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Mongers:
I'm researching which areas are the best to buy houses in BsAs 'burbs. Anyone have any incite? So far, reasonable areas are:
Lomas de San Isidro.
San Rafael.
Martínez.
OtownIrish
[QUOTE=Orlandoirish]Mongers:
I'm researching which areas are the best to buy houses in BsAs 'burbs. Anyone have any incite? So far, reasonable areas are:
Lomas de San Isidro.
San Rafael.
Martínez.
OtownIrish[/QUOTE]Hi Orlandoirish:
San Isidro and Martinez are in the northern Buenos Aires area and are good areas to buy property, but not really for investing (I. E. For buying and selling in a mid -term period) since prices are among the highest in the local market. If you scope is to use the properties for recurring visitis to BA, live there, or rent the places, it is then a good investment. But unless I misunderstood you, San Rafael is a town in the western province of Mendoza (which has winery activities, among others like tourism, mainly because there is nice canyon nearby - Athuel's Canyon) Did you mean this town?
Cheers!
Keep in mind that the economic geography of Argentina isn't the same as America. The best homes and neighborhoods aren't always in the suburbs; in fact, some of the poorest areas of Buenos Aires are in the far suburbs. That said, I do think San Isidro is a nice area with plenty of very attractive single-family houses. However, some areas of Palermo and Belgrano are just as nice, IMO.
Argentina's real estate is an all "CASH" market, there are "NO Term's" such as 30 year morgage's, bank Re-Finances or Home Owner Equity Loans.
I believe the major reason for this is the 12% inflation rate admitted by the government, which in fact is more like 20 to 25 percent Inflation in real life.
Since the above is True there is "No Liquidity" in Argentina's Real Estate, You can "Buy" but you can't "Sell". Once you own the property you can't "Sell" it so theres no way out. Your stuck with your investment pretty much forever, since the Seller needs Cash at Closing to protect Himself against the 20 to 25 percent inflation mentioned above.
Using a $100,000 cash as an example, (about what you'd expect to pay for decent place in or near Capital Federal) You'd be much better off using it as a down payment on a rental property here in the USA. Servicing the excess debt with the rental income and renting in Argentina. Sure you might have some debt you've leveraged, maybe even some negitive cash flow, but you've got "liquidity". You can get out of the deal, something that down the road will be priceless. You can't do that in Argentina, its all cash and in US Dollars to boot.
I recently spent a few nights in Jacksons apartment. As I was moving out a prominate Argentine was moving in. It turned out he was born in Recoleta a few blocks from Jackson's place and now is an investment banker in New York City. He works his trade only in Mexico & Europe, not in Argentina, he doesn't trust his country men. He went on to tell me that all his wealthy Argentine friends had indeed bought property at rock bottom prices after the devaluation and were now selling it as fast as they could. He went on to say that he had a friend whom is a director of "UBS" in New York (Union Bank of Switzerland) a very large international bank, And that they had very large loans in certain sectors of the Argentine economy. Jackson's new tenant went on to say that he asked his important banker friend where all the money was going. The banker told him their big clients were moving money out of Argentina just as fast as they could to Miami, New York, the Caymans, Switzerland and Europe, any place but Argentina. They didn't want to hold peso's, only Dollars or Euro's.
Now all of the above has got to tell you something. When you read the papers down there all you hear about in is strife and unrest coupled with strikes, protesters, inflation, corruption and a crooked government made up of "Home Boy's" that you could never trust.
Heed Exon's advice, Exon does this type of thing for a living and Exon is damn good at it. Matter of Fact all of Exon's mongering money comes from just this type of thinking.
Exon
As Hunt99 says, in BA (and other cities like Cordoba, Rosario, & MarDelPlata) you generally want to be closer to the center, and also on the correct side of it. Palermo and Belgrano are great options (north of center, well within capital yet far enough from Microcentro to have a more relaxed feel) If you're looking closer to the center, you definitely want to be north of Cordoba Av.
Check out Saint's extensive posts about the real estate market and his business. I know of another local company, tierraestates.com, which is run by a British guy and also mainly geared towards foreigners buying (and selling) property in Argentina.
As Exon says, the liquidity level here is nowhere near that of the USA, but its not illiquid either. "Flipping" new properties under construction has become quite popular around Recoleta. People put about 30% down on say a US$150k apt and then sell it a few months later (still under construction) for 160k, making a quick 20% return. Part of the liquidity problem is that the vast majority of Argentines have essentially zero net worth.
There is a new building on Ayacucho very close to my apt which is just being finished. I went in there about 6 months ago when it was just being started to have a look and there were already only 2 units (out of about 20) available. Every buyer had to put down about us50k (around 30%) to secure a unit. Thats just one example, but there is cash out there if you're selling something desireable.
I would not buy property or anything else as an investment in Argentina. However, if I decide to remain here forever then I will buy an apt as my permanent home. You can buy a good 90m2 place in Recoleta for about US140k and completely renovate it for under US10k. I think thats a pretty good deal. Rents are going up like everything else, although I expect the peso fx rate to shoot into the stratosphere not later than next year. Inflation at 1000% and the fx rate quoted in inches of 100peso bills per dollar. Thats when it gets really fun.
And when there is blood in the streets, thats when the ballsy people load up on local assets, like some people did here in early 2002 and others did on Wall Street in late 1929. I'll wait for the dust to settle just a little while.
Exon, I'd like to know what US markets you recommend. I was considering doing what you recommended - buying a place and renting it out. But from what I see and read, the US prices are so incredibly inflated that you generally can't cover costs and the mortgage with the rental income.
"Exon Id like to know what US markets you recommend. I was considering doing what you recommended - buying a place and renting it out. But from what I see and read, the US prices are so incredibly inflated that you generally can't cover costs and the mortgage with the rental income"
Look real hard at the "Sun Belts" away from the water. The beachs are to inflated, expensive!
My choice would be New Mexico, buy in the path of progress and wait for the "Baby Boomers" to retire and come to you, And they will.
On my last trip, six weeks, I had some interesting experience's in renting an apartment. I ended up renting from Roxana simply because she's my friend and I wanted her to have my money rather than some "Porteno".
But what I found out was theres property all over Buenos Aires for RENT, and more coming on line everyday. In case no one has noticed theres a building boom in Buenos Aires & the whole town is under construction. Which means there more product than customers. Much like "pussy" down there. To prove my point go to some of the rental website's and look at there inventory, there are hundreds of them.
