Best Areas to Rent-Buy-Live in Buenos Aires

[Dickhead]

I can look at the situation in two distinct ways. #A is a very rational and reasoned approach. #B is blunt and gets right to the point.

A) It is possible that given the gross rent multipliers and the lack of availability of suitable financing, renting could be preferable to owning in these particular market conditions.

B) Anybody who buys real estate now in Argentina is out of their mother fucking mind.

Hi DH,

My math arrived at the same conclusions.

Thanks,

Jackson

[Moore]

Yes, you foreigners should be careful.

[Hunt99]

Expropriation of foreigners' assets is the fashion du jour in South America. First Argentina seized the property of Suez, a French multinational. Venezuela's Chavez seizes oil assets and private real estate from the damn blood-sucking foreigners. Recently, Bolivia sends in the Army and seizes foreign energy companies' assets (developed mostly by the Brazilians). Following the example of his heroes Castro and Chavez, Evo Morales now threatens to seize real property owned by foreigners and redistribute it as "Property of Bolivians."

Can Argentina be far behind? I think not. It will be fun watching 20 people from the provincias squeeze into some gringo's house in San Isidro. Fuck the gringo. It belongs to the people of Argentina.

All of this will be very good news for mongers, because the Argie economy will turn to shit once again. :)

[Moore]

Nearly a year ago, one of the largest real estate agencies, Lacroze, opened a beautiful new ground level office very close to my apartment almost in the heart of Recoleta on Las Heras and Callao. It's an airy office - the type where you can clearly see all the 4-5 employees at their desks thru the windows. I walk by every day and have yet to see a single customer in there or a single employee doing anything but stare at the ceiling. Theyre all dressed in suits and have nice flatscreen workstations but could use some pointers about at least trying to look busy.

I know that one office is an irrelevant micro example but I thought Id mention that, apparently, business isnt exactly booming at this Recoleta location.

I actually walked in last year one time because I was considering moving. There are many advertisements of properties for sale/rent on the window. First off, I told them that I probably couldnt get a guarantee and asked them what properties were available. After a complex 5-second analysis and consultation, their answer was simple - "none". Really going the extra mile.

[Hunt99]

Something you can do with US real estate that you can't do with Argentine real estate is to use leverage to your advantage.

Let's say you buy a 200K house in Georgia. The typical homeowner puts down 20K. He finances the rest with a 30 year loan at 6.5% interest. If the market advances 12% a year for 5 years (less than it has over the last 5 peak years in the RE market, but let's use it as an example) and at the end of the time he sells, his sales price is 352K dollars. He walks with 184K in his pocket. Let's drop out brokerage commissions and all that crap, since that'll be paid both in BsAs and the US. Over the 5 years he's paid 56K in interest (in reality less, because of tax deductions) let's say 10K in property tax, and has paid down his loan to about 168K. Probably have to add in landscaping and maintenance costs, but those usually aren't huge, and again you'll pay them on real estate anywhere you own it.

So, for my house in Georgia, after 5 years, I've made a fine return of roughly 213%, turning 86K (downpayment plus interest and taxes paid) into 184K in five years. Actually a bit better if you use the mortgage interest and property tax deductions as most homeowners do - let's say that the 66K in interest and property taxes were deducted at the middle-income 25% federal tax rate, plus 5% to the Governor - so your real after tax costs for mortgage interest and property taxes is only about 46K. So the real equation is that I turned 66K into 184K over 5 years, a 118K gain, also known as (almost) tripling your money.

Now, if you did the same thing in Buenos Aires, you will have to pay 100% of the costs up front. Assuming real estate does the same 12% a year for 5 years, the Argentine homeowner will have ended up with 352K from his investment of 200K. A not too shabby return of 76% over five years.

But it hardly holds a candle to what you can do in US real estate, using the power of leverage. In fact, in a scenario like the one here, you'd have to do three times better in Argentina real estate to make the same kinds of returns you can in the US.

Is the market in Argentina going to perform three times better than the one in the US? Which market is riskier to own assets in? Which government is more likely to steal your house from you? Which market is more liquid, so that if you need to sell your house to pay off your ex-wife's lawyers, you would be able to? If you rent out your house, and your tenants fail to pay, in which place will you be able to get the deadbeats evicted? Some questions you have to ask yourself when pondering the benefits of investing in Argentina or the United States.

[Geo Eye]

Hell of a good point Exon.

[Exon123]

Buying a House anywhere, even in Argentina is an Investment.

In the past 3 or 4 years there has been a housing boom world wide. The US market has seen unbelieveable appreciation in most markets, as in other places in the world including Argentina.

