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Patrizio
New member
Username: Patrizio

Post Number: 1
Registered: 2-2008
Posted on Wednesday, February 27, 2008 - 6:17 pm:   Edit PostPrint Post

I know many foreigners who come to Buenos Aires, like it and see it as a place to buy a residence or make a real state investment because of it low cost compared to international prices in similar cities. Well, unless you`re willing to lose aprox. 60 percent of your investment in a two year period, i would advice against it.
Here are some hard facts you might want to take into account while making an investment in real state in Buenos aires. These are indicators of overprice and an upcoming general fall in real state.

For this exposition we`ll have into account that is the internal market the one that decides the price of realstate because of its dimensions. Also the fact that the general population had had a chance to save up US dollars during the 90`s while the currency exchange was 1 peso= 1 dollar.
Now the currency is 3.15 pesos=1 dollar, only that the prices of real state remained in dollars, since people had their savings in dollars and were able to make transactions with them for a while after devaluation (2, 3 years after 2002 and until more recently on cheaper propperties)
Now salaries varies from 350 Us Dollars up to a $ 1000, for the general population, the latter one being the exception.

In the other hand, a 1 bedroom, 1 living room appartment 50 sq metter aprox, in a decent neighbourghood like palermo is worth $80.000, $90.000 US.

So, now there is no way average population are able to pay a 1 bedroom appartment unless they are willing to save up their entire salary for the next 228 years .

Banks even tried to make the best of the situation, by giving credits for the entire ammount of the propperty (yes, you heard right, 100% financiation, no down payment), but the catch is that the person had to make more than 1700 US dollars salary, and they only finance up to 60.000 US.Again credit is not accesible for the general population.

It is a rule that people will buy a thing when its cheaper to buy than to rent it. Then... How much is rent?
Rent is from 3.000 US annually to $4800 US. That`s 3,75 % to 5,3% annual return on the $80.000, $90.000.
Well, any other solid investment like mortgages loans will pay up to 15% annually (at least in BA), so we`re talking about that is 3 times cheaper to rent than to buy.
In other words, instead of buying the appartment, you could rent three of them with the return you get investing the money elsewhere.

So people who has the money wont buy, but rather rent. People who doesnt have the money cant get access to a credit to purchase. Internal market is stalled.

Thats the first and stronger sign of descalibration in the market.

Add to that , there`s a building frenzy in the city. In some neighbourghoods you get to see 2, 3 new buildings per block.

Building companies who have the money to build buy a piece of land and build on it, would rather buy two pieces of land, stabblish martgages over them and build in two places making almost twice as much.
The thing is the market is pretty much stalled by the factors i just explained. So the credits they took over the land have started eating the building companies up, including the buildings themselves (since its a mortgage on the land). Is not uncommon to hear the building companies saying that they`ll give you the possesion of the propperty with 90% of the money, and they will make the transfer of the propperty once an X pertage of the rest of the building is sold.
This means that if they go into bankruptcy people will loose what they pay and the whole building goes to action.

So you have no credit, an stalled market, Increasing offer because of the building frenzy and decreased demand, building companies that will end up having to either sell very cheap to cover expenses or go to auction, and last but not least , realtors.

Realtors really multiplied over past years due to this building frenzy, and where there was just a bunch renown realtors, now there is an excessive ammount. There are some who put pressure on their clients to drop prices, other are turning to an international market (this is you guys), in order to try and save their businesses from bankrupcy.

So, everytime you see about thet great prices of argentina keep in mind that they are just squeezing the last profits in a market that is very close to dropping very hard and very fast, in my oppinion and looking at the indicators a little over 60 percent of their price.

I know there is going to be some very angry people ready to contradict me, and its okay, i`m sure they`ll have their interests compromised by this Article. Enjoy and i hope it clear up the scenario for those who are thinking on investing here. If you already invested here, its a great time to sell with a profit (if you are in fact able to sell) and enjoy the show.

PS. This article reffers to houses and appartments, i dont think this can affect country lands for harvest, since they are tied to international prices of the commodities. Also coomercial propperties will be the least affected but not excluded, since their value is tied to production and sales as well.
//Patrizio
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 394
Registered: 5-2005


Posted on Wednesday, February 27, 2008 - 6:45 pm:   Edit PostPrint Post

This is very simple. If you don't want to invest in Argentina, don't believe in the market or feel nervous...it's simple. Don't invest here. No need for long posts arguing with you as many people have already posted for the past years why they would disagree with your post. Just go to the "real estate in Argentina" section and you can read all the reasons why much of what you wrote is wrong.

I heard and read from MANY people like "Patrizio" over the past 4 years. Real estate here is almost all cash over the table so the claims of 60% losses over a two year period are pretty comical. Banks here don't loan out 100% or 125% of the value of the properies like they did in the USA or the UK. Again, almost all are cash over the table. I've purchased hundreds of properties including apartments, houses, land and buildings. All of them were cash over the table. People aren't getting loans to purchase. They are paying with cold hard cash.

So people should read the real estate in Argentina section on this website to learn a bit about real estate here. If you want to look at bubbles you can look at the USA and the reasons for the overvalued real estate with the ridiculous loans. Those don't exist here. Then you take the situation where the locals don't trust the banking system here so they don't keep their money in the bank. They buy real estate. There are no credible/safe investments in Argentina besides real estate. THAT is why prices keep going up. Remember it's not foreigners driving the prices up. (Sure, they aren't hurting) but the real estate market is still driven by LOCALS paying cash.

As I've always said since I've moved to Argentina several years ago. Investing in real estate in Argentina is NOT for the majority of people out there.

As I said before, public message boards are around for a long time. So let's see a year from now if Patrizio's prediction of a 60% fall is correct. I would disagree with it.

Good luck to all.
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Simon Fawkes
Member
Username: Expatba

Post Number: 59
Registered: 1-2007


Posted on Thursday, February 28, 2008 - 5:27 am:   Edit PostPrint Post

I agree with Mike on this. Almost all real estate purchases are in cash, which reflects the true supply and demand value. Prices here have not been hyper-inflated by the availability of easy credit like in some countries.

There may potentially be an issue with oversupply of new build developments - however new builds are not indicative of the whole real estate market. Some new builds have been priced "speculatively" to appeal to foreign buyers - in some areas they are marketed at double the going rate in Recoleta for the same square meterage in an older property. By global standards this appears cheap, but by local standards it's ridiculous. I know many locals who laugh at "stupid foreigners" who will pay these prices and think they are getting a bargain. When they come to sell they may well find (in the short term at least) that they can't achieve what they paid.

That's not to say that all new-builds necessarily represent poor value for money. It all comes back to the old adage "buyer beware". If you choose carefully what you buy and do due diligence your investment should go up over the long term. As I said before new-builds are not representative of the market as a whole.

Simon Fawkes
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 1430303980, http://www.amazon.com/exec/obidos/ASIN/1430303980
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 396
Registered: 5-2005


Posted on Thursday, February 28, 2008 - 6:59 am:   Edit PostPrint Post

I agree with Simon and also on his comments. Also, something I forgot to mention is that I think you have to separate and look at real estate by neighborhoods as well. For instance, I do NOT buy anything in Puerto Madero and really haven't for a few years now. I did buy there several years ago and the property prices have doubled since I bought but I stay away now. There are some developments which are up to us$ 5,000 per sq. meter. I don't pay that much for real estate when you can go to areas like Recoleta and Palermo Soho and pay $2,500 per sq. meter.

Again, not to say that all new builds are bad because they aren't. I'm not even saying the buildings in Puerto Madero will lose value in the next few years. I think the opposite. I think they will continue to go up in value. However, I think Recoleta and Palermo will go up in value at a much faster rate.

Real estate here (and in any place in the world) should NOT be purchased as a "get rich quick" type investment. It's certainly not. However, many investors have different reasons for buying real estate in Argentina which inclue but are not limited to asset diversification, asset protection, tax reasons, estate planning reasons, getting some money outside of the USA/UK/Europe (wherever they are from), cash flow via rentals, future capital appreciation potential or some people just love the city and come over and over and they want a "home base" when they come here since 5 star hotels are charging upwards of $450/night + with the 21% tax. Many are intelligent businessmen that come over and over to the city and their companies give them up to $400 per night to spend on a hotel. Instead, I showed them that they can buy a property, stay in their own property every trip and bill their company less per night staying in their own place essentially having their company pay for their place. Everyone wins as the company is actually paying less per night than a hotel. I have some clients where their companies over the course of a few years ended up paying for their apartment because they stayed in their own property. All perfectly legal and not breaking any rules with the corporations.

Also, consider that Patrizio's numbers are based on locals or property owners renting to other locals. That isn't the case with many owners now. Many owners have seen my business model that I created back in 2002 renting to foreigners instead of locals. Their returns are MUCH higher than Patrizio is claiming. In fact, many properties here the owners are making more rent than they could make in the USA or Europe on a property that costs 3 or 4 or 5 times more. Also, the expenses here are a fraction of the cost back home. Expenses here are very very low. Expenses in pesos and income in dollars. I'm talking like $5 a month water bills; $15 a month electricity bills, $5 a month gas bills.


There are lots of reasons why people buy real estate here. VERY rarely is there only one reason. Cheers all.
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Arial
Intermediate Member
Username: Arial

Post Number: 159
Registered: 10-2006


Posted on Thursday, February 28, 2008 - 8:33 am:   Edit PostPrint Post

Patrizio, my son has an Argentine friend who is renovating large buildings in San Telmo. He holds your viewpoint. So you have at least one savvy professional with a lot of Argentina experience in your camp! He fears that Argentina is getting ready to stage a repeat of past performance and does not want to be caught in it--again.

I think that you could be right. No one has a crystal ball. However, one additional factor that has been added to the mix is that Argentina is a resource-rich country. Commodities are now in one of the biggest bull markets in history. This has not been the case for many years. Might this make a difference for this country? I hope that it will.

Thank you again for giving us your analysis of this market. I appreciated it.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 397
Registered: 5-2005


Posted on Thursday, February 28, 2008 - 9:07 am:   Edit PostPrint Post

Arial,

Definitely I think different viewpoints on a message board are healthy. Certainly the world would be very boring if EVERYONE thought the same way. In fact, as an investor I wouldn't like it as there wouldn't be the opportunities to get in and get out if everyone thought the same way.

There have been lots of savvy professionals here that have called the real estate market wrong the past several years. In 2004 they said it topped, same in 2005, 2006 and also in 2007.

Now, I don't have a crystal ball, however, I'll say since 2002 pretty much every single forecast I've made has come true in both the USA and Argentina as well as other places around the world. This includes with the economy, real estate markets, exchange rates, gold prices, etc.

Now, I'm NOT advocating speculation projects. I agree with the risk there both from an inflation standpoint and a possible exchange rate change. Costs are priced in dollars and expenses are in pesos. So I don't like those plays and I don't really invest too much anyone in total speculation projects. However, when I want to build a building up. I can go out and get all the investors together and get 100% of the millions needed to fund the project. I can buy all the materials to shield the possible liability of inflation but labor is still something you have to deal with.

However, on pre-existing properties. Ask your friend if these people sold their properties, what are they going to put their money into? Most people sell their properties to buy another piece of property (either upgrading or downgrading). I mean, sure, many have off-shore bank accounts but with the Patriot Act these days it's almost impossible for a foreigner to open up a USA bank account and other countries are tough as well. So ask your savvy friend what he feels is honestly the safest investment in Argentina.

Ask him if he would rather put money in the banks here in Argentina or buy a property. Ask him what he would do or what he would select? I doubt he will say putting it in the bank here. Ask him to give you a list of the top investment opportunities other than real estate (apartments, buildings or land) that are predictable and safe here in Argentina. I'd be curious to see his list. (Or you, Patrizio..... please give us the top 5 investment picks you give. Since you are predicting a 60% fall in real estate in 2 years here.... throw us out your list of your top 5 investments for Argentina that are safe... I'd be curious to see your list as well.

Ask any local what the safest investment for locals has been over all the years here with the instability of Argentina... I can almost guarantee they will tell you it's "bricks/walls" that are the safest investment that has consistently been the safest. You have to factor all this in mind to realize the dynamics of why prices are what they are. Never forget that when these banks gave people that had their savings in the banks here a fraction of the actual savings they had and cut off their supply to money for several months, limiting the amount they could take out....remember where many of these locals "cashed out". That's right..they sold their properties for 100% cash over the table....

Many people don't really understand that part of the equation. And understand that point. In fact, if there is more instability here, I think it will make real estate even more attractive as it's considered a "safe investment" here for the locals. Rents prices went up 27% in 2006 and another 26% in 2007. That trend isn't likely to change.

So think about all of these things when you say real estate will fall 60% over 2 years. Investigate the entire scenario here and why people buy.

Good fortunes to all.
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Patrizio
New member
Username: Patrizio

Post Number: 2
Registered: 2-2008
Posted on Thursday, February 28, 2008 - 9:33 am:   Edit PostPrint Post

Well, the price is going down, the question is when, and it is related as to how long contruction companies in debt will be able to hold to their propperties before they go out to auction, or how long till market stalls complety. A real state system can`t live exclusivly of foreign market because they aquire it as an investment, as soon as it stops paying a good return they`ll sell.
Small appartments are easy to sell, but bigger appartments market has pretty much stalled.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 398
Registered: 5-2005


Posted on Thursday, February 28, 2008 - 10:41 am:   Edit PostPrint Post

Ok...so you went from "you will lose 60% within a 2 year period" to "the price is going down, the question is when". That is quite a drastic change in the course of a few hours.

So, again, please list the other investments you feel are better than real estate in Argentina. I'm sure all these locals that are buying real estate would LOVE to know your long list so they can sell their properties and get in that investment.

Also, I'm not sure where you are getting the idea of "real estate system living exclusively from the foreign market". I'm not sure how involved you are in real estate in Argentina but foreigners are NOT a "majority" of the real estate market here so you might want to check your facts.

Cheers.
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 54
Registered: 12-2007
Posted on Thursday, February 28, 2008 - 10:57 am:   Edit PostPrint Post

Patrizzio,

As an Argentine who knows alot of people in Argentina in the salary range you state (350-1000), I will cast my vote to say that these people tend to want to get into their own home/apartment. Now you state that such people would have to save their entire salary for 228 years to cover the current home prices. I know alot of people who got into their own homes with their savings in addition with savings provided by family members(such as parents and grandparents). These family members once they have secured their own home, any monies gained after that tend to use it to help their children get into a home because what are the other options?....the banks or under the mattress....and both of these are risky propositions.

You as an Argentine(depending on your age) should have plenty recollection of the instability of the country in the past and how this has made "bricks/wall" the safest investment for "MOST" Argentines. Also, there are neighborhoods and there are neighborhoods. I tend to think that anyone investing in Recoleta and Palermo can rest easy as these places are not just reknown to Argentines but the world over. One more thing, how have you come up with this observation? I have been reading "La Nacion" and have not come across such information as of yet.
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Arial
Intermediate Member
Username: Arial

Post Number: 160
Registered: 10-2006


Posted on Thursday, February 28, 2008 - 11:50 am:   Edit PostPrint Post

Interesting discussion. I would like to find a book (Spanish is okay) on the economic history of Argentina. Anybody have one to recommend?

I have read in the past how wealthy Argentina was at one time. Supposedly "Rich as an Argentine" was a common expression. In the past it has apparently been a very expensive country as well and I tend to assume that what it has been before it will be again.

If that is the case, real estate prices probably have a ways to go. But when did it change? And why? I donīt expect answers but would like some resources if any of you know of any.
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Roberto
Board Administrator
Username: Admin

Post Number: 1558
Registered: 12-2004
Posted on Thursday, February 28, 2008 - 2:33 pm:   Edit PostPrint Post

> Rich as an Argentine.

There was a time when a few wealthy guys would walk with their cows -just like dogs on their leashes- through Florida street, one of the first streets in the city map of 1814. That was the time when argentines would *import* french architects for developing their mansions. We grew up with the belief that if you spit on the ground something will grow -anything- and that 1 crop would pay our entire debt (it was true back then... it may become a reality again!). All to our detriment as we won't be learning the important lessons.

You will find many answers after studying the transition from the oligarchy of the beginning of last century to the advent of Juan Domingo Peron in 1945, an event that changed everything to this very day. We are living his legacy (minus/plus), so to speak.

Two books I highly recommend are:

El ejercito y la politica en la Argentina 1928-1945 (Robert Potash). This one might be in english too. And I believe he wrote the second part too.
De Pellegrini a Martinez de Hoz (Mario Rapoport)

There is an essay -can't find it now- called 'La Guerra de las carnes" which is critical to understand how the influence of the US increased during the 20's and led to the events of 1930, our first military coup.
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Patrizio
New member
Username: Patrizio

Post Number: 3
Registered: 2-2008
Posted on Thursday, February 28, 2008 - 3:36 pm:   Edit PostPrint Post

I think its important to take responsability for threads (all around internet) offering B.A. as one of the hottest realstate spot. What i`m doing is not sitting idle while some people with loose morals take advantage of others unaware of the market in a comunity that is suposed to help each other achieve our goals and not to take advantage of each other.
What you say since you`re getting an advantage out of it, we should all stay quiet while lots of people makes lousy investments? Its just an article for business people in a business forum making an analisys of reality.