Example: I had a friend whom joined me down there. He rented a beautiful one bedroom in Recoleta on Junical he picked out months in advance which was empty waiting for him. The rent was $200 per week, $600 per month. On a long term lease it would be less then that.
Moreover, the best way would be to find a place you like. Then cut a rent deal with the owner on a long term basis. Much like Jackson has done in Recolrta, with an option to renew the lease.
Heres an interesting question.
How many people do you Mongers know with a $100,000 US Dollars they have liquid and could just plop it down on property in Argentina without selling anything or changeing there standard of living?
My guess NONE.
I hang with some "Big Players" and even they would be hard pressed to do that. Their money is always working, so should yours be. They would be foolish to liquidate assets, good preforming assets, to buy property in Argentina and take such a risk.
As I said I do this sort of thing for a living and if I Fuck Up I'll end up working at 7-11 which means no more pussy in Argentina for Exon. Something I just could not live with.
Exon
[quote=Exon123]if I Fuck Up I'll end up working at 7-11 which means no more pussy in Argentina for Exon. [/quote]Exon, fetch me a large Cherry Slurpee. Chop chop! And also two Big Bite hot dogs, while you're at it.
Actually, of course, if Exon ever had to work at a 7-11, in about six months he'd have the franchise and be buying another one down the road. Then. Well, then, back to BsAs!
Peter / Fred88
I agree with the comment of Exon: it could take a long time to sell property. The reason is that, although the banks have plenty of money for mortage loans, most people who have a job cannot qualify for applying. One should bear in mind that the real income of this large portion of the society (which involves most of the middle class) was drastically reduced after the devaluation of 2001. So, being the middle class out of the market, the only potential buyers are either local or foreing investors, and this fact drastically reduces the possibility of selling a property in a short time. If one waits long enough and the property is worthvalued, eventually one could sell it, but on the other hand, investors have many choices, do not have practical pressures (like the need to have a place to move in) and would try to reduce the selling price to a real minimum.
Cheers
Mongers:
Thanks for all the feedback, think I will keep my 10,000 share of Google IN the market and rent in BsAs! It's not worth the risk. Although tempting.
Cheers!
Good idea Orlandoish.
Hmmm lets see, at today's close your Google shares would be somewhere north of $400,000 dollars. I suggest you sell them at the market tomorrow morning a buy a little condo or something in New Mexico, fuck today's up grade.
Rent the condo and have your leasing agent put the proceeds in your checking account here in the USA. Then using your ATM card slowly withdraw the money and spend it on "Pussy" in Buenos Aires, the rest you can just waste.
Thats what I do.
Exon
One more zero there Exon.
Not $400k - it would be $4.35 million.
10k Google shares at today's close would be 4,352,300.
Even at the most conservative capital protection income account with zero risk, say a large multi-CD or multi-linked BofA investment services money market accounts, he'd earn 3.2% as of today. Or a yearly income in just interest at around $139k.
After taxes assuming the most incompetent tax account that saves you nothing and you get screwed the max tax rate, that leaves a monthly interest income of $7076 take home pay to live off. Only been here in BA a few days, but $7 grand a month seems pretty easily livable down here.
Drop the FDIC insurance and go with a tiny bit of risk like an E-trade money market account and that little 4.1% interest rate difference is an extra $38k - or basically about $9k monthly interest income.
3% gross interest is closer to 2% after taxes. Now take out inflation and you're losing money and your real principal is shrinking. Unless you're very old and only have say 10-15 yrs of life and expenses left, you need to be in equities and earn a historical longterm rate of 10.5% After taxes and inflation that gives you an income of about 5%. Thats about $200k per year net (and not allowing your purchasing power to shrink) or $17k / mo on which you can live fairly well in Argentina.
Yes, this is all fine and well, but what am I to do with my 10,000 shares of Berkshire Hathaway?
I don't know, are you talking class A or B shares of BRK? Warren would probably hold 'em!
You stay put with the Berkshire, Hunt 99 but lets sell the Google and we'll buy that Denny's in Cleveland that Moore was trying to compete with El Alamo we were all talking about sometime ago. Thata be a winner.
Or possibly one mite be interested in my Calpine Junk bonds.
Exon
Gents:
Nice to know you boyz can do the math. LMAO. BTW, its not too difficult to get 10K shares WHEN YOU WORK FOR GOOGLE AS IT DIRECTOR OF THEIR ORACLE APPLICATIONS SUITE.
LMAO.
No sarcasm from me. In this day and age, single digit millions really isn't that much.
Moore- unless O is utterly foolish which I don't imagine he is, nobody is going to keep their entire net worth in one single stock, so I'd assumed 3% was plenty as the income generator from parking that cash into a money market to fund his income needs, and capital growth even on top of inflation would come from what are presumably his diversified assets.
If there are no diversified assets and just stock options from Google, then that's a whole different ball game.
Stop trying to become a manager at wal*mart and get real gents. Sorry I mentioned Google. OK, I am a migrant worker from Costa Rica on outdated green card, of which I plant roses at a nursery in Apopka FL, for 1.25 USD / hour. There, you brot the truth out of me.
[QUOTE=Exon123]Argentina's real estate is an all "CASH" market, there are "NO Term's" such as 30 year morgage's, bank Re-Finances or Home Owner Equity Loans.
I believe the major reason for this is the 12% inflation rate admitted by the government, which in fact is more like 20 to 25 percent Inflation in real life.
Since the above is True there is "No Liquidity" in Argentina's Real Estate, You can "Buy" but you can't "Sell". Once you own the property you can't "Sell" it so theres no way out. Your stuck with your investment pretty much forever, since the Seller needs Cash at Closing to protect Himself against the 20 to 25 percent inflation mentioned above.
Using a $100,000 cash as an example, (about what you'd expect to pay for decent place in or near Capital Federal) You'd be much better off using it as a down payment on a rental property here in the USA. Servicing the excess debt with the rental income and renting in Argentina. Sure you might have some debt you've leveraged, maybe even some negitive cash flow, but you've got "liquidity". You can get out of the deal, something that down the road will be priceless. You can't do that in Argentina, its all cash and in US Dollars to boot.
