#25 – The Expat Files: Real Estate, Culture, and Challenges in Latin America

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

[00:01] South of the border Down Mexico Hi everybody, I'm Johnny Miller and you're listening to the expat files Living in Latin America the one-of-a-kind show that tells you what it's like to live work play and or retire in Latin America It's a fact that millions of Europeans and North Americans have already made that big move south of the border You might know someone who already has maybe it's your dream to do it someday Well, it's a big move and it's not to be taken lightly and that's just what this show is all about So let's get started I have to point out now that we've been having a lot of trouble with our email system a lot of your emails have not Been getting through to me. So here's my new email and it's guaranteed to work

[00:49] The expat files at gmail.com once more the expat files at gmail.com Well Today I'm out to finish off on the subject of house buying and building So if you're keeping track this will be part 5 So if you've been listening to the show for quite a while now You must have realized by now that when I get on a topic, I often veer in who knows which direction But when I do it always has something to do with the basic topic So like today when I continue on with building and buying a house I could easily hit on 10 or 12 other related subjects in an effort to make the topic as complete as possible Because in this show the expat files we talk about the way things really are in Latin America

[01:39] And in this case when talking about building or buying a house or buying land There are certain things that differ so much from the way you go about it in the first world That well unless you've really lived the experience as I have or heard the stories of hundreds of other expats That have gone through the process of building and buying a house Well, let's just say it's our duty here at the expat files to tell you things exactly the way they are And in most cases you can be sure you're not gonna get the politically correct version That should get off a Latin American government website Or even from one of those glossy travel magazines you find at the newsstand like leisure and travel or content as traveler Well, anyway here at the expat files. We don't buy into the propaganda

[02:26] Like for example when they say Costa Rica is the Switzerland of Latin America. Give me a break But you see it in all their propaganda Go to any travel agency and pick up a pamphlet Costa Rica the Switzerland of Latin America Yeah, you can call it that if you've never been to Switzerland for real I'll tell you right now Costa Rica's got about as much in common with Switzerland as I have in common with Brad Pitt And if you just think I'm being a jerk or have a chip on my shoulder about Costa Rica for some reason Just remember this there's a country in Africa called Swaziland and the word Swaziland Sounds almost like Switzerland doesn't it and yes, you guessed it Swaziland is marketed in the travel brochures that is as the Switzerland of Africa

[03:16] Although personally, I don't think Swaziland gets many tourists But aside from that what is Swaziland have in common with Switzerland? Well, that's the $50,000 question because if you can think of anything, let me know. Yeah Now Swaziland the Switzerland of Africa has the highest HIV rate in the world and the people have a life expectancy of 47 years 70% of his people live in extreme poverty and the average income per capita is $2,000 a year Now I ask you who in his right mind would ever think that a country like that had anything in common with Switzerland Now I'm not saying that Costa Rica and Swaziland have anything in common either But I can tell you this Costa Rica has more in common with Swaziland than it does with Switzerland

[04:05] And what proof do I have of that? Well, just take a car and drive down any road in Costa Rica for let's say one mile Well, I guarantee you That there will be more potholes in that one mile stretch of Costa Rican road then there will be in the whole of Switzerland and There will be more garbage and litter in the gutters along that one mile stretch of road in Costa Rica Than in the whole of Switzerland, too You know, it's a good thing that the Swiss are non confrontational You know, they're mild and gentle people and they're pretty good sports too and they have to be I mean with those kinds of comparisons Going around I'm sure they get amused when they read about that kind of stuff Especially if any of them have ever been to Costa Rica or for that matter Swaziland

[04:52] but if I was Swiss I'd be a bit embarrassed and maybe I'd even be insulted and If you want to have a debate with me on that just send me an email and I'll give you a thousand and one other examples Okay So please the next time I hear somebody tell me that Costa Rica is the Switzerland of Latin America I'll know for sure that you're speaking out of one of your orifices that doesn't have teeth Okay enough said about that. So let's get on to the real topic part five of buying land and Building or buying a house in Latin America now so far. I've talked about buying land Hiring an architect getting a general contractor and building a house and I also talked a little bit about buying an existing house But right now the best way to buy a house in Latin America if you've got the time

