The winners are...
#1: Coronado, Panama
Monthly budget: $1,800 Monthly rent: $600
Panama caters for foreign retirees like no other country in the world right now. Day-to-day living here is affordable, the approach to taxation is favorable (depending on your circumstances, it's possible to live and run a business here tax-free as a foreign resident), property prices remain reasonable, even a bargain outside the capital city, and the country boasts perhaps the world's most generous incentive program for retirees. It uses the U.S. dollar as its currency, meaning no exchange-rate risk for retirees whose retirement income is also denominated in greenbacks.
Further, Panama is an international banking center and the best place in the world to start and run an international business. As the gateway to the Americas, Panama's geographic position makes it an important hub for both commerce and travel. This is part of the reason why, while other Latin American countries depend heavily on the U.S. economy, this is not the case with Panama. The country stands on its own legs, has a solid economy, and thrives as a major center for foreign business and investment, attracting investors from the region (especially Venezuela and Colombia) and around the world.
Panama City is unique in Central America, the only legitimate city in the region, being remade in real time right now thanks to myriad public works projects, including the expansion of the Panama Canal. Panama also offers some of the most advanced medical care facilities in the region, with many Panamanian doctors U.S.-trained. The more remote your location, the farther you'll be from the best facilities, but Panama City's hospitals are first-rate.
My top recommendation for where to retire overseas in Panama in 2013 is Coronado, a beach community on the country's Pacific coast about an hour outside the capital. Life here could be comfortable, convenient, and turn-key, as this area is home to one of this country's most established communities of foreign retirees.
#2: Languedoc, France
Monthly budget: $2,000 Monthly rent: $800
Whenever readers ask for my recommendation for the best place in the world to retire, budget considerations notwithstanding, I recommend France. It's the world's best example, I believe, of getting what you pay for. There are reasons France sees more tourists than any other country in the world, almost 80 million of them annually. To accommodate all those tourists, the infrastructure of this country, from the airports to the train system, from the restaurants to the hotels, has to be top notch and it is.
France is not only perhaps the best place in the world to live, thanks to its food, wine, architecture, history, museums, parks, gardens, and cultural and recreational offerings, but it's also, thanks to its reliable tourist trade, one of the best places to think about parking some capital. A rental property in France, especially in Paris but elsewhere in the country, too, is about as recession-proof a real estate investment as you're going to find.
Specifically, for retirement in 2013, I'd recommend the "other" South of France. Not Provence (which, yes, is pricey), but west of there, in the Languedoc-Roussillon region, between Provence-Alpes-Cote d'Azur to the east, the Midi-Pyrenees to the west, and the Auvergne to the north. Spain is a few hours' drive to the south. Not everyone is cut out for life in the Tropics or the developing world. If you prefer Old World living, this is perhaps your best option right now. This region is colorful, eclectic, always changing, never following a formula, and very open to retirees. This is wine country, with a long history and a lot of heart.
#3: Ambergris Caye, Belize
Warm and welcoming, independent and private. Those four perhaps seemingly contradictory adjectives best describe both Belizeans and their country. Belize is also one of the safest countries in the world, despite what you may read about it. In some neighborhoods of Belize City, gang members and drug dealers do the things that gang members and drug dealers do, but those are small, contained areas. In most of the rest of the country outside Belize City, crime is nearly non-existent. Belize was a colony of Britain until 1981, meaning the people here speak English. They also value their freedom, as it's relatively new.
In the nearly 30 years that I've been spending time in this country, I've joked that "the good news from Belize is no news from Belize." This is a sleepy Caribbean nation with but 330,000 people and three highways. On the other hand, little Belize offers a whole lot of what many retirees are looking for -- a chance to start over on sandy, sunny shores. Prices for a bit of sand on Ambergris, the most developed of Belize's islands, are not cheap but cheaper than elsewhere in the Caribbean, and it is this island, home to the country's biggest expat community, with the services to cater to it, that I would recommend to any retiree dreaming of retirement on the Caribbean Sea this New Year.