I recently spent a few nights in Jacksons apartment. As I was moving out a prominate Argentine was moving in. It turned out he was born in Recoleta a few blocks from Jackson's place and now is an investment banker in New York City. He works his trade only in Mexico & Europe, not in Argentina, he doesn't trust his country men. He went on to tell me that all his wealthy Argentine friends had indeed bought property at rock bottom prices after the devaluation and were now selling it as fast as they could. He went on to say that he had a friend whom is a director of "UBS" in New York (Union Bank of Switzerland) a very large international bank, And that they had very large loans in certain sectors of the Argentine economy. Jackson's new tenant went on to say that he asked his important banker friend where all the money was going. The banker told him their big clients were moving money out of Argentina just as fast as they could to Miami, New York, the Caymans, Switzerland and Europe, any place but Argentina. They didn't want to hold peso's, only Dollars or Euro's.
Now all of the above has got to tell you something. When you read the papers down there all you hear about in is strife and unrest coupled with strikes, protesters, inflation, corruption and a crooked government made up of "Home Boy's" that you could never trust.
Heed Exon's advice, Exon does this type of thing for a living and Exon is damn good at it. Matter of Fact all of Exon's mongering money comes from just this type of thinking.
Exon[/QUOTE]With that rate of inflation you would assume a steady and constant drop of the Peso against the US dollar. Why is it taking so long to catch up to reality?
This country seems to be in a constant and very dramatic state of flux. What by the way is Jackson paying for that beautiful apartment of his? Are opportunities like that still available in BA?
What about the hotel business, I could barely find a room in BA during the off season must be brutal right now. Now there have to be opportunities in the hotel sector.
Goblin
The Dollar is being supported at an artifically low price by the Argentine government in order to induce foreign trade and tourism by their centeral bank. This brings in "Hard" money which the Argentine government desperately needs to fianace the debt service on the remaining National debt.
As we all know they defualted on their national debt, when "Fucked" their bond holders out of 75% of their investments. Which in turn has ruined the country economicaly and turned the middle class into poverty.
The Argentine government must show a positive cash flow or balance of payments in order apease the IMF whom in fact holds the purse strings for the whole country. They due this by "Fucking" their population out of the true value of their goods and sevice's. Sorta like saying to the people "We Fucked Up" so everyone in the country has to work for less money than what the true value of what their "Work Product" would sell for on the world market.
This of course is the reason "We" all can afford to travel their. A $500 dollar "hooker" in New York, Chicago or Los Angeles can be had for $200 peso's, ($67 dollars) in Buenos Aires, cheaper in other cities.
Has anyone ever noticed that when you exchange money at the "Cambio" store on Friday's you get 3 to 5 peso's less than you would on Monday morning. The reason is no one wants to take a chance on the peso over the weekend, you pay a risk premuim over the weekend.
Or has anyone ever landed at a major United States port of entry with a few extra peso's? Then gone to the currency exchange window and tried to cash them in, or for that matter tried to buy peso's before leaving? Won't happen, they've got 20 or 30 different countries listed but no Argentina Peso listed. Even in Miami the major airport for South America no Argentine peso. They don't want to handle the peso and there must be a reason.
Finnally, recently you've noticed a small up tick in the exchange rate in Buenos Aires. We were getting about $2.85 to the dollar about six months ago. Now the rate is about $3.00 to the dollar. Thats the Argentine Centeral Bank "Tweeking" the Dollar against the Peso. What its telling you is that, " What Were Doing Is Not Working, So We'll Drop The Peso Even More".
Look for More Inflation in Argentine and Cheaper Peso's.
Exon
[blue]Hi Exon,
Effective yesterday, Argentina paid off all their IMF dept, and thus the IMF no longe has any infulence over the Argentine government, their banking practices, their monetary policy, etc.
For example, the are now free to pring all the Pesos they want. The provinces are also free to begin printing their own currency like the did immediately after the devaluation of 2001.
The international banking community justifiably sees all this as a bad thing, and the reaction is the recent davaluation of the peso.
Thanks,
Jackson[/blue]
[QUOTE=Exon123]The Dollar is being supported at an artifically low price by the Argentine government in order to induce foreign trade and tourism by their centeral bank. This brings in "Hard" money which the Argentine government desperately needs to fianace the debt service on the remaining National debt.
As we all know they defualted on their national debt, when "Fucked" their bond holders out of 75% of their investments. Which in turn has ruined the country economicaly and turned the middle class into poverty.
The Argentine government must show a positive cash flow or balance of payments in order apease the IMF whom in fact holds the purse strings for the whole country. They due this by "Fucking" their population out of the true value of their goods and sevice's. Sorta like saying to the people "We Fucked Up" so everyone in the country has to work for less money than what the true value of what their "Work Product" would sell for on the world market.
This of course is the reason "We" all can afford to travel their. A $500 dollar "hooker" in New York, Chicago or Los Angeles can be had for $200 peso's, ($67 dollars) in Buenos Aires, cheaper in other cities.
Has anyone ever noticed that when you exchange money at the "Cambio" store on Friday's you get 3 to 5 peso's less than you would on Monday morning. The reason is no one wants to take a chance on the peso over the weekend, you pay a risk premuim over the weekend.
Or has anyone ever landed at a major United States port of entry with a few extra peso's? Then gone to the currency exchange window and tried to cash them in, or for that matter tried to buy peso's before leaving? Won't happen, they've got 20 or 30 different countries listed but no Argentina Peso listed. Even in Miami the major airport for South America no Argentine peso. They don't want to handle the peso and there must be a reason.
Finnally, recently you've noticed a small up tick in the exchange rate in Buenos Aires. We were getting about $2.85 to the dollar about six months ago. Now the rate is about $3.00 to the dollar. Thats the Argentine Centeral Bank "Tweeking" the Dollar against the Peso. What its telling you is that, " What Were Doing Is Not Working, So We'll Drop The Peso Even More".
Look for More Inflation in Argentine and Cheaper Peso's.
Exon[/QUOTE]Got the same scam going on in the US just on a different scale. Say how does the income tax system work there? What is the rate of taxation?
[QUOTE=Moore]I don't know, are you talking class A or be shares of BRK? Warren would probably hold 'em![/QUOTE]B shares? What are B shares? Something for the [I]hoi polloi[/i], no doubt.
Speaking of Wal-Mart, I own a boat-load of that, too. World's best retailer, stock has done nothing for 6 years while the earnings have tripled and the dividend doubled (or is it the other way round?). Coiled spring effect.
