#585 – The Expat Files: Real Estate, Finance, and Cultural Insights in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wander Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started We talked about the real estate bubble down here in Latin America quite a bit So the question is how much bigger can that bubble expand before it explodes or more realistically? Implodes if you study how the games played down here You'll see it's reached its limit rents are going down and the local real estate brokers are starting to get into a panic

[00:50] In fact, I'm starting to see on those big billboards on the pan-american highway something I've never seen before Some real estate developers are now offering cash back Which is always a sign that someone is panicking and if you remember I mentioned a previous show All kinds of billboards are popping up now saying you can pay your down payment in 12 easy payments Which is completely counter to sound banking practices because what's a down payment anyway? It's proof you've saved enough money up to have skin in the game, right? However, if you have to pay the down payment in payments, that means you're not a good risk at all It's a sign you have very little disposable income and you just can't save money Not to mention signs like that are appearing in the auto in the credit market, too For example, just the other day I saw a string of billboard ads by Honda offering a $2,000 cash back

[01:41] That's another ad ploy that was totally unheard of just a year or so ago Yeah, I know I know that kind of stuff was around in the States 20 or 30 years ago But that's how lag time is here in Latin America And you know all those first-world tricks advertisers play on dumb consumers Came home to roost the other day for me when I read an article in the paper talking about credit card interest rates here in Latin America turns out the average APR the annual percentage rate on Latin credit cards Vista MasterCard and they got one called creditmatic 2 is 40% and of course every Latin person who doesn't have a credit card or 2 or 10 Longs to have one they have no idea what kind of interest rate they're paying and they really don't care And the fact is every Latin person. I know keeps their balance running, too

[02:27] They never pay it off every month, so they're all paying 40% or more But that's not all the article said when you count the list of charges and hidden fees that show up on your credit card statement If you even read it that kicks the average APR rate up to over 50% Now if you compare that with us based credit cards Visa MasterCard, etc As of May 2016 the average APR is 16.5% then when you factor in all the hidden charges and fees penalties and such we're talking about an average of 20% a year That's what you're paying up in Tucson my jammy in Cleveland So you can see the fixes in and the gouges on and Latin Americans Don't really seem to give a rat's tush because you see the most important thing fall for them is to be

[03:13] Gringo and first we're alike and have as many credit cards as possible Hey, it sounds like the good old days back in the 80s and 90s, huh? So what about gringos and expats? Well, as soon as we open bank account down here whether it's with an SA corporation or in your own name You automatically get debit cards one in the local funny money and one in dollars At least that's what you should request by the way You're always better off having two accounts in the same bank one in dollars and one of the local funny money Of course, we're not talking about countries like Panama El Salvador and Ecuador that use us funny money exclusively then of course You only have one bank account in us fiat money obvious But not so obvious to people who've never been down here and see that they only use US dollars But do note since the vast majority of gringos and expats do not live in those countries that use the US dollar pay attention

[04:00] Now you will want to bank accounts in the same bank one of the local funny money and one in dollars and that dollar account Will be the more important of the two especially since many gringos and expats and almost all Retired gringos and expats get social security pension or annuity money Transfer down from the states or Canada or somewhere else in the first world in dollars So of course a little land in your Latin bank dollar account and will hopefully be building up there So you'll have that as your kind of holding account now some gringos and expats especially backpacker types will have just a local Funny money currency account and when a US dollar wire transfer comes in It'll instantly be switched over to that Latin country's funny money Not a good idea unless you're living like a backpacker kind of day-to-day

[04:45] what I'm saying is you don't want for example a 20,000 US dollar wire transfer being instantly switched into lampettas and Honduras since most of the Latin currencies Predictably lose ground against the US dollar So what I'm saying is you'll have a US dollar holding account However, you'll be buying and spending with a local funny money So you'll have to have that money converted into colonis pesos Bolivars limpetas whatever and the best and easiest way to do that and the way to get the best conversion rate is to have the two accounts in the same bank and use your online banking system to transfer dollars into the local funny money account and then you can either withdraw the local funny money from an ATM machine or Use your local funny money peso or lampetta debit card or credit card to buy and pay for things in your chosen Latin country

[05:37] And with that US dollar account, you'll get a US dollar debit card to automatically I say just hide that away somewhere don't use it in your chosen Latin country It's best to just use it to pull out money from ATMs when you're traveling through other Latin countries or Europe or wherever But I wouldn't use it back in the States because then you're starting up a brand new paper trail and that's what you're trying to avoid, right? Oh and one more thing the dollar and funny money account you get in the same bank will both be checking accounts, too And whether you use them or not is up to you, but I prefer not to I mean if you want a small footprint in a low Profile use cash as much as possible. That's what most smart expats do anyhow By the way, I always recommend debit cards over credit cards because with debit cards, you'd pay no interest

