Travel Bests In Europe

Euro Bests

Aug. 28, 2011, Pisa, Italy: Europe is a land of superlatives, biggest, oldest, tallest, grandest…

Also This Week: Low-Cost Living Today, Currency Upside Tomorrow…Life On Cebu… Why This Southeast Asian City Is A No-Brainer Budget Retirement Choice… You Almost Don’t Mind Being A Tourist In This Town…

Dear Overseas Opportunity Letter Reader,

This month, motoring across Europe with our kids, we're tourists. No sense pretending otherwise. We're sight-seers...holiday-makers. Like Chevy Chase and his kin, we're an American family on a European Vacation.

Biggest, oldest, tallest, grandest...you don't travel far in this part of the world without encountering a superlative version of something. Here are some superlatives we've encountered and other favorite sights so far:

• The oldest continually operating restaurant in Central Europe is St. Peter's, serving patrons since the year 803. It's in Salzburg and today hosts dinner concerts where a small troupe performs Mozart while white-gloved waiters serve a three-course meal in an ornately decorated dining room lit entirely by candlelight. Not at all kitschy (as we feared it might be). More here...

• The biggest church clock face in Europe is in the tower of St. Peter's in Zurich's old town. It's 8.7 meters across and dates to 1534...

• The most fanciful gardens in Europe, outside Salzburg, are at the Hellbrun Palace. Markus Sittikus von Hohenems, Prince-Archbishop of Salzburg, who designed these elaborate and playful water gardens purely as an indulgence (because he had the money...and he could), would invite small groups of friends to come and spend a day with him at his "pleasure palace," as he called it. The prince-archbishop and company would drink wine from early morning 'til late afternoon, chase each other around the grottoes, terraces, and hedgerows from which water would suddenly shoot out from hidden spigots, and then gather for supper around the large outdoor table. When the prince-archbishop had had enough and was ready for his company to go, he'd flip a switch and water would gush up from the center of each guest's seat. The man's friends would be soaked, from the bums up, and rush away in a flurry...

• The best place for a five-star lunch in Porec, in Istria, is the Restaurant Zigante, run by the family recognized as having found the biggest white truffle in recorded history. This region is known worldwide for its annual truffle festival...

• The Jama Grotta caves, outside Porec, are the only place in the world to see a white salamander...

• The most interactive (that is, kid-friendly) museum in Venice is the Da Vinci Museum, which houses two floors of recreations of Leonardo's inventions, many of which can be tested and played with...

• Perhaps the most interesting back story for the art of the Sistine Chapel in Rome has to do with underwear. Cardinal Carafa criticized Michelangelo for depicting so many of the people in his paintings without clothes. Michelangelo wielded considerable sway in Rome at the time and, so, simply ignored his critic. (He also included him in the bottom right-hand corner of his painting "The Last Judgment," naked and encircled by a snake biting a particular exposed organ.) However, after Michelangelo died, the Council of Trent condemned nudity in religious art, even Michelangelo's, and Daniele da Volterra was engaged to go behind the master and paint underwear over the delicate areas of many of his figures. For this reason, da Volterra is remembered as "Il Braghettone" ("the breeches-painter")...

• The Pont Vecchio is the only bridge in Florence not destroyed in World War II. Today it's lined on both sides by gold and jewelry sellers, this thanks to the Medici. When they bought the Pitti Palace on the corner, the bridge was occupied by butchers. The Medici family didn't appreciate having to endure the smells and the mess associated with the slaughter of animals as they passed back and forth across the bridge to and from their palace home, so they evicted the butchers and replaced them with gold merchants, whose descendants today, I can report, are doing a thriving business...

• The biggest church in the world is St. Peter's Basilica in Vatican City. It's watched over by Swiss guards standing ever at attention in their colorful uniforms...