It's reported in the Buenos Aires Herald today that Argentina paid the IMF us$9.5 billion cancelling its entire dept.
Things must be improving.
[QUOTE=Flexible Horn]It's reported in the Buenos Aires Herald today that Argentina paid the IMF us$9.5 billion cancelling its entire dept.
Things must be improving.[/QUOTE]Unlike the previous debt cancellations of Russia and Brazil, this has been mainly a political measure, with almost no economic reasons: the message is: "Stop telling us what to do. Now you can't do that any longer. Leave us alone to decide what to do". All the major local newspapers reflect this viewpoint.
All the best
Nothing for nothing Exon but you had the exact same arguments over a year ago when I started buying real estate here. You were saying how it was not a good investment then really using the same arguments as you are using now. I think it's clear you were proven wrong by the levels of property prices since I started buying. You need to understand the underlying investment principles here in Argentina. You say you do this for a living so I would assume you would see it more clearly than the average Joe. The fact remains that the banking system here is simply not trusted. It's also harder to get money out of the country for the average local because since 9/11 American banks make it more difficult to open accounts from abroad. Real estate has always been the safest form of investment in Argentina. They don't put their money in the banks. They put it in real estate.
It's a very stable play. Take all this cash and what do people do with it? They don't put it in the bank, or buy mututal funds or stocks. They buy properties. Talk to Roxana or any other local. They can tell you what I am posting is correct.
You are also wrong when you say it's not a liquid investment. I would strongly disagree with you. I find a one bedroom apartment in Recoleta very liquid. In fact, I'm one of the largest buyers of residential real estate in Buenos Aires than anyone in the world. It's darn tough to find a good one bedroom apartment for sale in Recoleta. When they come on the market they go off very quickly. All this new construction you are talking about. Much of it is pre-sold before it is even started. Every week I try to buy at least 1 apartment and it's getting tougher and tougher. What you posted simply isn't true. And in fact, it's like cash because when you sell it's also in cash on the table. Also, there are 0% capital gains taxes when you sell.
You are discounting the fact that real estate for this quality of a city compared to other cities around the world is very cheap here. Property taxes are very low. Utilities are very low. Many are buying as investments not only for the capital appreciation but also for the rental income. Tourism here has exploded and will be strong for a long time. Hotels are booked solid. Some are at 95% occupancy and many of the top ones are routinely sold out. More and more airlines are fighting to get routes to Buenos Aires. What do you think this will do to the tourism industry in BA?
Also, different people have different reasons for buying. Many want diversification away from the USA market and stocks/bonds/funds. Asset allocation is always a good idea. Many of my clients are purchasing here with money from other real estate they sold at very high prices in the USA, UK, Australia, and other parts of the world. They bought low and sold high. They see the same potential in Buenos Aires.
Everyone has their opinions. I'm not saying I am right and you are wrong. What I am saying is that you were wrong over a year ago when you were making the same arguments about real estate here and how it was a mistake to buy. Foreigners have accounted for up to 50% of the high-end purchases here in Buenos Aires according to some private estimates. That trend will continue. More and more real estate every week is going into the hands of foreigners. Yes, many are individual players purchasing real estate but many are also very skilled corporations purchasing up big blocks of land and properties/buildings/apartments. Many are very skilled companies where all they do is buy real estate around the world for a living and have been doing this for over a hundred years and have been spot on. These are the kind of trends you might want to keep in mind.
Also, keep in mind there is no real mortgage system here. It's all cash. Unlike in the USA where people can get 5% down mortgages and you have all these people buying on speculation that aren't really risking any investment capital. The system is VERY different here. The real estate prices are REAL because people paid 100% cash for them. No loans, no credit. In the USA, just about anyone, including those with bad credit can buy property. You have these interest only loans and other schemes that have pushed real estate prices up and will eventually create real problems in the future, IMHO. Property prices here were paid with 100% cash so these prices are not some artificially valued real estate like many places around the world. You have to consider things like that.
Property here has always been priced in u$s so get the devaluation out of your head. The reason you had a flood of selling after the devaluation is that banks were closed and people had no funding to their accounts. Imagine if the same thing happened in the USA. There would be blood in the streets! People would be blowing up banks. Here they were banging on pots and pans and were protesting. And oh yeah. Selling their real estate because it's a cash transaction and they needed cash. It was a unique experience that most people will never witness in their lifetime. You had a situation like that along with no one buying and property prices ARTIFICIALLY went down. The rise up is just things settling back to how they left off before the crash. Look at a historical real estate chart for Buenos Aires. Property has only caught up to where it left off. Only in February 2005 did it surpass where prices where before the crash. I have posted and I still believe that property is ripe here for a tremendous upswing over the next decade here.
Also, look at their mortgage situation. Mortgages one day will be common here. I'm not saying it will be overnight. They just started introducing mortgages again here but at high interest rates (10% - 12%) and you have to have 50% equity and the period is only 10 years. Still, look at any other country in the world. When you introduce mortgages, it pushes up demand and demand pushes up prices. Add in to the mix that with the devaluation, it brought many, many, many foreigners here to discover Argentina that never otherwise would have come here. Unsurprisingly they fall in love with the city and decide to purchase real estate here. There is more and more foreign interest and purchases in the real estate market here. I am not talking about just a few bucks. I'm talking about hundreds of millions of dollars.
Argentina has some sort of crises about every ten years. The one safe play throughout the years for these Portenos has been real estate. Something you might want to keep in mind when you simply dismiss real estate here as a stupid investment. Exon- you might manage money for a living and you might be really good at it...but I always think it's fair to tell both sides of the story. I also manage a lot of money for people and I like to look at the big picture in any investment opportunity. Good luck all.
Saint
Are statistics available on the annual increases in the market value of Real Estate in BA? What kind of annual upswing are we talking about for a typical Ricoleta one bedroom apartment in the $150,000 to $200,000 range?
Goblin.
[QUOTE=Saint]Nothing for nothing Exon but you had the exact same arguments over a year ago when I started buying real estate here. You were saying how it was not a good investment then really using the same arguments as you are using now. I think it's clear you were proven wrong by the levels of property prices since I started buying. You need to understand the underlying investment principles here in Argentina. You say you do this for a living so I would assume you would see it more clearly than the average Joe. The fact remains that the banking system here is simply not trusted. It's also harder to get money out of the country for the average local because since 9/11 American banks make it more difficult to open accounts from abroad. Real estate has always been the safest form of investment in Argentina. They don't put their money in the banks. They put it in real estate.