Btw, its a worldwide trend, see how the analisys done by CNN is sort of similar in this article about U.S. http://money.cnn.com/2007/11/06/real_estate/home_p rices.fortune/index.htm
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 56
Registered: 12-2007
Posted on Thursday, February 28, 2008 - 4:07 pm:   Edit PostPrint Post

Patrizio,

I think that a lot of the foreigners on this thread that bought in ARgentina, did so some years ago when the "real estate was one of the hottest" places to buy in comparison to similar placesin other parts of the world....and B.A. being one of the hottest(in certain locations). I doubt that any foreigners, at least in this website, recommend buying "NOW" at the current prices. What they are arguing about with you is the fact that you stated that in two years prices could fall 60%. Now, let's hypothetacally say that they do fall 60%.....I, as an Argentine would prefer to have my home(even at a 60% devalue rate) than to have it in a bank in ARgentina....why?....well, you do recall the "corralito", right?....with your home, you have it and live in it . And real estate fluctuates so you can see it go back up eventually. Now with the money in the bank, you can kiss that baby good-bye.

Perhaps you have misread some of the posts. I don't think there is no intent to misdirect and take "advantage of others". I think perhaps you have not taken the time to read through the posts in other threads to find the facts and to also understand that we state opinions(which may be incorrect or even if correct not accepted by others).

Perhaps also, a language barrier could be making you misunderstand. Sincerely, Gloria
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 57
Registered: 12-2007
Posted on Thursday, February 28, 2008 - 4:20 pm:   Edit PostPrint Post

Patrizio,

Sorry, I type at the speed of light sometimes and mistate things...I meant to say..."I don't think there is "INTENT" to misdirect and take "advantage of others". Gloria
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Roberto
Board Administrator
Username: Admin

Post Number: 1560
Registered: 12-2004
Posted on Thursday, February 28, 2008 - 4:36 pm:   Edit PostPrint Post

Patrizio, I wouldn't think of someone who tries to maximize profits as having loose morals. Perhaps shrewdness is a better word? In any case, I think you may be underestimating americans when it comes to business. As stated earlier, in the US, citizens are very familiar with the motto 'buyer beware' and in case you still have doubts, they are the founding fathers of capitalism and if they aren't, they have perfected it.

Finally, I would think that someone buying real estate is probably considering it as a long term investment, not something they can flip in a year or two. Where do you see real estate prices in dollar terms 10 years from now?
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 401
Registered: 5-2005


Posted on Thursday, February 28, 2008 - 5:02 pm:   Edit PostPrint Post

Patrizio,

The information provided on this board is accurate information. Take the time to read over the past few years all the information given and maybe you might learn something. The plain fact of the matter is that some of us have been spot on target about the market here. When doom and gloom type of people were talking about Argentina the past few years, they were exactly wrong.

In fact, posts like yours that try to imply that foreigners are the "majority" of the buying here are totally false. It's locals driving up the prices. Supply and demand dictates prices on real estate. Especially in Argentina where it's all cash.

Now, I'm probably one of the only people in Argentina that turns WILLING investors away every single day. (In fact, I know at least a few members on this board that I turned away that wanted to invest and if they choose they can confirm that). I've said many times on this forum that investing in Argentina is NOT for everyone. In fact, I've continually said it's not for most investors. The information here is accurate. No one forces anyone to buy real estate anywhere in the world. Real estate investments are VERY serious and I think you will see that there are some responsible, ethical and knowledgable players that only take on clients that they think are a good candidate for investing in Argentina.

I've said it before, I believe real estate is a long-term investment not something that you buy and flip. Especially in Argentina where the buying costs are VERY high when you add in the realtor's fee, legal fees and closing costs, money transfer fees, possible stamp taxes, etc.

No one can guarantee the direction in real estate. No one. And any investor realizes that. Again, information on this site has been accurate. Also, something interesting is many people that have called the real estate market here the past several years aren't just telling other investors it's a good investment. They also invested their hard earned money on real estate here. And they continue to invest here. I know. I'm one of those people. I don't just tell my clients the merits of buying. I buy real estate here every year. In fact I bought more in 2006 and 2007 than I did in 2003 and 2004. And I'm still buying in 2008.

The best thing for an investor if they have doubts, don't feel comfortable, don't feel knowledgable enough is to stay away from the investment. And this doesn't just apply to real estate. It applies to corporations, stock, oil, gold or anything else. Really understand the investment before you invest in it. I'm not one of those people that say buy real estate just for the sake of it. Those that follow this board know the calls I made for people to exit the real estate market over the past several years. There are reasons why I started investing in Argentina. You really need to take a good look what is driving the prices up.

So again, please enlighten us on what better investments you recommend for locals to invest their hard earned money in. This is a pretty simple question for you so not sure why you can't answer it. If you are saying real estate is such a bad play here..... do tell what you recommend? Do tell what locals would feel more comfortable investing their money in instead of an apartment or land?

I think you will have a very difficult time answering and there in lies the answer why real estate prices keep going higher. Unless there is a fundamentally systematic change where people trust banks or there is something safe that is good to invest in, I feel comfortable in my real estate positions and adding to my portfolio. Cheers.

PS -- Definitely I think public message boards are always a good place for people to post their opinions. As long as the information is accurate I think definitely people should post. But you posting about people with "loose morals" is just wrong. Especially considering some of us that forecasted real estate trends here have been EXACTLY 100% accurate!
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Benco
Junior Member
Username: Benco

Post Number: 39
Registered: 4-2007
Posted on Saturday, March 01, 2008 - 11:10 am:   Edit PostPrint Post

Interesting discussion. I do not have a particularly negative or positive view of the market, since I am lacking the necessary experience and inside information. But there are some points that I think are important to take into account:

When looking at past performance of the market, take into account the devaluation of the dollar. Rising dollar prices are in part explained by the weakness of the dollar and have nothing to do with the performance of the real estate market in Argentina. Look at your charts in Euros as well, or better use a basket of currencies.

As mentioned before on this thread, real estate is not a uniform market and highly depends on the area. Recoleta is not Buenos Aires and Buenos Aires is not Argentina. Prices have been rising fast in certain areas, but not at all in others. Check if your arguments are really able to explain these differences, general observations (safest investment in Argentina, all cash on the table, etc.) are of limited value. You need to make the right picks.

Investing in Argentina is risky, and real estate is no exception. I think property prices fell by 50 percent within weeks during the last crisis (others probably know better). Do not only look at the years after the crisis, look at the long term (short term you will loose anyways due to fees and taxes). Not sure if over the past decades the return on real estate investments in Argentina has justified the relatively high risk. Of course it may be different in the future.

For a foreign investor there are obviously all sorts of alternatives, like stocks, bonds, currencies, commodities, and you can invest anywhere in the world. No need to invest in Argentina. But the same is also true for wealthy Argentineans, who can easily buy real estate or other assets abroad (and they do, e.g. for tax "optimization"). I wouldn't put much weight on the argument that real estate is the safest investment in Argentina and that there are no good alternatives. People know how to get their money out of this country.

I do not see why a dramatic downturn in the real estate market should be about to happen, although I am not really optimistic on the general economic outlook on the long run (that is another post...).

Good luck to all.

---
By the way, with respect to the original post let me point out that when saving 350 USD per month it takes 228 months to save 80000 USD. Months, not years. So that is 19 years, in contrast to the quoted 228 years. Please check your maths, since a factor of 12 matters to most investors.
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Arial
Intermediate Member
Username: Arial

Post Number: 163
Registered: 10-2006


Posted on Saturday, March 01, 2008 - 5:24 pm:   Edit PostPrint Post

Question: Is there any reason that Argentines cannot invest in precious metals, foreign currencies (probably not the best since all currencies are devaluing), commodities, etc? Why would it have to be real estate? Just wondering.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 407
Registered: 5-2005


Posted on Saturday, March 01, 2008 - 6:43 pm:   Edit PostPrint Post

Benco,

I think you are making excellent points but I think much of it is common sense when you buy real estate. Certainly I am NOT saying ALL real estate is a good buy. I assumed that was understood from anyone buying real estate (it least it should be). I believe in real estate no matter in the world you are talking about the 3 most important things are 1) location, 2) location and 3) location. I'm VERY selective where I buy real estate and I assumed people understood that.

I still say real estate is probably the safest investments for locals. You can try to argue with me but anyone that disagrees should explain their side objectively and explain what are some other good investments INSIDE Argentina for citizens here.

Certainly at no time did I ever say real estate in Argentina is the safest and best investment for everyone in the world. In fact, again, I'll point out MANY times I've said it's NOT for the majority of the investors out there.

In real estate buying in the right location is so critical but especially in Argentina. I'm very careful where I buy. For example, several years ago I bought several properties in Puerto Madero but I haven't purchased anything there for years. Some developments are between $4,500 and $5,000 per sq. meter. I do not find that to be a good value play. I still think properties can appreciate but I can still good good deals on real estate in Recoleta and Palermo and I feel those are the safest areas with the best return potential on both cash flow and capital appreciation so that is where I buy.

I agree that for a foreign investor there are lots of risks if you don't know what you are doing, you don't know the areas well, you don't understand the laws well and know how it all works. Also, if you have a bad property manager you can have things go REALLY wrong. I can tell you horror stories. I literally get 7-10 calls/emails a day from both locals/foreigners that want me to manage their property. I simply don't. I don't manage anything I didn't buy for myself or my clients.

For foreign investors there are LOTS of various investment options. Lots. But I think people are a bit confused. Many of the foreigners investing in BA are very savvoy investors that are well diversified and many have done well on real estate deals throughout the world. The same thing is played out all over the world....people have value plays and they move in and then move out when they don't think it can go up anymore. For the foreign market, BA is still a value play. Now, trust me. I've been all over Europe and the properties there it's Simply IMPOSSIBLE to get the yields that are possible in a town like Buenos Aires.

People buy for various reasons including tax reasons, estate issues and tax planning, diversification and a hundred other reasons. For the local market, of course the really wealthy can send money abroad. There are Billions and billions of dollars from the locals abroad. But I can tell you for the middle class or upper middle class it's not so easy these days and they still believe real estate is a good play here.

Lots of the buying here is NOT from just wealthy families. Quite the opposite. Lots of people have been saving for years, they are families that pool money together, parents that help out their kids buy a SMALL flat in a good area. The dream for a lot of locals is buying a property and they save up and eventually buy. Argentina is for the most part NOT an "I want it NOW" society like the USA where everthing is on credit and financed. Real estate certainly it's a goal for families and they save up and they buy and it's an investment they feel safe in. They know the government is not going to come in and take that away from them like even their own money in the bank.

So Benco, I'm NOT saying real estate is the only play in Argentina. But give some examples for a local that you feel are great investments for them INSIDE Argentina. I'm not talking about investing their money overseas. I'm talking INSIDE Argentina. Sure, people know how to get money outside and do but I'd like to hear some arguments from all of you that are implying there are lots of good options to invest INSIDE Argentina.... present them.....

Definitely anything can happen here with the Economy. History has been a pretty good indicator that things have a history of being unstable here, but I still say that in that unstability it makes real estate is better play.

Also, consider at the crash it was one of the most devasting times for Argentina and consider why real estate prices went down. You had people that did have plenty of money in the banks but remember the banks closed and didn't allow people to take out their money. Now, I'm not talking about middle class. Imagine if you are a millionaire and your money is in the banks and you can't access it. The smart money got their money out of the banks but imagine what would happen in the USA or the UK or anywhere else in the world for that matter if the banks closed overnight and you couldn't access your funds.

Certainly even people with money would be in trouble as we don't keep our cash under the mattress. One of the only ways for people to access their money was selling real estate. It was desperate times for locals. Even people that HAD money couldn't access it (or only access a few hundred dollars per month). Now these people needed to access their funds that were rightfully theirs. But some of them couldn't even pay their bills so it was a desperate struggle just to get by. So they had to sell. The sales were cash on the table. THAT is why real estate took a sudden downturn. No buyers and people selling. It's supply and demand. Now, once the banking got stable again and people could access their funds the prices rebounded VERY quickly. A lot of people simply don't understand this. So you can say prices skyrocketed since the crash but what they neglect to understand is that the prices were artificially deflated in the first place.

Imagine the SAME exact situation if it were to occur in the USA. Where access to funds got cut off. (Certainly I'm NOT saying this will happen). But just close your eyes and stop and imagine IF it DID happen. What would happen? You would have nuts blowing up banks, it would be chaos. Look at all the crazy right wing groups in the USA. I'm sure people are shaking their head and saying things like "oh..Americans are very civilized people....things would be more orderly". That is NOT true. Let me ask you something. Why did the nuts blow up the Oklahoma City building? Because they weren't happy with the government. That's the answer plain and simple.

Now imagine a scenario where you cut off access to funds from Americans. There would be pure chaos. How unhappy with the government would these people be then? That is what you need to think about. You can argue that it will never happen in the USA (and I would tend to agree it will never happen). But nevermind that. Just for the sake of argument.....IMAGINE if it did happen and ask yourself what would happen under that scenario and it's pretty remarkable to see how civilized these citizens of Argentina are.

Please don't mistake my message either. I am VERY proud to be American. I still think the USA is the best country in the world. I think the business environment is the best in the world. I think the level of ethics is better than any country in the world. I think the way Americans do business is the best. I think the education system is the best in the world. In short, I love America and maybe I'll even move back to the USA someday because my passion for the country, it's people and the way of life. It's a country that I'd be proud to raise my future children in. But I'm also a realist and I'll always tell it how it is. There ARE some "broken" things about the USA. I realize now country is perfect and living in Argentina the past 4.5 years has shown me that. But I think we need to realize the faults of each country.

So, you have that situation and that is why people simply don't trust the banks here. I can tell you the banks here are HORRIBLE!! Locals simply don't trust them and opening an account in Uruguay isn't so easy anymore for locals. Many, many banks in Uruguay are asking for documentation from the locals of were the funds originated from and a good percentage of the population in Argentina evades taxes so it's not so easy.

I think intelligent discussion is great and the purpose of message boards. But more times than not over the past few years, I hear or read from someone or read on some message board a random post like "investing in real estate is dangerous...it will go down 60% in 2 years...". Then when I call them out on it or ask them to explain their position, or ask them to present other good investment opportunities for locals INSIDE Argentina.... funny thing....i usually never hear from them again....

Benco made a great point which ANY investor in real estate should be a given.... location, location, location in real estate is always important. Even those in the USA have been sheltered by investing in the right places. There are some areas that haven't fallen at all (not too many). Also, being very selective and investing in the right type of real estate in the right areas....many investors are still getting great cash flow via rentals on their properties.... (some not so much).

Remember, all of my posts are MY opinion. Certainly I'm not saying I know more than anyone else. But for those that have your opinions, provide OBJECTIVE arguments for your side.

Cheers all.
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Benco
Junior Member
Username: Benco

Post Number: 40
Registered: 4-2007
Posted on Saturday, March 01, 2008 - 9:24 pm:   Edit PostPrint Post

Arial,
I suppose you just open an account with a broker and then get access to the assets traded on the various exchange houses. Personally I haven't done it but I think it is similar to opening a bank account. I suppose it is straightforward to buy foreign assets as well, what I do not know is how safe your titles/certificates really are when the argentine government tries to steal them. To some degree you will always depend on the integrity of financial institutions and the local judicial system.

ApBA,
you are certainly making valid points and yes, what I wrote was just what I think is common sense. Nevertheless it is often overlooked, e.g. people say "wow, the dollar price of this property went up 40 percent over the past years" without acknowledging the decline of the value of the dollar by the same amount.

And you are right, I can not present a list of good investment opportunities inside Argentina, my point was that few people are restricted to invest inside Argentina. An interesting case are the private pension funds (AFJP) who were recently forced to sell their foreign assets, mostly in Brazil, and invest in Argentina.

Now what did they buy? Apparently they have no good ideas either. A large part of their money is sitting on bank accounts, driving down the interest on fixed term deposits. Rates are below 10 percent, with inflation around 20 percent. In other words, real rates are negative and this is a clear sign of missing investment opportunities.

My personal solution is to keep my money at home where it is not eaten away by inflation, and only bringing in what I need to develop my own business activities. So at least I know what I am buying...

Happy investing to all.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 408
Registered: 5-2005


Posted on Sunday, March 02, 2008 - 8:12 am:   Edit PostPrint Post

Hi Benco,

Yes, I think you are right about many people not using common sense. It's ironic and really strange to me that some foreigners buy property here yet they rush into it. I literally get phone calls on a DAILY basis from foreigners that bought real estate here but then they had MAJOR problems after because some mistake was made or they didn't due proper due diligence. For example, many foreigners buy here without having an architect's inspection or an engineers report. Now, back in the USA they would never dream about buying a house without a proper inspection.