[05:39] That is if you're not under pressure to move into a place right away then by all means look for a house that's not yet completed and What I'm talking about here is houses that have been started maybe a third to a half done Maybe even three-quarters done and now you drive by and all of a sudden the house looks completely abandoned Every expat down in Latin America knows just what I'm talking about One minute you see a housing project going great guns then all of a sudden you drive by the same place a month or two later and it looks like everybody picked up their tools and Went home and the telltale sign that you could probably pick that thing up really cheap Is that just a few months ago the place was bustling with activity and now the house looks completely abandoned

[06:26] But the real dead giveaway is when you find a house like that where there's no longer a guard living on the premises You know I talked about that in the last show where every housing project from the smallest single family unit to a big multi-unit project Has a guard shack with a guy watching over the place 24 hours a day and he's there to make sure nothing walks off the project Well, let me tell you how it is right now the way the world financial crisis has hit Latin America The fact is it landed here a few years late just like everything else does in Latin America But now it's here in a big way and it's hit hard and the crisis has caught Latin American developers with their pants down Not that they couldn't have seen it coming if they'd just picked up a newspaper and read about what was happening in the first world

[07:14] Regarding the collapse of building construction and real estate in the last few years I mean they had plenty of advanced warning But they took no notice and that's why they call it the third world now practically everywhere in Latin America The place is flooded with excess housing units Unoccupied commercial rental space and all kinds of half-built underfunded projects Which is great news for expats and even if you have just a little excess cash on hand if you shop around You'll come out smelling like a rose. It's gotten to the point that developers are desperate and bargains are everywhere and Nowadays, for example You can get in your car and take a ride and select any one of the medium to high class housing development projects And you'll see that each one has dozens of houses in various stages of construction

[08:04] That appear to have been completely abandoned and of course these houses are owned by people who are now in some kind of financial straits and have run out of money and You'll see these seemingly abandoned houses in every kind of neighborhood and every once in a while you'll even see a for-sale sign slapped on the side of one of these buildings and That's where the real deals are. But most of the time people don't even bother In fact in the subdivision I live in right now, there was a house that was abandoned about a year ago That looks to be about 2,000 square feet. The concrete block work is completely done It's completely enclosed and the roof is on which is a very important thing in one of these projects Especially when the rainy season comes because you don't want water pouring into your structure every single day

[08:53] Even if it hasn't been finished painted or tiled yet a daily drenching can really take its toll What I'm saying is you really have to question a project that's been abandoned and without a roof for a long time But even so you can still get a terrific deal In fact, you won't even believe some of the deals I know expats have gotten just because they have a little cash on hand and I mean a little Anyway, this incomplete house that I'm talking about is sitting on a beautifully landscaped one-third of an acre It's all concrete and concrete block with no doors or windows actually installed yet now in a house like this is finished it should go for at least two hundred thousand dollars here and More than twice that up in the first world. That is if it was in a similar subdivision

[09:40] Well in this case after about a year of just sitting and sitting with no activity whatsoever One day there appeared a for-sale sign in a telephone number So I phoned him up and asked what they wanted for the place and they told me 30,000 US dollars now I knew at that time that the land was worth at least 20 So they're asking ten thousand dollars for this structure. That's about a third done Which effectively means that owner is pretty desperate and I'm figuring maybe you could finish it off first world style for about 50,000 more now if I would have had the money I would have picked it up in a second But I didn't so someone else did and then I found out they never paid 30,000 for it They only paid 20,000 in other words

[10:29] they got the whole shebang for the price of the land and the structure was basically free and Like I said in one of the past expat file shows at least half of the people in Latin America who start a housing project don't get bank financing and Though most of them may get financing on the land itself from the project developer just to sell the lots That's the easy part and the cheapest part too but even if you have the land financed or not most people are on the pay-as-you-go plan when it comes to building a house and Like I said in a past show a lot of that money comes from Relatives up in the United States that send back a monthly check called a remisa And we all know now that since the financial crisis hit the first world

