#553 – The Expat Files: Navigating Legal, Financial, and Real Estate Challenges 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 You know a lot of people asked me about my theme song south of the border It's sung by Dean Martin, of course, it's not sure it does a nice version too But Dean, you know, he's kind of loose and swings it a little better Probably because he's got more than a couple of dry martinis in him and people have commented saying Johnny

[00:48] The song says south of the border down Mexico way And of course, you know, I don't recommend Mexico to live work play and or retire not anymore Anyway, I do highly recommend it for a nice short relaxing trip and one or another of those cheap all-inclusive package deals That's always a great time. Now, of course, there's a lot of reasons I don't recommend Mexico way too many gringos for one thing By the way, if you live in one of those gringoized areas in Mexico You'll know it's not too safe to wander too far from there But that's another story While parts of the Yucatan Peninsula are absolutely fine and beautiful for now But will the nastiness spread? You bet Especially when the next economic shoe falls up in the States since Mexico and the US are so intricately related That's when all that massive remissa dough coming from illegals up in the States to their families down in Mexico will dry up

[01:40] And when that slows to a trickle Who do you think desperate locals used to that monthly influx are going to look to for extra dough? Why those supposedly rich gringos in their little gringo enclaves, of course And there are thousands of towns and hot spots just loaded with gringos in Mexico So if you're living there and can't leave because you have a business or own property Whatever you best stay put and huddle with the gringos because if you go outside that designated area Anything can happen. So then you might say what about the rest of Latin America? The remissas will dry up there too, right? Won't life get more dangerous and go sour for gringos living there, too? I'd say not likely because about 95% of all the remissa dough Goes to Mexico and the other tiny 5% spread out through the rest of Latin America

[02:27] So anyway, that song Dean Martin so smoothly sings has Mexico in it and I wish it didn't but you see the phrase down Mexico way it works a lot better than down Central American way or down South American way or down Latin American way, you know Unfortunately to convey that sentiment the phrasing for a song like that just wouldn't work That said we'll stick with south of the border down Mexico way because it's a very cool song and most people get the general idea Alright on with the show lately The vast majority of emails have been getting have been about quality health care here in Latin America and how to get it And next I get questions about real estate here in Latin America and that real estate bubble I'm always talking about and lately I've been getting quite a few emails about Banking in Latin America because you know with the fat gun got colas if you have money in a foreign bank account

[03:14] You your name and all your debts will get directly forwarded to the US Department of Treasury Etc and maybe another dozen or so alphabet agencies sure that sucks, but should you be worried? I don't know about you, but for me and all the long-term expats I know it's a very scary thought though Remember not that the long arm of Big Brother will be able to steal your assets when they're in a foreign bank account They won't in fact they can't but they'll certainly know everything about your financial instruments and monetary movements in and out of that account Oh, but do know this the IRS and the court system is up in the states can lock up your foreign bank account If it's got a branch in the US, so it's always recommended that your bank doesn't have such ties But you knew that already, right? So then how do you find such a bank one that doesn't have ties up in the US or a branch up there?

[04:00] And yet it's rock-solid has been around a long long time and has years and years of very good management under its belt Well, let me tell you don't search for banks like that on the internet Although these days all banks have an internet presence But remember because it's absolutely recommended that your bank doesn't have a branch in the US when you go to their internet site It's gonna be in Spanish, which means 90 to 95 percent of expats and gringos can't read the forms nor fill them out So then what do you do? Either come down ask around go to the gringo bars and such and find out what banks they're using Not a very good idea by the way, or you find yourself a local trusted honest Latin lawyer I know what you're thinking honest and lawyer rarely appear in the same sentence That said there are tons of lawyers in Latin America So finding one is easy but finding a good honest one is not in fact if you go searching for lawyers in gringo

[04:50] Expat bars are in gringo fight areas Every disheveled gringo will tell you about his lawyer and try to hook you up as long as you buy him a drink The fact is where you find a lot of gringos You'll find a lot of Latin lawyers making a damn good living off them inevitably leading to higher prices gringo prices and frivolous Overcharges because lawyers know gringos are very good clients They pay in dollars they pay on time and they rarely speak or read enough Spanish to slog through a simple contract Meaning they're pretty much at the mercy of their Latin lawyer for whatever he says They should read do or sign sounds like a recipe for disaster, doesn't it? Well, it certainly can be I know a lot of gringos who've been gouged and have had very bad experiences with their Latin lawyers But almost always that occurs on the gringo tourist trail now That's not to say you're not gonna have a bad or sour experience to with your local Latin lawyer

