally shakes out. My advice for right now and through 2013 is to open accounts where you can when you can and to do whatever you have to do to keep any current accounts open. Banks will continue to increase their fees as their compliance costs go up, but, unless you're certain that you won't ever need an account in the future, I say it's worth paying the higher fees. You never know, at this point, which accounts are going to be unceremoniously closed or when. The more options the better.
Next year's travel agenda includes at least two new destinations for me. The Philippines is a hot spot among American retirees, particularly military retirees, thanks primarily to the low cost of living and the abundance of English spoken. A few years ago, I invested in a small real estate development project in this country. It's time finally to go check it out in person.
Peru is close to my base in Panama, but with so many other opportunities in the region, I haven't made it to the country yet. 2013 is the year, as a friend who's undertaken a small development project in Lima assures me that a trip to that city is well worth the investment of time. That's my plan.
The United States may be facing a fiscal cliff, but 2013 is going to be a year of opportunity nevertheless.
Unless, of course, the world does end today. Did the Mayans simply run out of room on their stone calendar or did they really predict the world would end on Dec. 21? Friends are in Belize as I write enjoying the End Of The World parties regardless.
Lief SimonContinue Reading:
We sat down with Mr. O'Shea and gave him the rundown on the kind of house we were looking for. Georgian. Stone. At least three bedrooms and three baths. With a bit of land for a garden. Mr. O'Shea seemed to take our criteria under advisement and suggested a time later in the week when one of his agents could take us out to view available properties. That first day out, we saw not one house that matched the description we'd given to Mr. O'Shea in his office. Instead, his agent took us to see four new-built "bungalows" in "estates," as the Irish refer to suburban housing subdivisions, just outside the city. I refused to get out of the car to walk through the fourth place. It looked just like the three we'd already seen and that I'd already explained weren't at all what we were interested in.
This was our introduction to shopping for property in a real estate market without a Multiple Listing Service. No MLS means that agents can't show you everything available that fits your parameters, because they don't have access to everything available. They have access only to their proprietary listings. If they don't have what you ask for, they show you something else. Anything else. Whatever they have.
Thanks to our ignorance of how foreign property markets operate, it took us seven months to find the house that we eventually bought in Waterford. By the time we'd identified the 200-year-old stone country house that we agreed we wanted to buy, the Celtic Tiger market had meantime continued appreciating before our eyes. We considered reconsidering the purchase altogether. Could it possibly make sense to buy into what surely must have been a market top? On the other hand, we were in Ireland for several years at least, and I wanted a place to make our own. So we proceeded to buy.
That purchase was the start of a now nearly 15-year-long career investing in property overseas and, despite our initial misgivings, became our first success story. We resold Lahardan House six years later for more than twice what we'd invested in the property, including the purchase costs, the renovation, and the furnishings, and took our leave of the Celtic Tiger market just before it did, finally, peak and then turn. Today, Ireland's property market is in ruins. Meantime, we walked away with euro profits that we invested in an asset we continue to hold today, an apartment in Paris, that is, again, worth more than twice what we have invested in it and that, for the past four years, has generated an annual yield from rental income of 5%.
Our first experience, in Ireland, frankly, was more luck than genius, but it taught us many of the fundamental lessons we value most today.
In fact, though, while Lief and I began our overseas real estate investing careers unassumingly together in Waterford, Lief had made his first property investment before I knew him, in the States. A few years before we met, Lief had taken a US$5,000 gift and turned it into US$150,000 profit through a real estate deal in Ravenswood. Ravenswood is a north-side Chicago neighborhood of middle-class office workers and first-generation Latino immigrants, a very up-and-coming working-class kind of place at the time. Here, after months of searching and negotiating to put together a deal that allowed him to make the buy with but US$5,000 cash, Lief had invested in a building configured as three two-bedroom flats. He lived in one of the apartments and rented out the other two. The rents generated a good income from the start and for more than two years to follow. After that time (just 24 months later), Lief sold the property and walked away with $150,000 after expenses. Not a bad return on US$5,000. It was that US$150,000 that made it possible for us to purchase Lahardan House in Ireland. And it was the profits from Lahardan House that later made possible our purchase in Paris...and so on.