[11:16] Unemployment is at record highs up there and building construction is at all-time lows and since most Transplanted Latin aliens illegal or not work in the construction business up north or some kind of construction related business those monthly checks they used to send back home well a good percentage of those remisa payments have just dried up and so that means there are more uncompleted houses in Latin America than at any time in history and I'm not just talking about the Latin middle and lower classes either throughout Latin America The financial crisis has been an equal opportunity leveler just like in the first world Well, I guess that's not quite correct because if you happen to be in the banking or financial sector and got a bailout

[12:02] Well, you're sitting pretty but that's another thing altogether So anyway, what I'm saying is down in Latin America when you see an abandoned house that looks like it's been abandoned for some time at least six months and You're careful to note that no one is around not even anyone in that little makeshift laminated guard shack Well, if you happen to take a shine to that property, you can be sure that if you find out who that owner is He won't be the least bit adverse to strike in up a little deal with you Though when you make first contact with him, that's not the time to go throwing out just any old number Because in that case the best thing to do is to phone him up and ask him what he'd like for the property Which is almost always gonna be way more than he's likely to accept

[12:50] Maybe even twice as much as he's likely to accept that's when you hook up with your own architect or building contractor and do a walkthrough on the property and Get an idea what it's gonna cost to finish it and I mean finish it first world style Not Latin style and 95% of the time you won't even have to do a walkthrough with the owner present The fact is he doesn't even have to know about it Because almost all the unfinished houses that you'll be looking at don't have windows and most don't have doors So as long as you your architect or builder can get past the main guard I'm talking about the main guard house that you have to pass through and show your ID to get into the gated community in

[13:36] The first place I'm talking about the permanent guards stationed at the entrance to the subdivision that is as opposed to the guy that's living in the laminated shack who's temporarily guarding a construction project and Normally these guys guarding the entrance to the subdivision won't have a bit of a problem letting you in to see a house That's under construction that's pretty much the norm because there's always people coming and going on new construction sites and Nine out of ten times. No one's ever gonna give you any trouble about that In fact, that's usually how you're gonna find out who the owner of one of those Incompleted houses is you just go ahead and ask one of the guards at the main guard house to the colony Because these guards always have a list of owners and their telephone numbers in case they have to contact them for emergencies

[14:24] in fact many times the guards themselves will phone up an owner right from the guard shack and put you on and It's that easy and don't forget you can really lowball these guys because even if they're hurting financially Chances are they'll highball you and because there's not a lot of guys walking around looking for half-finished houses to buy You're in the driver's seat and he knows that every month that ticks by his house is just sitting there Deteriorating with no windows or doors. So he's got a real incentive to sell But don't confuse a guy that's in bad financial straits and desperate to sell for someone who's just temporarily stopped construction on his house because of the rainy season or Because he really is waiting for an influx of cash to start up construction again

[15:11] And the best way to find out which is which is again to look and see if there's a guard Station there at that little laminated hut that's built just for that purpose Because a guy who's really gonna start up construction again will keep at least that one man employed to guard the place Even during those months that he's closed his construction down Because who knows what could happen if he leaves his house completely to the elements or to whatever people might happen to stumble into it People are bound to stick their heads in just out of curiosity. I know I would if I was walking by The problem is with nobody around Anything is likely to walk off Especially when the word gets out around the colony with the cleaning ladies and gardeners and maintenance men with no one around

[15:58] They figure the place is up for grabs and soon enough things start to disappear Everything that's not bolted down and some things that are including sinks and toilets and bathroom fixtures And how they get that kind of stuff out of that colony for how fragile bulky and well breakable that stuff really is It always amazes me how they do that and how they get it past the main guard shack Which always makes me a bit suspicious of the guards themselves I mean What does it really take a five or ten dollar bribe could make somebody in that guard shack turn the other way real easy? or maybe the gift of a sink or a toilet that had worked too and Why wouldn't the guards in your colony look the other way to them that stuff's just coming from an abandoned house?