It's a very stable play. Take all this cash and what do people do with it? They don't put it in the bank, or buy mututal funds or stocks. They buy properties. Talk to Roxana or any other local. They can tell you what I am posting is correct.
You are also wrong when you say it's not a liquid investment. I would strongly disagree with you. I find a one bedroom apartment in Recoleta very liquid. In fact, I'm one of the largest buyers of residential real estate in Buenos Aires than anyone in the world. It's darn tough to find a good one bedroom apartment for sale in Recoleta. When they come on the market they go off very quickly. All this new construction you are talking about. Much of it is pre-sold before it is even started. Every week I try to buy at least 1 apartment and it's getting tougher and tougher. What you posted simply isn't true. And in fact, it's like cash because when you sell it's also in cash on the table. Also, there are 0% capital gains taxes when you sell.
You are discounting the fact that real estate for this quality of a city compared to other cities around the world is very cheap here. Property taxes are very low. Utilities are very low. Many are buying as investments not only for the capital appreciation but also for the rental income. Tourism here has exploded and will be strong for a long time. Hotels are booked solid. Some are at 95% occupancy and many of the top ones are routinely sold out. More and more airlines are fighting to get routes to Buenos Aires. What do you think this will do to the tourism industry in BA?
Also, different people have different reasons for buying. Many want diversification away from the USA market and stocks / bonds / funds. Asset allocation is always a good idea. Many of my clients are purchasing here with money from other real estate they sold at very high prices in the USA, UK, Australia, and other parts of the world. They bought low and sold high. They see the same potential in Buenos Aires.
Everyone has their opinions. I'm not saying I am right and you are wrong. What I am saying is that you were wrong over a year ago when you were making the same arguments about real estate here and how it was a mistake to buy. Foreigners have accounted for up to 50% of the purchases here in Buenos Aires according to some private estimates. That trend will continue. More and more real estate every week is going into the hands of foreigners. Yes, many are individual players purchasing real estate but many are also very skilled corporations purchasing up big blocks of land and properties / buildings / apartments. Many are very skilled companies that all they do is buy real estate around the world for a living and have been doing this for over a hundred years and have been spot on. These are the kind of trends you might want to keep in mind.
Also, keep in mind there is no real mortgage system here. It's all cash. Unlike in the USA where people can get 5% down mortgages and you have all these people buying on speculation that aren't really risking any investment capital. The system is VERY different here. The real estate prices are real because people paid 100% cash for them. No loans, no credit. You have to consider things like that.
Property here has always been priced in you$s so get the devaluation out of your head. The reason you had a flood of selling after the devaluation is that banks were closed and people had no funding to their accounts. Imagine if the same thing happened in the USA. There would be blood in the streets! People would be blowing up banks. Here they were banging on pots and pans and were protesting. And oh yeah. Selling their real estate because it's a cash transaction and they needed cash. It was a unique experience that most people will never witness in their lifetime. You had a situation like that along with no one buying and property prices ARTIFICIALLY went down. The rise up is just things settling. Property has only caught up to where it left off in February 2005. I have posted and I still believe that property is ripe here for a tremendous upswing over the next decade here.
Also, look at their mortgage situation. Mortgages one day will be common here. I'm not saying it will be overnight. They just started introducing mortgages again here but at high interest rates (10% - 12%) and you have to have 50% equity and the period is only 10 years. Still, look at any other country in the world. When you introduce mortgages, it pushes up demand and demand pushes up prices. Add in to the mix that with the devaluation, it brought many, many, many foreigners here to discover Argentina that never otherwise would have come here. Unsurprisingly they fall in love with the city and decide to purchase real estate here. There is more and more foreign interest and purchases in the real estate market here. I am not talking about just a few bucks. I'm talking about hundreds of millions of dollars.
Argentina has some sort of crises about every ten years. The one safe play throughout the years for these Portenos has been real estate. Something you might want to keep in mind when you simply dismiss real estate here as a stupid investment. Exon- you might manage money for a living and you might be really good at it. But I always think it's fair to tell both sides of the story. I also manage a lot of money for people and I like to look at the big picture in any investment opportunity. Good luck all.
Saint[/QUOTE]
Saint with all do respect "We all gota do, What We gota do"
Its "Your" money and or "Your Investers" money, you spend it anyway you want. As with any real estate agent, your in for a piece of the deal when an Invester puts down his money. One way or the other your going to do all right either buying or selling. Plus any rental commission you derive from renting properities you've already sold to Investors. So I'm not at all suprised with your comments about the Argentine real estate market.
I myself own substantual real estate here in the USA. I do so for a hedge against paper assets. I personally built it myself buying the land first then building on it. I have whats called " Vertically Intgraded Profits". That is to say I made a profit buying the land, subdividing the land, building out the lots, building the properties and finally holding and renting the properties. Plus of course substantual appreaciation.
All done in the "Path of Progress", in the South West, knowing full well there 70 million 'Baby Boomers" waiting to retire in warm climate's. And I'll have some "Product" for a few of them someday when I'm ready to sell. The deal is a "No Brainer", Exon doesn't "Gamble" with his money. I'll take "Risk" but I don't gamble. "Risk" being "Time", your going to make money no matter what, its how long is going to take and thats the "ROI" on the time the "Capital" is Employed. Also called the "Opertunity Cost of Capital", What could I've have done with that same amount of Capital? That would have made even more money.
Now here's my Question for you Saint.
There are hundreds of Thousands of US Investers that want "Off Shore" investments and the Idea would have been easy to "Sell to the "Investing Public". Hell, You could have even converted the Deal to "REIT" and taken the "Deal Public" and have it trading on the New York Stock Exchange, making even more Money, BIG MONEY.
With Your Belief in The Argentine Real Estate Market I'm Sure You Could Sell The Deal To A Large New York Investment House Yourself And Remember Thats What Those Guy's Do For A Living, They Put Deals Together, They Don't Care What The Deal Is. Now Your Talked About Making Some Real Money!
Just a Thought.
Exon
Hi Exon,
I've always believed intelligent discussion is healthy and beneficial for everyone. Thanks for keeping the conversation intelligent. I didn't mean any disrespect to you and I'm sure none was taken. As you mentioned, "we all gotta do what we gotta do". I was only pointing out that there are two sides to every situation. As long as people back it up with facts, that's what is important which I think we are both doing.
