If These Folks Can Do It, You Can Do It, Too
Dec. 2, 2012, Panama City, Panama: Here are four real-life success stories from folks who have reinvented their lives in retirement by retiring overseas.
Also This Week: Humble Baltimore Beginnings…How To Go Off-Grid In Belize…Current Opportunities In This Land Of Rapacious Colonialists, Cutthroats, And Shifty Transient Traders…Seven Reasons Not To Retire Overseas…
Dear Live and Invest Overseas Reader,
We receive hundreds of reader e-mails every day. Most readers write in to ask questions. However, some get in touch to share the good news of their own overseas adventures.
George G. writes:
"This July I retired from the Miami-Dade County government after 33 years of employment. In August, I flew to Panama. I'd been there only once before, but I had done research via your e-mail newsletters.
"On Oct. 2 I moved into a marvelous mountain cabin some 7.5 kilometers up Volcan Baru.
"I plan to be here for at least the next six months and maybe to base myself out of this paradise while I travel the world over the next five or six years, spending six months each year in the cabin and six months elsewhere.
"I also happen to be a 56-year-old totally blind man. I am pursuing this adventure solo (unless, of course, some charming young lady would like to tag along!)..."
Hyta F. writes:
"I am a single (divorced) retired female, 62, from Texas, who is currently living in Belize on Ambergris Caye. I retired here at the beginning of August and plan to live here at least until the end of January. Following your advice, I took out a six-month lease to see if this is 'where I want to grow up...'"
Gerald L. reports:
"My evolution has been from survival retirement at age 62 to what has become the most fun and rewarding part of my life today, 10 years later.
"In that time, I have developed successful tour and home construction businesses in Costa Rica. I have built a network of expats and Ticos who are working with me to accomplish more than any of us could have dreamed possible..."
Jonathan P. writes:
"My wife and I retired in 2003 at the ages of 54 and 53, respectively. We moved to San Antonio Tlayacapan on Lake Chapala in Mexico in 2005, where we learned quickly that we would have to find a place to escape the cohetes (mortars) that are blasted up to 16 hours a day for up to 15 days at a time during fiestas! We stabbed our fingers at a map and came up with La Manzanilla del Mar on the Tenacatita Bay, north of Manzanillo. It was love at first two-week visit.
"We began spending more and more time in 'La Manz,' including house sitting for people who became friends. Two years ago, we bought a house just a three-minute walk from the beach. It is now our primary residence.
"Meantime, we have kept our US$320-per-month, two-bedroom, two-bath rental in Chapala. We sublet the house to an American snowbird for 6 1/2 months a year. The rent covers more than 10 months of our costs each year.
"About the middle of July, the beach at La Manzanilla starts to get oppressively hot and humid. That's when we head north and lakeside. We then have three or four months of delightful weather during what qualifies in this region as the off season, which is our favorite.
"We think that we are living the ideal life, splitting our time between the ocean and the largest lake in Mexico..."
If George, Hyta, Gerald, and Jonathan can do it, so can you.Kathleen Peddicord
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P.S. What else this week?
Some 15 years ago when I left Baltimore, Maryland, headed for Waterford, Ireland, I carried with me marching orders from my employer-partner of the time: Establish an office, an EU base.
That long-ago history is on my mind this morning because I'm at the tail end of a Baltimore visit. Back in my home town, I can't help but think about how my adventures overseas got started.
Our first year in Waterford, Lief and I pushed ahead, stubbornly, persistently, enthusiastically even, through challenge after challenge. We'd come to establish an office for a direct-marketing publishing company, but no such industry existed in Ireland and hardly any industry whatever existed in Waterford. The Celtic Tiger was coming into its own, but Waterford was beyond its roar. The pool of available local labor was thin. For marketing, fulfillment, and editorial support staff we hired people with no relevant experience. They'd worked as receptionists in hotels, hands in local stables, cashiers in local shops. We tried to identify people who seemed to want to learn and then set about trying to train them.
Staffing our fledgling office was tough and so, too, was just about everything else, including finding the office in the first place. We didn't want to be located in the new "industrial park" being built on the outskirts of Waterford City (it looked like a prison compound to me), but other options for commercial space, like options for staffing, were limited.