But here in Argentina where there is more risk, it's 100% cash over the table, they don't speak the language, they rush into deals that they know little about. That can very often be a receipe for disaster. Certainly I'm not saying there is no risk here in real estate. Quite the opposite. There is a LOT of risk if you are buying in the wrong areas, you are buying the wrong types of real estate and you are buying "defective" properties.

Common sense always prevails so that should go without saying. I think that is an obvious point that no one is saying ALL real estate will go up wherever you buy in Argentina. That isn't true. Be very selective where you buy.

The plain fact of the matter here in Argentina is people simply trust cash or bricks. I've never seen a country quite like it. For the most part, the locals here don't trust in the stock market, they don't typically invest in start ups or their friends businesses or any other simple investments that are common in the USA. Here they are so distrustful (for Good reason!!) of the government and the banks. Investing in real estate all comes down to a "flight to simplicity" for them. They can easily understand it. They understand you save up, buy X apartment for $x and you will have that apartment until you sell it in the future for $X. You can have $X each month in rentals if you rent to a local or you can make $X each week renting to a foreigner (tourist).

Another thing I have looked at over the years in my travels to many countries around the world. I typically take a good look at the investment portfolio (if possible) of politicians. Politicians I don't care in what country typically have an inside edge as they know many influential businessmen and they in fact regulate certain laws determining the fate of those industries. In Argentina I noticed that MANY politicians own pretty extensive real estate portfolios. Look at the Kirshners alone. They own something like 25 properties (apartments/houses/storefronts/buildings) and they are generating millions of pesos per year in rental income. Do you really think they are going to pass some law that is going to punish real estate holders? Very doubtful. Why? They would be shooting themselves in the foot. They would be punishing their colleagues, their friends, their family and their constituents. Not going to happen, IMHO.

Look at the example of the former Economic Minister in the "toilet gate scandal". She was found with u$s 100,000 cash in her bathroom. Her response? "My brother loaned it to me to buy an apartment". That was her answer. Some of you just don't see the real dynamics of why real estate is going up here.

Another thing. Keep in mind I've purchased literally HUNDREDS of properties in Buenos Aires over the past 4 years. I've purchased from several politicians including some high level city politicians. Now, it was interesting in several of the purchases I had to keep the politicians honest. What do I mean by that? I mean that in several purchases it looks like the politicians picked up these properties VERY cheap at some public auction and unexplicably they never paid any taxes on the property. Now, maybe a local wouldn't force them to pay but I told them they must pay all the back taxes before we would buy and we would have an obligation to inform AFIP (local IRS - taxing authority) if they didn't. Of course they paid all the back taxes. One case took 10 months to solve but we finally get our client through it. It's interesting all the ways these politicians are picking up real estate here. Now, I've always maintained that it's difficult here if you don't know what you are doing. Take this example I just gave you. I was retained by an American ex-pat living here for the past 5 years. His wife was a local and they didn't have any clue how they can solve this problem. They already paid a 30% boleto down payment which the politician didn't want to give back. Definitely you take this situation with some foreigner that has no clue and there is a LOT of risk. I completed the deal for him and he bought with all the back taxes eventually paid before the closing. I refused to close until the politician paid all the back taxes. It literally took 10 months to keep this deal on track.

I agree with you Benco. I advise people that live in Argentina if they are foreigners to keep all their money offshore outside of Argentina. There is no advantage to having a bank account here in Argentina. NONE. As I mentioned before, the banking system here is horrible. It's quite amazing to think about but banks here have a debit and a credit tax. They charge you 0.6% every time you deposit a check and they charge you 0.6% every time you write a check.

Benco is spot on target about keeping funds off shore. Also, there are plenty of other investments out there as well around the world. As I mentioned before over and over again. Investing in real estate in Argentina is NOT for most investors. It's for a certain type of investor that has the finances for it. Most investors around the world and the majority of the population doesn't have hundreds of thousands of dollars of CASH sitting in their accounts that they can easily access without leveraging. This isn't for everyone....
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 60
Registered: 12-2007
Posted on Sunday, March 02, 2008 - 1:19 pm:   Edit PostPrint Post

Mike, you are so on target on your analysis on how "Things work in Argentina"...it makes me question the fact that you are an American....are you sure you don't have any Argentine blood in you?

Let me add something to the above post....in terms of houses that go to auction and in particular high end homes in good neiborhoods, the "average Joe" can forget on trying to obtain such property...the auctioneer is bought off even before the auction begins(la famosa "coima" Argentina).
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 409
Registered: 5-2005


Posted on Sunday, March 02, 2008 - 1:26 pm:   Edit PostPrint Post

Ha, ha. Funny Gloria. Now, if I got a dollar for every time a local told me the same exact thing..I'd be a very wealthy guy. Yes, I've heard the same thing over and over here from locals. Before I moved here I studied the market VERY closely and since living here that has given me incredible insight on how things work in Argentina.

You are also 10000000% correct about those public auctions. In the beginning I was convinced I would pick up properties cheap this way. Well, I quickly gave up as I determined EXACTLY what you mentioned. It's impossible. Coincidentally various politicians have picked up properties in these types of auctions. I tried in the beginning and then gave up as it wasn't worth the time. I came to the SAME exact conclusion as you mentioned.
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Benco
Junior Member
Username: Benco

Post Number: 41
Registered: 4-2007
Posted on Sunday, March 02, 2008 - 3:35 pm:   Edit PostPrint Post

Hmm, I am wondering how exactly they are cheating in a public auction. Is the buyer placing an artificially high bid and later pays much less (plus a bribe) in the actual transaction? Like registering a high value on the title with much less cash on the table?

Sometimes there is not even an auction, as in the privatizations under Menem... what a corrupt country.
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 61
Registered: 12-2007
Posted on Sunday, March 02, 2008 - 7:53 pm:   Edit PostPrint Post

Benco, yes as you say....a previous arrangement is made, coupled with a bribe. Bribes are very common in Argentina and you can find them in many business dealings. Business ethics is an oxymoron to many Argentines. Distrust of the government has led to years of disrepect of the law and consequently to such things as tax evasion for example. Many Argentines structure their business dealings in such a way to avoid taxation. Many business owners will prefer to pay a bribe then to pay a tax. This mentality is so ingrained in the citizenry that I can't see Argentina becoming a successful and respected country unless/until this is addressed.
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Benco
Junior Member
Username: Benco

Post Number: 42
Registered: 4-2007
Posted on Sunday, March 02, 2008 - 8:18 pm:   Edit PostPrint Post

Gloria, I agree on the mentality problem, and it is unlikely to change anytime soon. There are obvious things that need to be done to address corruption, e.g. the "Oficina Anticorrupcion" should be independent rather than depending on the government, as it is now. Are they going to examine the extraordinary income of the Kirchners? Certainly not. (I am not saying they are corrupt, but I would still love to see an independent investigation of their income sources. There must be more than rentals, and they should disclose it.)

What I still donīt get is how an arrangement in a public auction would work. I mean you have the banks and other creditors who will check that the highest bid wins and that the corresponding amount is paid. They are the ones losing money after all, so they will check. Maybe I am missing something...
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 410
Registered: 5-2005


Posted on Sunday, March 02, 2008 - 8:46 pm:   Edit PostPrint Post

Benco,

Obviously you have NOT lived in Argentina long enough. The fact that you seem surprised by how this all could happen shows me you probably don't really know how corrupt this country truly is. Argentina ranks as more corrupt than many African nations for example.

Almost daily you can read about some story in the paper about some corruption scandal here. Mayors bribing business owners (just happened again the other day I believe in Pinamar).

I agree with Gloria. It's all a mentality and state of mind. Argentina can NEVER become a first world country without a systematic change. Many locals I'm sure don't like my company. I get 7-10 emails per day of people wanting me to manage their properties and I never work with the locals anymore. I stopped even trying almost 2 years ago. Why? I think my firm is the only apartment rental company in town that actually forces our clients to pay taxes on their rental income. When I told locals this a few years ago that they MUST declare the rental income they looked at me like I was crazy. That is when I knew I couldn't work with the locals.

Even at some business seminars that I've attended there have been round-table discussions and I talk about all the high taxes for having employees and they all say I'm crazy as I have all the salaries in "white" and the payroll taxes here are extremely high. Also, paying all the required taxes and insurance makes them look at me as if I'm the one doing something wrong.

I have hope that someday that will change but I'm not holding my breath. As I've always mentioned, it's a very tough place to do business in. Fortunately, real estate is a good field to be in as you don't have governmental officials trying to get bribes, etc. If you are paying the required taxes then you are fine. It's not like owning a bar or some club or some other seedy business where you might have to pay off cops or government official. That's what I truly like about real estate. It's a fairly "clean" business and I believe that's why locals like it so much as well. It's easy to understand and as long as the property is legitimate and the Escribano makes sure the title deed is not cloudy, as long as you pay your taxes you are fine (albeit most locals do NOT report any rental income on that property).

Benco - I doubt you will get anyone to explain the ins/outs of how corruption works. Many Argentines don't know all the details but like Gloria mentioned, they know it goes on. Your mistake is trying to figure out how they can cheat you in a "public auction". That isn't the right way to look at it. The right way to look at it is more "how NOT can you get cheated". Yes, you are missing something. Same way that I'm sure there are commercial projects that probably have a bidding process but some how bids seem to always go to certain companies or contractors, etc. Don't think for a minute that there might not be some kick back arrangement. In fact, there have been scandals in the past and for every one that becomes public there are probably another 100 examples out there you never here about.

Now, I love Argentina just like I love the USA but as I mentioned before, I believe in being honest and pointing out flaws in the system here.

Benco - remember a better way to think and honestly I believe the question an Argentine would ask is NOT "how in the world could they cheat". They would ask, "How will they NOT cheat!!"
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 62
Registered: 12-2007
Posted on Sunday, March 02, 2008 - 9:46 pm:   Edit PostPrint Post

Benco,

I'm afraid that I can't tell you the details of any dealings that involve bribery as I have not ever been previ of such an account. I assume that each dealing is different and that in many, more then one participant has to "be payed off"...perhaps not even monetarily. I have heard of accounts that at times family of employees were given jobs in certain government positions in "exchange of misrepresenting information, repressing information, and fudging figures, etc.

News of corruption is so common that the average ARgentine has learned to live with it as a part of the culture.

Mike, I would love to be able to be a part of a meeting where an American tells a bunch of Argentines that they must be up to date on their taxes....hahaha...I would pay to watch and see the faces these people make at such advice.
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Keith Mangan
New member
Username: Kreation

Post Number: 17
Registered: 9-2006
Posted on Sunday, March 02, 2008 - 9:57 pm:   Edit PostPrint Post

Hi;
Just to put my two cents in on the auction game:
It is possible to buy in these auctions quite legally;but you will pay a "your not in the gang" tax.

I don't have first hand experience of this but am about to walk into the game in a few weeks.

Like I said I don't have first hand experience but from local knowledge; it is controlled from a "cosa nostra" experience..You can go with all the cash you like to public auctions but you will not get a thing.Someone is always there to outbid you.However whatever you bid is taken into account and it can/may be sold to you at that price but a lower book value..i.e,you go 240K it will be sold to you at 200K + a forty backhander; its an agents fee at the end of the day; it's up to them to pay their taxes.Not quite what we are used to; but if papers say 200 you end up in the white; but a wee bit out of pocket.

For entertainment I am going to look into this for buying a car here; chances are I won't follow through on anything but I feel it could be good to see how this works;whether this comes as a warning or an omen is still to be seen.....

I'm laughing at myself for even considering the idea but if something is worth it its worth it and at the end of the day we don't know who's paying what to who; government or otherwise.

Benco
(I am not saying they are corrupt, but I would still love to see an independent investigation of their income sources. There must be more than rentals, and they should disclose it.)

In principle; I agree but when it comes down to it; if they done it and got away with it; leave it be.Whatever they done is small money in comparison to what it costs to find out; and this comes out of the taxpayers pocket.Forget about the past; just make sure it cant happen again.(check out Ireland Tribunals;ref Charlie Haughey and Berie Ahern) C.H raped the country for millions and bought an Island with it...(funny but true; I'm not sure how people didn't notice it) but the tribunal has gone into the high millions paying lawyer's to find out facts with nothing resolved after 18 years...
Bertie ( Irish Pri-Minister; Taoiseach) is being investigated for not reporting 5,000 Irish pounds for tax purposes in the 80's yet the case has ran into millions for the taxpayer.Lets hope Argentina never makes that mistake.The only winners are the lawyers

If I go through with the going to the Auctions; I'll let ye know.
Chances are I may be talked out of it..:-)

Keith}
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WTMendoza.com
Intermediate Member
Username: Welcometomendoza

Post Number: 161
Registered: 7-2007


Posted on Monday, March 03, 2008 - 4:03 am:   Edit PostPrint Post

So one day Juan called his good friend Pablo in the government:

Juan: Hey Pablo, my kid just graduated college and I was wondering if you could help get a job in government?

Pablo: Sure, look..I have a great position for him, the salary is 15,000 pesos a month, and your son doesn't even have to show up for work at all, in fact it is a direct deposit into his bank account. Shall I sign him up?

Juan: Well Pablo, I appeciate that but isn't there something more down to earth that will give him experience?

Pablo: I have another position that pays 5000 pesos a month, your son has to come once a week to show his face, and one at the end of the month to pick up the paycheck.

Juan: Pablo..really ..thank you but I want my my son to have a job that will give him real world exprience, something where he has to work his way up the ladder.

Pablo: Well Juan, okay but the only job posting I have for that pays 1100 pesos a month, he will have to send hs in resume for consideration, and he will be cometing with dozens of other applicants.
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Benco
Junior Member
Username: Benco

Post Number: 43
Registered: 4-2007
Posted on Monday, March 03, 2008 - 6:58 pm:   Edit PostPrint Post

WTMendoza,
I guess you describe what people here call "noquis"... Recently Macri, the new head of the city government in BsAs, and his team showed up surprisingly in government offices, counting the number of "real" workers with shocking results. Some noquis have been fired since, but there are legal problems. I had to laugh out loud when I read that Telerman, the former head of the city government, said he would have done the same in a second term. That comment really made my day.

ApBA, to understand the level of corruption you donīt have to live here for long. As you say, it is in the newspapers every single day. Some examples of the last two weeks:

- Pinamar with Porretti and Leonian, asking club owners for bribes, or they would close their clubs "for selling alcohol to minors" or other reasons. It also emerges that the former administration was not any better, that the clubs were "arranging" for decades and never paid for the use of public space.

- The scandal about car imports by diplomats, involving cancilleria and aduana

- A story about "La Rural" in Palermo at Plaza Italia, which was given away by the state several years ago at a ridiculously low valuation.

- The scandalous accounting practices at the Obra social de Buenos Aires (OBSBA)

- Thales Spectrum, a trial about a rigged tendering procedure under Menem

- The Antonini case, making Cristina sweat

And the list goes on and on. You learn that quickly - what comes with the years is probably frustration and resignation. Now public spending and concessions and such are notoriously prone to corruption. But an auction about real estate in foreclosure is so simple. The highest bid wins and you canīt walk away from a bid. Even in Argentina it should be possible to organize that properly. Maybe Keith will find out more details about how they cheat. More often than not everybody (except the foreigners...) knows what is going on and there are some political interests protecting the system. Hope you keep us updated!

Cheers all.
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 63
Registered: 12-2007
Posted on Monday, March 03, 2008 - 7:26 pm:   Edit PostPrint Post

Benco,

I have two friends that use to work in PAMI...the stories they have told me about the corruption in PAMI would make your hair stand on ends. It's frustrating as you say and to me when it concerns the most frail, in this case the elderly, it just breaks my heart.

I love my country, and wish it were different, however I don't think that things will change in my life time. I often say I want to go back and live over there for many reasons...family, friends, the culture, food, ...but then the thoughts of corruption sober me up and I just give thanks to God that I have the choice to live somewhere else.
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WTMendoza.com
Intermediate Member
Username: Welcometomendoza

Post Number: 163
Registered: 7-2007


Posted on Monday, March 03, 2008 - 7:38 pm:   Edit PostPrint Post

Gloria, growing up here for people like you, must make it difficult to justify "why to return" when you touch on these kind of topics, but don't forget the corruption in the US is much more hidden and sometimes huge - like Enron, implied Haliburton, look at the CDO/SIV's etc, etc..the list goes on...

Why deprive yourslf of the family, friends, culture, and food when at least you can say you know what's going on and there is no way you can be fooled. Plus, you have a whole anchor now in a different country. Comon - take re-plunge:-) cheers
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 412
Registered: 5-2005


Posted on Monday, March 03, 2008 - 7:52 pm:   Edit PostPrint Post

Gloria,

I also heard from some people like you and the horror stories. I think there are probably 100 different ways those auction markets can be manipulated.

I also agree most likely we won't see a systematic change in Argentina in our lifetime. It's just so embedded in society here. That will take a VERY long time to change.