Lief is a bona-fide start-from-next-to-nothing overseas property investor success story. And he's not the only one I know, not the only guy (or gal) I know who has made a lot of money while having a lot of fun investing in real estate across the globe.
Here's the point: In the current global financial climate, overseas real estate is both the smartest and the sexiest way to invest your money. It's a key strategy for diversification at a time when diversification is not a sound investment approach but critical to survival. The very good news is that you can get started investing in real estate overseas with even a very modest capital budget. Lief began his career with US$5,000. The objective is much more than making money. Yes, you can make money this way, over time, perhaps a great deal of money. But you'll be accomplishing far more than racking up profits. At a time when it can seem like the world is spinning out of control, you'll be putting yourself firmly in the driver's seat of your and your family's financial future. You'll be positioned for profits in the immediate term (in the form of rental yields), in the mid-term (in the form of capital appreciation), and over the very long haul, building a legacy of wealth that can be enjoyed not only by you but also by your heirs.
And, all the while, purchase by purchase, you'll be reinventing your life.
P.S. What else this week?
Ambergris Caye, Belize, is unadulterated, unpretentious Caribbean...the sea, sand, and sunshine of the Caymans or the Virgin Islands without the price tag.
San Pedro town, a former fishing village, is the center of activity and home to a growing expatriate community of North Americans and Europeans catered to now by dozens of restaurants, shops, art galleries, and community organizations. You could settle in here quickly and easily, as the language (like everywhere in Belize) is English.
The real estate market, for both buying and renting, is developed, meaning you have many options at all price points. You can buy a condo for as little as US$100,000 or invest up to US$1 million or more, and you can rent for as little as US$600 to US$700 per month.
Life on Ambergris is relaxed and friendly, carefree and sunny. Adopt this island as your home, and you'd enjoy most all services and comforts you're used to, and you'd never want for like-minded company.
That's one face of Belize. Back on the mainland, life is very different.
Mainland Belize can be broken down into four zones: Belize City; the northern coast around Corozal; the southern coast around Placencia; and the interior Cayo.
Forget Belize City. This isn't a place you'd want to live. The city has a reputation for being poor, dirty, and unsafe for a reason. It is poor, dirty, and unsafe. In Belize City last week for our Live and Invest in Belize Conference, I found it wholly unchanged from all my preceding visits. Seeing it for the first time, especially certain neighborhoods south of the river, the first word to come to your mind might be: appalling.
But Belize City is not representative of Belize...
Mick built a few thatched-roof cabins...then a few more...then a dining room and a bar...
I met Mick nearly a quarter-century ago, when his Chaa Creek Lodge was a humble (electricity- and hot water-free) but beautiful oasis in the rain forest. I returned as often as I could for years, but, when I traveled out to see Mick most recently, I realized it'd been maybe 13 or 14 years since my last visit.
In the intervening years, Chaa Creek has grown up. Today it's 25 luxury villas, a spa, a swimming pool, and five-star service in the still thatched-roof dining room.
"The world has changed since we saw each other last," Mick said our first evening together. "We watch the news here each evening. We know what's going on out there. It's not that we've got our heads stuck in the sand. It's that we choose a different reality..."
"Walk down the street on Ambergris," Peter says, "and you hear the music of the Boomers all aroundâ€”the Beatles, the Rolling Stones, Janis Joplin...
"These folks, the Baby Boomers, they had a great time in the 1960s...listening to their music, growing their hair long, and getting stoned all the time...
"Then they became the most boring people on the planet. They made a lot of money...by ignoring everything but hard work.
"Now they're looking to reclaim their lives. They're finding their way, in retirement, in bigger and bigger numbers, to places like Belize...where they're listening to their music again, growing their hair long again, and getting stoned all the time again..."
"And it should be every bit as popular among foreign retirees, as well.