This has been predicated on two things. The crash of the stock market's in late 2001 and the lower interest and bond rates. Investers, renters and potentual home owners discovered owning property was a better investment than owning stocks or bonds. This is the normal ebb & flow of capital as it search's for higher return's, as it flows from one asset catagory to another around the world.

All this is changing as rates of return are improving on stocks, bonds and commodities, Oil, Gold, Silver, Copper ecta, ecta. And falling on real property. Simply because the interest rates are rising making it more expensive to buy, own, refinance or resell real property.

Argentina is unique in that all or most real estate tranactions are done for all cash in American Dollars.

Any good businessman before investing in anything will have an exit strategy, basicly saying to himself, "How the Hell Am I Going To Get Out Of This Deal If or When This Investment Go's South on Me".

In Argentina there is "No Exit Strategy" you own it with no way out. Simply because theres no way to finance the property. Your completely dependent on the "Greater Fool Syndrome", that is to say you've got to find someone dumber that you to pay as much as you all cash, mind you, or your going to take a loss.

Moreover, owning property in Argentina makes the investment completely dependent on the Argentine economy, its Government and its Policies. (Which I might add has not been to impressive) The government has "Fucked" everyone including itself, it simply can not be trusted. With 40% of the people living below the poverty line, 20% or more unemployed and 20% or better inflation every year, (They lie when they say its only 12% inflation) something has got to give down their somewhere.

Argentina is simply not the place to invest in real property.

The posters below have articulated a strategy which I've posted about before. Your better off investing your money in the USA and spending the income of the investment on rent in Argentina.

Just this last week I e-mailed a leasing agent in Buenos Aires that knows me personally about the prospects of a long term lease. I wrote asking for a one year lease with an option to renew for a second year or more. I asked for an unfurnished apartment which I could renovate to my own tastes. And I asked for something a little special. I asked for permission to Sub-Lease the apartment from time to time with the idea of picking up some of the expense while I'm not in town.

Exon

[Geo Eye]

Hey guys,

Very good advise. I too was not sure of buying or renting, I now know I will be renting 3 month out of the year.

The government is very unstable and they are more incline to have a "BIG BROTHER", all owned by state attitude.

Renting with $500 a month can get you a hell of an apt and the rest is off course to bang away.

[Hunt99]

You are right on point. Armbia

Except that 100 grand stashed in a money market account now makes 366 dollars in interest a month.;)

[Armbia]

Amen. When you can rent a big spacious place (like the Mansion) or even a small apartment for something like.30% per month of the value of a place, it is a no-brainer to rent rather than buy.

As an example, you can rent a nice studio or one bedroom apartment in Palermo or Barrio Norte for US$300 per month. The price to buy such a place would be US$100,000. Take your hundred grand, put it in a money market account, earn your US$333 in interest a month, and pay for an hour's fun once a month at 1707 Santa Fe with the extra 33 bucks. Or for the more adventurous, invest the hundred grand in a diversified stock portfolio and pay your rent with the dividends, and also get capital appreciation in the long term.

Argentina is the kind of country that is one law away from expropriating all real property owned by foreigners, giving your house / apartment to the cronies of the government, and telling you to go to hell. The Argentine government did just that to their entire middle class in 2001, they did it to their bond holders in 2005, and would certainly have no problem doing it to you in 2008, if you're stupid enough to invest your money there.

You are right on point. Armbia

[Moore]

No ramifications, tax or otherwise that I know of Pappy. I think the CDI is quite easy to get. This is essentially just an extra form to fill out.

There are no capital gains taxes here and basically no one pays income tax on rental income.

Whether or not you report your foreign transactions to the IRS is your call, you are 100% liable for all worldwide income .

[Beakerh]

I would just like to say thank you all very much! I am very glad I was able to find this board it has been very helpful I was thinking of buying a place here to spend a few months a year for a holiday. But have read all your wise opinions and have opened my eyes thank you all very much and keep up the great work. I will be there in June and will ad hopefully a lot of great reviews!

[Starfe]

"I could be selling more hats in BA than any other individual in the world"

Could you imagine 2 out of 3 men walking the streets of BA in one of my hats!
Is it possible one hat could change my luck my life and my chances to get laid?

Starfe

[Orlandoirish]

Cheap sweatshirt-$5

Stupid look-$15

Pink hat-PRICELESS

[Hunt99]

But I would like everyone to know I represent a new line of.

"Brokeback Mountain" hats. PM if you have any interest in a particular size. We only carry one color!

http://www.indymedia.org.uk/images/2005/08/321180.jpg

LOL! Good one!:D