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This is an excellent time to look at real estate in Brazil. Lower domestic demand coupled with a weakened real have created opportunities for those with dollars, pounds, or euros.
Purchasing real estate in Brazil is straightforward. Foreigners may own property in Brazil with only a few restrictions: They may not own land bordering another country and may not own a farm over 150 hectares (371 acres). These restrictions do not apply to corporations.
While Rio de Janeiro has its charms, other parts of Brazil also offer beauty… at even more attractive prices. The Northeast—the hump of Brazil which projects into the South Atlantic—experienced waves of development beginning about 15 years ago, which continued right up until the current economic crisis brought sales to a screeching halt. The result is a glut of homes on the market, reminiscent of South Florida 10 years ago.
While there are certainly many good deals to be found in the current cashstrapped market, don’t look for a quick flip. Even if you buy at a below-market price, to realize a profit you’ll need a buyer. A four- or five-year time frame to sell would be realistic, according to Amit Ramnani of Ipanema Wealth.
You’ll want to begin any search by enlisting the help of a good agent. In Brazil all realtors are required to be licensed by CRECI (Conselho Regional de Corretores de Imóveis). Actually, you may want to enlist the assistance of several agents, as Brazil doesn’t have an equivalent of the Multiple Listing Service. Instead, each agent has his or her own listings and contacts, but won’t have access to all listings in the area.
The process, though similar to buying in the States, does have some differences. You’ll also want to find a locally licensed realtor to assist you throughout the process.
You may opt to rent first—generally a good strategy when just getting to know a housing market. While traditionally leases in Brazil are long (30 months is still the norm), it is becoming more common these days to find 12-month contracts. And in many areas which experience seasonal influxes of foreign tourists, 90-day (por temporada) leases are common. While you’ll pay a bit more per month for shorter leases, there is typically less bureaucracy involved. (Interestingly, many owners here prefer to rent to foreigners rather than to other Brazilians.) Also, por temporada units often come furnished and professionally managed.
If you find that you like Brazil but only intend to winter here, you might simply rent, or you might buy a unit and rent it out when you return home. You’ll want to choose an area which receives a reasonable number of tourists, and of course you’ll need to have someone on the ground to manage things. But per-week rental prices are such in some areas that this approach could be worth looking into. In fact, in some cities, such as Natal in the northeastern state of Rio Grande do Norte (discussed more below), buildings were constructed with the intention of the units being rented out, and there is professional management on site. Note that in such buildings there are often restrictions on how much time the owner may spend in the unit. And if you buy in a traditional private building, verify that the bylaws don’t prohibit your renting out your unit.
For most foreigners, whether renting or buying, we suggest looking at apartment units rather than single-family homes, as they are in greater supply, are easier to care for, and frequently come with many amenities. Look for new or recent construction to avoid refurbishing costs such as rewiring. Typical units here may have rooms slightly smaller than North American standards, but are solidly built of brick and concrete; no two-by-fours and drywall here. Buildings typically offer covered parking, a swimming pool, a gym, and barbecue patio (Sundays here are for soccer and barbecues). Virtually all have a 24-hour security desk as well.
It’s already a buyer’s market, but there’s no hurry to buy. Predictions are that the economy here will continue to be weak for the foreseeable future— yielding more buying opportunities. So explore. Shop around. Look at a number of places. Make low offers. While Brazilians can be very resistant to coming off their initial asking price, the market these days is such that someone is likely to accept.
For the more seasoned investor, there are still opportunities in raw land. Look to buy near spots that are already popular.
Note that title insurance is not common here. Typically, the buyer’s attorney researches the property for any potential claims or issues.
Purchases by foreigners are generally in cash. Banks in Brazil are unlikely to give a foreign buyer a mortgage, although developers and private sellers may finance a purchase.
Those living in cities or town will pay a real estate tax called IPTU (Imposto Predial Territorial Urbano). The more upscale the neighborhood, the higher the tax. IPTU will generally run between 1% to 2% annually. (Note that in Brazil tenants are generally expected to pay the IPTU, as well as any monthly condominium fees, but these often aren’t included in the quoted rent—so be sure to ask before signing any lease.)
We recommend you don’t buy any type of property here looking for short-term profits in today’s market. Even if you buy at a below-market price, you may have to wait some time to find a buyer. Rather, buy because you truly enjoy an area, and be prepared to hold onto the property awhile.
When selling a property in Brazil, you can receive the proceeds in an account located in another country, perhaps eliminating the necessity of a funds transfer and the associated fees. However, the proceeds still need to be declared in Brazil, and any required taxes or capital gains paid.
Thanks to a slowing local economy and a weak real, you have a window of opportunity in Brazil… both for living and for investment. Real estate bargains are widely available. You just need to decide where you want to focus. In such a large, diverse country, your options are plenty.
We dollar-holders have enjoyed increasing buying power abroad each year since 2013, with every year eclipsing the last. Procrastinators and foot-draggers have been rewarded as they’ve watched properties get cheaper each year in dollar terms. But 2020 was different. Of the major currencies that I track, the dollar has gained in only three countries. In the remaining six countries, the U.S. dollar has lost buying power. Those same procrastinators and foot-draggers are getting a wake-up call as prices climb in...Read more