To the apartment owners out there

[aussie_tim]

Hola all,I've been living in Buenos Aires for a few months now and have been investigating the property market here. I am comparing the "short term rental to foreign visitors" apartment investment against other investment options here.It seems there are quite a few property owners on this board, so my question to you is: are apartment owners here still making money from renting out to tourists or not? I would prefer to hear from those who have bought recently, as I know those who bought a few years ago would most probably be in a nice position now (and unfortunately nobody has invented a time machine yet to go back to purchase property at 2003 prices, so there is no point saying "you should have bought 3 years ago").I understand there are many variables, and I don't expect anyone to reveal confidential financial information but just whether you would recommend it / do it again (given the current real estate prices), or not.A lot of people are saying that property prices are inflating far too rapidly as can be seen with the many falsely high prices about at the moment, while others (usually those in the real estate business) say its the time to buy - before the election... Thoughts?By the way I am not a huge rich investor, just someone looking to buy maybe 1 or 2 small apartments. cheers,tim.

 

[sergio]

If you are going to live here long term (years and years) buying investment property can make sense however if you are basically just passing through and have no strong commitment to Argentina I would not recommend buying investment property here. As you have pointed out, prices are high in local terms and the return on the investment is not likely to be better than you can get on the most conservative investment in the US. Consider the costs involved in buying, renovating. buying furniture etc. You must then manage the property and hope that it gets rented. If you are not committed to Argentina you could, some day, be burnt by currency restrictions including restrictions on getting the money out of the country. In the end, buying here makes more sense if you need a place to live or if you have a serious reason to be here. If not, why take the risks when there are far safer and equally profitable ways of managing your money?

 

[Ernie]

Hey Tim, I can only agree with Sergio.Cheers,Ernie

 

[aussie_tim]

Thanks Sergio and Ernie, extremely good advice.Just to answer your question, I do have a commitment to Argentina, in the form of a future wife, so while I can't say for sure we will be living here for the rest of our lives I certainly will have ties to the country. Therefore I have been looking at places that are suitable for both renting out and possibly living in at some point (but trying to please both the head and the heart is a difficult thing to do!).Thanks again for any input.

 

[sergio]

If your future wife is Argentine you have a reason to make some financial inventment here. I would advise you to hedge your bets. Be careful not to put too much into Argentina. Unless you are willing to live under local conditions with poor salaries and other inconveniences, you will probably not stay here the rest of your lives. More than likely your wife will agree to live in Asutralia and you can make frequent trips back here.

 

[danc]

I bought a place in Las Canitas in 2006, renovated, funished it and rent it out to tourist. I have had no problems finding renters, but it is a unique apartment. The reasons why i bought the place: i married a local girl and wanted to have nice place when we visit/live in argentina, asset diversification, fun. The experience has been positive, i have a positive cash flow and a nice place to stay when i visit BA. I know there has been alot of discussion surrounding the value of property levels in BA, but i would like to point out that most property purchases in argentina are purchased on a 100% cash basis, no mortages. This signficantly reduces speculation both from the buyers and property developers, so i am not sure property is "overvalued" as many on this forum indicate. Take a look at phuket thailand, granted its a much different market, but its similar to argentina in which there are no mortages and moving money OUT of the country is difficult. most buyers are not speculators, they are buying a place to kepp. when the tsumani hit, property values contiuned to appreciate.

 

[JG]

I could offer several examples. ill just give 2. this agency has photos and deals with san telmo and Barracas, the area next to it. www.arkis.com.ar
and www.leticiafirpo.com, deals mostly in san telmo and also has photos. i saw one small apt. on her list on called brazil, across from parque lezema, no view. i found it small for the 49K she was asking. thats 150000 pesos and a lifetime of saving for many argentines. She told me, thats what san telmo is getting at the moment.
look at both websites, look at the size and photos and tell me if you think the prices, paid in cash mostly, are realistic.

 

[Granadaiscool]

I could offer several examples. ill just give 2. this agency has photos and deals with san telmo and Barracas, the area next to it. www.arkis.com.ar
and www.leticiafirpo.com, deals mostly in san telmo and also has photos. i saw one small apt. on her list on called brazil, across from parque lezema, no view. i found it small for the 49K she was asking. thats 150000 pesos and a lifetime of saving for many argentines. She told me, thats what san telmo is getting at the moment.
look at both websites, look at the size and photos and tell me if you think the prices, paid in cash mostly, are realistic.

I would say San Telmo and/or Barracas are good places to buy an appartment and rent out to foreigners. I would never want to live there but somehow foreigners like the place.
If you spend around 50k you probally can still rent it out to locals if the foreigners leave and get some return of your investment. Or sell it with a small loss(20%-30%)

 

[sergio]

It is hard to say if property prices are inflated. What is clear is that the relationship between incomes and purchase prices has grown enormously. Consider this: a good salary in the Menem years was about $3,000 pesos/dollars. That $3,000 pesos is no more than $5,000 pesos (not dollars as before) now, probably less. A $100,000 dollar apartment in the Menem years is easily $150,000 dollars now. Do the math yourself - the gap has increased tramendously. I have not even factored into the equation that huge inflation we have had since devaluation. So while the higher values are good for some, they are tough on others - especially as credit is less available than it was in the past. Those expats who were not here at the time of the crash may not know that housing prices plummeted by about 50%. Eventually they went back up. For those with cash and imagination, there were great deals as victims of the crash were forced to sell due to personal financial ruin brought on by the loss of life savings, jobs etc. Could this happen again? Never say never in Argentina, the land of amazing possibilities. This thread started with a question about the advisability of buying property here. Is it a good idea? I'd say it depends on how important the money is to you and whether you have a personal interest in living here. If the loss of the money would seriously impact your life and if you have no great commitment to the country, I'd say you'd be better off to invest in a more stable country.

 

[Granadaiscool]

It is hard to say if property prices are inflated. What is clear is that the relationship between incomes and purchase prices has grown enormously. Consider this: a good salary in the Menem years was about $3,000 pesos/dollars. That $3,000 pesos is no more than $5,000 pesos (not dollars as before) now, probably less. A $100,000 dollar apartment in the Menem years is easily $150,000 dollars now. Do the math yourself - the gap has increased tramendously. I have not even factored into the equation that huge inflation we have had since devaluation. So while the higher values are good for some, they are tough on others - especially as credit is less available than it was in the past.
Those expats who were not here at the time of the crash may not know that housing prices plummeted by about 50%. Eventually they went back up. For those with cash and imagination, there were great deals as victims of the crash were forced to sell due to personal financial ruin brought on by the loss of life savings, jobs etc. Could this happen again? Never say never in Argentina, the land of amazing possibilities.
This thread started with a question about the advisability of buying property here. Is it a good idea? I'd say it depends on how important the money is to you and whether you have a personal interest in living here. If the loss of the money would seriously impact your life and if you have no great commitment to the country, I'd say you'd be better off to invest in a more stable country.

A good salary is 5000 peso now?