Opening a corporate bank account, getting a company credit card (uncommon back then), finding an Irish tax accountant to keep us compliant, drafting employment contracts (which, we were instructed, had to allow for things like regular tea breaks)...all these administrative tasks were a struggle.
Meantime, Lief and I, only recently married, were struggling on every other front, as well--struggling to solidify our new family unit, struggling to adapt to life in Waterford, struggling to communicate our situation to those back in Baltimore, where the publishing company we were working for was based. They couldn't understand how or why it was taking so long to do simple things like rent office space, open a company bank account, and hire start-up staff. We couldn't adequately explain the delays or the struggles, because we didn't understand them ourselves.
Today, 15 years and a half-dozen starting-a-business-in-a-foreign-country-from-nothing experiences later, I can explain...
We're not alone. Over the past few years, I've noticed an interesting trend. Many of our fellow expats who also call Ambergris Caye home have also begun investing in second homes on the Belize mainland, primarily in the Cayo District...
When you visit the wealthy island-nation now, it's hard to imagine the Singapore of yore. Modern Singapore has one of the world's most developed economies. It's a country full of financial giants and mighty multinational corporations operating in towering skyscrapers overlooking a prosperous, safe, and clean city. Its seaport is one of the busiest in the world, and the little nation is a global offshore banking powerhouse with some of the safest, most solvent banks in the world. Today, Singapore's three major homegrown banks are all rated safer by Global Finance magazine than older, well-known institutions such as JP Morgan Chase, Barclays, and Deutsche Bank. In its 43-year history as an independent nation, Singapore has never had a bank failure...
#1: The people will be different from you. They'll speak a different language (probably). They'll dress differently. They'll have different ways of doing business, different ways of showing respect, different ways of celebrating Christmas and their childrens' birthdays. They'll take different approaches to serving meals, planting gardens, building houses, paying utility bills, and enjoying their Sunday afternoons...
PLUS—From resident global real estate investing expert Lief Simon:
I first alerted you to a Brazil coconut plantation offering I like about a year-and-a-half ago. In the 18 months since, the UK-based developer behind this project has sold it very successfully. Now he has conceived a next offering:
In fact, neem was part of the development plan for this coconut plantation from early on. In the planning and preparations for the coconut trees, the question of pesticides had to be addressed. Finally, a solution was identified in neem, a natural pesticide. The drawback, though, was a limited supply.
Solution: Grow more neem trees. Thus neem became part of the big-picture plantation plan.
Having identified a potential market, the developers researched further to try to determine the commercial potential of neem beyond their own needs for their coconut trees. What they discovered was exciting enough to persuade them to expand what had been planned as a 20-hectare farm to 100 hectares, enough to create an industrial level of supply to fill the needs not only of their planation, but to be able to supply other coconut plantation owners in the area, as well.
Neem is an evergreen tree that can grow up to 30 meters tall. Its wide canopy forms a rounded crown of leaves, and the tree produces small, green fruit and delicate, white flowers. It is a hardy species that grows well in sandy, stony, and saline soils, and it has a lifespan of 150 to 200 years. The trees are often used to line streets and to surround markets or gardens, as they provide good shade and help to keep away mosquitoes.
The neem tree's ability to ward off pests was noticed by ancient farming communities who began using the tree's seeds, leaves, and bark to make pest control substances that helped protect and preserve vital crops and farmland. Not only do neem products keep crops free of pests, but the pressed fruit and seeds of the tree act as an effective fertilizer when added to soil.
The neem tree is also the source of a number of health and beauty products, including ointments, creams, etc., to treat everything from scratches and skin rashes to malaria and diabetes. As a result, the neem tree has developed a reputation as a cure-all in native regions worldwide; however, the rest of the world is only now beginning to recognize that almost every part of the neem, from root to tip, has potential to address a host of global concerns.