[06:24] There's no monthly fee and there's no danger of you spending money You don't have and believe me just like up in the States the sales department at your local Latin bank will try to talk you Into getting a credit card because you are a gringo and automatically wealthy in their eyes and a very good risk Oh and don't give banks or any other commercial businesses your real phone number either or you'll get pestered to death with text messages Trying to get you to buy that stuff too. And yes businesses will hand your data and phone number to other businesses So beware that remember you and only you are in charge of protecting your own privacy and besides that in Latin America There's no one to sue and to paraphrase the ever quotable expat Eddie He says the third best feeling in the whole world is waking up in the morning and knowing you got no debt You got no creditors and you got no biker repo man beaten on your door

[07:11] So then what are the first and second best feelings in the world? Well, Eddie's not saying but you can guess when speaking of credit and credit card debt We mentioned in a show a couple of months ago that some consumer groups were lobbying to have laws to place a ceiling on Credit card annual percentage rates. Oh, and I mentioned Latin consumer groups have been popping up to three or four years ago Those things just didn't exist. At least they never got publicity or any traction But today you do seem in the news and you even see him picketing out in front of government buildings is on occasion Anyway, just recently consumer groups were successful in putting a cap a limit on credit card interest in a number of Latin countries But guess what after a couple of months suddenly those new laws were suspended Because banks and credit card companies realized they'd tapped into a real windfall

[07:58] Now remember until very recently banks down here had been very very strict with real estate and building loans In order to build a house or a project ahead have 20% down or more big skin in the game to get a loan So banks as a rule do not have many home loans on their balance sheets In other words banks down here are run very conservatively like banks were run in the 50s 60s even than 70s in the states Of course now with the Latin real estate bubble stretched to the limit creative and ultimately very risky finance options are Popping up all over the place Now just imagine if you were on the board of a bank a stodgy old conservative one Just chugging along getting six eight ten percent interest on building loans and car loans, etc And suddenly this credit card thing comes along something. They've been doing up in the first world for a long long time and

[08:48] Everyone wants one and are willing to pay 40% or more interest a year on their balances well, that's like taking a guy who's used to smoking a joint or two on a weekend and Inviting him to compete against Willie Nelson and Snoop Dogg in the Bob Marley annual bong fest smokeout weekend So anyway, somehow Latin consumer groups lobbied enough to get some lost pass to put limits on credit card APRs Well, it sounded good but there was a big blowback and it didn't last long because right away the banks the card issuers and the big retail store chains Got together and in the time-honored Latin tradition started bribing Congress So what else is new, huh? Now, you know, if you're a free thinker or leaning towards libertarianism You'd be inclined to say well good let the free market work credit card companies can charge what they want, etc

[09:36] No one forces anyone to get a credit card and if the uninitiated uninformed public get burnt along the way They learn their lesson and next time around do a little research or not Okay, moving on a bit. You know what I've been seeing a lot lately here in Latin America food trucks I mean food trucks that have been imported from up in the States Telling sandwiches burgers hot dogs tacos and all that it seems like that's unregulated down here, too Especially since they're mobile. I've spoken to a couple of people who have these trucks and there's no permits or paperwork involved That includes any kind of license or inspection to sell whatever but I will tell you this I haven't seen any gringos in these trucks though You think they would be because they're actually trucks that have been sent down from the States

[10:22] with first-world gringo English lettering and all at least some faded remnants of it a Lot of these trucks that have made it down here I'm sure came down pretty much as russet out junks, but Latins are very very good at restoring vehicles Even so I'd say only maybe one out of 20 of these trucks is restored to something like tip-top shape the rest They're scratched and dented to various degrees as are most things that pass for vehicles on the road here in Latin America In fact, I said of every 20 trucks Maybe one looks pretty new the rest are beat up around the edges as you might expect details details, right? However, I've discovered this kind of a first world gringo connection to this fact is the other day I was driving past a dirt bike track. Yes, they have them down here though Most of them don't have many dirt bikes just kids with regular bikes pretending they have dirt bikes