There are positives about Argentina as well but I think maybe you can have the best of both worlds owning a place in the USA and also a place here in Argentina. I plan to pick up a few houses in the USA starting in 2009. There are some things I miss about the USA after living in Argentina for almost 5 years. I miss the variety of food as well as other aspects of the quality of life in the USA.

There are great things about both places. I know you mentioned you have a child and I'd say the educational system in the USA is one of the best in the world. You have private schools here in Buenos Aires but they are just as expensive as private schools in the USA.

Both countries (the USA and Argentina) are great in very different ways. A shame that they both can't learn a bit from one another.
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Roberto
Board Administrator
Username: Admin

Post Number: 1571
Registered: 12-2004
Posted on Tuesday, March 04, 2008 - 11:04 pm:   Edit PostPrint Post

It appears y'all scared Patrizio... School discussion can continue in education in Argentina
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 427
Registered: 5-2005


Posted on Sunday, March 09, 2008 - 11:14 am:   Edit PostPrint Post

Benco,

One more thing I'll mention about public auctions just because I read an article yesterday in the paper that reminded me about how shady the system is.

A judge here is facing impeachment for participating in an illegal association that stole property from detainees during the 1976-1983 dictatorship. Judge Emilia Marta Garcia worked as an employee of a notary office, where she allegedly signed documents changing the legal deeds of property belonging to people who were killed or disappeared.

Now, if you are saying to yourself, "yeah but that was 30 years ago and doesn't happen today". That isn't true. Just last year the City arrested a big ring of people that included engineers, architects, judges, lawyers that were finding people that died and selling their properties (in many cases at public auctions)illegally. Now, they will be in jail for a very very long time but that doesn't make it any easier for the people that paid 100% cash at public auctions for these properties and fighting the next of kin on properties that should have never been sold in the first place.

The thing is these public auctions I'm sure there are many legit deals but from what I've seen, there are lots of shady deals as well. My theory is why take the chance on having problems or issues. I use probably THE best Escribano in town and a former ex President of the Buenos Aires Escribano Association. I don't buy properties at auctions and make sure there are no issues with the title deed. You will find most reasonable people do the same thing.

Roberto - I hope we didn't scare Patrizio off. That was not my intent. I truly believe it's good to have other sides of the argument if the other side fights for their side/cause objectively but unfortunately many times on public message boards that is NOT the case. They write something that can sound alarming anonymously and then when you call them out on it asking for objective, detailed facts, they disappear.

If there are other sides of the argument. Post objectively. Tell all of us your experience in real estate in Argentina. Tell us if you own here, ever purchased here, your experience in real estate in Argentina, your returns, your other investment options. Then let people of the board read the posts objectively and let them decide.
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WTMendoza.com
Intermediate Member
Username: Welcometomendoza

Post Number: 170
Registered: 7-2007


Posted on Sunday, March 09, 2008 - 8:45 pm:   Edit PostPrint Post

There are a number of these cases across the country of tryng to get back property "taken" by the military from the 1976 to 1983 period - much is just starting - there was and still is alot of fear that there may be retaliation for making such a re-claim. There s a rather large tract of land very close to where I live that allegedly was taken by the military, divided up sold off in lots, the new owners, regular people , built home that are now 25 years old, and the original owners of the large tract,who live in another ountry now, are making claim back to all this property. What an issue....more so how important it is to be aware of the local history of what you are buying. In the aforementioned case, it would seem logical that the Argentine government should restitute the original owners with cash y listo.
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Benco
Junior Member
Username: Benco

Post Number: 47
Registered: 4-2007
Posted on Wednesday, April 09, 2008 - 1:11 pm:   Edit PostPrint Post

Here is a piece of bad journalism about real estate prices in Barrio Norte, Buenos Aires:

http://www.clarin.com/diario/2008/04/09/laciudad/h -03803.htm

The article says that apartments in Barrio Norte are more and more expensive and exclusive, that prices went up by 18 percent in the last year, and 38 percent between 2005 and 2008. You can also read citations from real estate agents who say the reason would be enormous demand and a shortage of available apartments.

This article confirms the lack of common sense that I have posted about before on this thread. The devaluation of the dollar and peso is not even mentioned, although it fully explains the numbers. Nor do they mention inflation - just about everything you can buy has risen in price at similar rates. And why are the apartments more "exclusive" when you take into account that nominal salaries have risen as fast or even faster? And then they cite people from inmobiliarias with views that are distorted by self-interest in an obvious way.

If the numbers in the article are correct, then the real estate market in Barrio Norte has been flat for the last four years (in real terms).
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Roberto
Board Administrator
Username: Admin

Post Number: 1623
Registered: 12-2004
Posted on Wednesday, April 09, 2008 - 9:21 pm:   Edit PostPrint Post

Benco, you are right on the money.

It is the same as oil at $112 per barrel. How much of that is inflation (or dollar depreciation)? It doesn't take a very sharp eye to see that internationally, countries need more dollars to buy the same barrels... even more so as the dollar weakens. Her suprising tone stems from the fact that such *high* sq. meter prices are unheard of. What she misses is that today's dollars have little or nothing in common to dollars of the past. In my recent trip to Argentina I encountered two different versions... some 'escribanos' telling me biz has soften a lot since mid 2007 whereas a few smaller developers continue to invest.
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WTMendoza.com
Junior Member
Username: Welcometomendoza

Post Number: 228
Registered: 7-2007


Posted on Wednesday, April 09, 2008 - 9:40 pm:   Edit PostPrint Post

While the dollar has some to do with it, there have been a few articles in the press in BA how the construction industry has ground to a slow trickle over the last year- is this true?

The unheard of prices are probably relating to areas and zones not used to being further developed in the recent past...I would think
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Roberto
Board Administrator
Username: Admin

Post Number: 1624
Registered: 12-2004
Posted on Wednesday, April 09, 2008 - 11:12 pm:   Edit PostPrint Post

Perhaps, Sean. But I can't remember an apt. of 100 sq. meter valued at u$d 300,000 in that area in all my time in Argentina, about 30 years. And prices in dollars have remained pretty much steady over the years. You would have to go back to the time of Martinez de Hoz and the "plata dulce" period when argentines were buying real estate -and electronics- in Miami like hot pancakes. And even then, I am not sure about those prices.

Question is, does the exchange rate at 3 to 1 indicate a cheap dollar -or an overvalued peso- as it was the case 28 years ago when Martinez de Hoz artificially -by way of La Tablita- created a strong peso? Something is not adding up... More about plata dulce (spanish)

It would be interesting to know how many cows were needed back then to buy an apt. in that area and how many are needed today... or barrels of oil or oz/gold or swiss francs. To compare with a basket of commodities and currencies.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 466
Registered: 5-2005


Posted on Thursday, April 10, 2008 - 12:46 pm:   Edit PostPrint Post

Prices HAVE appreciated significantly in the Recoleta area (as well as most good areas including Puerto Madero, Barrio Norte, Palermo) over the past several years. I would disagree that they are as much as $3,000 per sq. in Barrio Norte. While there ARE some properties at that price it's few and far between. Also, much just depends on the condition of the property. But anyone expecting $3,000 (so far today) will be hard pressed to get it. I've sold several properties in Recoleta in the $2,500 range per sq. meters in good areas.

But even today I list some very nice properties that are totally renovated including marble bathrooms, totally new kitchens, etc. even in the most exclusive areas like Avenida Alvear (across from the Alvear Palace Hotel) and the listing price is about $2,700 per sq. meter. Much depends on the specific location, the amenities of the building (i.e. pool, 24/7 security, gym, sauna, etc), amount of natural sunlight, uniqueness.

Property prices HAVE appreciated significantly. This is what I forecasted many years ago. To give you an idea, last year I sold a 68 sq. meter apartment for $2,500 per sq. meter. I have received some other offers on properties I own and usually they are around $2,500 per sq. meter.

You have to consider the fact of what I have mentioned so many times over the last several years. There aren't too many SAFE investments here for locals other than real estate. Supply and demand will always dictate what prices are.
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Roberto
Board Administrator
Username: Admin

Post Number: 1626
Registered: 12-2004
Posted on Saturday, April 12, 2008 - 4:24 pm:   Edit PostPrint Post

The $2,500 range per sq feet for Recoleta seems to be holding well and I think has been steady for the last few years. I remember on of your posts back then where you mentioned that bracket.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 467
Registered: 5-2005


Posted on Sunday, April 13, 2008 - 12:47 pm:   Edit PostPrint Post

Hi Roberto,

I wish it was $2,500 per sq. feet but it's per sq. meter. I know you just made a typo. (10.76 sq. feet in 1 sq. meter). Well, really it hasn't been the past several YEARS on that price.... it's been in the last year or so in some areas. Before that it was less. (Some areas like Puerto Madero has some projects as much as almost $5,000 sq. meter which is a bit insane if you ask me for today's prices). Much really depends on the exact street/location and the amenities of the building and also the condition of the property. If it's in bad shape, it can be less. If it's totally renovated then closer to that price or a bit above.

Really, many people that are buying investment properties are buying new construction now. Personally I find older buildings more charming and they are built with a much higher quality of construction but many foreigners buying real estate in Buenos Aires are buying as investment properties and the rental occupancy rates tend to be higher in buildings with more amenities like 24/7 security, pools, gyms, saunas, etc. So I've seen a real shift over the past 1.5 years or so into those newer properties. Almost all of the new properties I buy for myself are in newer buildings with full amenities now. Hard to find these types of properties in Recoleta so most are in Palermo or the various neighborhoods in Palermo (Soho, Viejo, Hollywood).

As I mentioned earlier in this thread, these days I'm staying clear on new projects that are totally new. There is too much uncertainty in those types of projects for me with the insane inflation. I typically only buy in projects now that are 1 year or less from being done. That way there is less risk.

I've seen a LOT of smaller players that are building here that don't have much experience and they didn't account for inflation. Remember that it takes about 1.5 to 2 years (or more for a skyscraper). MANY of them didn't account for 30% or more inflation while the project is being built. More expensive labor, more expensive cement, materials, fixtures, etc.

So, those investing in totally new "hole in the ground" projects need to factor this into the risk/reward ratio.

Cheers all.
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Tom
New member
Username: Tomatalki

Post Number: 25
Registered: 10-2007
Posted on Sunday, April 13, 2008 - 8:26 pm:   Edit PostPrint Post

Okay, I've read thru the whole thread and I'm not going to touch the corruption issues but as far as investments...... I bought an apt in Polarmo to keep forever. I'm moving down and I don't plan to sell. I'm happy here.

I am a realtor in the US. The reason investing in Real Estate works so well in the US is leverage. When you buy RE in the US you put !0%, 20%, 50% down and finance the rest . You are making 7% per year to who knows how much on THE FULL VALUE of the property. You buy a property for $100,000 with 20% down. The property goes up 7%+ ($7,000+) per year on your $20,000 investment or about a 30%+ return. LEVERAGE!!!

Location matters. In Seattle, where I'm from prices haven't dropped so I wouldn't invest there. Other places prices have dropped and they will go up again.

Buy here if you want a place. Buy in the US (especially now) if you want to make money.

That's my 2 cents.
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Apartmentsba.com
Advanced Member
Username: Saint

Post Number: 468
Registered: 5-2005


Posted on Monday, April 14, 2008 - 9:25 am:   Edit PostPrint Post

Hi Tom. I agree with you that the use of leverage in the USA is so key and helps ROI because you aren't having to front the entire 100% in cash. However, that is the reason why many of the problems in the USA real estate market are there today. The banks allowed people to leverage too much and in fact, the banks themselves are leveraged too much. Most investment banks today are still leveraged to a factor of 30 to 1.

In Buenos Aires it's tough for most investors because for the most part it's 100% cash over the table. That's why I always say it's NOT an investment for everyone. I actually like the fact it's 100% cash here as it means that people that can't afford to buy simply can't here. Those purchasing are those that saved up the money and are buying so it's totally different than the USA where you put down a small down payment and pay for the next 30 years. I've always liked that aspect about it here and keeping the market stabilized for the most part.

I agree prices have fallen hard in the USA but like most economists now....I think it can fall further throughout 2008. I don't see a recovery until at least 2009. The credit mess isn't solved yet. I do plan to buy in the USA but I'll wait a bit more. I think in many areas, prices can fall another 10% to 15%. I do agree with you for the long-term prices will come back but I think it will take many years for things to stabilize.

Good luck.
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Roberto
Board Administrator
Username: Admin

Post Number: 1630
Registered: 12-2004
Posted on Friday, April 18, 2008 - 1:26 am:   Edit PostPrint Post

> I wish it was $2,500 per sq. feet but it's per sq. meter.

Thank you for the correction, Mike.
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d
New member
Username: Davidcarpediem

Post Number: 1
Registered: 12-2008
Posted on Wednesday, December 17, 2008 - 12:55 am:   Edit PostPrint Post

i read of this topic of few other ...Now since the financial crise who is involving almost all countries ... i have some question

- I do understand that the real estate market is healthy in B.A because evrything is paid in cash . But the fact tha many foreigner own flats , and if they are going to need cash the 1 st selling will be their overseas properties ..So did the market is not going to fall down ( and also the fact that many people will now hesitate or will not have the fund to invest ) ?
- I am thinking to buy around march 2009 in Palermo ( small place around 70 000 dollard )? wise ?

Thanks for all your comments , good or bad , it well thinking

Do some people have different name of escribanos( i do speak spanish) , real estate ( mike , your website have help me a lot but i am not enough rich for you )?

cheers
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Simon Fawkes
Member
Username: Expatba

Post Number: 76
Registered: 1-2007


Posted on Wednesday, December 17, 2008 - 4:35 am:   Edit PostPrint Post

Hi David

Prices in BsAs have remained more or less static over the last six months or so. It is true that some foreign owners are desperate for cash and are selling their properties here, which could exert a downward pressure on prices, although it hasn't really done yet.

Equally, many Argentineans are/have brought their overseas wealth back to Argentina as there is deep concern that foreign banks may go bust and they could lose everything. The locals don't trust the banks here either, and so are sitting on piles of cash. The best investment here for their cash is buying real estate, which will most likely create an upward pressure on prices.

Currently, the majority of people who have repatriated their wealth are sitting on it waiting to see what will happen to prices and if there will be a price fall, so most are not spending yet. The consensus among realtors seems to be that in 2009 prices will remain static or may possibly drop a few percentage points (estimates range from 2% to 10%), but that significant increases are unlikely. Only time will tell.

This should be set against the backdrop of people moving house anyway -the day to day transactions of the real estate market - not all real estate is necessarily bought or sold as a pure investment.

I hope this is some help

Simon Fawkes
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 0557001927 http://www.amazon.com/exec/obidos/ASIN/0557001927
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Mark
Junior Member
Username: Lostintheandes

Post Number: 44
Registered: 10-2008
Posted on Wednesday, December 17, 2008 - 4:22 pm:   Edit PostPrint Post

I think what has to be figured into this equation is that at the end of the day..an apartment simply represents rents. If rents reflect a ROI than prices are less likely to drop but if after paying taxes, utilities, management fees the return is minimal then prices will drop. I will even argue one step further...the very fact that there are no mortgages in Argentina is not a safe thing as suggested. It simply shows how scary the market is here as no one is willing to loan money on it. For a great lesson on how real estate works as an investment google Robert Schiller. You can make money as it fluctuates but thats it:it returns to the norm. If you still don't get it google Dutch Tulip bubble. Yep, a tulip is just a flower and an apartment is just rent. Mike and Roberto already made all the money. The rest of us should look for where prices are less than 10x rent. By the way before you get to upset at my point of view I am looking at real estate in Argentina.
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AMARAGGI
New member
Username: Amar

Post Number: 14
Registered: 12-2006
Posted on Wednesday, December 17, 2008 - 5:58 pm:   Edit PostPrint Post

Mark,

I follow your posts with great interest and I am really learning a lot on investment and markets. Don't you think in the case of real estate that there are factors like attractivness of cities that have to be considered. A town like Bs As has still a great potential and not only because of Tango. Soon or later Argentinan politicians will have to face reality. If the system improves don't you think that this could have a leveraging effect on real estate? Most probably civilisation will learn to live without oil but food will always be needed and Argentina can provide some. I think that a positive bet on the development of a local middle class and of tourisme is not completely irrealistic. But I may be too optimistic.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 347
Registered: 7-2007


Posted on Thursday, December 18, 2008 - 6:54 am:   Edit PostPrint Post

Actually there are mortgages in Argentina - typical terms are 10 year, max $300,000 pesos and high interest rates.
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Arial
Advanced Member
Username: Arial

Post Number: 299
Registered: 10-2006
Posted on Thursday, December 18, 2008 - 11:44 am:   Edit PostPrint Post

In Buenos Aires, if you are a professional (high enough income probably) you can get a mortgage for 50% of the total price. You have to have the other 50% in cash.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 64
Registered: 9-2008
Posted on Friday, December 19, 2008 - 5:25 pm:   Edit PostPrint Post

In Bariloche, there are many good ROI properties from Cabaņas to private homes to apartments.