The first neem seeds were introduced to Brazil by the Agronomy Institute of Paraná (Iapar) in 1986. Since the late 1990s, the species has been grown in several Brazilian states, including Ceará, São Paulo, Pernambuco, Bahia, and Pará. Most of Brazil's neem plantations are relatively small and between 5 and 15 years old. Further, to date, neem has mostly been produced by small-scale farmers with limited understanding of the cultivation techniques required to produce healthy harvests.
In other words, most neem crops in Brazil have not been set up for the production of fruit and timber, and many neem trees are being grown in soils with unsuitable mineral contents.
Neem grows well in tropical countries, and Brazil's climate provides ideal conditions; however, it is in the northeast of the country where the perfect soil for growing neem trees is to be found. It is in this part of the country, therefore, that neem can best be cultivated for both fruit and timber. And this is where the plantation I'm highlighting is located.
Neem's fundamental uses are for products to repel insects (from both crops and humans) and as a natural fertilizer. Other products can be made from the tree's oil and leaves, but the developer has excluded those possibilities from the revenue projections until such time as they have a clear path to market for them. For the current launch projections, insect repellant for crops and fertilizer are the only two products factored into projected cash flows.
This new neem investment offer is similar to the coconut offer. You invest in fee-simple land that is planted with the trees. The developer manages the tree farm, harvests the crop, and sells the produce. Brazilian taxes are paid off the top, as is a fixed maintenance cost. The net proceeds are split 70/30 between the land owner and the plantation management company. It's a very straightforward set-up.
For this new neem offering, the minimum purchase is 1 hectare. That hectare will cost you US$30,000, including the first five years of crop care (during the first several years, not much care is needed, as the trees don't produce seeds until sometime during year three).
Once the trees reach maturity, the annual gross revenue from the seeds is projected at US$30,000. Take out the crop care fee and the tax bill, and you end up with US$20,500. After the 70/30 split, the owner of the land receives US$14,350. That's a 47.8% yield when the trees reach full production, which is expected in year eight. Annualizing the returns to take the first seven years into account, you get an IRR (annualized yield) of 19.65% using a 20-year investment timeframe (and no inflation adjustments for increases in revenue).
Again, though, note that one interesting thing about neem from the investor's point of view is that the tree lives for 150 to 200 years. That means you won't be replanting in your lifetime and probably not in the lifetime of your heirs. The 20-year timeline for projecting investment returns allows you to compare the IRR for this investment with other investment options you might be considering. However, your investment should continue producing long past that 20-year window, and the longer you hold the investment, the higher your IRR will go. And if you resell the investment, you'll, of course, have a return of capital along with, potentially, a capital gain.
One caution I would offer has to do with currency fluctuations. The currency of Brazil is the real. In the past five years, it has been as low (bad for them, good for dollar-holders) as 2.40 to the U.S. dollar and as high (good for them, bad for dollar-holders) as 1.55. Currently, the real is at 2.10 to 1 against the dollar. That will change. It likely will be higher at times and lower at other times. You have to be ready for what this might mean to your overall return.
Because your income from the neem oil and cakes will be in reais...at least initially. If the developer starts selling neem oil outside Brazil, this could change, but don't count on it. Your real income will vary in dollar terms each year, even if the income remains the same year to year.
The other variable I'd highlight has to do with the products being created initially—oil and cake. If the developer grows the plantations enough to warrant a processing plant, higher value products could be added to the mix in the future. This could mean additional upside.
I like this new neem product because it offers product diversification within an existing and proven structure. Further, its cost of entry is low. You can get in with a relatively small amount of capital, and you should see cash flow (that is, return) sooner than with the coconuts (although it will take a bit longer for the neem trees to mature and reach peak production).
For more details on this new neem plantation offering, contact the developer here.
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In many places around the world, it's possible still to enjoy very personal care, where you, the patient, work in partnership with your doctor to determine the best course of treatment.
Healthcare overseas is also much more affordable. The reason for this is because there's no pressure in these places from any insurance industry...and no pressure from any pharmaceutical industry either.
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Kathleen Peddicord'sNew Book
An Expert Guide To The Advantages And The Challenges of Investing In Real Estate Overseas..." Learn More
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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.
Read more here.
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