Kudos for your real estate plays in the Sunbelt in the USA. I am full aware of all of what you are talking about. Also, something that is important to me as an investor is CASH FLOW from the investment. Sure it's nice to have capital appreciation on an investment or real estate but something that is more attractive to me and many other investors is cash flow that pours out from the investment. It sounds like your investments have really worked out for you. I'm very happy when I hear stories like that. I'm not sure how much cash flow they are churning out but let's just say I'm very happy with both the capital appreciation of my investments in BA and also the cash flow. I wish I got involved in real estate a long time ago.
I'm NOT a realtor. I'm a real estate consultant. What you posted about me making money no matter what is NOT true. Investors/companies hire me for my expert advice on the real estate market here, my opinions, help them negotiate the purchase price. I'm not a realtor and do NOT make any commissions from someone buying. I ensure a smooth process and make sure that they are not taken advantage of. For most I have power of attorney to purchase for them. So contrary to what you posted or believe, I do not benefit financially by someone buying or selling. I am paid my entire consulting fee upfront whether they buy or not. I'm paid for my time and expertise. (Of course we do make money in renting out the property should they decide to rent it out but what people like is my business philosophy is simple...I don't make money unless I'm making them money as we make a % of the total rent).
Of course, due to the sheer number of transactions I am doing I AM thinking of opening a real estate company later this year. Not sure if I have time though.
As far as what you mentioned, I'm not sure anyone specifically wants their name or business plans mentioned so I won't comment on them specifically. I will say that I have been approached by several large companies to purchase my company. I have had 3 serious unsolicited offers from USA and UK firms. I'm not talking about pocket change either. I'm talking fairly good sized numbers. The way I figure it is that people are approaching me to buy my company and it's not even for sale. I'm good at what I do so if I really wanted to sell it I could get much higher than what they are offering me. It doesn't take a rocket scientist to see that some of their plans probably involve plans similar to what you mentioned.
Honestly, I believe there is more to life than money. For the first time I am actually in a business that I am totally passionate about and love. I don't answer to anyone, I own 100% of the company, I'm living in a city I truly love and making more than enough money to live a totally comfortable life (actually I live like a King). I didn't move to Buenos Aires to become rich. So my philosophy is to just live life working hard and in a business I truly love, I have wonderful clients, wonderful employees. I am still fairly young and I'm quite sure I'll be set for life even if I don't sell out now for a small fortune. I've always made money and I'm not worried about making money in the future. Nothing was given to me. Everything that I have in life I did myself by working hard.
Also, keep in mind this is a very new company and the growth rate has been amazing. I believe this is only the beginning and it will become a much more valuable company / business in the near future so there is no need to rush and try to sell now. Honestly, I don't know if I would sell even at any price. Still, I don't rule anything out. The deal making you are talking about don't assume I'm not already part of. I've helped put some fairly good sized deals together. The consulting gig for me has been very good. In fact, I spend most of my time now consulting.
I have several other ideas for other companies that I'm sure would do well and make a lot of money. The only thing I'm limited by now is time. I work a lot of hours a day. When I'm not working I'm with my girlfriend and when I'm not doing that I am traveling around the world. I just got back from a 6 week 6 country trip including traveling around Australia.
We both can go on and on about making money, selling out, etc. In the end, those that have followed my journey all over the world the past several years knows that for me life isn't about dollars and cents. It's about the journey, having fun and enjoying yourself which is what I am doing. Too many people b*tch and moan or complain about aspects of their work, life, relationships but they don't do anything to change it. The past several years has been the most enriching and rewarding of my life.
I wish you and all the other WSG'ers a very happy new year. Take care and stay well.
Saint
P.S. -Those thinking I'm posting trying to get business are just wrong. In fact, I have been turning away some business as I am selective who I want to work with and have refunded consulting fees for people I don't think will be a good match. In fact, I don't work with WSG members so if you contact me better not to tell me it's from WSG or I won't take you on as a client.
[QUOTE=Saint]Property here has always been priced in USD, so get the devaluation out of your head. The reason you had a flood of selling after the devaluation is that banks were closed and people had no funding to their accounts. Imagine if the same thing happened in the USA. There would be blood in the streets! People would be blowing up banks. Here they were banging on pots and pans and were protesting. And oh yeah. Selling their real estate because it's a cash transaction and they needed cash. It was a unique experience that most people will never witness in their lifetime. You had a situation like that along with no one buying and property prices ARTIFICIALLY went down. The rise up is just things settling back to how they left off before the crash. Look at a historical real estate chart for Buenos Aires. Property has only caught up to where it left off. Only in February 2005 did it surpass where prices where before the crash. I have posted and I still believe that property is ripe here for a tremendous upswing over the next decade here. [/QUOTE]Your comment applies to high-end property, but not necessarily to all.
I sold my apartment last year and the most I could get was 65% of the 2001 value, since local people cannot afford the real estate prices they used to pay before.
Andres
Andres,
I'm not sure where your property is located or how much you originally paid. I know in some instances the prices are still lower but look at just about every transaction that is going on and relative property prices around the city in areas like Recoleta, Palermo, Barrio Norte (only areas where I buy) prices have gone up.
I still see prices going up. I think you will agree that for the most part in BA, property is priced by the sq. Meter and the price per sq. Meter has steadily gone up since the crash.
Saint,
I read your recent postings and exchanges with Exon. A lot of this is interesting for me since I have no experience in real estate investing. Local property is no doubt the place for Argentines to store any wealth, but I still don't understand why you think that Argentine real estate will be a great longterm investment play for foreigners. The tourism here has increased, you can see that on the street. But I doubt that BA will ever be a true tourist destination and/or derive a significant % of its GDP from tourism. There are 13 million people in metro BA. It's WAY too far from the large markets. All the major foreign destinations like Costa del Sol, Spain, Costa Rica, Cancun have something in common – they're a 2-3 hour flight from the markets they serve. The Managing Director from London makes multiple trips per year to his vacation house in Toledo, Spain, but I don't see the CEO from Chicago coming down to a BA penthouse for Labor Day weekend. And this is great for me since I don't want BA to ever be a major tourist place. I like my remote, isolated BsAs just the way it is.