• The engineers of Pisa figured a way, in 1964, to put their tower right, but the city fathers instructed them instead simply to find a way to keep the structure from falling farther. Pisa wasn't on any tourist's map until its tower decided to make a name for itself by leaning over at an angle that seems to defy gravity. Set the tower straight, and the town might slide into obscurity...

• Each of Florence's dozens of medieval and renaissance towers was originally a private structure, built by various of the monied (and always-warring) families of this city. Each was a show of wealth, and each new tower was built a bit higher than the tallest that had preceded it. When one family gained control, it would go around town chopping off the tops of the other families' towers...

Kathleen Peddicord

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P.S. What else this week?

• "A local hotel here advertises their bar as 'a bridge, waterfall, sunshine, and piano--it could bring you to be a full, new human and nature developing boundary," writes Intrepid Correspondent Paul Terhorst.

"With that kind of translation, you figure we're probably in Asia, and we are. We're in Tonghai, in Yunnan province in southwestern China. Two years ago I wrote about Yunnan province, suggesting that Kunming and/or Dali would be fine places to live part of the year.

"Now we're back in the area. Look at a map, stick the point of a compass in Kunming, and draw a circle with a 300-kilometer radius, more or less.

"You've just circled what may be Asia's best up-and-coming retirement area, call it central Yunnan. Besides Kunming and Dali, there's Lijiang, Shangri-la, Tonghai (where we are right now), Jianshui, Geiju, Yuanyang, and more..."

• "In my first report from Cebu, in the Philippines, I gave you an idea of just how affordable life could be on this tropical island. You could live here comfortably on US$1,000 per month or less.

"But what would your life be like?"...

• "With all its amenities, Hua Hin isn't the least expensive place to live in Thailand," writes Asia Correspondent Wendy Justice. "However, it can be a bargain choice by Western standards.

"Costs are similar to those in the capital city of Bangkok, three hours to the north. However, the city of Hua Hin (one of the destinations I'll be featuring in my presentations for our Retire Overseas Conference in Orlando in October) is a vastly different place than Bangkok, with a real small-town ambiance, a high standard of living in a very safe environment, and a big, beautiful beach perfect for whiling away your days..."

• Ordinarily, we work hard to avoid tourists and the zones they frequent and recommend that you do the same.

In Venice, in season, as far as I can tell, you've no choice but to embrace your position as tourist. The canals, the bridges, the gondolas, the water taxis, the narrow cobblestoned passageways, the restaurants, the shops, and the hotels of this lagoon city, this time of year, are overrun with tourists. They're dozens deep in every direction. We console ourselves by remembering that, in Venice, being a tourist is part of a long and
grand tradition...

Also This Week...from Resident Global Real Estate Investing Expert Lief Simon:

Finding a balance between investment agendas and personal preferences when investing in real estate can be difficult. I recommend that you invest as much as possible in places where you want to spend time. Otherwise, ongoing management and administration of the asset can become a chore.

That baseline suggestion aside, I understand that the line between for pure investment and solely for personal use can easily blur, especially when investing in a vacation rental. I'm re-learning this lesson during this trip through Europe.

Six years ago, in Istria, Croatia, Kathie and I bought something we wanted rather than something we were comfortable would work as a rental investment. The truth is, we didn't do enough research into the local rentals market in this region. We found a country house we liked and pulled the trigger.

This means we have a great place in a great location with a great view, but we're remote by vacation rental standards for this area, even though we're less than 30 minutes to the beach, 5 minutes to a town with an annual truffle festival, and 10 minutes to a town with an annual film festival. Because we're also halfway up the side of a mountain at the end of a dead-end road.

We like the remoteness and will enjoy spending time here with the kids, but the situation will affect returns once we finally get the place ready for rental.

When buying a vacation home you plan also to rent out, you have to balance the yield potential with the pleasure potential. Depending on your personal preferences, this can be easy. For example, the one-bedroom resort rental I told you about last week works well for someone who wants the Caribbean, likes to scuba dive, and needs only one bedroom.