[11:12] Hey, no harm in that when I was a kid, my buddies and I couldn't afford dirt bikes We pretended to anyway, the guy and a Latin lady in the food truck were telling me about the food truck connection They had in Houston, Texas turns out she had a brother with a couple of food trucks up there According to her they were doing great for a number of years until recently She said too much competition guess what happens then the business peters out dies or expands to guess where Latin America Especially if you've got relatives in a Latin American country who can learn from all your experience and mistakes When by the way, not all these food trucks actually run the other day I watched as a pickup truck towed a food truck that said heroes and American style hot dogs on it and Dropped it off in front of a soccer field Now from what I see there always seems to be some business in front of these food trucks again, believe it or not

[12:00] It's part of the gringo advantage as it happens Latins who turn out for a weekend soccer match or whatever It seems they actually prefer buying whatever from a truck that looks like it's been Transplanted directly from a gringo land the land of the American dream And it doesn't hurt at all that the people who are working in the truck have t-shirts and sweatshirts with English sayings on them But then again, so does everyone else down here. So again, it's all about having boots on the ground food trucks Who would have thunk two or three years ago? I never ever saw a food truck here in Latin America and now they're not only popping up here and there I've noticed that some fairly high-end restaurants are developing their own food trucks And what's strange about that is there are all kinds of ultra cheap mom-and-pop Kiosks and little hole-in-the-wall restaurants and food carts serving the local typical dishes

[12:49] I mean the competition is fierce yet the food trucks are coming down here and making it Even though what they serve is a little more expensive. It's also about the gringo ized food They offer to providing that sort of first-world coolness factor The local little mom-and-pop restaurants couldn't hope to match So again for all you gringos and expats up there who have a limited amount of cash And you know that your nest egg isn't big enough so you could simply retire and you're thinking you're gonna need a stream of income eventually The good news is that in Latin America, there are loads of low-budget business opportunities And of course when gringos and expats come down, they're always wondering how long their nest eggs gonna last They calculate their expenses over and over again And in fact, some of them remain worry warts for a long long time worrying about where that next income stream is gonna come from

[13:38] Of course, let's say you're a married couple and you figure you can get by in Latin America living a nice comfortable First-world lifestyle on 20 grand a year by the way very easily done, especially off the gringo tourist trail Anyway, if you have a nest egg or a reserve of let's say a hundred thousand bucks If you come down and have absolutely no other revenue stream, that should last you five years, right? Though no doubt about it. If you're like any other first-world person, it'll bother you a bit. Yep I've heard enough fresh new green gringos say hmm worst case in five years. I'll be dead broke then what so I've been hearing stories like that from expat gonna be some wannabes for years and years now, you know, what generally happens I'd say at least 80% of the time they come down with let's say a five-year Projection that their money's all gonna run out if they don't get a source of income then five years later

[14:26] They look at their resources and say hmm. I've got five years before my resources run out. That's the same answer I gave five years ago. Hey, nice job. But how'd that happen? That's because it's a whole different thing Once you get your boots on the ground, you'll find there are always ways to supplement your income though You'll be very limited if you're on the gringo tourist trail, especially in places like Costa Rica Remember rule number one. You don't want gringos to be your competition your clients. Yes, that's alright But not your direct competition That's why you want to be off the gringo tourist trail or slightly off the gringo tourist trail unless you've got a one-of-a-kind product Or have found a tremendous niche that needs to be filled. You'll see opportunities all the time. Okay changing beers again

[15:11] You caught that right? Now normally when I run into a fairly educated group of the young Latins college kids and such The ones that know a little English will try it on me and after the ice is broken We're all friends and kind of laughing it up the more curious one or ones in the group Will often start to ask me questions about what's happening up in the United States things They see in the news that are confusing to them. Like for example, what's with this preoccupation with? Transgender bathrooms up in the States man. If that isn't the stupidest, huh? Though I can't say the subject hasn't entered my world in some sense to being that ever since I've been down here in Latin America I've become kind of a habitual user of female restrooms not because I'm a pervert or anything

[15:58] Only because they're much cleaner and nicer. Yes I've been in many public places where I've gone into the restroom where the sign on the door says Mujeres Damas or Chicas. Yes. Those are the three most common terms for ladies rooms down here Mujeres Damas and Chicas it's funny because the direct English translation for Mujeres is women or ladies the English translation for Chicas is girls or the slang chicks and the English translation for Dama is Get this dames, you know like dames in the old gangster movies. Yeah dames Hmm. No, I don't think a sign on a public restroom in the States that said dames would go over very well A lot of pissed-off feminists might even be a little picketing unless of course, you're a British dame like Dame Judi Dench