"Known as 'The City Built on Tin,' 'The City of Millionaires,' and 'The City of Bougainvillea,' Ipoh offers many advantages for Westerners interested in relocation to this part of the world. The health care is First World, the infrastructure modern, the visa program flexible, and there's ample opportunity to mingle with friendly, English-speaking locals..."
Also This Week...from Resident Global Real Estate Investing Expert Lief Simon:
Greece's credit rating with Moody's is already in "junk" territory, and, earlier this week, Spain was downgraded to just above junk quality. Things are getting interesting in Europe.
A few weeks ago, I recommended that, given the current and trending status of the euro versus the U.S. dollar, as well as the disastrous local economic states of affairs, you begin looking in this part of the world for real estate investment opportunities. I reiterate that recommendation today.
One friend has made plans to go shopping for a vacation home in Greece in August. Another is considering picking up a place in Barcelona.
One problem with these two countries, as you know, is the local banking industries. It's not going to be easy, if it's possible at all, for my friends to get local financing as a hedge against the further fall of the euro, as I've suggested previously.
On the flip side, with local financing drying up, you can expect these beaten-up property markets to take yet further hits...meaning that cash buyers are going to become extremely attractive to sellers. Come in with cash, and you should be able to negotiate discounts big enough to more than compensate for the fact that you're not able to borrow locally.
The important thing to take away from all this right now is that it's time to "get into the market," as I call it, if either of these countries is a place where you're interested in planting a real estate flag. Identify the area that suits you and start gathering data. With some basic background information on specific local markets, you'll be prepared to act when a great deal presents itself.
In both Spain and Greece, you'll find attractive and well-located properties for as little as €50,000 right now. As the crises in these countries play out, property prices may fall further, but you'll need to be in the market to gauge this. Don't sit back thinking you'll wait until the market has bottomed before you start shopping.
That's what happened to me in Argentina following that country's currency crisis at the end of 2001. I didn't get to Buenos Aires until October 2002. The market bottomed out in July 2002. I still found very attractive opportunities, but the best deals, the true fire-sales, had already passed.
The crises in Spain and Greece have been longer drawn out than that in Argentina, so it's tougher to say when (and some would say if) these property markets will turn around. Regardless, €50,000 amounts to about US$63,000 right now. It's hard to argue with a two-bedroom apartment in a good location that could serve as both a vacation getaway and a rental investment for US$63,000.
Good locations for a rental investment are to be found all along the coast of Spain. In Greece focus on the island vacation destinations. You're not going to find a villa on the ocean for €50,000. The market hasn't gone that crazy. But you will find good choices in that price range in villages both coastal and inland.
In the bigger, higher-profile markets, you'll need a bigger budget. In Barcelona, for example, one of my favorite destinations in Spain, you'll need, say, €120,000. Current per-square-meter average in this city right now is in the range of €3,000, which is down at least 25% to 35% from the highs I remember before 2008.
To be clear, I don't see Spain or Greece as pure real estate investment plays. Prices are low and likely will drop further, meaning this is a good time to be shopping, but prices won't be shooting back up anytime soon, so you're not buying with the expectation of quick appreciation. You'll get some rental income if you buy in the right (tourist) areas...enough to cover your carrying costs and maybe to generate a decent yield.
These markets are bargain-priced flag-planting plays right now.
Editor's Note: Lief's essay this week is republished from his Offshore Living Letter. Lief's Offshore Living Letter comes out twice-weekly (Mondays and Thursdays) and addresses the benefits of and current opportunities for diversifying your portfolio, your business, your assets, and your life.
If you aren't yet on the list to receive Lief's Offshore Living Letter (it's free), you can sign yourself up here now.
The nearly 200-year-old Lahardan House we'd finally found after months of searching oozed charm and potential and stood, we'd made sure, blissfully out of the path of any planned progress. No housing estate on the books for this remote corner of County Waterford as far as we could tell.
The surrounding seven acres were well overgrown, and the half-dozen outbuildings were crumbling, but we didn't mind. We could address the landscaping, the barns, and the stables over time. To start, we needed only to make the house habitable.