BTW, we are very close to getting our final zona de seguridad approval and having the title put in our name (our friends just recieved theirs last week).

When that happens, we will be celebrating as we scored quite the deal, and it was well worth the vale la pena!
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Arial
Advanced Member
Username: Arial

Post Number: 302
Registered: 10-2006
Posted on Saturday, December 20, 2008 - 9:46 am:   Edit PostPrint Post

Perhaps I should read back through old posts but on what basis will you get approval? Has the government changed re the zona de seguridad? Please let us know if and when you are able to change the real estate to your name. And thanks for the update!
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Living in Patagonia
Member
Username: Soulskier

Post Number: 65
Registered: 9-2008
Posted on Saturday, December 20, 2008 - 10:25 am:   Edit PostPrint Post

Arial, contrary to what you might have heard, virtually everyone gets approval, it just takes time. Our escribania only has one case of someone not being approved, and that was from lack of paper work submitted, even after repeated requests. There is a lot of misinformation out there, but I can list more than 5 foreigners that have received approval and the title is in their name, including one this week.

My wife wrote an article on the whole process, I am happy to send it to anyone if they like.
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Arial
Advanced Member
Username: Arial

Post Number: 306
Registered: 10-2006
Posted on Saturday, December 20, 2008 - 10:49 am:   Edit PostPrint Post

Two big, important questions:

Can you do it now without doing a trust first?

And how much time?

I am interested in the article. Thanks
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Living in Patagonia
Member
Username: Soulskier

Post Number: 66
Registered: 9-2008
Posted on Saturday, December 20, 2008 - 11:35 am:   Edit PostPrint Post

Yes, you can get it down thru a power of attorney (we did this).

Time for my friends was 18 months, and us will be close to 20. When Cristina took over, she changed the department in charge, causing a longer than normal delay.

I will send you the article as I respect the admin's request not to post links on the forum.

Suerte!
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d
New member
Username: Davidcarpediem

Post Number: 2
Registered: 12-2008
Posted on Saturday, December 20, 2008 - 2:04 pm:   Edit PostPrint Post

Living in Pantagonia -> you are completely out of subject, here it is Overpriced Real Estate market in Buenos Aires! so i do understand you need to do your promotion but please do it in another discution. You have many discution ( real estate in argentina...) where your conversation fit ...HERE, he dont and it is annoying !
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Living in Patagonia
Member
Username: Soulskier

Post Number: 68
Registered: 9-2008
Posted on Saturday, December 20, 2008 - 7:43 pm:   Edit PostPrint Post

D, I saw that Mark started discussing ROI so I chimed in. I don't really care one way or another if others buy in Patagonia. In fact, judging by the tone of your post, I don't think you would be such a cool neighbor anyways.
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Arial
Advanced Member
Username: Arial

Post Number: 307
Registered: 10-2006
Posted on Sunday, December 21, 2008 - 9:01 am:   Edit PostPrint Post

Soulskier, thanks. After my last post, I wondered if we are on the same page. You mentioned good ROI properties in Bariloche which indicated to me you meant foreigners could now buy apartments or houses in their own name. Of course we could always buy lots and build business type stuff in our own name, subject to approval, of course. The problem was with the ready-built structures. But thank you for clarification about what is going on. Interesting info.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 69
Registered: 9-2008
Posted on Sunday, December 21, 2008 - 12:44 pm:   Edit PostPrint Post

Arial, yes, we purchased a property with 3 structures. We live in one, and have the other 2 on a short term rental program with occupancy rates of 65% and 90% for 2008.
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Mark
Junior Member
Username: Lostintheandes

Post Number: 45
Registered: 10-2008
Posted on Tuesday, December 23, 2008 - 11:18 am:   Edit PostPrint Post

Amar,
A nice touisty city fits into the equation by keeping the rents high and there for a better ROI. By the way I just helped someones ROI in Patagonia. The casita wes great thanks to the help from soulskier. m
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Living in Patagonia
Member
Username: Soulskier

Post Number: 70
Registered: 9-2008
Posted on Tuesday, December 23, 2008 - 5:54 pm:   Edit PostPrint Post

Mark, hope you guys enjoyed it, pretty crazy weather for summer huh?
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Georgio Armani
New member
Username: Georgio_93

Post Number: 1
Registered: 1-2009
Posted on Saturday, January 03, 2009 - 5:42 am:   Edit PostPrint Post

Argentina is inexpensive simply because it has one of the most corrupt governments in the world. This is a red flag to major investors which is why the country is impoverished.

The only people investing in Argentina from abroad are middle to upper-middle class Americans and Brits that made a few dollars back home with their own property and believe they can do it again from Argentinas low price point. These Americans and Brits are naive.

When you have a country with no credit then you can only depend on foreign capital to purchase real estate. Do you honestly think your going to buy and renovate a property and then sell it for 100k more to an Argentine that makes $400US/mo, doesn't have access to credit, and can't sell their own "unrenovated" property? Do you think you will sell it to an American or Brit at that higher price point when they can find their own poperty for half the price at argenprop.com etc.?

If you ever get a chance to visit some of these "luxury argentina properties for sale/rent websites" you will know what I am talking about. The properties listed are rediculously overpriced compared to buscainmueble.com or argenprop.com where you can find the same square footage on the same streets in Recoleta that are both remodled to the same level for 100k less!

And even on the Argentine websites they are overpriced and Argentines know that and expect to get offers less than they are listing them for. You have to be a complete moron to buy at that higher price point subjecting you to pay thousands more in wealth tax every year which Argentines don't even pay because most live in the same apartment till they die. (No foreclosures for default taxes in socialist countries)

You have to wonder about a country that charges foreigners 2.5% on your incoming wire transfers forcing your currency into peso and then forcing you to convert back to dollars at another 2.5% in order to buy property. As if the 2001 bank stunt the Argentine government pulled on its people didn't sink in.

Then you have to pay 1.25% wealth tax instead of .75% like everyone else. (Because you are a foreigner)

Next you have to declare all your rental income when you work with these companies at aregentina's socialist income tax rates. Plus 15% commission and other so called "nominal" fees at the end of the month for website advertising.

All of these taxes were pretty much invented to "screw over" the foreigner.

If you want a safer investment... buy in Uruguay or Chile where the banking system is very stable and you can purchase property with just a passport. Although your limited to Punta del Este for Uruguay.

If you really want to live in Buenos Aires... keep your capital offshore and use the interest you make in the banks or US treasuries to pay for your rent the entire year.

Remember... when you rent in BA, utilities are included and you don't have to pay maintenance fees, ABL tax, wealth tax either.

Over the years I visited real estate websites selling property in Europe and South America and you can see the same properties for sale at the same prices that still haven't sold after 5 years. Europe is basically 3rd world now just like South America but just 5 times more expensive because they think they get American dollars back via tourism. Britain is slummy, crime is high and illegal immigrants are flooding into Europe from African and the Balkan states further bankrupting their socialist pension/welfare funds. The only 1st world countries left are: US/Canada representing North America, Russia, Switzerland, Luxemburg representing Europe and Japan and Singapore representing the Orient. If you must move to a 3rd world country because you cannot afford to retire in a 1st world one I would suggest looking into Panama for Central America and Chile or Uruguay for South America.

Smart Americans exploit cheap access to credit to turn fantasy dollars into real dollars when they purchase hard assets in cash. Too bad 70% of we Americans use credit to buy their next ipod and work 60 hour weeks trying to pay the interest on their mortgages, financed/leased cars and plasma tv's. These same Americans have a net worth of zero or less than zero when you subtract what they owe against the fantasy equity they have in their homes.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 72
Registered: 9-2008
Posted on Saturday, January 03, 2009 - 10:34 am:   Edit PostPrint Post

Hi Georgio, great first post.

I am an American lving full time in Argentina since 2005. I have bought property in 3 provinces in Argentina. I have made excellent profits on both our farm in Mendoza and our apartment in the Recoleta, both resold to Americans. We are now invested in Patagonia, and could surely sell our remodeled property for a tidy profit if we choose.

There are still many opportunites to buy property, fix them up, and resell them at a large profit throughout the country. The key is doing your homework and due dilligence, then marketing it correctly when it is ready to resell.

So, I respectfully disagree with your position. I highly doubt I am the only one who has "gotten lucky" either.
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Mark
Junior Member
Username: Lostintheandes

Post Number: 49
Registered: 10-2008
Posted on Saturday, January 03, 2009 - 11:34 am:   Edit PostPrint Post

Interesting post Georgio. You are right about the corruption and goofiness in the systems here. I am renting for the very reasons you outlined but will buy when the time is right.

Soul Skier, the key to your comment is since 2005. Ask anyone who came here in 2000 how they made out. Just because a rising tide raises all boats does not mean you were lucky though. You had the forsight and timing to do what you did in a sea that was rising. Had you made those same investments in the US beginning in 2005 you would not be sitting so pretty. Congrats.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 75
Registered: 9-2008
Posted on Saturday, January 03, 2009 - 11:38 am:   Edit PostPrint Post

Thanks. I was recently nominated for the golden telescope award from a friend back home. For my wife and I, the writing was on the wall, "take the money and run" it read loud and clear.
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AMARAGGI
New member
Username: Amar

Post Number: 16
Registered: 12-2006
Posted on Saturday, January 03, 2009 - 2:21 pm:   Edit PostPrint Post

Dear Georgio,
Your post is interesting although I disagree with your position. First may I remark that Argentinans living in Recoleta or bying there are not the ones with 400$ per month revenue. I had during the three years I spent to find the right property the opportunity to use the different web sites you mention but I found them not so much usefull. I had to go myself through agencies, untill I found the property at the right price.
The main weakness (At my view) of your position is the supposition that Argentina has no chance to get on the right track and that things will remain the same on the next 5 to 10 years. I consider that they don't not have any other alternative than getting out of their poor governance because their neighbours are improving, because Cuba, the leftist centre in this part of the world will evoluate also and finally because the ressources Argentina can supply (Agriculture, water,air, sun and tourism) are the ones the world will need and develop.
As far as Panama don't you think there is a real estate bubble?
And unless you are a golf fanatic or swimmer what can you do living in the Panama's towers.
Life in Bs As is a lot more exciting.
You have also to take into account the exchange situation very intereting for euro owners. In a recent article of Le Monde (french best newspaper) first world countries are considered to get poorer (with large public spending) when emerging countries (like S America) would improve their positions.
Of course I may be wrong. We will see in the future.
Cheers.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 2
Registered: 1-2009
Posted on Saturday, January 03, 2009 - 6:20 pm:   Edit PostPrint Post

You are absolutely right about BA being an exciting city. It has French architectural flare with beautiful women and things to do like New York City.

I hope I didn't come off too strong to people reading my posts. I am just trying to express my point of view since I have some indirect experience. My grandfather immigrated to Argentina from Italy and owned a shoe factory and made lots of money there during Argentinas more prosperous times. Eventually when he died those assets just disappeared and never went to my family... something that would never happen in America where we now live and started over.

I am just trying to warn people of Argentina's history which tends to collapse every 10 years on the mark since the early 20th century. Live in Montevideo or Punta del Este and take the fairy over to BA and play and enjoy yourself... you will thank me later. If you live in BA long enough all the money you accumulate will eventually disappear.

With the global recession of the 1st world countries taking place you can count on decreased tourist dollars and decreased foreign capital from these middle to upper-middle class Americans and Brits. Argentina is moving towards the left and I have read of some communist uprisings which is detrimental to anybody who is affluent. A common cold for 1st world countries is like HIV for the rest of the 3rd world countries.

If you want safe investments... 25% of your portfolio should be gold bullion, 25% in US treasuries, and 25% in US municipal bonds for some tax free growth, and the rest in real estate paid in cash.... Financing anything is for suckers unless you finance 50% or less of an asset and use the proceeds from the asset to pay off your investment asap.

As for Patagonia... your success can be largely contributed because you are targeting upper class wealthy people that can afford to lose what they invest in vacation homes in one of the most beautiful areas in the world... Bariloche is a hidden jewel to most people in the world that do not have traveling experience or world exposure.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 3
Registered: 1-2009
Posted on Saturday, January 03, 2009 - 7:00 pm:   Edit PostPrint Post

Also, I forgot to add that if you are set on buying in BA despite the risks I laid out... don't buy anything over 100k. I believe 30k is sheltered from the 1.25% wealth tax. Also, use a reputable company to acquire your residency ASAP to get your DNI before you buy your property. Once you have your DNI you get 50% off your wealth tax obligation every year.

Use Argenprop or Buscainmueble.com to pick out your property and then use an American agency to puchase the property that you are interested in. If current market value is 100k for the property... declare 80k when you sit with the buyer and record sale price so you are subject to less wealth tax and he is sheltered from tax he would have to pay if he doesn't reivest his capital within a year. Declaring 20% less won't raise any red flags when you go to sell but 50% will!

Have your rental income deposited in an offshore bank acount with privacy laws... Uruguay and Switzerland are good. Tax evasion is not a crime in Switzerland!

And finally, if you never plan on selling your property you are at an advantage since AFIP doesn't check for origin of funds when you buy, rental income tax evasion, payment of wealth tax, or declared title value UNTIL YOU SELL. This means if you never sell you don't have to worry about these taxes. (NOTE* if you have your DNI number you are not under the microscope of the AFIP! The Argentine IRS only utilizes their resources to check if FOREIGNERS did everything correctly on the buying and selling of real estate because they know they can get the money from you and not their own people that have nothing!)

The best thing is buying an apartment for 70k with black funds, fixing it up for 20k, and renting it out tax free until you get your money back and then some and just never sell. You will save and make more money that way then if you declare everything that these agencies want you to declare.

PS. Agencies just want to you declare everything because they are fearful for their own business. Which is why most people are confused when a construction company tells you to declare half the value and an American agency tells you to declare everything!

Also... ask the owners of these American agencies if they are renting or have purchased their own home in BA. The answer is that they rent and want you to buy!
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Mark
Junior Member
Username: Lostintheandes

Post Number: 50
Registered: 10-2008
Posted on Saturday, January 03, 2009 - 7:51 pm:   Edit PostPrint Post

Not in total agreement but your last point is fabulous. And its true the world over Real estate agents make money talking you into investing, not investing themselves. I've always thought if the Ford salesman doesn't own a Ford than don't buy a Ford from him.
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Mark
Member
Username: Lostintheandes

Post Number: 51
Registered: 10-2008
Posted on Saturday, January 03, 2009 - 7:59 pm:   Edit PostPrint Post

Patagonia,
My telescope is only silver. I got out of the US market in 2007 but got here too late. In spite of my giving apartmentsba such a hard time, I think his may be platinum. By the way my favorite wine is by Santiago Acheval.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 4
Registered: 1-2009
Posted on Sunday, January 04, 2009 - 2:48 am:   Edit PostPrint Post

Apartmentsba sounds like a reputable company and I know for sure they will want you to do everything on the "up and up" but I guarantee it will be an expensive endeavor. If things go wrong, they are an American company subjected to American lawsuits but after much research I know for a fact that this Michael Koh is no dummy. I have noticed that he in fact does rent in BA and he has sold the majority of the properties that he had bought after the 2001 crash. Which means only one thing... he is cashing out and knows about the cyclical crashes that I am talking about. He is clever in that he is now not directly owning assets in BA but rather using foreign capital to generate rental income off of your properties via commission which pays his rent and allows him to live a very comfortable lifestyle within poor argentina. If there is a huge crash he can simply dissolve his company and move someplace else overnight and all the people who bought properties from him won't be able to sell without his help (since you need advertising exposure on the internet). Argentina will only get worse, the bubble ended in 2007. Be smart and wait for the next crash. (Which I am sure he is prepared to do since he has liquidated most of his real estate there)

Real Estate tips:

1) Buy the cheapest property in the best neighborhoods (even if it needs a lot of work so long as there are no major structural problems)

2) Buy the smallest home on the block... real estate goes up by higher percentages on smaller than larger properties relative to their purchase prices and maintance costs.

3) Before buying, take into consideration maintance fees (are they capped or will they continue to rise... is there an itemization sheet documenting monthly expenses to all tenants?)

4) Property taxes- learn their structure and how they are collected (i.g. my aunt pays 12k per year in New York for property taxes on a 600k home that I wouldn't pay more than 50k for.)

5) Never rennovate your property until after you have paid off your mortgage (argentines and most italians don't have this problem- they most likely already have their properties paid and most likely will never rennovate lol) This is why, you rennovate before the mortgage is paid, you lose your job, your forced to sell in a down market you now lost your rennovation money and have a higher balance on your mortgage forcing you to walk away from your property with little to no gain.

6) Make sure your costs of ownership are no more than a weeks worth of work... if it is more than YOU CAN'T AFFORD THE PROPERTY... this is why most Americans never pay off their home and are forced to retire in the deserts of Arizona or New Mexico.

7) Never buy leasehold properties... always buy freehold.

8) Always look for political stability in a country... expropriation can and still does happen.