[05:39] You know if he's a nice honest guy, I've been through that myself Just always remember you're in a different culture the land of manana time So definitely there will be times when things don't get done to your Satisfaction or within your time frame and you will get pissed off at your lawyer So your mission should not be to go for a ball-busting whirlwind of a Latin Perry Mason Your mission should just be to get a good honest one then in time everything will work out Then at least you won't be in the dark and you won't get gouged But for sure as long as you're down here in Latin America, the more you're gonna get pissed off at your lawyer Here's my advice. Remember one thing you all got what I call that gringo advantage meaning your detailed people compared to Latin Americans Why do you think they call this the third world? Because the people down here are at the top of their game. No way

[06:24] You've grown up in a competitive business and professional climate up in the states wherever you come from stateside It's survival of the fittest and down here even idiots and morons drive nice cars have bodyguards and have thriving businesses You know how up in the states if something's mediocre or subpar it just kind of fades away or goes broke That's certainly not the case down here So remember as far as your Latin lawyer when you feel he's coming up short whether you realize it at first or not It's kind of your job to teach him the finer points of gringo details Because he was brought up in a culture that does not know or respect those things and the best way to illustrate that Example is to see what first world franchises are doing up in the states. They're moving to Latin America and cleaning up Why well again the competition is ruthless up in the first world and those big franchises and chains

[07:12] They're not making the money that they're used to in fact a lot of them are pretty much imploding But when they come down here It's the 60s and the 70s all over again and that gringo advantage kicks in for example You've heard about all the trouble Walmart's having up in the states now They're closing down stores and well things are looking kind of bleak Well, guess what Walmart is the number one employer in Latin America. How'd that happen? Especially when only five or so years ago you couldn't find a Walmart to save your life and now they've got thousands of stores That goes for Kentucky Pride and Domino's Pizza Taco Bell Dunkin donut. I hop even Dairy Queen So while up in the states owning a franchise like that is no guarantee of success anymore down here They're cleaning up. They're on the upward slope of a massive Latin demand curve, but where were we?

[08:01] Oh, yeah We were talking about putting your assets in foreign bank accounts that don't have branches up in the states to keep them out of the reach Of the long arm of Uncle Sam by the way you'll find a lot of gringles and expats have made some big mistakes in selecting their banks down here because they didn't get good advice or They just checked out the internet Which is why if you're serious about this meaning getting your dough out of US banks and into a foreign bank account One of the best ways to get yourself set up and not get screwed is to come down to my July Latin American Insiders seminar where we'll go over all that stuff in great detail That's where you'll meet some honest and straightforward professionals And of course, we'll talk about the right banks to use We'll show you first world hospitals and specialists and health care plans We recommend for gringos that just blow away anything you could get up in the first world

[08:48] That'll cost you less per year than the Obamacare penalty We'll show you so much stuff You'll feel like you're drinking from a fire hose You have to get your boots on the ground down here and see it to believe it So to get started on your plan B, just go to www.thenewexpet.com Click on Johnny's 2016 seminar link at the top of the page for all the info and remember the $500 per person early bird Discount ends on May 1st. Oh and remember the cost of the seminar includes your six nights at three and four star hotels Which reminds me all you guys and gals out there who've been sending me emails asking about which flights to take and what airfare Is going to cost just talked to John Galt last night and he spoke to a lady who said she's flying in for around 475 bucks round trip now, that's a deal. I guess you do that by going through the hub at LAX

[09:39] So it looks like there are some very good deals out there right now So do check out the airline consolidators like obits price line and cheap air, etc But I digress as usual anyway another great way to preserve your assets and keep them completely out of the reach of a long bony arm of Uncle Sam as well as Keeping assets out of the reach of US creditors and exes and judgments bankruptcies and frivolous lawsuits and such is to have land And property outside the US preferably in Latin America because that's what this show is all about now Of course, you've heard me say over and over again. There's a big real estate bubble here in Latin America it really is a renters market in fact in a lot of places rents are actually going down a Sign of massive oversupply and the bubble starting to crack in any case

[10:25] It might sound like there's a contradiction here. If there's a big real estate bubble, you don't want to buy in at the top No way But yet you should have land or property in Latin America to keep your assets well out of the reach of lawsuits and creditors and exes And Uncle Sam so then what gives you know If you go on the internet and you check out Latin American properties, you're never gonna get a deal You're going through US gringo intermediaries and people who speak English But when you're down here with boots on the ground You'll see that there are lots and lots of desperate sellers popping up signs of a cracking bubble, too So what my advice again is always come down to the Latin American country of your choice and rent for at least six months and during That time start hunting out those desperate sellers if you keep your eyes open and plan things right you're bound to find the condo or house or