Legal residency is easy to obtain in Belize, and foreign residents pay no tax in Belize on non-Belize income. I would not recommend Belize if you have a serious health concern or existing medical condition. Health care facilities and standards are improving but limited.
#4: Cuenca, Ecuador
Monthly budget: $1,300 Monthly rent: $500
Lots of overseas retirement destinations tout the fact that they're just like the United States, that, retired there, you could settle into familiar surroundings. You won't hear that about Ecuador. Each day you spend in this country, you know you're in a different and wonderful part of the planet.
Ecuador is also one the world's best place to retire overseas on a budget and to live better for less. The cost of living is low, and the cost of real estate is near rock bottom for Latin America. The health care is high quality, honest and inexpensive.
Specifically, I would recommend Cuenca, Ecuador, a beautiful colonial city with a fresh, spring-like climate 12 months of the year and a large and growing expat community that is one of Latin America's most diverse and well-blended. Ecuador has other colonial cities, but Cuenca is the cultural heart of the country, with an orchestra and active art, theater, even tango traditions that you can often enjoy free.
Perhaps the biggest draw to Cuenca is its cost of living, which is low in an absolute sense. The falling dollar has caused prices to go up sharply for overseas Americans in many countries where goods are priced in the local currency. This won't happen in Ecuador as long as the country continues to use the U.S. dollar as its currency. Real estate, too, is an absolute bargain. You can buy a small condo for less than $40,000.
#5: Chiang Mai, Thailand
Monthly budget: $1,100 Monthly rent: $400
Thailand is arguably the cheapest place on earth to live well. Expat friends in this part of the world have long tempted me with tales of $1 Pad Thai lunches and $11-a-night hotels (including breakfast and free WiFi).
My top recommendation for retirees considering Thailand in 2013 is Chiang Mai, about 435 miles north of Bangkok, in a fertile river valley surrounded by mountains. Chiang Mai, home to more than 17,000 foreign residents, enjoys a more temperate climate than other parts of Thailand and is an area rich in history with a culture distinctly different from that in central and southern Thailand.
Big pluses for Thailand include health care, which is both very good and very cheap international living options. Downsides include the distance from North America.
P.S. The world's top retirement havens for 2013 numbers 6 through 10? I'll share glimpses of those best choices later in the week.
Meantime, today, we make our way from New York to Chicago, for leg three of our holiday travels Stateside this year. I’ll be in touch again tomorrow from the Windy City...
P.S. What else this week?
For those of us who grew up in snow country, it seems odd to be walking around in T-shirts and flip flops on Christmas Day. But, having lived here on Ambergris Caye for seven years now, I've come to appreciate that Belize offers a unique collection of blended Christmas traditions. More than 70% of Belizeans are Christian, so the majority of residents celebrate the birth of Christ. However, the country is also home to more than 10 different ethnic groups. The result is the most multicultural holiday celebrations I can imagine...
The bang drew my attention; followed by a rattling engine noise that sounded like a 1960s-era lawnmower within five minutes of its mechanical death. Turning around, the vehicle making its way down the street was indeed a relic, but not a lawnmower. It was a reddish-brown 1971 Ford Pinto, headed straight for the park I was walking in.
The Pinto pulled up to the curb and stopped, its engine rattling to a halt. A man and a woman in their late-50s both squeezed out through the passenger-side door and opened the trunk to reveal a bushel or so of carrots and a few dozen large oranges. The lady removed the carrots and oranges from the trunk, while her husband lifted a large car battery onto the ground, which he proceeded to rig up to a pair of vegetable juicers mounted on a wooden stand.
Two minutes later, I was drinking a large, frothy glass of garden-fresh carrot juice...a great way to start the day.
And in this large, leafy park, the couple in the Pinto is not alone. An entire flotilla of fresh fruit and juice vendors has assembled on the south end, where a crowd of local residents has gathered to sample the day's offerings.
The temperature has just reached a comfortable 70 degrees at 7:30 a.m., and it's another typical sunny morning in Bucaramanga (pronounced boo-cah-rah-MAHN-ga), Colombia...
