Post Number: 1
|Posted on Tuesday, June 26, 2007 - 7:44 am: |
I am looking into the feasibility of a business in Mendoza which will involve buying a lot of land and building on it to make an out of town “wine hostel”, the cost of buying property and the red tape are bothering me the most at the moment.
I am trying to understand how much the purchasing process is going to cost me. Currently I am factoring in the following fees
Inmobiliara 2% of purchase price
Escribano 1.5% of purchase price
Transfer of funds 1.5%-2% of purchase price.
Am I missing anything here?
One of the upsides of buying a lot and building on it is that the initial additional costs are low, but I have a few queries.
1. I need to transfer cash to the country for building work and later a vehicle for the business. If I make a transfer from the UK will the government keep 30% of it for a year? If so can I claim interest back on it!
2. Is IVA charged at 21% for building / renovation work.
Can anyone offer an insight into getting residency. I understand that to get a visa on the basis that you are an immigrant with capital you need to invest 50,000 USD, would a tourism business satisfy the requirements for this visa and do they need to see upfront capital expenditure or will a business plan do the trick?
Any advice would be really appreciated. I am very glad I stumbled upon this forum, lots of very good information. Cheers
Post Number: 1175
|Posted on Tuesday, June 26, 2007 - 11:36 am: |
There is a member here who is very familiar with 'red tape' in the Buenos Aires real estate market and can share some insight. Private message 'saint' or 'apartmentsba' (Mike). Also, contact Tom unless he shows up here. He -I think- is involved in another real estate project somewhere in Buenos Aires.
Yes, you are missing a big chunk in your cost assessment. In Argentina, once we get to the final number we usually add a residual (and unbelievable) 10% for contingencies. You never know but most likely you will be blindsided... something that wasn't in the picture at the time.
- Do you have an accountant in Argentina that will handle your business? How does he recommend that you initally fund the operation? Perhaps the best way of accessing funds for your initial investment will be to completely avoid the official channel and get the money there through well known 'casas de cambio' some of which now operate as banks.
> Is IVA charged at 21%?
My fist advice would be to find a competent accountant in Mendoza. Even if we know the answer, rules may change by the time you start or finish your work and may need a local person to navigate argentine taxing.
You may also consider doing all of this through a local partner and avoid all the immigration hurdle, provided there is someone you can trust.
Sorry I couldn't offer straight answers
Post Number: 2
|Posted on Tuesday, June 26, 2007 - 12:23 pm: |
I promise I won't hold anybody responsible for advice given, I understand from my first stint in Argentina that nothing is clear cut! I suppose I just want to have ballpark figures before I commit any money to the venture.
I could well start the business through a partner in Mendoza, That option had slipped my mind. Residency is appealing in the long term though, even if it is stopping me having to hop to Chile to renew Visas while I have a business to run.
Post Number: 174
|Posted on Tuesday, June 26, 2007 - 2:28 pm: |
Thanks Roberto for mentioning me. I would suggest however that Richard get serious and professional consulting advice.
Richard - if you are talking about an investment of this size and scale, I suggest you consult a professional consultant in Mendoza. PM me and I can suggest one to you. NOTHING is easy in Argentina and as Roberto suggested, things are much more than you would estimate. I've done literally hundreds of purchases in Argentina on land, buildings, apartments, etc and on most of them there has been some issue.
I specialize in Buenos Aires and the laws are different from region to region in Argentina so I'll just speak on general terms. You should add on to any realtors and legal fees IVA tax (21%) on top of those professional fees. Some will allow you to avoid paying this tax if you don't need an 'official receipt' but you will have to take that up with those people. But you should know normally there is iva tax on realtors and legal fees.
Transfer of funds into Argentina is not difficult but expensive and with the new anti money laundering laws passed last year any institution or bank that wires in the "white" which I would recommend will require quite a bit of paperwork like bank statements, paycheck stubs, last few years of tax returns. You basically have to show the origin of the funds so they know you aren't a drug dealer or money launderer.
Also, I'm not sure of the laws in Mendoza but you should know in many areas in Argentina (including Buenos Aires) there are stamp taxes (impuesto de sellos) that can be up to 2.5% of the purchase price. You should consult a professional in the area you are going to buy in as buying here can be complicated and there are NO room for errors considering you are paying 100% in CASH on the purchase.
There is a LOT of red tape here especially when the purchase is a large lot or building. I bought a multi-million dollar here in Buenos Aires and it took several months as everything was in "white". It was full of red tape. I also had to set up a corporation here in Argentina to purchase it (SRL) and bringing the money in was complicated since there were many investors so just be prepared.
Also, make sure you use an excellent Escribano that does a full title check on the property and know what you are buying. I recently received several emails from some people in London that were excited about some property they bought in Argentina and I hated to be the bearer of bad news that there was an article in the local paper that said how some company was selling fake property to these people in the UK and these people were people that got conned.
IVA tax (21%) on renovations will be charged on the actual materials that you buy typically. The cost of renovations has skyrocketed with inflation. Both the cost of labor and materials has gone up over the past 2 years. I'd estimate just from last year it's 20%-25% higher.