[16:49] But there's only a few of those so it's a completely different thing Anyway, like I said, I've been using female restrooms in Latin America for years and I recommend them Why because Latin guys were brought up in the proverbial barn. In other words, their bathrooms are simply Disgusting and it all goes back to the fact that the world is their urinal Whereas it's a completely different story for Latin women. They have a much stronger sense of propriety They embarrass easily and well just are completely different from the male of the species down here And you know even with the Latin upper classes where they have multiple maids and cleaning ladies doing all the household chores and picking up after Everyone it's the men and the boys of the house that basically don't lift a finger They're the ones trashing everything and never picking up after themselves Whereas even an upscale Latin families the ladies of the house the girls mom and such will tell the cleaning lady with maid that

[17:41] Certain places are off limits like their bedrooms For example that as opposed to Latin men and boys of all classes. They don't care. There are such slobs They throw things everywhere never washed a dish or did a load of laundry in their lives much less change the sheets on their beds So yes, even in the wealthier families the cleaning ladies and maids are forever picking up after the males in the house So you can imagine or maybe you don't want to imagine what it's like in the lower middle classes and poor people's houses Believe me the bathrooms are hellholes and generally stink to high heaven. Oh and the bedrooms of the boys and men and the family Well, you don't want to step foot in those places either I've done it way too many times and I try not to sit in certain places If you know what I mean, and I try not to stare at things too much So as far as Latin bathrooms There's always a kind of a cold war going on with the males of the house forever

[18:28] Trashing them and the women of the house never quite able to keep up with the mess, but I digress as usual Oh, yeah I was talking about educated Latins who watch some first world TV and they've been seeing that certain state Legislatures have passed what they call bathroom bills So that transvestites and transgenders and in fact anyone can use any public bathroom They like depending on how they feel that day and how the hormones are running by the way I'm sure you know by now that restrooms are called banyos down here B a n o s and the n is an Enya, you know a regular n with a squiggle over the top called the Enya So then why do they call it a bathroom when maybe only one in two hundred Latin bathrooms actually has a bathtub in it But again, they picked that up from the first world because up in the states

[19:13] Bathtubs are being phased out to in Lewis showers, right? Of course in most public places up in the states, they call them restrooms, right? But I've never seen anyone actually going in rest However, that just might be what ladies do when they go into bathrooms in pairs. They might be resting who knows That's always been kind of a mystery to us men folk So anyway, I've admitted before on this show that I often used ladies restrooms here in Latin America Though I know if I got caught doing that up in the state said I'd probably get on some kind of watch list or pervert Tracking website or something. God, I'm glad I don't live up there Of course, I only use ladies restrooms down here that have locking doors on them I mean really I don't want to scare anyone in the middle of putting on her makeup In fact, here's something else that only happens in Latin America. There have been times

[20:00] I've been standing waiting to use the restroom, but the doors lock It's occupied and a lady will walk out of the ladies room and wave me in no not with her She'll just say go ahead use this one again It's got to be the gringo advantage because I've never seen that happen to a Latin guy Certainly because Latin women know their men will just trash the place like they do at home So anyway in the last week or so I've been asked what's up with the bathroom legislation in the states and truthfully I could give a crap ouch was that necessary? Well, maybe so then how did I answer those questions? I said truthfully It's just another diversion to keep the real serious problems out of the minds of the American sheeple Yep, it's bread and circuses open bathroom legislation gay marriage and women in the military

[20:49] Those are the real pressing issues, right? So again, it's just further proof that the first world news from up north the sound bites We see in the Latin media down here are filtered through the very same sensors that run the mass media up where you live Thank God for the internet, huh? Oh, you know, what's big down here in Latin America now Whether it's an anniversary quinceaños graduation birthday special event It would be covering your entire car with post-it notes now. I don't mean just you know one or two or a dozen I'm talking about hundreds and hundreds of post-it notes In fact, I've seen a dozen or so cars decked out like that in the last month or two Let me tell you it's a real mess in the rainy season, too I understand if you try that move up in the states You're likely to get a couple of tickets one for littering one for being a road hazard

[21:38] One for inattentive driving, etc, etc However down here the Latin cops play along with the game nicely in fact a couple of months ago I even saw a cop car with a couple of hundred of post-it notes on it He was at the gas pump next to mine and I said what's that for and he said celebrating 20 years on the force Then I congratulated him. What else could I do and he proceeded to hit me up for two gallons of gas Just living up to their motto, I guess to serve protect and extort something like that, right? So anyway down here painting your car with post-it notes is a fun kind of happy experience However up in Cleveland or Seattle it could cost you a couple hundred bucks and you might get your car impounded, too Oh and speaking of cars now, I've mentioned in the past many times that lands have a personal space problem