[11:14] Residential tower or gated guarded community of your dreams, but I have to stress again You're never gonna find that on the internet You have to come down and get boots on the ground yourself and even if your Spanish sucks If you come to my Latin seminar for instance We'll do a show-and-tell and you'll find out exactly how to find those desperate sellers Remember John Galt has that Latin concierge service with bilingual ladies that'll take you around and show your properties and anything else You want to look at like schools hospitals MDs dentists health clubs golf courses, etc And the best off the gringo tourist trail vacation and Sun and fun spots, too So whatever you're looking for they'll help you find it But let's talk a little bit more about land and housing and the bubble now I'm finding through emails Of course and a lot of expat gonna bees and wannabes want to build their own house exactly the way they want it the house of

[12:04] Their dreams which sounds counterintuitive if there is a big real estate bubble here Why because when the market really starts falling and the prices crash there will be a vast surplus of houses and properties for sale Even now in most Latin markets, they're building like crazy and there's an oversupply I mean that is the bubble though even in the face of all that for some people It's always been their desire to build the house of their dreams You know in any other place, but Latin America, I'd say it's a very bad idea to build a house But you have to remember like I said in the last show I think it was the last show you could build any beautiful first-world style house for 25 to 35 bucks a square foot whereas up in the States the average cost is 125 bucks a square foot that's four to five times more

[12:49] So in the end even in a big real estate bubble, you can't go wrong building your own house Then of course, you'll have to get some boots on the ground to find the right lot or the right piece of land to build on And for that again, you just check out desperate sellers because as you know in a big real estate bubble land is terribly overvalued, too I mean, come on Why pay 80,000 bucks for a nice lot where you can find a desperate seller and get it for 20 or 25? But remember when dealing with desperate sellers, you'll have to pay cash. Don't even think about bank financing Why would you do that? Anyway, who wants to get on the mortgage treadmill again, huh? Which brings me to this very relevant email. It starts dear Johnny want to thank you again for your radio shows Still deciding where to go and I'm listening to your comments about the real estate bubble

[13:34] Does this apply also to raw land or just high-end homes? Fact is I've been perusing Panamanian real estate in Chidiaki and the prices seem pretty high So Johnny the question is do you know any websites with affordable Panama or Latin American real estate? I know some folks that recently bought a small farm in the caldera region just south of bokeh tea And that seems like a nice location. Do you expect that region to be part of the bubble in other words? Should I wait to buy my current business plan is to start a little farm? I don't want to put too much money into a house still putting a plan together, but ready to get started However, I don't know if I could escape the first world or not due to personal issues But I haven't given up yet. By the way, did you see what they just did in Colorado? It's chilling

[14:23] She's referring to the GOP cutting Trump off the ballot then continues Johnny since you have been in construction Can you tell me if they would approve this particular house? Then she sends me a file of what looks like a kind of a domed mushroom mad Hatter Alice in Wonderland style house like it just kind of grew out of its green foresty surroundings Rather cool actually and if you're checking out my youtube channel, you'll see the photos then finally she says Johnny Do you know of any Christian agrarian communities in Central or South America? Seems like this kind of information is especially difficult to obtain on the net Then she says if you need a consultant fee to answer these questions, please advise. Thanks Hey Barb, you don't need to pay a consulting fee because we're talking about it on the radio But you know any of you guys and gals out there who want some very personal advice for your particular situation

[15:12] Just send me an email the expat files at gmail.com and we'll hook up with a phone or a Skype console to hash out Your personal plan B. All right, then let's talk about this She's asking if the Latin American real estate bubble applies to just raw land or high-end homes Well, the bubbles certainly blown up everywhere on the gringo tourist trail And it's well underway in most medium and large-sized cities however, as you travel outside of those medium and large cities and start heading out in a boonies hitting small towns occasionally of five ten or 20,000 you'll see that the bubble effect is not so strong at all perhaps Non-existent because there's not a lot of movement in the real estate market now. Here's a little tip You'll never find out about unless you've got a lot of boots on the ground down here Many single-family homes in Latin America are constructed in fits and starts

[16:02] In other words someone buys a lot They sit on it for two or three years and all of a sudden the ground floor goes up Then it might look like it's abandoned for a year or two Then all of a sudden a second floor goes up and finally it gets finished or sort of finished and people move in That's because you see in almost all of Latin America. There's no final inspection required to move in You know, of course that in the US and Canada anyway, you have to have a final inspection or else That's why if you drive around Latin American Residential areas or even out in the boonies, you'll see a lot of buildings that aren't finished at all They look abandoned just black structures with a lot of rebar sticking out of them in various stages of construction You think they're abandoned but most of the time they're not it's just that the owner is waiting for another influx of cash a lot of times from remisses from an illegal family member up in the states to get the next phase underway

