Hi debzor, at the moment I'm in contact with two developers as their buildings are almost completed. If they will lower the price as per my request I'll buy it otherwise I'll stay put.

Another "Must Not" While Investing In Brazil!!


NEVER base an investment from not only hearsay, but actual newspaper articles, government reports, even from personal conversations from representatives of the government themselves, here in Brazil concering infrastructure!

Roads, bridges, airports, cities to "soon" get international flights. All of this stuff are things that I have not only been hearing for a decade that is "soon coming", and not only here where I am, but in numerous cities throughout the northeast, and really the entire country.

I hope everyone realizes that there are literally thousands of situations, roads, bridges, etc. all throughout this country that if you go to the local governments they have documents, proof, to show you that money was allocated by the federal, state, or local gov't., to pave a road, build a bridge, fix this or that, and it simply was never done. That money allocated just "disappeared". And I'm not only talking about small projects, I'm talking about large ones as well. My fiancé lives in the south of Bahia, close to Minas Gerais, the closest city to her town is a place called Itamaraju. From Itamaraju to her city it is 100 km's. The road from Itamaraju to her city is a dirt road.....a terrible dirt road. When it rains you can only make the journey by 4 wheel drive or heavy truck. The last time I was there it started to rain the night before we left. We paid for a truck to take us to Itamaraju. You can buy a "ticket" on this truck which in the bed are benches where everyone sits. To make a long story short it took us 6 hours to travel 100 km's......6 hours!

Now, if you go to Salvador, which is the capitol of Bahia, not only will they tell you that this road is paved, but they will tell you that it's been paved since 1997!! And since then they have granted monies to "fix" and maintain this road 4 different times!!!

There is a joke I was told here shortly after I arrived to live by a group of Brazilians...it goes like this;

There was an american senator, Joe, and brazilian senator, Jose, who became friends. One day the american senator invited the brazilian senator to Washington and shortly thereafter he arrived. When Jose got to the american senator's office he was very impressed, Joe had a beautiful office, was wearing a $3,000 Armani suit, and driving a $130,000 Mercedes. Jose asked, "Joe, how much money do you make in a year?" Joe replied, "Jose, I make a salary of around $150,000 a year, but come over here for a second." Joe motions for Jose to come beside him in front of the window where he is standing. Joe says, "Jose, do you see that interstate down there?" "Yes, yes I do Joe" says Jose. "Well, 10% of the cost of that interstate....right here", tapping his pocket. "And Jose, do you see that gov't. building over there and that hospital over there?" Jose responds, "Yes, Joe, very beautiful, very modern." "Yes" Joe replies, "10%....all right here", once again, tapping his pocket. "Ohhhhhh", says Jose, "very nice!!"

Well, a few years later the american senator travels to Brasilia at the invitation of his brazilian counterpart who picks him up at the airport in his brand new Lamborghini Countach. Joe notices that Jose is now wearing a taylor made Valentino suit and a Rolex presidential edition watch. They arrive at Jose's office and after some chit-chat Joe asks Jose, "So Jose, how much money do you make?" Jose says, "Joe, come over here beside me at this window. Take a look out there Joe, do you see those bridges? Do you see that hospital? Do you see that airport?" Joe looked, wiped his eyes, and looked again. "What bridges? What hospital? What airport?", asked Joe. Jose replied, "100%.....right here Joe!" tapping his pocket!!!

The situation described above is COMMON all throughout this country. And everyone that lives here knows this. It's no secret.

Even if you see a government "project" and construction begins, don't assume that it's going to be completed, especially if there is going to be a change in government, or an election, during the construction phase. There are literally hundreds, if not thousands, of government projects where infrastructure was getting built, then an election changed the governor or mayor, and all construction came to a halt and was never restarted. May be hard to believe for some, it was for me, until I saw enormous structures or developments, partially finished and rotting from the years of neglect and asked what happened, it's a very sad thing. A terrible waste of tax money while so many here are so desperately poor.

I have an american friend that's been living here in Brazil in my city for a while now, believe he moved here around the same time I did. He tells a story about when he spent some time in India some years ago. He was staying in a rural area and had to travel some distance to buy wood. When he arrived at the place the man said that they were out of wood but the man delivering it was "soon coming". Well every few hours he would ask the man, "When is the guy getting here with the wood?" Always the same reply...."Soon Coming." Well, he waited for 3 days!!! A Brazilian buddy of mine and myself always got a kick out of that and when we hear these "stories" of big gov't. expenditures and projects, even legitimate ones, we just look at each other and say...."Soon Coming!"


Don't belive it, until you see it!!

__________________
www.mjrdevelopments.com/ www.rosegardenbrazil.com

I think howard davis was in Bulgaria previously doing pretty much the same

[quote=mitico67;23034]As a matter of fact I spoke to GW more than once and he has given me some sound advice. (...) Just before sending the money out I've started a few questions and to my desmay I realized the most of the time I knew more than them. It's a fact that a lot of the agents you can find surfing have very little knowledge of what they are selling. QUOTE]

Mitico, while it is very true that there are a ton of dubious agencies out there, please make sure you research all the information you are given from all sources as from GW's posts on this forum, despite his (possibly) best intentions, he has a lot of facts purely wrong.