9)If you must finance your home, stay away from interest only loans, negative ammortization loans, ARMS, and pay-option mortgages. If you can't afford payments of a 30-year, 15 year, or 10 year fixed mortgage YOU CANNOT AFFORD THE HOUSE!

10) Typically homes are better investments than apartments/condos in the US because they appeal to families and families are the majority market. Outside of the US apartments/condos are better because the city is the only place to find work... suberbs/rural = poor for the rest of the world since they do not have the infrastructure like America has to put 5 starbucks within one block of eachother in a small town.

Hope this post helped some people out!
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AMARAGGI
New member
Username: Amar

Post Number: 17
Registered: 12-2006
Posted on Sunday, January 04, 2009 - 7:12 am:   Edit PostPrint Post

Hi George,

Your points are quite interesting indeed. I tend to disagree with the society conception that they involve. I think you don't take nto account the cost of pleasure to live in a property you like and you eventually rent which is the case I guess of many retirees. Very frankly also I don't see any objection to pay a reasonable level of taxes and get back from the state services that allow a society to live and prosper. When you compare Italy to Germany guess which economy and society is the wealthier?
The same should apply to Argentina. If they can get out of Peronism and back to a more structured aconomy you can be sure that the country could recover its past glory. If this happens real estate will be at a higher level than today. Does this sound completely unrealistic?
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Mark
Member
Username: Lostintheandes

Post Number: 52
Registered: 10-2008
Posted on Sunday, January 04, 2009 - 9:50 am:   Edit PostPrint Post

Georgio,
Michael says he has been personally buying apts in Recoleta/Palermo and has been quoted as saying he believes those areas will increase in value by as much as 12% so I am not sure I buy your assertions on him. Taking profits is part of business so if he is re-investing it back into BA then this does not mean he is cashing out(all though I think he should). As to whether he rents or buys: as I stated before "I wouldn't buy a Ford from someone driving a chevy" and I wouldn't buy an apt from someone who rents, but I have no reason to doubt his sincerity at this point.

cheers
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Living in Patagonia
Member
Username: Soulskier

Post Number: 76
Registered: 9-2008
Posted on Sunday, January 04, 2009 - 11:09 am:   Edit PostPrint Post

Georgio, I couldn't agree more about Bariloche and the Lakes District being a hidden jewel. I am still in constant amazement of the beauty of the area.

Check out our pic of the week from the blog this week, that was taken on a hiking trail 5 minutes from our house.

We feel extremely lucky to have found this part of the world and are pulling it off down here.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 77
Registered: 9-2008
Posted on Sunday, January 04, 2009 - 11:14 am:   Edit PostPrint Post

Mark, a year is a long time from now, are you sure Santiago will still be your number one buddy in 2010?
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EAST WEST 3000
New member
Username: Eastman

Post Number: 3
Registered: 1-2009
Posted on Sunday, January 04, 2009 - 11:19 am:   Edit PostPrint Post

One thing is for sure this Global Financial Meltdown will affect everyone. I think that we can safely say that the rule book has been thrown out the window on this one.
What has happened to the Argentinean Middle class over the last 7 years is about to happen to the USA .... So Argentina can kiss all those US & EU Tourists goodbye!
The Tourism industry in B.A has been Booming here in the last 7 years. It is just a mater of time before Argentina defaults again due to a (never seen before) global Slow down in the export/import industry. Argentina has little or no more cards left to play.
Sit back and watch the Taxation laws change! Beware the foreign investor.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 5
Registered: 1-2009
Posted on Sunday, January 04, 2009 - 3:48 pm:   Edit PostPrint Post

Well Michael Koh has stated that he rents in BA and its on his website so I guess you won't be buying from him, right Mark? Also, he is not lying when he says "BELIEVES Palermo will increase in value by as much as 12%"... its not a guarantee! Secondly lets do some math...

200k apartment with projected increase of 12% = 24000 gain

24000 - 2500 (wealth tax 1.25%)- 300 (ABL)- 1800 (utilities and maintance fees for the year at 150/mo) - 3600 (15% commission for rental services)- 4080 (17% for argentine income tax) = 11720 profit

This is a 5.8% net gain and this is IF you get 12% return. I personally would rather get 3.5% from a US treasury and not risk 200k for a measly 5.8%. But THIS IS JUST MY OPINION! lol

The only reason Germany has a better economy than Italy is because they are arguably more capitalist, have more natural resources, and embrace industry more than Italy. Italians are borderline communist and the illegal immigration that is flooding there is putting a huge burden on the state (in my personal opinion Italy joined the EU to eliminate billions of dollars of debt and now is breaking every EU rule so it can get kicked out and regain sovereignty... I could be wrong with this theory though) I am Italian and I have to say that Italy went from being a 1st world empire during the Roman Empire to a 3rd world fragmented country... Italians still don't call themselves Italian but rather from what region they come from. 70% of Italy's GDP is based on tourism while a similar percentage of Germany's GDP is based on German car export which both are going to slow down when Americans stop buying them or traveling because of the recession.

I am a true capitalist and believe that if you can lower taxation (especially on homes) you will increase the amount of $$ each family can spend on other things therefore supporting companies and businesses and increasing growth. Not everyone agrees with me... many believe in high taxes and more government control is better for a country than establishing a private sector.

Yes... as I stated earlier, the global financial 1st world recession will kill 3rd world countries including Europe due to the fact that Brits and Americans which hold the majority of the wealth in the world per capita will cease to invest and travel over the comming years in aims to recover.

Argentina is talking about being more leftist... (they just nationalized all the pensions. Now the pensions will be a slush fund for the government to pay off debt like the US has been doing with its social security pensioners) this is embracing Peronism/socialism, not moving away from it, which is why Argentina's future is looking grim.

All Argentina has to do is get rid of the wealth tax and the bank transfer fees and they will get so much foreign capital it will be disgusting. They also need to establish credit at least for foreigners who have the ability to repay. They also need to establish a functional judicial system. This will make properties sky rocket in value but they don't want to do any of these things because they are such a huge welfare state and are against globalization and favor isolationism. Which is fine... BA will remain to be the 148th cheapest city in the world out of 150.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 78
Registered: 9-2008
Posted on Sunday, January 04, 2009 - 8:11 pm:   Edit PostPrint Post

Georgio, while Argentina is at it they should also do away with famous Zona de Seguridad area and really bump up foreign investment.
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Mark
Member
Username: Lostintheandes

Post Number: 53
Registered: 10-2008
Posted on Sunday, January 04, 2009 - 8:27 pm:   Edit PostPrint Post

Very interesting debate....no I won't be buying from Michael. Your math forgot a very important point..rental income. He is saying you will get a 12% increase in value plus rent.

It is the very problems you mention however that make this place a paradise for me. Its a beautiful country, the people are friendly, and my dollars go a long way. m
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EAST WEST 3000
New member
Username: Eastman

Post Number: 4
Registered: 1-2009
Posted on Sunday, January 04, 2009 - 8:56 pm:   Edit PostPrint Post

Mark,
Its beautiful but unfortunately very neglected.... the country is run by a bunch of greedy slobs. Yes, the food here is the last luxury that makes this place feel "cheap"
However the inflation is out of control at over 20%. Prices of Vehicles i think we can safely say ... "is off the Chart" it is at least 30-40% more expensive than Europe and the US, plus 21% VAT !!! ..... I thought California was expensive !!
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Georgio Armani
New member
Username: Georgio_93

Post Number: 6
Registered: 1-2009
Posted on Sunday, January 04, 2009 - 11:44 pm:   Edit PostPrint Post

I believe in the 12% annual rental income return because he charges a lot for his apartments relative to the initial price and renovation costs. I don't however believe in the capital appreciatiation per year.

I periodically check his website and much of the information about price per square meter in Recoleta has been the same for a few years now at $2000/square meter. I still find most properties on argenprop.com and buscainmeuble.com for $1500/square meter in Recoleta.

Argentina is nothing like the US. They don't actually have a "real estate market". In the US... when jobs decrease and wages go down (or there is a recession), so does the real estate market in the given area. (IN RECOLETTA THE AKING PRICES STAY THE SAME) Prices in the US are also calculated based on comparables (what a house actually sells for within a 1 mile radius with similar square footage. Appraisals are conducted and priced up or down based on whether you have a pool, landscaping, etc. Also, people in the US can't just make up a number to sell their house for because a real estate agent will not list something that is too much higher than market value due to appraisal and financing constrictions.

For example, if I have a 500k home paid for in cash that I am listing for 700k. When the buyer applies for financing and is approved for 80% of an appraised value for my home of 500k he will only receive a 400k loan from the bank. This buyer has to come up with an extra 300k cash and knows the licensed appraiser only gave a 500k value and is aware that the home is overpriced by 200k.

No mortgages, appraisals, or bank equity assurance departments to deal with here in Argentina. Therefore, some guy asks for 200k for his 100k valued home and it just sits on the market for years on end. (Value is determined by square meters, neighborhood, floor, luminosity and whether it is located in the front or back of the building)But this "value" is subjective depending on who you talk to since there are no institutions or appraisers that can confirm or measure value officially) So most people just agree on the price per square meter rule... $1500 for Recoleta, $2500 fo Puerto Madero etc.

Basically they wait years for some stupid American or Brit with money to buy their overpriced home. In short, every Argentine's house is a potential lottery ticket that they hope to cash out on. It is a sad state of affairs. Occasionally they do get a fish "hook, line, and sinker" but most of the time there delapidated apartment just sits on the market for years.

The only beautiful spot in BA is Puerto Madero because it is new and clean. Recoletta has people with money and it is safe too but a lot of the buildings look delapidated and the rest of BA is a slum outside the tourist hotspots but it is a city. NYC and LA have really bad and ugly areas too. Dollars do go a long way, won't argue there.

Reasons for living in BA over most other cities:

1) Cheap... dirt cheap. As inflation rises, we Americans are sheltered because we just get more peso to the dollar :-)

2) Beautiful women and really easy to get. In California, women are only interested in your $$$. Actually women all over the world are only interested in your $$$ lol. Except in BA you only need 400 pesos while in California you need a net worth of at least a half million lol. This way they can divorce you after a year and get 50%. Gotta love community property states!

3) Food is great!

4) Utility costs are laughable! Run the AC all you want!

5) Things to do... theater, music, art, soccer, horse races, restaurants, shopping (not my favorite thing to do but chicks love it).
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Georgio Armani
New member
Username: Georgio_93

Post Number: 7
Registered: 1-2009
Posted on Monday, January 05, 2009 - 12:15 am:   Edit PostPrint Post

I am not to concerned with the price of cars issue. You don't need a car in BA and most of Europe because so much capital is invested in cheap public transportation. In the US if you don't have a car you DIE! Can't even buy groceries without walking a couple miles.

I don't look at VAT taxes too much... I just care about how many US dollars it costs me "out the door". Even if they have a VAT tax of 100%. If it is 100% of 1 peso for a tube of toothpaste, than it is still $1.50 US cheaper than what I am used to paying.

Currency conversion is the most important issue you should be worried about which is why I would never retire in Europe now.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 5
Registered: 1-2009
Posted on Monday, January 05, 2009 - 7:46 am:   Edit PostPrint Post

Euro has never looked so attractive for US investor ??? The Dollar has been slamming the Euro the last 6 months.
..... in a years time you will wished you did get out of the dollar to euro!

Right now Swiss franc is looking sweet for the dollar!!

oh ps. HSBC bank will transfer any amount of funds ($100,000 min) to any location of the world Free of charge! inc Argentina.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 6
Registered: 1-2009
Posted on Monday, January 05, 2009 - 7:57 am:   Edit PostPrint Post

Another thing. Cheap is not always good. Most of the the produce here in Argentina
is the lowest of the low from China! Crap that would never pass US & EU regulations, so it gets pumped to the 3rd world countries. That cheap toothpaste you mentioned could be loaded with lead!
Hey if i wanted cheap i could just by all my goods from a 99c store, Right ?
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Living in Patagonia
Member
Username: Soulskier

Post Number: 79
Registered: 9-2008
Posted on Monday, January 05, 2009 - 8:06 am:   Edit PostPrint Post

EastWest, for those with dollars, Argentina is still a very cheap place to live on many fronts besides food. True cars and electronics are more expensive, but how many times to you buy those?
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 353
Registered: 7-2007


Posted on Monday, January 05, 2009 - 8:19 am:   Edit PostPrint Post

Happy 2009 to all !

Here is horseback that we and some friends and all of our kids did on Jan 1 at 10,000 feet in the high Andes behind Mendoza City:



Georgio you make some interesting points, and I don’t defend real estate prices because I defend buyers, but you should be aware that there are more than just “middle upper Americans and Brits investing in Argentina” You are identifying a certain segment of the market place but that is not the only thing happening.

Also, it’s not the “country” that charges you 2.5% incoming wire fee, and it’s not the “country” that forces you to convert the pesos back to dollars. These are all terms that a buyer negotiates with a seller. Trouble is, most buyers don’t know about this until it is almost too late. This is why it is important for buyers to have proper representation with them when they negotiate for the first time in Argentina.

It is not surprising you may have had bad experiences in buying in Argentina – you have to know the language and traditions well, and like I said , be represented properly. Not being represented properly is probably the biggest problem many foreigners have.

Argentina is not for everybody. It is a very unique culture here, much more exciting than Uruguay and Chile, but as you say, more risky if you mis-step.

In fact, as many have often pointed out, once you can do business here, you can do it anywhere. It’s good training ground, lol.

Great job on some of the rest of your points and tips and tricks

Jamie – that is an excellent picture!!!
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AMARAGGI
New member
Username: Amar

Post Number: 18
Registered: 12-2006
Posted on Monday, January 05, 2009 - 8:32 am:   Edit PostPrint Post

There is something basically wrong with the cycle theory (see Galbraith) it is the belief that nothing changes and everything repeats. Why should 10 years be such a special date for Argentina? Why should this country be condemned to never get out of its problem? If you look at what it can offer in view of the changes that the climate reorientation will force I think it is not unrealistic to agree that Argentina has some cards to play.

I think also that many people would be quite pleased to get a 6% or 5,5% return on investment with a garantee capital. Most of them don't have any telescope at all and don't read on the walls. So they are like me loosing some money (fortunately not a lot) in banks collapseS like Fortis, Amro, Royal Bank of Scotland or Lehman Brothers not to mention Madoff. So real estate can still be attractive for some poorly trained investors. And Argentina offers in Bs As a cosmopolite and cool life that is rather unique.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 10
Registered: 1-2009
Posted on Monday, January 05, 2009 - 4:13 pm:   Edit PostPrint Post

Nice pictures you guys! Fantastic views!

I would never convert my US dollar into Euro until I get a 1/1 ratio or better and I was planning to move all my eggs to Europe. Otherwise I rather move my money to British pound if and when it ever gets to 1/1 like it did one time in the mid 70's. British pound has less currency in circulation so it will always remain more powerful than the US dollar or Euro unless there economy collapes like it once did in the 70's. Which will make it a good time to buy.

I am not a fan of the Euro... currently it only has 25% of the worlds cash reserves and isn't backed by any hard asset like gold. The US has tons of gold (although it no longer has as much gold as currency anymore) and has 70% of the worlds cash reserves. The US dollar is still the king of currencies. All you need is US dollar and gold and you are stable.
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Mark
Member
Username: Lostintheandes

Post Number: 54
Registered: 10-2008
Posted on Monday, January 05, 2009 - 5:37 pm:   Edit PostPrint Post

Amaraggi, <cycle>
Before an outcome changes(another crash) an input has to change. What is different now.

1. Corruption is the same,
2. peoples expectation that the govt. needs to take care of them is the same,
3.and a complete lack of fiscal responsibility by the powers that be is the same, driven by numbers one and two.

m
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AMARAGGI
New member
Username: Amar

Post Number: 19
Registered: 12-2006
Posted on Monday, January 05, 2009 - 8:58 pm:   Edit PostPrint Post

Hi Mark,

Many things have changed:
dictature is no more a possibilty
end of cold war
globalisation
devElopment of neighbours (Brazil, Chile)
Energy crisis (need of bio oil)
End of Castrism (death of Castro, new US administration)
End of Chavez (he will not be allowed to represent himself)
Opposition inside the peronist party
Impossibility to inforce laws (look at the defeat in the agriculture tax conflict)

Corruption of course is a problem but it should decrease and after all it is present in many first world coutries (Dick Cheney, Bill Richardson, Eon, Maddoff, Dumas (in France), Siemens etc, etc)

In all counties people are looking for state assistance. The finance crisis in the US is the best example of extreme "socialist" measures. It was just impossible not to adopt them.
For the same reasons the bet that Argentina improves
does not seem too irrealistic.
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Mark
Member
Username: Lostintheandes

Post Number: 55
Registered: 10-2008
Posted on Monday, January 05, 2009 - 9:19 pm:   Edit PostPrint Post

ahh the eternal optimist. As someone who lives here and loves it, I hope you are right. Unfortunately in a micro economic place like Argentina all the regular laws of logic apply. The US has avoided them because they are so huge but mark my words...no one can avoid the wages of fiscal irresponsibility. If you live on credit sooner or later you or your kids have to pay; even if you are the US of A.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 12
Registered: 1-2009
Posted on Monday, January 05, 2009 - 10:51 pm:   Edit PostPrint Post

In response to Amaraggi:

I believe you are an optomist. Most Argentines do not share your sentiments simply because they have been through so many tragedies.