Here's how Mike describes it:
"I get up in the morning, make a big mug of coffee, and head out to my deck overlooking Pacific Ocean. I call it my 'office.' I answer a few e-mails and then plan the day. Do I go boogie boarding...or for a ride on my motorcycle? Maybe I should call one of my fellow musicians to jam...or just sit there awhile, taking in the view and the sound of the waves below and breathing in that fresh ocean air...
"Almost all of us have a dream about how life could be...how retirement could be. But far too often, our ideas collect dust until one day, far off in the future, we ask ourselves, 'What if I had done it?'
"'What if I had pursued that dream I had long ago?'
"I promised myself that I was not going to let that happen to me...
PLUS—From resident global real estate investing expert Lief Simon:
Last year, I bought an apartment in downtown Medellin, Colombia. The price was great (less than US$700 per meter), and, despite having spent much more than I intended on the renovation (friend Lee Harrison refers to this as the "Spousal Factor"), I could resell the unit today (18 months after the purchase) for a profit of at least 50%. And I could likely find a buyer quickly, as this is an active market. I bought the apartment partly as a rental and partly for personal use. One Medellin rental manager who has inspected the property now that it's been renovated and furnished projects rent and occupancy rates that would translate to a net yield of 11% or 12% per year based on the purchase price (and including the monthly HOA fee).
Not a bad return, especially as it doesn't include any potential appreciation. Of course, not everyone has the time or the inclination to manage a renovation or a rental property in another country, and not everyone wants to put as much money into Colombia as it takes to buy and furnish an entire apartment.
That's why I was excited when one of my real estate contacts in Medellin, Rich Holman, told me about a project he's put together. It amounts to a very reasonably priced first step into this market that comes with the added bonus of a Colombia residency visa.
One way to establish residency in Colombia is to invest 100 times the monthly minimum wage in a private company. At today's minimum wage and exchange rate that works out to about US$35,000. Of course, finding a private company looking for investors at that level isn't easy, so the reality is that gaining residency in Colombia this way isn't normally a realistic idea unless you're ready to invest a much greater amount.
Rich and his partner Joe Greco, however, have put together an offer using a building that one of their real estate investors bought and renovated in Medellin. The three-unit building is in the Zona Rosa in this city's tourist epicenter. Fully furnished, the units are being prepared for short-term rental.
The idea is simple. Investors can buy a share of the company that owns the building for, not coincidentally, US$35,000, thereby qualifying you for a residency visa in Colombia. The units then will be rented out, and owners will receive their shares of the net rental income after rental and property management fees have been covered.
Projected net yields are 4% to 6% after Colombian taxes (my projected net yields above for my rental scenario are before Colombian taxes, which can be as high as 33%). That's a decent yield especially when you consider that the main benefit of the investment is residency in Colombia. This is also an opportunity to get your feet wet as an investor in Colombia with a modest amount of capital.
If you were to buy an apartment in Medellin and furnish it, the minimum total amount of capital required would be around US$100,000. (One reader found a great apartment last year for US$75,000 and furnished it for another US$10,000, but that was last year.)
As an investor in the project, you enjoy a discount if you'd like to stay in one of the units. Further, the cost of your residency application is included in the investment amount, meaning this is a fully turn-key opportunity.
I think the yields Rich and Joe are projecting are probably conservative. These guys put together a similar project last year (for investment only; there was no residency component). The rental returns for that effort are beating their projections. As they own a real estate company with a rental management arm, they have a steady flow of rental inquiries from tourists, businessmen, and investors. They also have experience managing rental properties in this city.
Along with the yields, investors should see some capital appreciation of the underlying asset. While Medellin real estate prices have increased over the last few years by as much as 10% a year, prices are still very reasonable on a global scale. In addition, the local economy is growing nicely. Therefore, I expect property values to continue up.
The bottom line is that you won't find many real estate investments in this price range, and you won't find an easier residency option for Colombia. And you can reserve a unit with a fully refundable deposit of but US$500. For more details, on real estate in Medellin, Colombia, get in touch here.
Image credit: Myukie, Keg1036, Asteiner, Francesco Bailo & Lester Mathias Andersson
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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.
Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.
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