The U.S. dollar is at a 10-year high against the Brazilian real. Brazil’s long coastline boasts some of the world’s most beautiful beaches. These two facts combine to make Brazil a top choice for a dollar-holder interested in a beachfront retirement.
Consider the Brazilian island of Itamaracá, where you could buy a three-bedroom house on the beach for less than US$120,000 at the current exchange rate. Driving over the causeway onto Itamaracá, the island appears like a tropical paradise rising out of the sea. Its shoreline is lined with thick, tangled mangroves and spiked with tall palm trees reaching into the blue sky. Green, lush hills rise up behind the mangroves to the island’s peak, about 2 miles farther on.
Arriving at the peak of the island, you have a view down over its eastern shore where you see a few small towns and miles of sandy beaches bordering clear, turquoise waters. Thanks to a protective reef just offshore, the sea here is calm and gentle. Every day of the year brings warm weather and fresh ocean breezes. The beachfront restaurants can be rustic, but they serve up some of the most mouthwateringly fresh grilled seafood you’ll find in Brazil.
Itamaracá is not as desolate as it can appear at first. The 4-by-9-mile island is home to around 18,000 permanent residents. However, that population can increase to 50,000 on holiday weekends and rise to 500,000 during the country’s famous Carnaval (a time of year when resident retirees might want to be somewhere else).
Life on the island is simple and basic, with no malls, auto dealers, or high-rises. In fact, the tallest building is four stories, and beachfront construction is limited to two stories. Almost all island properties are single homes, and, while the island’s main roads are paved, many of the side roads are sand and some are dirt.
On Itamaracá, you won’t find fine-dining venues, theater, or other upscale amenities. For these things, as well as stores selling major appliances or cars, you must travel to Recife, about 45 minutes away. However, you will find grocery stores, medical facilities, and almost anything you’d need day-to-day on the island.
Itamaracá is an hour from the international airport in Recife, with good connections to the United States and Europe. In addition, the island is home to an active English-speaking expat community, a rarity in Brazil.
The lifestyle on Itamaracá is all about boating, beaches, and the sea. Retired here you could pass many a pleasant and sunny afternoon enjoying a good meal and hanging out with friends at the local yacht club.
A beach home on Itamaracá would not only make for an appealing retirement lifestyle, but it could also be rented out to generate enough cash flow to cover associated carrying costs. You aren’t going to get rich renting out a beach house on Itamaracá, but you could expect to earn a net rental yield of 5% or 6% per year. Your target rental market would be Brazilian families who rent vacation homes on Itamaracá seasonally, supplemented by the occasional expat from England or North America.
When it comes time to sell, your target buyer would be a local Brazilian or maybe an expat. Property prices on Itamaracá would be hard to beat for a beachfront home at the current exchange rate. However, it’s important to remember that Itamaracá is simple, basic, and, in some areas, rustic. This isn’t the Bahamas, Cancun, or Fortaleza, a more developed spot on Brazil’s coast. If your ideal retirement lifestyle includes five-star restaurants, theater, or all-night discos, then Itamaracá isn’t for you.
On the other hand, Itamaracá’s beaches compete with the best of those in any other Caribbean hotspot you might be considering. The water on the island is safe to drink, and the Internet and electricity are reliable. The islanders are warm and welcoming, the beer is cold, and the fresh seafood, lobster, and shrimp are fantastic. The beaches, festivals, life on the town square, and lively expat community could provide all the diversion you need.
One final note: Brazil imposes exchange controls, so moving money in and out of the country is more cumbersome than it is in many countries. It’s not difficult or risky, but you must follow the process when bringing money in for the purchase of a piece of real estate. Consult an attorney to make sure your money transfer is properly documented. Otherwise, you risk not being able to take your money—neither the initial capital nor any associated gains—out of the country when you eventually decide you want to.
Kathleen Peddicord is the publisher of Live and Invest Overseas, offering retirement and overseas living advice in her free daily Overseas Opportunity Letter and the monthly Overseas Retirement Letter. Her preceding essay originally appeared on U.S. News & World Report.