PM me and I can recommend a good immigration attorney. If you are going to buy a big property or start a company I suggest you get your residency here. I wasted a lot of time and money on my first immigration attorney but then I found a very good one that guarantees their work. You should know that it is almost impossible to get an investment visa showing investments here. NO matter how good your business plan is or how much you invest (I invested over a million dollars here in Argentina) and still didn't get it. I had to go another route. For some reason the investor visa is very difficult to get. A good immigration attorney can help you.
No, you will not be subject to the one year withholding on the money you transfer in if you structure it properly but again I recommend you get professional help on making sure you do this right.
Again, my advice is based on not just one or two or three or a few transactions. It's based on literally hundreds of purchases in Argentina.
For some reason, foreigners see buying real estate in Argentina very exciting. They see the cheap prices and compare it to prices back home and they get excited. I've never had any problems but I've seen many foreigners have problems that didn't use good people.
Trust me. There is nothing exciting about investing money on a piece of property or real estate and getting conned or cheated or having a lien or title problem on that real estate!
Also, keep in mind setting up a corporation here (SRL or SA) is not a complicated process but it involves partnering with a local resident so unless you are willing to do that, you better think twice about going the corporate route. Also, consider the exit strategy from buying as an individual vs. a corporation. When you go to sell, most areas in Argentina have a 0% capital gains tax as an individual but a 35% capital gains tax as a corporation so be careful. A majority of the Directors on your board of directors must be Argentineans.
Also, be mindful where you are buying in Mendoza. Certain areas are restricted from foreigners buying in it. These are border areas so make sure to be mindful of this. None of this is posted to scare you. It's just to help you and remind you to do a LOT of due diligence before you buy.
Hope this advice helps.
Post Number: 391
|Posted on Wednesday, June 27, 2007 - 6:15 pm: |
I personally do not know that much about Mendoza RE transations. The provincial governments have a lot of say in the matter just as states do here.
My partners have exprerience throughout Argentina.
Post Number: 3
|Posted on Thursday, June 28, 2007 - 1:54 pm: |
Thanks for such a comprehensive reply, much appreciated.
The majority of people I have come into contact with have urged caution at the very least, with one guy telling me that a large percentage of businesses in Mendoza are in fact fronts for shady operations elsewhere! Which I think is a touch cynical
It's clear that it will be a hassle to get off the ground and I need to get professional local advice for all these issues.
Is it worth the risk?? I suppose I am going to have to chuck a bit money at it before commiting a lot. Thanks for your help
Post Number: 175
|Posted on Thursday, June 28, 2007 - 2:12 pm: |
You're welcome Richard. I've also heard many cautionary tales from more than one person about Mendoza operations. I don't just think it's limited to Mendoza. It's better to take a "cynical" approach and err on the side of caution when doing business in Argentina.
I own a Venture capital company in Argentina, a consulting business and a real estate/property management and consulting firm. I CAN tell you my best advice from all of these perspective is to really take a good look at the cash flow potential of the investment as well as the capital appreciation potential. Than factor in the risks involved.
It's basically a risk reward ratio. I'm CERTAINLY not saying that it's not a good investment. I'm one of the largest buyers of real estate in Argentina so I can tell you that certainly real estate here is a great investment. I'm only saying that you need to take a good look at ALL the risks. Certainly what you are proposing and buying a simple apartment or house are two totally different things.
You have to take a good look and see if it's worth the risks in this particular case. Also, keep in mind it's not so easy to run a hostel or business if you aren't here on the ground. I certainly know that if I wasn't living here in Argentina and overseeing MY business day in and day out, I wouldn't be so invested here.
It's not so easy building up a successful business here in Argentina. I have several offers from companies to buy my firm and part of the big reason is that it's already established and set up. The biggest headache here is getting all set up, having a good operation and employees and team and most importantly debt free and cash flow positive.
Best of luck to you.
Post Number: 395
|Posted on Thursday, June 28, 2007 - 6:49 pm: |
Apartments BA, I look forward to meeting you in October at Roberto's get together in Bs. As.
Post Number: 396
|Posted on Thursday, June 28, 2007 - 6:53 pm: |
Richard Graham, come see us in Bs. As. in October, it is a networking thing, a social thing, a chance to see who we really are on this great blog.
Post Number: 1
|Posted on Friday, July 27, 2007 - 10:35 am: |
Hi Richard and all, I am glad to have found and signed up on this board, and also glad to see folks like ApartmentsBA on here who know their stuff!
I grew up in St. Louis, MO, USA, spent 3 years cumulative in BA between 1982 and 1991 with 15 trips in that time frame alone, married an Argentine beauty, and now live and work in Mendoza for the last 2 years. I speak Spanish fluently and know the area VERY well, not to mention knowing how to handle logistics here with ease.
Indeed there is lots of on-going interest in the Mendoza area, both by foreigners and the "dreaded porteños" (lol) and yes the most important first step is to establish a relationship with a good local English-speaking accountant and lawyer. I have some very good candidates for consideration.
