If you’re holding U.S. dollars, I’ve got very good news for you:
Right now is the best time in a long time for harnessing the dollar’s power abroad.
The dollar’s current strength is creating amazing bargains in countries where property trades in the local currency. I call this temporary distortion a “currency discount,” and it’s a metric I watch closely.
Simply put, real estate in many countries has become dramatically cheaper, in dollar terms, thanks to favorable exchange rates.
Here are the markets offering the most dramatic currency discounts at this moment:
| #1 Brazil Currency: Brazilian real (BRL) Currency Controls: Yes Exchange Rate: R$3.89 per USDIncrease past 12 months: 16.5% Increase in buying power: 90% |
#2 Colombia Currency: Colombian peso (COP) Currency Controls: Yes Exchange Rate: COP 3,179 per USDIncrease past 12 months: 6.1% Increase in buying power: 81% |
| #3 Mexico Currency: Mexican peso (MXN) Currency Controls: No Exchange Rate: MXN 20.11 per USDIncrease past 12 months: 5.5% Increase in buying power: 58% |
#4 Chile Currency: Chilean peso (CLP) Currency Controls: No Exchange Rate: CLP 687 per USDIncrease past 12 months: 7.8% Increase in buying power: 46% |
The “increase in buying power” mentioned above is measured from Jan. 1, 2013.
#1 Brazil: One Step Beyond Latin America
The currency champion as we head into this New Year is Brazil, which now offers a whopping 90% increase in buying power for U.S. dollar-holders. That’s an increase of 16.5% over the past year alone.
Brazil is exciting, romantic, and diverse. I think of it as “one step beyond Latin America,” as its culture and language are a bit more unfamiliar and romantic to North Americans.
Brazil offers beautiful beaches and a wide range of climates. You can choose a year-round warm climate or a changing climate with seasons opposite those in the Northern Hemisphere.
Brazil is also culturally diverse, from its German regions and wine country in the south to its French- and Dutch-influenced regions in the north.
One cumbersome aspect of buying in Brazil are the currency controls this country imposes. This means a few extra steps when transferring money, but it’s a process you’ll learn to manage.
Historically, another disadvantage has been that Americans and Canadians need a visa to enter Brazil as a tourist. This was an annoying hurdle that consumed time and money. However, Brazil now offers an eVisa, which you can obtain online for only US$40, plus a service fee of a few dollars. American, Australian, and Canadian citizens can apply here.
Also, new for 2019, Brazil has introduced a new visa option, whereby a real estate purchase can qualify you for permanent residency. In Northeast Brazil, the minimum investment is 700,000 reais, which is about US$180,000 at today’s exchange rate.
Brazil’s economy has faltered in recent years, so you stand to gain twofold… from the recovery of the economy as well as the current currency discount. When the recovery comes, the economy should help to raise prices in reais… while the recovering real should further raise the value of your investment in dollar terms.
#2 Colombia: A Big Currency Discount With Good Upside Potential
Colombia is now offering an impressive 81% increase in buying power since 2013. In just the past 12 months, the increase has gone up by 6.1%.
Medellín, Colombia, offers the best city living I’ve found in the Americas. Its 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 diverse cultural activities, from open-air festivals to orchestra and theater.
in Latin America…
Colombia also has a Caribbean coast that’s popular with expats and Colombians alike. Cartagena is the most popular with North Americans and international visitors, while Santa Marta is favored by Colombians.
Colombia still suffers from the negative stereotypes left over from the days of Pablo Escobar and the Medellín Cartel, more than 25 years ago. But this bit of ignorance has resulted in some of the most undervalued markets you’ll find anywhere.
You can gain in two ways in Colombia. First with the disappearing stereotype prices have been rising nicely as people forget the old stories. Plus, you could profit from the currency’s rebound.
One final benefit is that Colombia is one of the easiest places to obtain residency. The country offers 17 visa options, and requirements are minimal. I got my visa at the ministry in Bogotá in less than one hour solely based on information from the ministry’s website.
The only disadvantage I can think of is the country’s currency controls. Like Brazil, wiring money in and out of Colombia 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 Colombia, and you cannot have a dollar-denominated bank account.
These minor drawbacks aside, I believe that Medellín, Colombia, is the best value in Latin America for a sophisticated, elegant lifestyle… especially at today’s exchange rate.
#3 Mexico: Still The First Choice For Americans And Canadians
If you’re buying in U.S. dollars, your buying power in Mexico is now 58% greater than it was in 2013… and your buying power has increased 5.5% since last year.
Mexico is still the #1 overseas destination among its fellow North Americans, with more than a million American expats calling it home, myself included. Also, about 500,000 foreigners own homes in Mexico. 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 or Mexican pesos, depending on the market. The latter is where your increased buying power lies.
Mexico offers well-developed coastlines along the Pacific, the Gulf Coast, and the Caribbean. The options for coastal living are limitless, despite the widely held misconception that foreigners can’t buy coastal property here.
peso-priced properties…
Mexico also 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 some practical advantages, too. First, there’s more English spoken in Mexico than in any other non-English-speaking country I’ve visited.
The country’s residency process is among the world’s easiest, even easier than that in Colombia. I received my visa about 20 minutes after applying at the Mexican consulate in Phoenix. Better yet, they accepted English-language documents, had English-speaking agents, and did not require apostilled certifications.
You can drive to Mexico. So if you’re planning to bring a household or to travel back and forth, this proximity can save you a lot of money and hassle.
Also, while you can’t use Medicare overseas, retired in Mexico, you could drive over the border to get your health care in the States. Quite a few expats in Ensenada, for example, travel across the border to San Diego for their major health care needs.
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. You can eat enchiladas instead of guinea pigs, and you’ll see full-size, V8 American pickups and SUVs on the road instead of those wimpy Chinese pickups. You’ve also got familiar stores like Sam’s Club, AutoZone, Walmart, The Home Depot, and OfficeMax.
Mexico is my choice for the most hassle-free option for retiring overseas or owning a second home abroad.
#4 Chile: A First-World Option That’s Once Again Affordable
Chile offers a 46% increase in buying power to the dollar-holder for properties priced in Chilean pesos. Your increase in buying power increased by almost 8% this past year.
Chile covers a long latitude, so there are plenty of options for seaside living in a wide range of climates. One of Chile’s biggest selling points is that it has four seasons that are opposite those in the Northern Hemisphere. So if you have a second home there, you can enjoy your favorite season twice each year. The country is also geographically 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, with an honest culture, low corruption, and low crime. It’s a place where you can enjoy drinkable water, excellent highways, and a strong economy.
Over the past 17 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, property and cost of living are bargains, especially in the context of the lifestyle you get.
Properties in Chile trade in pesos, a monetary unit called UF, and sometimes in U.S. dollars. The “currency discount” in Chile works only on peso-denominated properties.
Residency is relatively simple in Chile. You can apply for residency by mail, and there’s no minimum income requirement to get started. I went to the do-it-yourself kiosk in Santiago and found the agents very helpful.
If there’s a disadvantage to Chile, it’s the distance from the States. The flight takes over nine hours, although the airlines serve a good number of U.S. cities from Santiago.
2019 presents an exciting window of opportunity for U.S. dollar-holders interested in investing in property in key overseas markets. I recommend you take advantage of today’s strong dollar while it lasts.
Lee Harrison