1) Dictatorship is always a possibility, especially with a weak judicial system like Argentina has.

2) Neither the cold war nor global terrorism effects Argentina. These were/are primarily 1st world issues.

3) Argentine remains to be an isolationist country. Its only tie to globalization is exports. It's when you start importing mass goods (and not taxing them heavily) that you truely become emersed into globalization. Also, Argentina does not embrace free markets.

4) The development of Brazil/Chile is a result of embracing capitalism over socialism. Good for Brazil/Chile, bad for Argentina since there is no way for it to catch up with its current philosophy.

5) Argentina has plenty of oil which is why it is so cheap. Cheap oil isn't always good. They need to exploit that cheap oil to industrialize the rest of Argentina and connect the major cities more which they currently suspended.

6) The new US administration will not move towards the right but towards the left with Obama. You will see more entitlements and larger government which will hurt the US even more. Americans don't care about Cuba... the only thing we like is their cigars which we buy from online vendors in Spain and Canada etc.

7) Chavez and Obama are the result of liberalism's victory over conservatism. Don't elect the most competant individual, elect the minority. Because after all, diversity is more important than competance. White European rule was the best thing that could have happened to S.America and the only reason why you have cities like BA in the first place. Look what happened when Europeans pulled out of Africa, Mexico and most cental to south American countries like Columbia, Bolivia, Paraguay, Peru etc. Are those places you would want to live in now?

8) Opposition to the Peronist party is a start but unless the people understand that hard work, self reliance, and low taxation are the way to the future for their children then nothing will change.

9) They were always good at making laws but enforcing them seems to only happen when there is a dictatorship.

10) You can get away with corruption when the people have 3 things: food, shelter, and security. America has that, this is why America can get away with it.

The assumption that socialism is going to fix America is false. There is not one superpower in history that was socialist.
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Simon Fawkes
Member
Username: Expatba

Post Number: 77
Registered: 1-2007


Posted on Wednesday, January 07, 2009 - 7:15 am:   Edit PostPrint Post

Sorry for coming to this a bit late.

Georgio - some of your points are good and valid, others are not. To say all Brits and Americans who invest in Argentina are naïve is rather wide-sweeping. Sure, there are some naïve investors who fall for the websites aimed at foreigners that you mention, but there are many who do due diligence and see beyond these foreigner rip-off merchants (and yes, there are rather a lot of them).

It is correct the wealth tax is higher foreigners than locals, however Argentina is hardly unique in doing this. Until recently even Spain did the same (until the EU ruled it was illegal to treat other EU residents differently from nationals - although I believe there's still a differential for non-EU residents).

A good rental agency won't charge you for website advertising or other fees. They will take an agreed percentage of any rental they make (or agree a base level with you, and stick their mark-up on top). If they are managing the property on your behalf you can expect to pay US$60-US$80 a month for this service (plus the expensas). You shouldn't be charged any other fees. In 2006 whilst researching the first edition of my book I contacted nearly 100 agencies posing as both a potential landlord and tenant. Most agencies didn't impress me or make the grade and in fact there's only 2 currently in BA that I would actually recommend.

There are many ways, both legal and illegal, to bring purchase funds into the country without paying exorbitant fees. A canny investor will research the possibilities.

I agree that I don't think prices in BA will rise substantially in the short term - however neither will they drop like they have in some countries where demand, fuelled by easy borrowing, has driven up prices to ridiculous levels. Property transactions in Argentina are underpinned by hard currency (not easy credit) which leads to stability. A prudent real estate investor will look not just at capital growth but at rental income (yield). If you do the sums correctly and it shows a reasonable positive cashflow then a property could still potentially be a worthwhile investment.

The moral of the story is that investors need to research the market thoroughly and do proper due diligence. Never accept anything at face value without checking it out throughly.

Regarding buying anything over 100K - foreigners no longer get the “property is less than 260,000 pesos” exemption, and now pay wealth tax on the entire amount, regardless of value.

As for expropriation occurring, this isn't going to happen. Property rights for individuals are guaranteed under the 1853 Argentine constitution. Even under dictatorship/military/peronist governments in the past this has always been respected as an absolute. Now, with global world media and the global economy I really can't see this changing.

As for Britain is slummy – yes, that's true in parts, but it's certainly not true for the whole country. Parts of Grand Buenos Aires are slummy, but I wouldn't tar the whole of Argentina with that label because of it.

Cheers

Simon Fawkes
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 0557001927, http://www.amazon.com/exec/obidos/ASIN/0557001927
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Living in Patagonia
Member
Username: Soulskier

Post Number: 82
Registered: 9-2008
Posted on Wednesday, January 07, 2009 - 8:36 am:   Edit PostPrint Post

Nice post Simon, you know what time it is!
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Georgio Armani
New member
Username: Georgio_93

Post Number: 13
Registered: 1-2009
Posted on Thursday, January 08, 2009 - 2:12 am:   Edit PostPrint Post

My sweeping statements about Brits and Americans fall for the majority investing in BA. Usually when I make sweeping statements, it is true for the majority group. I don't think anyone can express an opinion that holds true for everyone.

The fact that a wealth tax is higher for one group of people vs another is yet another shining example of how Europe preaches equality via socialism/communism but doesn't actually practice it. Argentina has adopted many aggitating qualities from Europe.

Apartmentsba.com charges website advertising fees. Does that mean they are not good? I have heard the contrary... its just if you want things safe you will have to pay double in Argentina which simply makes the country "not so cheap" anymore.

Argentina is like my father's country of Italy. It is not illegal until you get caught (and you wont get caught because of the beaurocracy). Which is why EVERYONE cheats the government if they can. Hence the "black and white" and sometimes gray system you hear people talking about.


Yeah, prices rarely drop... they just stay the same and never sell like Italy. Argentina is a stable country in that it will never garner its former wealth.

I certainly have never advocated "lack of research". In fact I am hoping people read my posts to get a better sense of the reality of what it is like down there and to be wary of all of these investor sharks.

All I am saying is that if you want to make money in Argentina it is through rental income, not capital appreciation.


Thanks for the update on the "property exemption" being obsolete for foreigners. This just further supports my disdain about the wealth tax and owning property in Argentina. But if you read all of my previous posts you will see my comment about recommending the acquisition of a DNI number before ever attempting to purchase property in BA. Therefore the exemption should still hold true if you follow my advice.

What about the property that was expropriated from all those missing persons in Argenina during the military junta? I think Apartmentsba mentioned that tricky title deed jive in an earlier post on this thread.

Britain is slummy... sorry if I disagree. If its not the filth from London its the weather everywhere else in the UK. I live in Southern California. If you are from the east coast or the UK you really haven't been spoiled or understand that you don't need AC or heat all year round here.
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Arial
Advanced Member
Username: Arial

Post Number: 309
Registered: 10-2006
Posted on Thursday, January 08, 2009 - 9:28 am:   Edit PostPrint Post

Simon, as always, thank you for your informative posts. I do have a question. When you write:

It is correct the wealth tax is higher foreigners than locals, however Argentina is hardly unique . . .

I thought I understood how this works but just to check, can you please define foreigners in this sentence? Is a foreigner someone who is not a citizen of the country and who has no residential status? Or is it one who is not a citizen but has temporary residency? Or one who is not a citizen but has permanent residency? Or is it any person who does not hold Argentina citizenship.

Sometimes the meaning of the word "foreigner" is not clear on this forum. Thanks.

Thanks, Arlean
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Living in Patagonia
Member
Username: Soulskier

Post Number: 84
Registered: 9-2008
Posted on Thursday, January 08, 2009 - 4:46 pm:   Edit PostPrint Post

I believe a temporary resident with a DNI has a more favorable tax basis than those without a DNI.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 14
Registered: 1-2009
Posted on Thursday, January 08, 2009 - 6:02 pm:   Edit PostPrint Post

If you are NOT a citizen OR do NOT have a DNI number then you are a foreigner. This rule is for how AFIP (Argentine IRS) catagorizes foreigners from non-foreigners for tax purposes.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 86
Registered: 9-2008
Posted on Thursday, January 08, 2009 - 9:35 pm:   Edit PostPrint Post

Well as a temporary resident with a DNI, my tax structure is bueno, toque madera.

I am pretty sure you can't get a DNI without being a temporary resident first.
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Arial
Advanced Member
Username: Arial

Post Number: 310
Registered: 10-2006
Posted on Friday, January 09, 2009 - 12:33 pm:   Edit PostPrint Post

Okay, Soulskier. Thatīs what I wanted to know. I have a DNI but still consider myself a "foreigner" because I am not a citizen. So I was a little worried if the tax structure was worse for "foreigners." But if it is good for you--thatīs good enough for me. And of course you are right--you have to be a resident to have a DNI.

Also, Mendoza, while I am at it, I think you wrote that the US gov would not deposit into a foreign bank. Just letting you know that you were right. In response to the Argentina governmentīs new requirement, I got a letter from my bank affirming that I do have an account. Also a letter from the Embassy stating that the US will not deposit into a non-US bank. My attorney is going to present both to imigraciones and see how they handle it.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 7
Registered: 1-2009
Posted on Friday, January 09, 2009 - 6:46 pm:   Edit PostPrint Post

again .... HSBC Premier Account, will deposit anywhere there is an HSBC location in the world ...free of charge, with minimun of $100,000 us.
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Arial
Advanced Member
Username: Arial

Post Number: 311
Registered: 10-2006
Posted on Saturday, January 10, 2009 - 12:39 pm:   Edit PostPrint Post

Yes, Eastman, I understood what you wrote about HSBC. But the specific instruction from imigraciones was that I must change my Social Security deposit so that it is direct-deposited into an Argentina account. Not that I deposit it from another bank.

However, my attorney now advises that he submitted the papers described above and imigraciones says they will accept it and everything is fine. So as far as I know at this writing, things will remain as they are. I am now awaiting my DNI renewal. If anything changes I will certainly let everyone know.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 8
Registered: 1-2009
Posted on Sunday, January 11, 2009 - 7:45 pm:   Edit PostPrint Post

open a us bank account in your country deposite the funds and give the the atm bank card to the person that needs funds. when emptied close the account.
(bank accounts are like email accounts).... now come on .....

if it is a one time small amount ... wire it ! weston union etc etc.

How is that !!!
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EAST WEST 3000
New member
Username: Eastman

Post Number: 9
Registered: 1-2009
Posted on Sunday, January 11, 2009 - 7:46 pm:   Edit PostPrint Post

Whats a bit of plastic between friends !!!!
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 674
Registered: 5-2005


Posted on Friday, January 16, 2009 - 5:03 pm:   Edit PostPrint Post

I just got done reading this thread. I'm super busy now but I'll post an in-depth response this weekend. You all sure have been busy since I've been on vacation.

There are some really good posts. I do agree there are some valid points but some of them are in correct as well.

Georgio Armani - I liked some of your points and I'll respond in detail but already I'll say some of your posts about me are wrong. I own more real estate here now than I did in 2003, 2004, 2005, 2006 and 2007 so some of your statements that you made were inaccurate. Even today I have turned down a few offers I got on properties near my asking prices. So you need to be careful on making false assumptions.

True, I did sell a few properties but with every sale that I've made I've invested that money back into other properties. Mostly selling bigger properties and buying smaller properties.

Again, lots of good points. I'll go through this weekend and post in in-depth response. One thing is for sure. Things here are definitely getting more expensive. I came back to Argentina from a trip to the USA and I came back to an electricity bill that was 300% more than usual. Granted compared to other countries the rate is still pretty inexpensive but this isn't stable when a utility company raises your rates 300% overnight. Very troubling to see.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 365
Registered: 7-2007


Posted on Saturday, January 17, 2009 - 9:09 am:   Edit PostPrint Post

AptsBa welcome back - yeah daddyhood certainly changes things doesn't it? congrats.

Electric:
There is for sure no overnight factor here
This has been an going topic in the news for the last 8 years now, even since the 2001 devaluation.

To sum it up quickly, the rates have been pretty much frozen for years, to help protect the average Argentine Joe against rate increases after th devaluation. International observers warned this is not a good long term plan. Inventors, and foreign residents in Argentina absolutely have been loving this, because it means electric bills much, much lower than in their home countries.

Several weeks back, the government announced the inevitable, that they would be "unfreezing the rates and getting them back to "normal market standards" through a tier structure that charges a higher user more money (I believe anybody over 1000 kw a month)

For example, in our case for a 3 bedroom house in Mendoza where we use waaayyy too much electricity already (averaging about 1400 kw a month, we have been averaging about 110 pesos a month.

Based on the new tiers our rates have now gone up to close to 200 pesos a month.

As you can imagine, this is an evolving story, and everybody and their brother is really upset about this, registering official claims with the electric company.

Apts Ba I suggest you register the claim with the electric company, to keep with the evolution of this topic.

Good luck.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 675
Registered: 5-2005


Posted on Saturday, January 17, 2009 - 9:25 am:   Edit PostPrint Post

Ok. I will give my 2 cents on some of the past few comments. (Thank God I type very fast).

Georgio - again, some of your comments are good and I actually agree with some of them. I respond to some things I read below.

Georgio wrote: "The only people investing in Argentina from abroad are middle to upper middle class Americans and Brits that made a few dollars back home with their own property and believe they can do it again from Argentina's low price point. These Americans and Brits are naive."

Mike's response: I disagree with this point Georgio. While true some are in that category it isn't limited to just that group. I should know as I work with lots of investors. I do agree many are upper middle class but there are also lots of very wealthy and also funds buying real estate in Argentina.

Also, lots and lots of foreign investors here that sold off part of their stock portfolios to buy here in Buenos Aires in real hard assets don't feel so naive. I would think the typical investor in Citigroup, Lehman Bros, Washington Mutual, Wachovia or pretty much anyone that invested in any type of bank or financial institution the past few years feels more naive than an investor in property here. Keep things in perspective. Many of those stocks will never recover and went to $0 or are going to $0. The same can't be said for real estate in Buenos Aires or Argentina so keep that in mind as a comparison.

Many of these people did sell real estate in their home countries and made a good profit and looking to repeat the same thing. However as I've mentioned many, many many times. You must really look at all your motivations and reasons for buying real estate here in Argentina. I've said 100 times there are lots of different reasons for buying and each person has to see their personal situation.

I've said and I'll continue saying that for the majority of investors out there. Real estate in Argentina is NOT for them. Besides the net worth aspect of it and cash on hand, you have to think about all the other aspects of this type of investment. I consider real estate a long-term investment. I don't buy to "flip". Sure I've flipped before but I don't go into real estate buying to turn around to sell quickly. I don't think that is prudent.

Real estate anywhere in the world is tough on rental properties but I think here in Buenos Aires it's even tougher with all the aspects dealing with the local system. Many people just don't have the mentality, patience and fortitude to deal with the possible many problems so I'll repeat again that investing here is not for the majority of investors out there.

Georgio wrote: "When you have a country with no credit then you can only depend on foreign capital to purchase real estate. Do you honestly think your going to buy and renovate a property and then sell it for $100k more to an Argentine that makes $400/US month?"

Mike's response: Even with the big boom with foreigners coming to Argentina and buying property here over the past several years. LOCALS have always been the driving force and the # of transactions have always been the force behind the # of deals and sales. Foreigners certainly didn't hurt with their buying here but make no mistake. There are lots of locals with lots of money. Tremendous amounts of net worth have been built up with families here over the past Century.

Also, again, Argentina is NOT the country to try to go into the business of buy, renovate and flip. I've said countless times real estate is a long term investment. Any one trying to buy real estate to buy and flip here quickly is being foolish. I've outlined before all the costs of buying here including stamp taxes, realtor's fees buying, legal fees buying, transfer taxes, legal fees selling, accountant's fee getting AFIP permit to sell as a foreigner, money transfer fee getting money into Argentina, etc. I think you should go into real estate with a long term vision.

Georgio writes: "If you ever get a chance visit some of these luxury argentina properties for sale/rent websites" The properties are rediculously overpriced. And even on Argentine websites they are overpriced. Argentines don't even pay wealth tax every year because most live in the same apartment until they die".

Mike's response: I think you really need to compare apples and oranges. You can have the same apartment in the same building on the same block and you have to see what each unit has. Now I've done over 100 renovations in Buenos Aires. Some of those renovations I've spent up to $200,000 US on so you really need to see what it would cost to duplicate that renovation. Apples to apples. I think some things on the market is overpriced and some are underpriced. The fact remains that many sellers aren't motivated to sell and won't sell unless they reach a # they set. I've been in that position before and I think each seller should get the highest price they can.