[22:24] Well, it's really not a problem to them It's normal to us It's a problem and they just love to park their cars within inches of yours sometimes with the mirrors kissing and you know fresh green Gringos as nice as we are Well often leave a post-it note or a note under the windshield wiper kind of advising the guy to park more carefully next time And of course we get very pissed off when people park in handicapped spots who don't belong there Anyway, if you think you're adding a nice little windshield note, it's gonna work down here. Forget about it Latins just don't get the personal space thing. They never will. Oh And one last thing about Latin bathrooms now you'll find when you're out shopping at a tienda or restaurant Sometimes you'll want to use the bathroom And more often than not the person behind the counter will say no tango We don't have one then I'll usually say well, then where do you pee?

[23:12] And you know if I'm saying that to a woman oftentimes she'll blush a bit and say Hmm, I'd let you use it by my hefe that would be my boss doesn't allow clients to use the restroom However, you are a gringo and you have the gringo advantage So often they'll let you use it even though it's against the rules But of course that doesn't happen 100% of the time just be prepared for that eventualities So when there's hired help behind a counter oftentimes they'll say there is no bathroom They're lying, of course But if you happen to be at a mom-and-pop store and one of the owners is behind the counter They'll be very obliging and often walk you through a door that leads to the living room or the kitchen Pass the kids in the TV in the driveway chickens and they'll let you use their own personal bathroom I know what you're thinking damn that Johnny's got weak kidneys. Nope. I'm just telling a story here

[24:02] The difference is you see when you're dealing with the owners mom and pop they'll usually bend over backwards to accommodate you In fact one time I remember the lady behind the counter the owner She walked me across the street to a competing tien de and there they let me use the bathroom again That's your gringo advantage. That'll rarely happen to Latin customers Oh and speaking of stores the other day I was in a mall in a clothing store and you know all the male mannequins are tall muscular and Caucasian-looking they're not short dark and brown like the average customer However, when you're talking about female mannequins about half of them are tall white Caucasian looking too Not much resembling the average Latina at all either. However, as I've mentioned in a past show Curvy, but Colombian mannequins are starting to take over the showroom floors

[24:51] You know the Sophie of Vergara big-butt kind and they really don't resemble the average Latina either except a certain small Percentage of girls from Brazil, Argentina in Colombia Anyway, I was in this men and women's clothing store and there were a row of mannequins Two of them had the voluptuous Colombian bodies and two of them were the typical pale tall blonde Caucasian types now I was standing a couple of feet away from a little girl and her mother I overheard the little girl say mom eta. How come the manic ease? That's what they call him down here Manikis kind of like manatee, you know the sea cows good memory aid their mana key She said mom eta how come manikis are so much prettier than other people and her mother wouldn't you know didn't miss a beat?

[25:38] She said honey, that's because they don't eat Now there's a saying that should be on a t-shirt, huh? Okay, we're getting pretty close to the end right now and like to remind you my signup page for my January 2017 expat insider seminar is all set up and ready to go just go to www.the new expat comm Click on Johnny's 2017 seminar link at the top of the page and that'll bring it to the information and signup sheet. Yes It's quite a few months away, but I've had my arm twisted and now I've put up the signup sheet It's really all about people wanting to get their plan B going in a big way So get on it times a-wasting and you know just the other day someone asked me Johnny What's the difference between a prepper and a preparer? Well, I'd say a prepper is a kind of person who does have a plan But it's a plan a on steroids in other words

[26:26] He thinks there's gonna be some rough times, but it's gonna swing back around to normal again So a prepper is an optimistic dreamer Whereas a preparer like I hope all of you are is a realist You've got a plan B You don't even try to resist the negative things that are happening or even try to buck the direction of the system at all Instead you follow the path of least resistance to a place like Latin America where change will be minimal So I hope most of you are well along on your plan B now And if you're not do sign up for my January seminar that web page was just activated a few hours ago And already the seminar is one-third filled Don't miss out on this or the pre and post John Galt trips either And of course, don't forget to go to my youtube channel

[27:11] We're improving it all the time Follow along learn a few things and get a few laps out of it And finally for your listeners out there who are interested in doing a phone or a Skype consult with me Of course, that's something I do charge for I like to mention that if you do the phone consult and come down to the seminar I'll hand the cash back to you as soon as you arrive. So effectively the phone consult will be free You've been listening to the expat files living in Latin America coming to you twice a week from somewhere south of the border Email me the expat files at gmail.com And if you want me to help you sort out your own Latin American plans schedule a one-on-one Consult with me just send an email and let me know at the expat files at gmail.com. No spamos