In advance of the purchase, we'd tried to have the property inspected. This isn't obligatory in Ireland. Foreigners can borrow for the purchase of real estate in Ireland, and the bank, to lend for the purchase of a piece of property, by a foreigner or a local, will require you to test for termites and a couple of other specific risks, but they won't call for an overall inspection of the kind we take for granted when buying a house in the States. Even though no one was telling us to arrange for a formal inspection, we wanted one and asked around for the name of an inspector. The report from the guy we engaged was a dozen pages of general commentary related to his impressions of the place. "The living and dining rooms would benefit from re-decoration," he noted. And: "The gardens might be cut back."
As we found ourselves doing often those early days in Waterford, reading this inspector's report, we looked at each other, shook our heads, and moved on. That is, we closed on the purchase having, it turned out, no idea what we were buying.
Property acquired, we needed someone to help with the work we wanted to carry out in advance of moving in. One of our new staff, a young Irish girl named Deidre, knew a "decorator," as she referred to him, named Noel. I called Noel and made an appointment to meet him at the house.
The chilly, drizzly morning that Noel and I met at Lahardan House for the first time, I followed the tall, lanky, red-headed Irishman from room to room, upstairs, down the hall, back down to the living room, then again across to the kitchen, where Noel turned, finally, and explained, "I'd say there's a bit of damp."
"Yes, it's very damp here, isn't it?" I replied.
"No. You have damp."
"I know a good damp guy. I can call him for you if you like."
"Yes, ok, that would be great..."
That's how I came to be, a few days later, on another chilly, misty Irish morning, wandering from room to room, imagining our furniture (when we finally got it out of storage in Dublin) and ourselves in these grand Georgian rooms. I was waiting for the damp guy.
When I heard the car pull up on the gravel out front, I went to the front door to look out. I watched as the small, bent-over Irishman got out of his little mud-splattered Toyota and began walking toward me. When he reached the portico, he paused to scrape his mud-caked boots on the slate tiles, then looked up at me, tipped his woolen cap, and asked:
"Is himself inside?"
The little bent Irishman mumbled something in the direction of the slate porch tiles that I couldn't decipher and then continued on through the big red Georgian door into the entryway of the house and from there, without pausing, on into the living room. I followed.
"Himself isn't at home?"
"You mean my husband? No, he's at work..."
Before I could finish explaining Lief's absence, the little Irishman pulled a screwdriver from the back pocket of his pants and began poking it into things. He pushed it into every piece of wood he passed, starting with the window casings, then the shutters, the skirting boards at the bases of the walls, the frames of the French doors leading to the side patio, the floor boards... With every poke, his look grew more grave. After he'd finished in the living room, he continued on, poking as he went, through the dining room, the breakfast room, the kitchen. Then back to the entry hall and up the stairs, poking every step as he climbed. On the second floor, he started all over again, poking his way through each of the five bedrooms, each of the three bathrooms, and all up and down the hallways that connected them.
"Rising damp," he declared solemnly. "All throughout."
"Rising damp? What...uh...how...what should we do?" I stammered.
"Got to treat it," he replied as he walked back down the stairs and toward and then out the big red front door. As I watched him drive away, I picked up my cell phone and called Noel.
Rising damp, Noel explained, is a common phenomenon throughout the Emerald Isle, where damp from the constantly wet soil seeps into the foundation of a house and then rises up the walls until gravity gets the better of it. Left untreated, damp will rise, Noel told me, about six feet before the force of gravity halts its progress. In our house, the damp evidently had been left untreated for a very long time. Once I understood how to recognize the signs, I could see that every wall on the ground floor had been affected. Some were so afflicted that they bubbled with tiny white plaster blisters.
In addition to rising damp, we had rot, both wet and dry. We had mold and fungus, too, in every hidden and covered corner and crevice, beneath the floor boards, under the stairs, and behind the shutters.
This realization turned our simple old home make-over into an all-out renovation that extended over more than a year and that was complicated by another realization.
Five months after our move to Ireland, I discovered I was two months pregnant...
P.S. Today's dispatch is excerpted from the manuscript for my next book, now in process. More tomorrow.Continue Reading:
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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.
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