My understanding is that the underlying economy of a market must improve for property values to rise. I don't see that happening here. As you write, there are so many fundamental problems with the system here and the general level of ethics, efficiency, and ambition ingrained in the culture seems quite low. Now add a political climate in which most of the continent is turning away from free market reforms and probably would have long ago save US intervention. Several countries such as Ireland and Spain were incredible success stories of the past generation. Much of their success was attributable to systematic reform and their strategically positioning themselves as attractive investment locations for foreign corporations. Again, I don't see this happening in Argentina!
When you write "I think you will find Buenos Aires a decade from now a much different Buenos Aires that you had since the devaluation.", what differences do you see?
" WERE NOT WORTHY " can sometimes be a VERY good thing.
Starfe
[QUOTE=Saint]Andres,
I'm not sure where your property is located or how much you originally paid. I know in some instances the prices are still lower but look at just about every transaction that is going on and relative property prices around the city in areas like Recoleta, Palermo, Barrio Norte (only areas where I buy) Prices have gone up.
I still see prices going up. I think you will agree that for the most part in BA, property is priced by the sq. Meter and the price per sq. Meter has steadily gone up since the crash.[/QUOTE]My property was in a quarter other than the ones you mentioned.
I agree that prices will go up in most neighborhoods, specially in upscale neighborhoods such as Recoleta, which reached saturation in terms of available lots for new construction. That's certainly not the case for properties south of Rivadavia Ave.
Andres
I've always found real estate to be tricky business to predict even in the US where the markets are transparent and competitive. The use of the MLS to control commissions is the only serious efficient market obstacle that I see and that's getting some Justice Department attention (I assume triggered by insufficient campaign contributions)
Making serious money by investing in real estate seems to be fairly simple.
1. Live somewhere prices happen to go crazy and have the option to move to a less expensive area (or be happy with just leaving a big estate)
2. Buy low, sell high, and don't make stupid mistakes.
Reminds me of Las Vegas where almost everyone that makes money thinks it was because they are smart while almost everyone that loses money thinks it was because they are unlucky. In my experience, thinking you are smart and thinking you are unlucky are usually two sides of the same coin.
Saint took a big risk and is making lots of money. Good for him. He says he's a really smart guy so I'm sure he realizes that luck is a big part of his success and is prepared if his luck happens to change (like another economic crisis that causes investors and tourists to shun BA for an extended stretch) Survival, like luck, favors the well prepared.
I think there are lots of red flags related to investing in property in BA but you can make a lot of money on a quick flip in a hot market (especially using OPM to manage the risk) Saint is taking advantage of a market inefficiency by becoming a trustworthy advisor to foreigners that think BA is a good place to invest and says he is doing quite well at it. If you don't think he is trustworthy, don't want to invest in BA real estate, or are not interested in renting a premium apartment at a premium price, don't do business with him. But bitching about it here is, like bitching about guys paying $US600 for a chica at Black, is a waste of time and bandwidth.
I've considered renting from apartmentsba on trips as the places look nice but generally end up either renting something 50% less expensive (think Marriott vs Four Seasons) or renting from Roxana or Jackson where I can keep the money "in the family".
Think of Saint as the Donald Trump of Buenos Aires. He may have a giant ego and be a horse's ass but at least he's entertaining. That's more than can be said for most of us.
One of my biggest investment concerns would be the lack of financing options and limited positive leverage which would have the effect of limiting your cash on cash return.
At present rates in the USA you can easily leaverage $250,000.00 into a $1M+ commercial real estate investment with a c / c yield of over 20% on an NOI of only 11%.
To match that in BA you would have to buy cheap and rent high at minimal operating costs.
The only possibility for a substantive escalation in Real Estate values would be through the introduction of proper financing options and I can't see that happening without support from the international banking community and the IMF.
Goblin.
[QUOTE=Easy Go]I've always found real estate to be tricky business to predict even in the US where the markets are transparent and competitive. The use of the MLS to control commissions is the only serious efficient market obstacle that I see and that's getting some Justice Department attention (I assume triggered by insufficient campaign contributions)
Making serious money by investing in real estate seems to be fairly simple.
1. Live somewhere prices happen to go crazy and have the option to move to a less expensive area (or be happy with just leaving a big estate)
2. Buy low, sell high, and don't make stupid mistakes.
Reminds me of Las Vegas where almost everyone that makes money thinks it was because they are smart while almost everyone that loses money thinks it was because they are unlucky. In my experience, thinking you are smart and thinking you are unlucky are usually two sides of the same coin.
Saint took a big risk and is making lots of money. Good for him. He says he's a really smart guy so I'm sure he realizes that luck is a big part of his success and is prepared if his luck happens to change (like another economic crisis that causes investors and tourists to shun BA for an extended stretch) Survival, like luck, favors the well prepared.
I think there are lots of red flags related to investing in property in BA but you can make a lot of money on a quick flip in a hot market (especially using OPM to manage the risk) Saint is taking advantage of a market inefficiency by becoming a trustworthy advisor to foreigners that think BA is a good place to invest and says he is doing quite well at it. If you don't think he is trustworthy, don't want to invest in BA real estate, or are not interested in renting a premium apartment at a premium price, don't do business with him. But bitching about it here is, like bitching about guys paying $US600 for a chica at Black, is a waste of time and bandwidth.
I've considered renting from apartmentsba on trips as the places look nice but generally end up either renting something 50% less expensive (think Marriott vs Four Seasons) or renting from Roxana or Jackson where I can keep the money "in the family".
Think of Saint as the Donald Trump of Buenos Aires. He may have a giant ego and be a horse's ass but at least he's entertaining. That's more than can be said for most of us.[/QUOTE]
[QUOTE=Andres]Your comment applies to high-end property, but not necessarily to all.
I sold my apartment last year and the most I could get was 65% of the 2001 value, since local people cannot afford the real estate prices they used to pay before.
Andres[/QUOTE]My friend Andres pretty much sum's it up with the above quote replying to "Saint" below.
Now lets look at the facts.
Andres is an Argentine, he was born in Argentina, Love's his Country, is Very Highly Educated, Yet he can't fined a decient job in Argentina and is forced to work in another Country. That tells you something right there, If Argentina has to ship their 'Best" and their "Brightess" off shore to find work there's something basicaly flawed in their economy.
If any of us is qualified to speak on this subject it would be Andres. He knows the culture, the people and how they think. (In case some of you newbies haven't realized this yet, an Argentine doesn't think like a typical American.