The stamp tax is in full force here also, however this is often negotiated here to split between the buyer and the seller. In fact, much can be negotiated if the circumstances are right. While yes it is true that some properties are priced in dollars, the majority of properties are priced in good ‘ole pesos.
Realtors here are sticklers for the 3% buyers commission, although from time to time they will bend for you. As in BA, it is difficult to find a good realtor, but once you have one, they really pay off for you. Ditto on the essential Escribano as ApartmentsBA has always pointed out.
Also like BA, Mendoza prices have risen sharply over the last several years also. Asking prices for some properties are absurd. Owners are usually ready to "talk about it" way more often than not, and it is my advice to always "work on the price"
Mendoza is a very, very conservative province. Upper Mendoza (Mendoza City, Lujan de Cuyo, Maipu, Agrelo, Porterillos, Uspallata, and the stunning Uco Valley cities of Tupungato, Tunuyan, San Carlos, and La Consulta) are all "mountain town" zones...so the folks here, just like most mountain areas in the world, are fairly reserved and sometimes stone cold. But once you get close to any given person, they open up like budding flowers.
The "restricted" zone (called the border zone or “zona frontera”) absolutely allows foreigners to buy there, there is just more red tape (like police reports from your home country) and forms to fill out. The border zone has a very clear boundry and usually affects those who buy in the remarkable Uco Valley. Some people and companies have been waiting for over a year for their border zone approval recently, but that time frame is now actively being reduced, by the Minister of Interior in BA, back down to the normal lead time of 3 months or so. I have some good contacts in the Ministry of the Interior in BA that will help expedite any "delayed processing" as long as all paperwork is in order. No extra fees required by them. Contact me if you need help here on this issue.
If you or anybody else needs assistance in Upper Mendoza, please don’t hesitate to contact me. My strongest areas are just south of Mendoza City (Chacras de Coria and the surround suburbs) down to the southern tip of Uco Valley, and properties up into the mountains, to the border with Chile. I can also help with dependable referrals and direct negotiation and trouble-shooting in other areas of the province.
If you are looking for an apartment or home in downtown Mendoza City, I would recommend ApartmentsMendoza.com
Mendoza is becoming more and more popular for part-year and all-year living. I also provide relocation services and have helped move several people and families here. The area is very kid-friendly with all the outdoor activities related to the mountains, not to mention a few kid-friendly wineries that have big lawns where the kids can play ball while the parents, um, investigate the winery
From overseas: +54-9-261-553-5735
From inside Argentina: 0261-15-553-5735
Post Number: 1
|Posted on Sunday, December 16, 2007 - 12:50 pm: |
Hi Richard, I tell everybody that is my first message to the forum, that the truth is very good.
Soy Mendoza, I live here in Mendoza, I'ma real estate broker, which my partner and I will take care of the needs of stakeholders in the province. We have a team working really good, lawyers, accountants, architects, notaries, engineers, all working for us. Our job is to study and present the different orders of buyers, looking to satisfy their demands and needs. You asked a property and we move Mendoza to find any property that is closest to your needs or requests.
We also have our properties for lease, manage properties with the technical facility management, sell.
Any questions you need not hesitate to contact me.
My phone: 542614203635
Email: leandro.vdv @ gmail.com
Post Number: 78
|Posted on Monday, December 17, 2007 - 10:25 am: |
Hi Leandro, one of our products here is providing buyer services to clients and prospects thinking of buying property in Mendoza, mostly in the theme of lifestyle properties (snow-peak mountain view, natural and new forestation, water, land size 1500+ meters to 5 hectares) , in the counties of Lujan de Cuyo, Maipu, and the counties in Uco Valley, and the mountain townships...all in "Upper Mendoza" . No need to review private guard-gated neighborhoods as 96% of my clients don’t want to be in one although rural, spacious, well-organized private neighborhoods are very interesting. Both all and part-year living property candidates sought after. We charge buyers the same rate they would pay if they go through a seller agent, but we don't represent sellers. Can you contact me with any property candidates you exclusively represent? Thank you.
firstname.lastname@example.org, Tel: 155-535-735)
Post Number: 9
|Posted on Tuesday, December 18, 2007 - 9:20 pm: |
Thanks for your post Leandro,
I am being quite cautious about my future plans in Argentina, like many at this moment probably. I am continuing to look at the different opportunities available. Your company sounds promising, I will certainly get in touch.
Post Number: 2
|Posted on Tuesday, December 18, 2007 - 10:44 pm: |
Hello everyone, thanks for the comments, the benefit that we have in our company is that we worked well, although it is growing and recently we are as real estate, we have an advantage that I am Real Estate Agent (martillero Publico and Corredor comercio) with this title I am empowered to crear una real estate legal in Argentina, allows me to negotiate with both the buyer and seller. Is this important to me and supports the law of our country. Any questions I am at your service. Every time I like most here, I found people very warm.
Leandro.vdv @ gmail.com