Investing in Argentina

[Martín La Rosa]

Hi, I live in Buenos Aires and I'm trying to decide if it is a good move to buy a property.

I was doing some math, lets say there is a 100.000 dollars property that would be around 1.170.000 pesos. I could rent that property for lets say 3.500 pesos a month. That is les than 3.6% of rent per year, in pesos, with a, let's say 30% inflation rate yearly.

So I'm guessing that is not a good cash flow. On the other hand, the property would maintain its value in dollars, so the capital invented won't be damaged by the peso inflation, just the opposite.

I just also listened to the 17th podcast where the guest was say that at my age (26) I should not be caring about cashflow but about building capital.

A personal loan from the back would have a 60% of interest, although if I buy the property as my first house to live in it I could get a 18% anual interest rate and pay the loan in 20 years. And that way I could be able to stop paying rent.

What do you think I should do? Or what should I take into account to decide? It seems that cashflow wise it is better to do another kind of investment.

[David P.]

Welcome to BP @Martín La Rosa - Congratulations on beginning your investment career.  Although you are 26, you should always care about cash flow, but it is also important to build capital as well.  Living in a property is not cash flowing, and you should not necessarily consider you home as an investment - you are moving from rent to mortgage and additional cost associated to owning a property.  

If you are truly purchasing for investment the numbers will work for you and there are some great Spreadsheets available on BP to help you analyze the property.  

Here is one I have modified for my own usage: http://beta.biggerpockets.com/files/user/MrMadMoney/file/property-cashflow-analyzer-v12

If I were to analyze this property, consider all the cost associated with this property.  I have traveled to Europe and South America, and know cost/taxes vary from region to region significantly.  Although I am not familiar with Argentina except for my limited travel there, property cost such as these can reduce the cash flow significantly.  Additionally, will you be managing the property if you decide to rent to someone else or live in it yourself.

I think you need to weigh the amount you spend on rent to what you would "Cash Flow" from buying the property.  Once you have determined the cost benefit you can make the decision weather to live in the property or not.  

Good luck, and please remember to VOTE on reply's you think have helped. This validates respondents posting and lets readers know that this information was valued.

Hope you have an excellent future!

- Dave