As I wrote earlier, the wealthy Argentine that lives in New York I met while moving out of Jacksons apartment told me, "Yes all my friends bought properties right after the "Crash" in 2001 & 2002 and are now trying to sell them as fast as they can.
Heres a very good example of what I'm talking about.
Last July I paid "Ana" do some homework for me. I had Ana look up some possible long term rentals in which I was willing to take a two year lease baised on what terms I could negociate.
She found me a "Gorgeous" place on "Quintanna", very nicely furnished, about 200 feet from the Alaver Palace Hotel, one of the best parts of Recoleta. The place was a huge furnished one bedroom, very large bathroon & Kitchen, I'd say close to 100 meters in size. With a one year leasing price of $1,000 USD dollars per month. I was excited about the place and told the Landlord & Leasing Agent I'd get back to them. Time passed and I did nothing and soon Ana's phone rang.
The leasing Agent wanted to know what was wrong and was I still interested. More time passed and she called Ana again dropping the rent to $850 dollars per month on a one year contract. I did nothing and returned home to Sex Prison.
Then again I returned to Argentina in September, the place was still for rent and Ana and I looked at it again. This time the price was $750 dollars per month with a years lease. I went home again and returned once more in November. The beautiful apartment was still "Vacant" no takers.
Now heres the "Math", if the going rate for prime property in Recoleta and else were is $150 per meter and up, which has been stated on this board. The apartment I was looking at had a value of about $150,000 USD dollars, all cash, all up front, you own it for $150,000 dollars with what ever hidden problems that were not disclosed.
But I could rent the place for $750 per month, (The "Nose Picker" price for American's, Furnished no less) $750 per month times 12 is $9,000 USD dollars per year. $9,000 dollars per year dividend by the $150,000 "Alleged" value of the place is 6%. Why "Fuck You Mongers", Exon will take his $150,000 and buy a AAA rated Corporate Bond, (I can Buy & Sell with a Phone call) which will pay a higher return and finance his Mongering with "Debt Service" from the Bond. Course we all know theres better Investments than that if You've got a Hundred & fifty Grand in Cash.
Its a pure and simple business decission, no brain surgery here. Why gamble in a foregin country thats both Policticaly & Econmomicly unstable on the hope's of the "Greater Fool" syndrome.
"Trees Don't Grow To The Sky" and neither will Argentine Real Estate.
Exon
And that is without considering furniture, operating expenses, and an obviously substantial vacancy allowance.
Argentina needs a stable monetary system to recover economically, a strong tourism sector will never be enough to impact Real Estate values significantly.
This forum does not appear to be the place for reliable financial advise.
Goblin.
[QUOTE=Exon123]My friend Andres pretty much sum's it up with the above quote replying to "Saint" below.
Now lets look at the facts.
Andres is an Argentine, he was born in Argentina, Love's his Country, is Very Highly Educated, Yet he can't fined a decient job in Argentina and is forced to work in another Country. That tells you something right there, If Argentina has to ship their 'Best" and their "Brightess" off shore to find work there's something basicaly flawed in their economy.
If any of us is qualified to speak on this subject it would be Andres. He knows the culture, the people and how they think. (In case some of you newbies haven't realized this yet, an Argentine doesn't think like a typical American.
As I wrote earlier, the wealthy Argentine that lives in New York I met while moving out of Jacksons apartment told me, "Yes all my friends bought properties right after the "Crash" in 2001 & 2002 and are now trying to sell them as fast as they can.
Heres a very good example of what I'm talking about.
Last July I paid "Ana" do some homework for me. I had Ana look up some possible long term rentals in which I was willing to take a two year lease baised on what terms I could negociate.
She found me a "Gorgeous" place on "Quintanna", very nicely furnished, about 200 feet from the Alaver Palace Hotel, one of the best parts of Recoleta. The place was a huge furnished one bedroom, very large bathroon & Kitchen, I'd say close to 100 meters in size. With a one year leasing price of $1,000 USD dollars per month. I was excited about the place and told the Landlord & Leasing Agent I'd get back to them. Time passed and I did nothing and soon Ana's phone rang.
The leasing Agent wanted to know what was wrong and was I still interested. More time passed and she called Ana again dropping the rent to $850 dollars per month on a one year contract. I did nothing and returned home to Sex Prison.
Then again I returned to Argentina in September, the place was still for rent and Ana and I looked at it again. This time the price was $750 dollars per month with a years lease. I went home again and returned once more in November. The beautiful apartment was still "Vacant" no takers.
Now heres the "Math", if the going rate for prime property in Recoleta and else were is $150 per meter and up, which has been stated on this board. The apartment I was looking at had a value of about $150,000 USD dollars, all cash, all up front, you own it for $150,000 dollars with what ever hidden problems that were not disclosed.
But I could rent the place for $750 per month, (The "Nose Picker" price for American's, Furnished no less) $750 per month times 12 is $9,000 USD dollars per year. $9,000 dollars per year dividend by the $150,000 "Alleged" value of the place is 6%. Why "Fuck You Mongers", Exon will take his $150,000 and buy a AAA rated Corporate Bond, (I can Buy & Sell with a Phone call) which will pay a higher return and finance his Mongering with "Debt Service" from the Bond. Course we all know theres better Investments than that if You've got a Hundred & fifty Grand in Cash.
Its a pure and simple business decission, no brain surgery here. Why gamble in a foregin country thats both Policticaly & Econmomicly unstable on the hope's of the "Greater Fool" syndrome, "Trees Don't Grow To The Sky" and neither will Argentine Real Estate.
Exon[/QUOTE]
[QUOTE=Exon123]Andres is an Argentine, he was born in Argentina, Love's his Country, is Very Highly Educated, Yet he can't fined a decient job in Argentina and is forced to work in another Country. That tells you something right there, If Argentina has to ship their 'Best" and their "Brightess" off shore to find work there's something basicaly flawed in their economy.[/QUOTE]Thanks for your comments, Exon.
You mentioned something that I should detail more so that mongers get the precise picture: I was making a "good salary" for Argentine standards on my last job when living there (around ARS 3,000) which let me afford many things (chicas included) but may be short for supporting a family and / or pay education loans in the US.
The reason to leave Argentina, in my case, was because I can make much more than ARS 3,000 up north and get some positions that I wanted to work in, and work many less hours than in Argentina.
Andres