To Sell Or Not To Sell?

[Ceviche]

T
On a side note, I wonder if some expats making a "decent" income in USD and planning to stay here for the next +4 years have thought (or managed to) about trying to negotiate the purchase of some real estate, paying in monthly installments (in USD obviously), instead of paying a monthly rent.

Frenchie, how to go about it? Elaborate. Sounds like a good plan.

 

[mrporoto]

garryl.
I bow to your superior knowledge.I read what I posted,didn't say it was 100% correct as I am not the one who wants to sell up and move!I can give info on the UK market but if you have info on US market I would be happy to listen to your advice.

 

[French jurist]

Frenchie, how to go about it? Elaborate. Sounds like a good plan.

I hope it's a good plan because that's what I intend to do within the next 12/18 months.

My situation is a bit special since I pay low rental fees (3000 pesos for a house+garden+pool) but that's even more valid for expats using short term rentals & paying 1000 USD.
The landlords of the house I live in wish to sell the house. They are not too satisfied with the estimate given by the real estate agent, and hope for a price of around 190.000 USD. The market is really slow, it's unlikely they'll get dollars, they want to sell the house but not for a too low price, the house could take 3 months to 2 years to sell (impossible to know), etc. On the other hand, if I'm making enough money to offer to pay monthly 3.000 USD during 6 years, maybe will they be interested (total of 216.000 USD= a bit more than what they wanted, getting paid in USD will be their "premium" for selling me the house on monthly installments + avoiding the risk of a sudden peso devaluation, etc.).

Same could be said for an expat paying in Capital 1.000 USD for an apartment worth 150.000/200.000 USD, and intending to stay here for +4 years. Maybe it can be worth it to try to buy an apartment in a potentially profitable place (Caballito, etc.) worth 150.000, paying installments of 3.000 on 5 years.

That's a bit the other side of the OP message. A "window" to buy real estate is in front of us. Some may have the cash to buy straight, some others not (my case).

There's also a risk that the real estate prices crash within 24 months, like in 2002, so the timing aspect is important too. For instance, Uruguayan friends of mine bought a PH in Cabrera x Bonplan in early 2002, right after the corralito. They paid (I'm not joking) 40.000 USD at the time (groung floor = about 80/90 sq. meters, a room on a half floor and an azotea/terrace above of 80/90 sq. meters as well). This PH is likely worth now 200.000 or so.

I might even try this technic to launch my project of black truffles cultivation (in Patagonia, in a micro-climate, using lands where trees have been burned down some years ago = makes the soil poorer, raises the pH -not the same PH as above- + Calcium in the soil = perfect for truffles).

I'm wondering though if any expat has done that (negotiating directly with owners). The sales contract will be the tricky part though (when to do the "escritura", guarantees not to get scammed and such).

 

[dennisr]

My concern would be what happens if the owner of the property dies or gets into financial difficulties during the financing period? You are in a very precarious situation if something happens. At the mercy of creditors and/or legacy holders. Who will hold the title?

 

[French jurist]

My concern would be what happens if the owner of the property dies or gets into financial difficulties during the financing period? You are in a very precarious situation if something happens. At the mercy of creditors and/or legacy holders. Who will hold the title?

Yop Dennis.

I'll check soon with a lawyer to see what can be done (will inform the forum, can be useful to know)

 

[Mano Negra]

I am in the EB -5 business, EB-5 is perhaps good for a green card, but once your 500k-1m is merged into bullder's big fund, good luck to have
it back in 5 years. Very likely it will be gone. So far very few people have seen their money back, much less for returns,.
It's kinda scam that a lot of people from China would not mind, they just want to get a green card for emergency.

A friend of mine has recently become president of this established EB-5 development which appears quite low risk. http://crystalspringseb5visa.com/eb-5-visa-program
Not something I know anything about personally but happy to make an introduction should it interest anyone.

 

[TomAtAlki]

Frenchie, if I were the seller I would worry about how to keep you making payments if the housing market crashes. Also I have heard that if a person wants a home mortgage here, it is very short term and very high interest rates. But this is just hearsay. If true, why would the seller want to sell to you for almost no interest? Just being devil's advocate. Good luck.

 

[garryl]

A friend of mine has recently become president of this established EB-5 development which appears quite low risk. http://crystalspring...-5-visa-program
Not something I know anything about personally but happy to make an introduction should it interest anyone.

A friend of mine has recently become president of this established EB-5 development which appears quite low risk. http://crystalspring...-5-visa-program
Not something I know anything about personally but happy to make an introduction should it interest anyone.

Yes, the risk of getting the green card process to start is low. But risk to get your money back is high and almost impossible.
Many people do not care to get their money back on time, that's why they are comfortable.
If you talk to an EB-5 fund, very likely they will say that they can not guarantee that, that 's the truth.
You are not guaranteed to get your money back (at least on time), that is your financial risk.
If the fund is small, they can be derailed, that is your green card risk.

 

[steveinbsas]

The landlords of the house I live in wish to sell the house. They are not too satisfied with the estimate given by the real estate agent, and hope for a price of around 190.000 USD. The market is really slow, it's unlikely they'll get dollars, they want to sell the house but not for a too low price, the house could take 3 months to 2 years to sell (impossible to know), etc. On the other hand, if I'm making enough money to offer to pay monthly 3.000 USD during 6 years, maybe will they be interested (total of 216.000 USD = a bit more than what they wanted, getting paid in USD will be their "premium" for selling me the house on monthly installments + avoiding the risk of a sudden peso devaluation, etc.).

I wonder if the seller would really get "a bit more than they wanted" if they carry the paper for six years. If they can do the math they will see that they would be getting much less than anyone else loaning someone $190.000 USD in Argentina...where interest rates for private loans (even with real estate as collateral) can be as high as 59% per year.

You could probably get these terms from many sellers and lenders in the USA if you wanted to buy property there. Accrued interest in the amount of $26,000 over six years on a $190,000 loan at an annual rate of 4.137% will probably not be attractive to sellers or lenders in Argentina. The seller would probably not want to transfer title until the "mortgage" was paid in full and nothing will protect you if an embargo is filed against the property due to claims against the seller as long as the property is in his name. You would not be able to have the escritura without paying off the debt and the house could be sold out from under you at auction if the debt isn't paid (in a lump sum) in a "timely" manner (as orderd by the court).

 

[Mano Negra]

Yes, the risk of getting the green card process to start is low. But risk to get your money back is high and almost impossible.
Many people do not care to get their money back on time, that's why they are comfortable.
If you talk to an EB-5 fund, very likely they will say that they can not guarantee that, that 's the truth.
You are not guaranteed to get your money back (at least on time), that is your financial risk.
If the fund is small, they can be derailed, that is your green card risk.

Agreed, you can only work with a big fund that will escrow your investment until you get the green card and will match or double your investment with their own equity and bank finance. From what I understand the main restriction is that you have to create 10 long term jobs which is pretty difficult/dangerous to do on 500,000 dollars. My friends fund apparently runs into the billions and the resort has over 1 million visitors per year. Hotels and resort services seem to be a fairly easy way to create jobs. That being said I have not done any due diligence, but if you are in the business it might interest you to take a look.