Sunday, May 6, 2012

Where Would You Go if the S**t Hits the Fan?


Sitting around the pool the other evening—with a very high end group of businessmen, the topic of our conversation turned to: where would you move to if living in the USA became difficult? And by difficult, our conversationalists meant impossible in one way or another. The worst case in our discussions would be if the American administration became fully socialistic to the degree that personal property was confiscated—but the discussions were longest and strongest in the “more likely” category—in which we assumed extreme inflation brought on by a cheapening dollar and possibly default on government loans.

The players in this circle were financially able to live anywhere, but they each prefer to say where they are—for now.  And where they are in the winter is Florida, but they also have homes in various locales around the northern states in the US.  These are conspiracy theorists, who are already hoarding precious metals.  This discussion was about their personal “life boat”, where they would go if getting out of the USA and going somewhere else to live for some time became important.

You may not have the same drive they do, modifying the Marine credo, “when the going gets tough, the tough get going”  but even if you only watch HGTV's “House Hunters International”, and wonder what it would be like to live outside the US, you share in this fantasy.

What would it be like to live there? And where is there? And who is John Gault? Questions for thought.

More and more people spend their days working from home—employers are happier today not to have to provide a desk and phone for workers who can do as good a job working from home.  It’s a double win--for the employer, he saves the costs of providing space for the employee—and the employee can save the commute, and maybe the cost of day care for a child while he/she works from home.

As I say, the guys around the pool could afford to live anywhere.  And so the conversation wandered, but the topic was: “Why don’t I find a place to live (just in case) and prepare to work from there. The short list of places that might make sense to the group were warm and not too far from Florida. They discussed Costa Rica, Panama, Columbia, and Equador. Most of this selection came from a thin knowledge of the cost of living in each country, the beauty of the natural topography, the language needs, and the safety of the economy and political outlook. So there is a bonus if Americans are already there.

Even plain vanilla retirees have flocked to Mexico in the past decade. Some half a million U.S. citizens are living there full time or close to it. The Social Security office says more checks are sent to Guadalajara, Mexico than any other city outside the US. But other sunny spots have also seen a huge influx of retirees, including Costa Rica, Belize, Roatan Island in Honduras, and the highlands of Panama.

More intrepid adventurers have ventured further south to Ecuador, Argentina, Uruguay, or Brazil to take advantage of great buys on real estate and cheap salaries for domestic help. In recent years these retirees have been joined by younger and younger expatriates who are taking advantage of the ability to do their job from anywhere with a high-speed Internet connection. These younger residents don’t receive the same incentives that retirees do, but with the cost of living a fraction of what it is in more developed countries, they still come out way ahead.

Here are some of the factors to consider and resources to check into when thinking about a move to Latin America, either on a sabbatical or as a full-time residency:

Costa Rica used to offer incentives to rich (by their standards) gringos to move there and watch the foreign investment flow in like a river. It worked so well that they finally stopped offering the incentives and didn’t even grandfather in the people already living there. But the construction crews didn’t miss a beat. The momentum kept going. So some parts of the Pacific Coast of Costa Rica are now more expensive than parts of the U.S., fed by a property bubble caused by “crazy California money” flowing down south.

But many other Latin American countries still offer great incentives to expatriates. There is usually an age requirement—though this can be as young as 45 in some cases—and residents must prove an ongoing income over a certain amount per month. This amount is high by local standards but low by first-world standards: $1,000 a month in Panama and Nicaragua, $1,500 in Honduras, and $2,000 in Belize for instance. Nicaragua will actually waive the age requirement if your income is high enough and Honduras will waive it if you invest $50,000 in a business that employs locals.

If you can meet the official requirements—including a letter from police stating that you haven’t been convicted of a felony—you get a whole basket of goodies. These may include a fast-track residency permit, duty-free importation of household goods, reduced or eliminated property taxes, a tax waiver on construction materials, cheaper medical care, and even discounts on travel and entertainment.These vary from country to country.
  
More on this topic in next week’s column.

Dane Hahn is a real estate professional practicing in Englewood, you can reach him at dane.hahn@gmail.com  or by phone at 941-460-8979.  See him on the web at www.danesellsflorida.com

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