How To Choose Among These Top Four Property Markets
Over the past few months, you’ve heard a lot from us about the amazing real estate bargains that the strong dollar has created in some of the world’s top markets.
And, during this time, we’ve received many emails from people who are trying to sort through the facts related to some of these markets in an effort to focus on one or two of them.
Reviewing data is one thing. But other factors go into making a country a good buy as a second home, an investment, or a place to retire.
So, today, we’re going to let the top most-heavily-discounted markets go head-to-head, pointing out some advantages and disadvantages of each one.
Here are the discounted markets in our sights right now:
- Real Estate Currency: Brazilian real
- Currency Controls: Yes
- Currency Discount To Five-Year Low Point: 59%
- Real Estate Currency: Colombian peso
- Currency Controls: Yes
- Currency Discount To Five-Year Low Point: 43%
- Real Estate Currency: Chilean peso
- Currency Controls: No
- Currency Discount To Five-Year Low Point: 35%
- Real Estate Currency: Mexican peso
- Currency Controls: No
- Currency Discount To Five-Year Low Point: 31%
Now let’s take a look at the pluses and minuses of buying in these bargain countries…
Brazil: The Biggest Currency Discount
Brazil is exciting, romantic, and diverse. I like to think of it as being one step beyond Latin America, as its culture and language are slightly more unfamiliar to North Americans.
Brazil’s big advantage is its thousands of miles of beautiful beaches, which extend through a wide range of climates. This means you can choose between a year-round warm climate or a seasonal climate with seasons opposite those in the Northern Hemisphere.
Another advantage right now is the price. Brazil’s currency has taken a beating, resulting in the lowest property prices in many years. It’s now trading at the deepest currency discount among the countries we’re tracking. This has lowered both the cost of properties and the overall cost of living.
Among Brazil’s disadvantages are the currency controls. Wiring money into and out of Brazil requires some extra steps and takes a bit more time, given that the money has to be declared when entering and exiting. Also, you can’t spend dollars in Brazil, and you cannot have a dollar-denominated bank account.
Another disadvantage is that Brazil is not easy to get to. Flights often require a connection in São Paulo or Rio, which are inconvenient if you’re headed for the popular Northeast. Also, Americans and Canadians need visas to enter as a tourist, which requires a bit more time and money. The visa, however, is good for 10 years.
Brazil’s economy has faltered in recent years; so you stand to gain twofold… from the recovery of the economy as well as the currency. When the recovery comes, the economy should help to raise property prices in Brazilian reals… while the recovering real should further raise the value of your investment in dollar terms.
Colombia: A Big Currency Discount With
Good Upside Potential
Colombia is offering the second-largest “currency discount,” thanks to the peso trading at 43% less than its five-year low.
In my experience, Colombia—specifically, Medellin—offers the best city living I’ve found in the Americas. Medellin’s El Poblado neighborhood is safe, clean, and attractive, with shady streets, upscale shopping, and more restaurants and cafés than you could experience in a lifetime. The city also offers cultural activities from open-air festivals to orchestra and theater.
Colombia also has a Caribbean coast that’s popular with expats and Colombians alike. Cartagena is easily the most popular Caribbean destination among North Americans, with Santa Marta favored by Colombians.
Colombia still suffers from the negative stereotypes left over from the Pablo Escobar days that ended 25 years ago. But this bit of ignorance has resulted in some of the most undervalued markets you’ll find anywhere.
As with Brazil, you can gain in two ways in Colombia. You can continue to benefit from the disappearing stereotype, as Colombia continues to go mainstream. Prices have been rising nicely as people forget the old stories. Plus, you can profit from the currency’s rebound.
One final benefit is that Colombia is the easiest place I’ve seen to obtain residency. The country offers 17 visa options, and requirements are minimal. I applied for my visa on my own using only information from the ministry’s website; processing it at the ministry took less than one hour.
Like Brazil, Colombia has currency controls. It’s an inconvenience… but it’s one I’ve learned to live with.
Chile: A First-World Option That’s Again Affordable
Chile competes favorably with Brazil when it comes to coastline… with an important difference. Jump into those cold Pacific waters, and the difference will be immediately apparent. Chile covers a wide latitude, so there are plenty of options for beachside living in a wide range of climates.
One of Chile’s big selling points is that it has four seasons that are opposite to those in the Northern Hemisphere. It’s also diverse, with mountains, lakes, deserts, a long coast, a wine region, and great cities… with plenty of skiing, fishing, and wildlife.
Chile is a first-world choice where you can enjoy drinkable water, excellent highways, and a strong economy.
Over the past 14 years since my first trip to Chile, the only complaint I’ve heard from potential expats has been that it’s expensive. But at today’s exchange rates, the properties and cost of living are bargains for the lifestyle you get.
Like Colombia, residency is simple in Chile. It’s the only place I’ve seen where you can apply for residency by mail, and there’s no minimum income requirement to get started.
If there’s a disadvantage to Chile, it’s the distance from the United States. The flight can take more than nine hours, although connections to the States are good.
Mexico: Still The First Choice For Both
Americans And Canadians
Mexico is still the #1 overseas destination for North Americans; more than a million expats call it home. These expats are enjoying a low cost of living at today’s exchange rates, while new arrivals are getting some good property bargains.
Properties trade in U.S. dollars, Mexican pesos, and sometimes Canadian dollars… and the latter two are where your increased buying power lies.
Mexico offers well-developed coastlines that include the Pacific, the Gulf Coast, and the Caribbean. The options for coastal living are limitless. Plus, Mexico offers a wealth of well-preserved Spanish-colonial cities. Climates vary from cool highland and mountain environments to the warm beaches on both sides of the country.
Mexico offers practical advantages, too, aside from the fact that so many people speak English.
First, it’s close, and you can drive there. So if you’re planning on bringing a household or traveling back and forth, the proximity can save you a lot of money.
Also, for those who are eligible for Medicare, remember that you can’t use it overseas. However, living in Mexico, you could drive over the border to get your healthcare in the United States. This takes a big item off the table. Quite a few expats in Ensenada, for example, get their major health care in San Diego… at U.S. government expense.
Finally, Mexico is a culturally familiar neighbor. Having lived in South America since 2001, I’d forgotten Mexico’s familiarity, which shows up in many small ways… like eating enchiladas instead of guinea pigs… or seeing full-size, V8 American pickups and SUVs on the road instead of those wimpy Chinese vehicles. You’ve also got familiar stores like Sam’s Club, Auto Zone, and Burger King.
Choosing Among These Top Four Markets
In each of these countries, it’s difficult to open a bank account as a non-resident. However, each offers banking workarounds that you can employ to manage your funds.
Each country also has a strong expat history, which can ease the transition for future expats.
The country that comes in first for you depends on what you’re looking for.
For me, Colombia has the best near-term upside potential, combined with a healthy currency discount.
I believe Brazil has slightly more upside potential but over a longer term than Colombia.
Chile offers the chance to buy into a first-world country and strong economy at prices that we haven’t seen in a long time.
And Mexico comes in as the most convenient and culturally familiar choice… not to mention its cross-border convenience for everything from Medicare to Best Buy.
Really, they’re all good choices. Picking one as a place to live or invest is a matter of thinking through which one best fits your needs and preferences. The important thing is to take advantage of today’s strong dollar while it lasts.
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