[16:54] However down here now with the big real estate bubble in full bloom many many Latin builders and homeowners who haven't finished their Projects yet are running short on cash or maybe that a legal family member in the drywall business in Cleveland lost his job He got deported back and no more remisses. That's why more and more these days You'll see a lot of unfinished projects and very nice neighborhoods that have signs on them Let's say for sale say Vendee in Spanish and some of them say say Vendee for sale Ganga GA and GA which means cheap. That's when you know, you've got a desperate seller by the Wavos or cajones we're talking about people who don't even have enough dough to finish off a project a lot of times you'll see these projects finish to The point where the windows and doors haven't even been installed yet

[17:42] And of course the outsides not finished and painted either Why would it be in fact all these projects are the color gray like gray concrete and cinder block and down here? They have a special name for unfinished projects like that They're called works in gray or Obra's which is works in Greece, which is great. Obra's in Greece so if you see in one of the local papers or real estate magazines or on a bulletin board or There's a sign out front that says Obra in Greece. That means you got yourself a desperate seller He's tapped out and wants someone to take it off his hands. So then what if you're interested? What if it's a great location and a great site in a great neighborhood? Well, you hire yourself a Latin architect for a day You pay him maybe 50 bucks or maybe nothing because he hopes to get the job of finishing it

[18:29] So you go out to the site and you let him decide what's necessary to finish the place off Oh and by the way You might not like or be happy with the final design and you might ask that architect what it would cost to add this and add That extra bedroom garage, whatever and here's something else You probably never heard discussed before a lot of times you can get one of these works in gray Maybe a third to a half done already simply for the price that guy paid for the land That's how desperate these sellers can get in fact I know of a gringle who bought such an unfinished house like that in a very nice wooded guarded gated community for a grand Total of something like 25,000 US dollars. So now he's got a piece of land That's worth at least that with a house. That's a third to a half done already

[19:15] You get the picture, but again, you have to have boots on the ground to find these deals You're never gonna find them on the internet or by walking into a gringle bar and asking if anyone knows of some great real estate deals then you truly have marked yourself as a clueless gringo and deserve a walletectomy and Then even if you found a work in gray that you couldn't get from a desperate seller You're gonna need a lawyer to do the title search on the land Remember they have no title companies in Latin America It's up to your lawyer to make sure not only the land is free and clear and the taxes are paid up and that the guy Who's selling it is the bona fide owner too? So then what happens if you find a great deal like that on a work in gray Should you be concerned that the owner who's selling it might still owe on the construction materials in the house?

[20:02] Well, you don't have to worry about that because believe me the hardware stores and the construction materials companies only take cash Check or a credit card. It seems like when it comes to construction and building almost no one But the very big construction companies get a line of credit that said if you're looking to buy one of these Incompleted houses works in gray as they're called. You don't have to worry about what's been constructed on the lot You just have to have your lawyer check out the land itself and make sure it's registered in the municipality correctly and there's no liens on and Next Barbara our emailer mentions. She's been perusing Panamanian real estate, and she says the prices seem pretty high well, of course, they're really high it's on the gringo tourist trail and Panama along with Nicaragua Colombian beliefs have been touted by international living and other rags like the overseas investment letter, etc

[20:53] As the next Costa Rica and if you listen to this program or ever had boots on the ground in Costa Rica You know all the good cheap properties were picked over 10 or 15 years ago Now she talks about the caldera region in Panama just south of Boquete and she says it seems like a nice location It is a nice location, but you're stuck with a lot of gringos, and it's gonna be gringo prices Is it part of the bubble? Yes, of course it is. Should I wait to buy she asks? Yes Again, you're never gonna find deals surfing the net on the couch up in Cleveland I mean, Colorado again, you have to get boots on the ground and I'm not talking about one or two weeks either I'd say if that's your plan and what you're looking for you have to spend at least a month in whatever Latin location You're considering and remember during that time You're gonna have to find a bilingual person who knows exactly what you're looking for and can scout that stuff out ahead of time before