From your post it seems you have a good grasp of the market in Natal and congratulations for that. If GW helped you to get to that point, then he's done you a great service and congratulations to him too. But between the bad agencies and the good agencies there is a huge grey area and GW seems to be somewhere in that area, so beware.

(Not intended as an insult to GW - it's just my honest view on his posts)

__________________
Yes, I work for a Real Estate company doing market research and analysis but I'm not involved in sales.

Have a nice day

Which facts did I get wrong Mr Broad.....the ones about "cheap, easy and regular flights to Brazil"? Like Foxtons saying there are regular flights from London to Brazil with TAM or Gol have bought 737's for Europe..or better still flights to Brazil with BMI Baby on a 737?Or maybe the one about the airport not being open in 2008? Or how about the bridge making a major difference to Jacuma/Natal Golf access..did I not really see that blooming great sand dune in the way? Or how about the new road that is "planned", ask Ralph about infrastructure projects in Brazil. Or was it "stable currency" as quoted on many websites? If a 20% increase in the Reis v Pound in 12 months is stable, what is unstable? Could be my lack of knowledge of openeing a bank account in Brazil, is it really much easier than I thought? Or rental incomes, when and if they come in where will they be paid to my easy opened bank account? Are you sure I got my facts wrong or is it that only me and a few others live in the real world?

Just for the record- rental income can be easily managed by the letting agents. They arrange for taxes to be paid from the rental income. They can also arrange for regular remittances abroad on presentation of the rental contract and tax receipts. The tax payable on this income will be just 15% of the gross rental value. It is true that at present without a resident visa (which you can apply for if you invest 50,000 US$ or more) you cannot have a bank account of your own. I believe that may change, but nevertheless income can be managed. The number of overseas owners of Brasilian property is increasing rapidly and thus will attract attention of the legislators. With the economy so strong, and positive balance of payments, the currency may even become a tradable. Brasil has the resources and strength now to enter the world markets, without fear. Black gold has seen to that. It may not happen in this government's life time, but for sure things are changing here in Brasil and for the better.

I agree with what you say Michael but look at the realistic commercial implications. Let's assume at best you can rent at 1000 Reis per month for 8 months that's $R8000/3.4 = £2353 per year income. Less administrators fees, less witholding tax, less bank transfer fees and = or - exchange rate fluctuation. Not to mention UK Bank fees to receive the money. So let's assume net funds in the UK of £2000. Even if you double the assumed rent it is only £4000! If you have borrowed in Europe to buy in Brazil you also have interest charges there. If it is free capital happy days. So, how much of a good investment for rental returns will this be? That is the question that needs answering and I await the deluge of answers proving me wrong.

it's a uncertain market for rental in the short/ med term for me. Certainly won't be stretching myself with loan repayments on my Brazilian investments in the hope that rental will bridge the majority of the repayments.

Around 2012 I'd hope to be realising 6% and, if the authorities play their cards right, with the w/cup investment in infrastructure/ tourism / branding then, maybe, 8%. Might be talking out of my arse, there's no figures to justify my forecast just an "educated !" guesstimate. What I do think is that £100k today will be worth £300k in 10-15 years in the tourist areas of Natal and Bahia.

Cheers
YeboC

I thought idea of the investment was also for capital gains that historiclly have been around 20% pa. Rental returns will vary on what you have paid for the property- aparthotel investments are producing net of fees, IPTU tax, condo charges etc, a minimum of 1000R$ upto 1800R$ a month high season. This is fact. The cost of the investment around 230,000R$, and with occupation rights as well for your own use. I estimate a 7.5% return gross of tax which is lower than UK tax. Of course you can leave the income to accumulate for your own holiday here as well., and make fewer transfers, and reduce the bank transfer costs. Either way people invest in real estate for the longer term. For shorter terms gains invest in land (no income)!!

Everyone talks in percentages but if you look at it R$1800 per month for a peak six month season, which is generous, it works out at £3176 Gross! After all deductions that is about 4 return tickets with TAP to Natal. If you look at it in that context, how good is the investment? So it has to be all about Capital growth of the property, currently in sterling terms Brazilian properties are 20% more expensive (against 12 months ago) due to exchange losses and that assumes local prices are stable. So if the Pound rises again, your property is cheaper to buy and your rental drops in value. Obviously the reverse applies if the Pound goes the other way. Hopefully the current market prices will flatten and bring reality back into local price demands. But, if you haven't bought already or are paying in stages, get ready to pay more because I can't see the Pound rising or the Reis dropping in the short term. What does this tell me, it tells me that for 4 grand a year sterling, on very expensive and limited flights Brazil is high risk at present. And your rental return just about pays you to get there. Now, find you can get there for the same price as Dubai from the UK £350/£400 or via a lowcost airline thru Capo Verde or Canaries and the whole thing could change.....end result...it's all about transportation, not oil in the gulf of Siam or wherever!