[16:44] And when there's no personal guard posted on the premises anymore That's a bad sign and kind of an open invitation Because then a lot of the locals suddenly have this idea that it's community property in fact one expat I knew done in Costa Rica told me that he caught his cleaning lady red-handed Stealing his DVD player and she'd worked for him for more than two years in all that time He'd noticed a few little things gone missing, but he never said anything until the DVD player incident Well, it turns out he had a nice long talk with her and she explained to him that she'd only taken things from him that she Felt he either didn't need or didn't care about and she pointed out that he had two DVD players And one was enough and she didn't have any and in her twisted logic

[17:32] She tried to explain to him that since he could only use one DVD player at a time He really didn't need the other one and to her taking the extra one was really not much of a crime at all Now personally I can see some kind of logic in that even if it's false logic But it does go a long way to explain why when your household help gets caught stealing from you Most often when they're caught red-handed, they don't even have any shame In fact when my ex-pat friend fired her He'd still see her from time to time in the neighborhood because she worked for two more houses on the same block and when she'd see him she'd be as friendly as ever and wave and smile as If the DVD incident and the firing never even happened Now my ex-pat friend had told me if this would have happened to him up in the first world

[18:20] he would have immediately walked over to the neighbors and Give him an earful about the thieving employee that was working for them And he might even have reported her to the police but being an ex-pat in a foreign country He just didn't do it and the reason this woman had two young kids And she'd often bring them to the job and sit him in the kitchen and let him play on the floor while she cleaned the house And the big problem was that she had a drunken husband who was always in between jobs and my ex-pat friend Well, he felt sorry for her and the kids and he really didn't want to get her fired from her other two jobs down the block So what's an ex-pat to do? How do you find good household help? Aha, and that's the point I'm getting to and why I took this little diversion and told you this story

[19:08] Because if you're gonna build a house or even buy a partially finished one and have a construction crew come in You're gonna have at least six months dealing on a very close basis maybe even on a daily basis with the construction crew of maybe a dozen people and By the time you're into the job for a month or two And if you ask your general contractor or architect for an honest opinion about which guys working on your project are the most trustworthy honest and reliable and with a dozen men working side-by-side in each crew They'll always be at least one or two guys that stand out from the rest that are model workers and just good people in general Now these are the guys that are going to be good resources for you

[19:56] Because if you need a cleaning lady or a maintenance man or a gardener these are the guys to ask and More often than not they'll want to take that job for extra money themselves And if not, they'll only recommend people who they honestly trust Because they're good people with high standards themselves and chances are they're not gonna give you a bummer steer and most expats I know will tell you that's one of the best ways to find household help be it cleaning ladies gardeners or maintenance men and Since everybody knows that when you own a house things do go wrong eventually it's a real good idea to get the name and phone number of a few of these guys in case you need some work done in the future and Because these guys don't make much money at all if you've got a side job for them

[20:44] they're always willing to moonlight and believe it or not the going rate for these guys is anywhere from 10 to 20 bucks a day and These guys can do just about anything carpentry plumbing masonry electrical. That's one thing you'll find in Latin America There's not too many specialists and a lot of generalists and believe it or not The same guy you might hire it just to weed your garden He's the same guy that can build you a whole garage from scratch anyway, they get between ten and twenty dollars a day and they're glad to get it and Another thing expats have found if you hire a guy like that by the day Be sure to give him some breakfast and lunch too because normally Latin employers never do that That is of course unless you have a live-in maid with them regular meals are part of the deal

[21:29] But for gardeners contractors and day laborers They almost never get a free meal out of a Latin employer. And if you supply the food, they'll bend over backwards for you But still there is a word of warning when hiring household employees You might remember in one of the past expat shows I mentioned that some of the big contracting firms the ones that build giant construction projects Well, some of the more astute ones refused to hire workers that live within five kilometers of the job site Because they found out that if they hire workers who live far away there's much less chance for things to sprout legs and go missing on the job site and That's because these people live so far away that they have to take the bus home and it's pretty Inconvenient to steal a sink or a roll of electrical wire and try to haul one of those things ten or fifteen miles back to

