Experience investing out of the US, and surprises?

[Chris Moore]

Hello BP,

Short version: anyone know the tax/banking/currency consequences for investing outside the US? Or where I can find this? (obviously find some international tax attorneys/bankers, but hoping for some friendly advice/experience)

Long version

So, I know general advice is to invest in your backyard. I failed that one by investing in Colorado while living in California. Now I am curious about taking a giant leap from California... haha

I am on vacation in Brazil and see huge opportunities. Yes, I know they are still in an economic and political crisis, but I think the next few years there is huge potential. I am in Sao Paulo (one of the biggest cities in the world) and see an amazing amount of vacant commercial bulidings yet there is still 18 floor high-end apartment buildings being built all over. I also see this scenario as multiple ways to win, (cash flow/property appreciation/exchange rate improvement). I just can`t seem to find much info about the process. (getting lending, making purchases, tax consequences from each country, issues getting paid in reais ((their currency)), but withdrawn in dollars). Any thoughts are appreciated!!!

Chris 

[David Thompson]

Hi Chris,

Don't want to discourage you but unless you are living there and can really understand what's happening there, I'd avoid Brazil and most Latin American countries.  Investing in real estate is complex enough from afar, but add in currency moves, political corruption, economies tied to vary narrow industries (export oriented / commodity based), language, unique laws, regulations, taxes, etc, why endure that headache.

I've written about this before and won't go into a ton of details but I traveled to many LatAm countries working for Dell and like you, saw opportunities.  I purchased land / construction deals in 3 of them including Brazil.  It's been an overall nightmare and I wish I never had read International Living magazine that espoused only the cool things about international travel and living.  I bought pre-construction condos in NE Brazil on the ocean.  Builder seemed legit.  Strike happened and the project was delayed 18months.  They only communicated w/me in Portuguese so I never actually understood a lot that was going on in real time, had to get everything translated by the British broker who sold to me.  The story was great, Olympics, World Cup, economy was booming, then it tanked, currency dropped over 50% killing the value of the investment.  I was fortunate to get out w/o waiting that long but that took lawyers, costs, a ton of my time, etc.

I love Brazil, I have many friends there and probably flew down there 40+ times on projects.  I just don't think it makes any sense to invest there unless you plan on living there a long time and can learn the ropes from the locals, language, customs, laws, etc.  I had a similar situation in Mexico and Ecuador.  I laugh a bit now because things went so bad that if I wrote about it everyone would think I was making it up.  The Ecuador property on Pacific Ocean, raw land for buy n flip to a developer, now that developer paid us about 2/3 of what we sold it to him, but payment has happened over 3 years, now the lead guy is in jail due to some government investigation.  Every time I turn around we are having to pay our attorney, who I think is paying locales to get things done and those are not on his payroll if you know what I mean.  They had a massive earthquake a few months back that essentially wiped out the roads and small towns around it so the country so you can imaging no one is thinking about building vacation condos right now till they get infrastructure back.  I could go on...but you get the picture, add complexity, hassle, time, headaches on investing intl from U.S. IMO and expect to lose money.  No a pretty picture.  Best to rent, enjoy the people and culture if you are not going to live there long term.