Property type and size are important rental factors. In most markets, a one- or two-bedroom property yields better than a three- or four-bedroom place. The incrementally higher rental rates you should be able to charge for a three-bedroom usually don't compensate for the higher cost of purchasing the larger apartment.

And while a super-high-end property might suit your personal preferences, a higher-end (read: more expensive) property probably means a lower yield. To keep your occupancy up, you'll likely have to compete on price with the general (not high-end) market.

The best way to start your search for a vacation rental is to decide what is more important to you--yield or personal preferences. If you decide that personal preferences should take a priority role in making your decision, then you simply tell the real estate agents you're working with what you want in a property and go from there.

If you decide yield is of primary importance, then you want to start by looking at the market. Understand the answers to the following questions:

• Where do people want to stay? In Paris, the traditionally best arrondissements for rental are the 5th and 6th. These are also the most costly arrondissements. Good for rental but more affordable are the 4th or the 9th, meaning an investment in these areas could generate a better yield.

Take a similar approach when shopping for a rental in any city. Rather than focusing on the heart of the most rentable district, look around the fringes of the main tourist area and work your numbers to determine if the lower acquisition costs could result in a better yield, even with slightly lower expectations for rental price and occupancy.

When shopping for a rental in a beach location, the closer to the beach the better (to state the obvious). However, again, prices will be higher right at the beach so something slightly back with an ocean view might yield a better return.

• What size rentals are in demand? Again, generally speaking, one- and two-bedroom apartments are the rental sweet spot. However, a market can be overrun with rentals of this size, creating opportunities for either smaller (studios, for example) or bigger (three-bedroom) places. This was the case in Paris about seven years ago. Everyone buying for rental was focused on studios and one-bedrooms. The abundance of product in the category pushed yields down for smaller apartments. Meantime, bigger apartments (with three bedrooms) were few, meaning you could charge enough to generate a better yield, even given the higher cost of acquisition.

In Medellin right now, investors are buying two- and three-bedrooms even if that's more apartment than they need because the prices are so low it's hard not to be tempted to buy bigger. And, right now, rental yields for these apartments are high. That said, picking up a one-bedroom apartment in this city right now could generate the same or better yield. Again, it's a matter of balancing investment agenda with personal circumstances and preferences.

• Is there a high season, and what's the opportunity for occupancy beyond that time? Also, when considering the rental season, remember your plan (if you have any) for personal use. Would you want to be occupying the place yourself during the season when much of your rental return otherwise might be earned?

Punta del Este, Uruguay, is a good case study from this point of view. The high season in this coastal resort town is mid-December through February. Over this 10-week window, you can charge outrageous rental rates. In fact, it's not uncommon to earn as much as 80% or 90% of the annual rental income during this peak-season period alone. The rest of the year, the going rental rates are a fraction of the short-term rents you can ask for in January and February. That's ok, as you can earn enough during this period to make the investment worthwhile overall.

Unless that's the time of year you'd want to use the place yourself. In that case, your intended rental investment could default into a holiday home for the family.

We plan to use the mountain house we bought six years ago in Istria during the shoulder season, meaning we'll be able to make it available for rental for the high season. We bought big enough to accommodate our family (three bedrooms). Again, this should work in this market, as it's a popular family holiday destination, and hotel rates in season can be high.

All things considered, the house in Croatia should net at least 5% to 8% annually, which is my general rental investment target. On top of this is the potential for personal use, which is at least half the equation in this case.

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Panama Without The Sugar Coating

No marketing hype, no rose-colored glasses.

That's the promise of the Panama Letter.

Panama is right now the world's top retirement, investment, offshore, and doing business haven. To get the most out of this little country with such an abundance of upside right now, and to determine which opportunities might be right for you, you need to know the full story. You need to understand all the facts, straight, complete, and current.

This is Panama without the sugar coating. From a team of expats, investors, and businesspeople with, together, many decades of experience spending time and making money in the Hub of the Americas.

Go Here Now For The Full Details.

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