[22:21] Your little town not to mention hoisting it up on a bus and that's also good advice for anyone who hires household help No matter if they're gonna work inside or outside of your house Because even if you hired a most trustworthy and honest person every family in Latin America is very large And I guarantee you that the lady that you've hired to clean your house The one that's a dead ringer for Mother Teresa. I Guarantee you that there's someone in her immediate family some young man or adolescent kid Whether he's a cousin or a brother or an uncle anyway I guarantee you that someone in the family is involved in drugs or extortion or theft or other kinds of crime and If his sister or aunt or mother is working for someone they perceive as a rich expat or gringle

[23:12] Word about you and your house is definitely gonna get around that family and normally that's not because you're nice little cleaning lady It's out to stir up trouble it's just that she's kind of proud to be working for an expat and everybody else in the family is curious as to what it's like and People you'd normally never associate with much less never let pass through your front door I'm talking about the undesirable elements that seem to show up in every Latin American family Well, let's just say you'll never know what pressure comes to bear on your nice little smiling cleaning lady when she's back at home And sooner or later there will be people that know just what you have in your house And even if it's just small talk you have to watch out Because let's face it We all talk about our jobs once in a while when we're in mixed company and any Latin worker that you have is in a unique

[24:03] position simply by working for an expat or a gringo Which is pretty much a rarity throughout Latin America except for like I said before Some of the tourist areas like Costa Rica and Mexico So naturally your workers friends and relatives are gonna have questions for them They're curious about first worlders in their lifestyle So why wouldn't they if you were in their shoes? You'd be curious, too And on top of that you have a lot of strange habits compared to the Latins and they're curious about them Because Latins haven't been exposed to them for example in your first world style house Chances are you just might have a garbage disposal in a dishwasher or even an electric toothbrush or a food processor or a trash Compactor or an electric nose hair trimmer

[24:49] Well, you can be sure that the average Latin person has never even seen most of those items in a house Much less knows how to use them So that's gonna be a natural point of interest back home when all the relatives get together at little Juanita's birthday party you can be sure that someone's gonna bring up that crazy expat and his weird little gadgets and everybody in the family is gonna want to hear about it including drunken uncle nester and young cousin Jose with all the prison tattoos on his neck and you can also be sure that there's really no harm intended and it's just curiosity and maybe even pride because someone in the family landed a good job and is working for a first-world expat but you Can also be sure that someone in the family is one of the bad guys and he's taken in all that information, too

[25:37] But it won't do him any good if he's living 10 kilometers away from your house And that means his bad boy buddies also live 10 kilometers or more away from your house Which is a pretty nice buffer if you ask me But if he's only living six blocks away, well, then maybe you got something to worry about You get the idea now. I have to mention. I'm not padding expats on the back Just because as a rule Latin people prefer to work for them instead of having a Latin boss But I can see their point because as a rule expats like to give things away to their help And that's pretty much unheard of with Latin employers For example expats give a lot of things away to their cleaning ladies Whereas in the first world you might throw away your old pairs of shoes and coats or maybe give them the goodwill

[26:24] and If you have an old toaster that still works, but it's rusty usually toss the old one in the garbage and get a new one Well, the fact is first worlders and we expats tend to throw things away that are perfectly serviceable Things that latins and other third-world people would just love to have like for example suppose you bought a new kitchen set What do you do with the old one? Most of the time in the first world you just put it out on the curb and let the garbage man pick it up, right? Well in Latin America all that stuff goes to the cleaning lady or the maintenance man or the gardener and man Let me tell you from my own experience. I had an old computer and you know what happens with old computers They still work, but they don't run the new software anymore The old ones have tiny hard drives and are as slow as can be well in the first world

[27:10] You just toss it out with the garbage, right? Well, I gave mine away to a gardener who has got a couple of kids in grade school And those kids are still thanking me six months later every time I run into him at the grocery store to them I'm a local hero end up in the first world. I never got much past being a jerk You You've been listening to the expert files living in Latin America and don't forget you can email me about any question You have about Latin America. That's the expat files at gmail.com See you next time those famous