[21:44] You get down and you'll have to find your lawyer during that period too and have a few meetings with him So is a month with boots on the ground enough? Well, it depends how well prepared you are before you get down and the question always is do you have to know Spanish? Or at least a little Spanish. Well, not at all not if you hire a bilingual translator slash girl slash guy Friday And of course Skype with her and set up some plans in an itinerary Well before you get down and like I said before you'll have to hook up with a local architect to check out the property and the structure And then maybe have him drop a preliminary cost analysis and finish plan on how the house will look when it's done And at that point you could head back to Cleveland or Colorado and have the architect drop a complete set of working plans For a contractor to get started. Let's see. What else does she want to know? Oh, she says Johnny since you've been in construction

[22:31] Can you tell me if they would approve the building of one of those dome houses? She sent me the picture up Well, here's the thing once you've got a lot you could build practically anything you want However, if you're building on a lot in a gated guarded community sometimes they have a condo or homeowners association that'll set a minimum on the square meters of Construction because they don't want you to build a tin shack Of course many upscale communities only want nice houses and why not? However, it's not generally at all about the look of the house It's about the square footage more precisely down here square meters. Everything's in square meters They don't use square feet at all By the way When you see any property or real estate in square meters just multiply that by 10 and you'll get a very good approximation Of square feet. So if a house let's say is 200 square meters

[23:19] You multiply that by 10 and it's around 2,000 square feet but back to that funky mushroom house. She sent me the picture up I see no problem at all with getting a house like that constructed However, it doesn't matter if your drawings or design came from the most respected architects in the universe Frank Gary Frank Lloyd, right? Or Frank Lloyd wrong no dice Because the only way you'll get a building permit approved is to have a local Latin architect draw the plans and bring them down to municipality So you find yourself a local architect and I mentioned exactly how to do that on a previous show probably some years ago now Anyway now some gringos bring down a complete set of finished plans that they ordered from the back pages of metropolitan home Architectural Digest or better homes and out houses Well, then you just hand those plans to a local Latin architect and he'll convert all that to the metric system

[24:10] No feet or inches down here except in Belize Then he'll put his Latin countries architect seal on it take them to the municipality and get them approved for you So how much does the architect charge? Well anywhere from maybe two to five hundred bucks But remember this guy's starting from scratch redrawing everything in the metric system Plus he'll create an entire list of building materials and supplies you'll need to finish the house And here's another tip if you're building a house I always recommend that when you select your architect you have him Select the general contractor to and make it part of a package deal because you know down here in Latin America Selecting a good building contractor or former and is like throwing a dart at the classifieds in the paper However architects know the good the bad and the ugly builders and they don't want ugly or bad So you're best off letting your architect select the building contractor and believe it or not

[24:59] Some architects especially the young ones will be the building's general contractor, too But that's another story for another show, but let's get back to the email finally Barbara asks Are there any agrarian Christian communities? Well, yes, there are even Amish factions here now You know Latin America is very Christian So nobody gives outsider groups like that any trouble as long as they say they're Christian in Latin America To be Christian is alright with everyone and the last thing you ever want to do in mixed company is to admit that you're an Atheist or a theo as they say here now imagine back in the 60s and 70s in the states if someone said they were an atheist In mixed company chances are in that moment. The music would stop everyone would gasp and take a step backward

[25:44] Thinking you were about to get hit by lightning. Of course up in the states It's not at all like that anymore, but it's like that down here Believe me all you atheists out there take heed and keep your mouth shut now about those agrarian communities Christian and otherwise The best way to find out where they happen to be in a Latin location near you would be to search the internet for the Organic farms in your area. There are many organic farms here since for most Latin countries agricultural products are their biggest export That of course includes weed and cocaine Agricultural products too, right? anyway all you have to do is locate any of the many organic farms here in Latin America and they'll Definitely have a lead on the local agrarian communities. After all, they're in the same business, right growing non-gmo and

[26:30] Certified organic or nearly certified organic food. In fact, let's take the beautiful little town of Antigua Guatemala up in the Altiplano if you were to have boots on the ground in that town of around 20,000 people you'll find there are two or three good-sized organic farms within 15 minutes to a half an hour from the Central Park And by the way, you'll find out that most organic farms in Latin America are owned and operated by guess who? Expat gringos or Europeans? Hmm. How'd that happen? Because gringos and expats are the main market for that kind of stuff Whereas Latins of all classes could give a Kardashian's ass if their food was organic or pesticide saturated or not By the way shopping at those amazing outdoor food markets is the next best thing to having certified organic

[27:16] By the way at my July seminar will be hitting one of the biggest Craziest open-air food markets in all of Latin America and I guarantee will be the only gringos there. Oops We're near the end. So do check out my youtube channel to see the slides that go along with the audio do subscribe. It's free south of the border 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. Nos vemos