Higher ROI in South America

[George Gammon]

I've done several deals internationally, most recently in Medellin, Colombia.  Happy to answer any questions or would love to discuss with other investors that have done the same.  

[Jackie Lange]

There is a higher ROI in many foreign markets but you need to look at much more than just ROI.

Some markets allow foreign investments without getting a visa, others do not.  Some markets add a VAT tax (in addition to capital gains tax) for foreign investors which you get hit with when you sell the property and even more tax when you try to take the proceeds out of the country.

Most importantly, is the stablity of the government and the economy.   Colombia inflation is going through the roof - currenlty at about 7.5% which is not good.  Other Latin American countries, like Panama have a much lower inflation rate of less than 1%.  Unemployment rates are another important indicator to check out before infesting in a foreign market. 

Another good indicator of stability is the average local income which you can find on WorldBank.org and the GDP per capita.  If that number is too low, there will be much more crime and break-ins to your properties.  (Colombia is about $7900)

Your ROI can be greatly increased by doing vacation rentals vs long term rentals -- if it is allowed in the market without heavy taxation.

In most of latin america, It may be cheaper to build new than to rehab old properties.  I'm building 6 rental houses in Panama at a cost of $35,000 each for a 1200sf house that will rent for $750 all inclusive. Build time is about 3-4 months for new construction.

There could be a better use or ROI for the land than building residential or commercial estate. A commercial greenhouse can product about $50,000 a year in income.

I just bought a couple of acres with plans for greenhouses.

Some other great investments.. 

20 acres Pacific Ocea front - spectacular views - only $450,000
Ocean front lot for only $15,000

Presonstruction sales are popular in latin america.  Don't even think about getting involved in this unless the builder is a local citizen and has been building for a long long time ( 20 years or more).  Avoid foreign preconstruction projects.  

It is always best to go visit the area before you jump in to any investment.  And talk to a LOT of locals before you invest any money.  You'll hear the good, the bad and the ugly. 

Beware that some property it titled and some of ROP (right of possession).  You should only buy titled property even if the numbers on ROP look extremely attractive.

In Panama, where I live, there are real estate scams all the time. The investor seller (usually US or Canadian) usually moves out in the middle of the night after he has carefully wires all investment capital to a different offshore bank account... and leaving the investor buyers high and dry.

Not much you can do legally when you have been taken advantage of in a foreign country.  Most latin American countries do not have contingent fee attorneys so you will need to pay a lot of money up front to even start an investigation which could last for many years..with no resolve. 

So, buyer beware in foreign countries. 

But there are some incredible opportunites if you check them out personally before you buy and always use your own attorney to investigate the title and prepare the purchase contact for you.