None of my clients hold a mortgage on their property and it's paid free and clear so there is not any big rush to sell. Same with all my local friends here that I know.

As far as Georgio's comments about most locals evading taxes I'll say I agree with him on that point. I don't think it's fair that the government of Argentina doesn't enforce the property taxes for locals yet they force foreigners to pay this. If Argentina only enforced collecting property taxes for all it's citizens they would be in much better shape. NO NEW taxes or tax laws are needed. They only need to enforce existing laws.

Georgio wrote: "You have to wonder about a country that charges foreigners 2.5% on your incoming wire transfers forcing your currency into peso and then forcing you to convert back to dollars at another 2.5% in order to buy property. As if the 2001 bank stunt the Argentine government pulled on it's people didn't sink in".

Mike's response: "Georgio I 100% agree with you on this one. Argentina is being totally ignorant on this point and it keeps billions of dollars of foreign investments out of Argentina. It's totally senseless. I've gone both routes of legal money exchange firms and also banks and I never use banks anymore. There are legal money exchange firms here where you can get a flat fee to do all the conversions and it's less than what you write Georgio. But in principle I agree with you this is ignorant.

Georgio writes: "Next you have to declare all your rental income when you work with these companies at Argentina's social income tax rates. Plus 15% commission and other so called nominal fees at the end of the month for website advertising. All these taxes were created to pretty much screw over the foreigner."

Mike's response: I agree with you the tax rates are VERY high here Georgio. The thing is that most locals that rent out their apartments are NOT declaring their income and evading taxes. Foreigners don't have this luxury as they can't sell their property unless they pay their taxes. Many foreigners don't know this. AFIP (Argentina's IRS) when a local sells their property doesn't scrutinize anything. When a foreigner sells it's an extensive study of the taxes, etc.

I think I'm probably the only company in Buenos Aires that forces property owners to pay full taxes. I've never heard of another company in town that does that but I think it's the right thing to do and will avoid problems. But Georgio is right in that the taxes are VERY high at 21%.

As far as taxes created to "screw over the foreigner". Well, no one likes paying taxes but these taxes were created for all people making money in Argentina. It's just that most foreigners are paying it and most locals evade them. I believe Argentina should force locals to pay it just like they make foreigners pay it.

Georgio writes: "If you want a safer investment..buy in Uruguay or Chile where the banking system is very stable and you can purchase property with just a passport. Although your limited to Punta del Este for Uruguay".

Mike's response: I agree with Georgio that Uruguay has a very solid banking system. None of this 2.5% to get money into the country BS. I've been very impressed with the banking system there. I also own real estate in Uruguay (Punta del Este) and I agree the system to buy (and sell) there is much simpler than Argentina.

Georgio writes: "Remember when you rent in BA, utilities are included and you don't have to pay maintenance fees, ABL tax, wealth tax either".

Mike's response: This isn't necessarily true about the expenses. It just depends on if you are signing a short-term or long-term contract. True on short term contracts utilities, condo fees, ABL fees, etc. are typically included but on most long term contracts the person renting pays all utility fees. I've been renting the same apartment for 4 years and I pay my own condo fees, utility fees, ABL bills. I know many locals that rent long term and they pay all utility and condo bills as well.

Georgio writes: "Smart Americans exploit cheap access to credit to turn fantasy dollars into real dollars when they purchase hard assets in cash. Too bad 70% of Americans use credit to buy their next Ipod and work 60 hour weeks trying to pay the interest on their mortgages, financed/leased cars and plasma TV's. These same Americans have a net worth of zero or less than zero when you subtract what they owe against the fantasy equity they have in their homes."

Mike's response: Georgio I couldn't agree with you more. I've been saying for the past several years what is playing out in the USA/Europe was going to happen. Most people are shocked or surprised by it. Not me. I knew it was all going to happen. For me it wasn't a matter "IF". It was only "WHEN". I wholeheartedly agree with you that many Americans have a net worth of Zero or negative Zero.

I agree with Georgio when he says this isn't really a "flip market". Another poster wrote that there are many opportunities to buy property, fix them up and resell them at a large profit throughout the country. While I think there might be opportunities to do this, I'd say there are much better places around the world to "flip" properties. I don't think Argentina is the best place to do that. I NEVER buy a property, renovate attempting to flip it. The costs involved are very high with 3% (or more ) realtor's fees, legal fees, 2.5% stamp tax, money transfer fee bringing in the funds, AFIP permit fee an accountant will charge you to get the AFIP permit, 1.5% transfer tax when you sell, etc.

AMARAGGI is spot on target when he comments that the Argentineans buying in Recoleta are not in the $400 US a month revenue bunch. In fact, the last few properties I've sold in Recoleta were not to Americans, British or Europeans. The last 4 or 5 deals were all sold to local Porteņos and none of them are renting out short-term. A few bought just because they got their money out of the USA/Europe and brought it back to Argentina. 2 bought the flats for their children to live in. People forget that many of the locals in Recoleta, Palermo, Barrio Norte, Puerto Madero and many of the Northern Suburbs have quite high net worths.

These are the people buying in these areas. Remember what I've been saying the past several years. There is simply NOTHING really solid to invest IN Argentina besides real estate. I maintain that point and I think any local would agree.

As far as the question of if Argentina will ever change and dig themselves permanently out of this mess. That is a very tough question to answer. I'm certainly not as optimistic as AMARAGGI. I'd like to think someday they would get their act together but after living here full time for the past 5 years, getting my DNI and having permanent residency here I'd say it would take a VERY long time. The inefficiencies of the government and the banking system and society in general here is at an extreme level.


Argentina does have tremendous potential with Agriculture and green energy, etc. but they need a good solid government in place to achieve that potential.


Georgio's comment about his family's shoe factory here is a good one. I think Roberto and many other locals can tell you similar stories. Argentina is a brutally tough place to do business. Argentina's history of shooting itself in the foot every 10 years or so is well known and well established.

Some of Georgio's comments about the percentage of taxes sheltered are out of date as the laws have changed from year to year as Simon has mentioned. It's best you talk to your accountant here to get the most accurate and up-to-date advice. Also, just because you have a DNI doesn't mean your taxes will go down as there are certain taxing categories of living here vs. not living here certain months of the year. It can be a bit complex sometimes.

Georgio writes: "The best thing is buying an apartment for $70,000 with black funds, fixing it up for $20,000 and then renting it out tax free until you get your money back and then some and just never sell. You will save and make more money that way then if you declare everything that these agencies want you to declare".

Mike's response: Georgio on one hand you complain about Argentina and how corrupt it is and then on the next you are advising people to do a totally illegal transaction, bring in money illegally, evade taxes for the entire time they own their property and basically break all the laws". Therein lays the problem of Argentina that on one hand you are saying it's corrupt and on the other you are advising people to break the law, evade taxes and forget the rules. For me part of the solution of Argentina is forgetting that type of mentality completely.

If Argentina is going to make a fundamental change then you need a shift away from that type of thinking.
NO ONE likes taxes. No one but unfortunately in most civilized societies they are a necessity. I agree with you that the taxes are excessive here in Argentina. Now, I'm a permanent resident and I pay lots and lots of taxes and don't like it but not too much I can do about it. I could complain but who would listen? Ha, ha.



Georgio writes: "Also, ask owners of these American agencies if they are renting or have purchased their own home in BA. The answer is they rent and they want you to buy".

Mike's response: Georgio I agree with part of this post. There are many foreigners that came to Argentina and working illegally. Many of them do not have DNI #'s nor residency status nor working visas. Many of them are on tourist visas. Many of them are illegally working in Argentina and many of them have never purchased properties here. I do find that wrong that they are working here illegally.


However just because someone rents doesn't mean they don't own a home here. I can't speak for all foreigners from other agencies but I can speak for myself. I'm a good example. I own several properties in Buenos Aires yet I've rented for the past 5 years vs. living in one of the properties I own. Why? It's simple. I can make more money renting out the properties I bought vs. living in the property.

For example, I can rent out my units and with that rental income I can live in an even nicer property in a nicer area that is bigger. So it all comes down to rate of return for me. I do agree with you that lots and lots of foreigners that work here in real estate or tourism or this business don't own here or never purchased here but don't assume just because someone is renting doesn't mean they don't own here.
Mark posts: "I've always thought that if the Ford salesman doesn't own a Ford than don't buy a Ford from him".


My response: BINGO! I totally agree with you Mark. When I lived in the USA many years ago and I was deciding between a BMW and a Mercedes and test drove several cars at both dealerships I asked the salesman at both which units they owned expecting them to be one of their own cars. Well when I was at the Mercedes dealership and the salesman told me he had a 525i BMW naturally you can guess I didn't buy the Mercedes. I agree with this philosophy.


Georgio, you mistakenly wrote that my firm is an American corporation. That is not true. We are an Argentina corporation subject to Argentina laws, taxes, etc. So once again you have made another mistaken assumption. It's ok for you to speculate on something as long as you're not posting things as facts as that can confuse people.


I'm glad that you think "I'm no dummy". :-) Yes, I rent an apartment in Buenos Aires but you are wrong that I "sold the majority of the properties I bought after the 2001 crash". You couldn't be more wrong in both your post and assumption. As I posted yesterday, I own more real estate now than at any time before. Yes, I have sold off some properties. Most of them were unsolicited purchases or I only listed it for sale after I got an unsolicited offer but I've always taken the profits and re-invested it in Argentina typically on smaller units.


I'm well aware of the 10 year crashes of Argentina but when you say I'm "cashing out" you couldn't be more wrong. I've recently had the chance to sell a few units at close to my asking price and I decided against it. Am I saying that I think real estate will keep going up at the rates/values it has for the last few years? No. In fact, if you read my past posts in detail you will read where I pretty much forecasted the recession and financial crises going on around the world. I will say again that in times of severe worldwide recessions, real estate values pretty much everywhere around the world will fall.

I don't think Argentina is any exception to that.
What I AM saying is that when I invest in real estate it's not a quick flip. I invest for the long term. Georgio, you make some good comments but also some of your comments are just false including several you posted about me. Posting things like "he liquidated most of his real estate there" is a patently false and totally misleading post and it couldn't be more wrong.

Those that know me know that I'm a "straight shooter". I can honestly say I own more properties now than at any time in the past 6 years. I'm very happy with my investments in the past 6 years. I am very happy that I decided to invest a large chunk of my net worth in tangible and REAL assets vs. other investments like paper/stocks/bonds.

In fact, see my posts from last year where I suggested people to lighten up on their stock portfolios as the market was going to start to tank.

In this kind of worldwide environment, I continue to believe that having hard assets that are producing cash flow and having no debt and not over-leveraging yourself remains the intelligent play.

I will continue to give the advice that buying real estate in Argentina is NOT for the masses. In fact, I'll say again for the 100th time it is not for the majority of investors out there. You really have to look at all your motivations for buying here and do your due diligence well and factor in all possibilities.

Mark, for the record I haven't updated my website for a while other than when a tax law changes and I have my staff make an update. So admittedly some of the information needs to be adjusted which I'll do when I have more time but which I do let people know when they email me. As you CORRECTLY pointed out, taking profits and selling and reinvesting those proceeds doesn't qualify as "cashing out".

As to the reasons why I rent vs. live in something I've purchased is common sense. If I can buy a few properties with $500,000 and make much more money and take that rental proceeds and rent a much larger property and still have plenty of money left over there isn't anything wrong with that. That is the prudent thing to do.

East West 3000 is absolutely spot on target when he/she says that this Global financial meltdown will affect everyone. This is absolutely true. Honestly, I don't know one single person that isn't affected in some way by this. I do also agree that tourism will take a big hit in 2009 and possibly 2010 as well and I've already seen big slowdowns in tourism resulting from the massive worldwide recession. In times of severe economic slowdowns and heavy unemployment, international travel will definitely slow down. Vacations as well as corporate travel. Definitely tourism will suffer in Argentina over the short-term. NO doubt about that.


I do agree with Georgio's point that Argentina could get rid of some of the things they do and the taxes they have and banking fees and it would create many more foreign capital investments which honestly is what Argentina desperately needs. I agree with him also about them needing to establish a functional judicial system. That is desperately needed as the current system is broken.

There are alot of positives and a lot of negatives of each countries including Argentina. I think everyone could write a book about the frustrating things and a book about all the positive things. I still haven't met many people that didn't totally love Buenos Aires. Even locals that moved out of Buenos Aires or Argentina to have a better life in the USA or Europe still really love the city.

Georgio, as I pointed out to Mark the information on my website hasn't been updated in a while but you are right that it's almost impossible now for most people buying to get those types of rates of returns as the costs on real estate have gone up, as well as renovations as well as furniture. The inflation has been very high. Many owners that live here and can take a more hands on approach to management can make double digit returns however it is more difficult now.

I disagree with your point about how "Puerto Madero is the only beautiful spot in Buenos Aires because it is new and clean. Recoleta has people with money and it is safe too but a lot of the buildings look dilapidated and the rest of BA is a slum outside of the tourist hotspots" I couldn't disagree with you more and in fact I really don't like the Puerto Madero area much at all. I think there are lots of beautiful parts of the city outside of Puerto Madero.

I also disagree when you said Britain "is slummy". I think every single country has good parts and bad parts but you make many sweeping statements that I don't agree with, which is ok. It's good people have different opinions on things. I do think Buenos Aires has bad parts of the city but many are also beautiful.

I liked AMARAGGI's post about people not having "telescopes". That's true. My friends swear that I have ESP but I assure them I don't. :-) The problem is that many investors want to "hit a home run" every year and that just isn't realistic. Many people also didn't know what they were invested in. I personally know a few people that lost money with Madoff and they are hurting from it. And when Amaraggi says "some poorly trained investors". Well many of Madoff's clients were some of the best trained investors out there. The point is that many "paper" investments you just don't know what it's truly worth anymore. Many have so much toxic waste on their books it's impossible to see the true worth of the company. I still believe that it's good to have some hard assets in your investment portfolio that you understand.

Mark - I agree with your point that the USA has avoided many problems for a long time but the wages of fiscal irresponsibility and credit will catch up sooner or later. I've always said the USA will have huge huge problems and we are starting to see that play out today. Many banks in the USA are basically insolvent and without the massive bailouts would have gone under.

I think there are a lot of interesting points on this thread while I was gone. I think that it's ok for people to have different opinions and often times spurs more research and debate which I think is healthy. The only thing I'm against is people posting patently false information.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 676
Registered: 5-2005


Posted on Saturday, January 17, 2009 - 9:32 am:   Edit PostPrint Post

Mendoza,

Thanks. I just saw your post. Yes, definitley when I said "overnight" I was using that as an expression of speech but you are right. It has been building up. I know rates were frozen but nonetheless it would have been better for the government to have raised them a bit each year vs. the whamo up to 400% increases.

Sounds like electricity is VERY cheap in Mendoza. Here in Recoleta my flat is 150 sq. meters and we don't usually use too much electricity. My bill is usually around 100 pesos to no more than 160 pesos every bill which runs in 2 month cycles.

Well we were gone most of the past month so that would only account for 1 month of usage and no one was using our flat while we were gone yet the bill we got the other day went up to 500 pesos.

I heard on the radio yesterday people complaining and one lady said she got a 2,000 peso bill. Yeah, we called the utility company but like many things here in Argentina... what can you do.... life here.. Still, I predict it's going to cause massive problems once people finally get their bills. The utility companies are saying it won't affect 90% of the people and probably most people think they won't be affected but I can tell you that I don't buy the government nor the utility company's % of people that will be affected. Once people start getting their bills you will see the real protesting.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 90
Registered: 9-2008
Posted on Saturday, January 17, 2009 - 10:13 am:   Edit PostPrint Post

On behalf of the other board members, thanks Mike for the long and detailed post. Very interesting points indeed!
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 677
Registered: 5-2005


Posted on Saturday, January 17, 2009 - 10:47 am:   Edit PostPrint Post

Living in Patagonia,

You are certainly welcome. I think intelligent and open discussion has always been really beneficial. I think people can disagree with one another as long as they are respectful with one another and give their points backing up why they think the way they do.

My feelings on things are pretty clear as I've been transparent and posted quite a bit how I feel and think over the years on this board as well as other boards.

Some people mistakenly think (without taking the time to read all my past posts) just because I own a lot of real estate in Argentina I think it's a slam dunk for everyone when that is simply not true. I've posted in great detail over the past few years that this investment is not for everyone. The simple fact remains that many many investors aren't in a position to pay 100% cash on a property here in Argentina or in their home countries as well.

Also, even if they can afford it financially or have a lot of cash. A certain type of person shouldn't buy or invest in Argentina as a vacation rental if they can't deal with the ups and downs of the economy here, the problems that can occur (water pipes breaking, electricity outages from time to time, new AC units breaking down or not working, waterleaks from building neighbors that cause problems with walls/floors/ceilings/etc. problems with internet/phone service from time to time), problems with buildings or administrations, along with a whole host of other problems.

Rental properties really anywhere in the world are a lot of work and upkeep but I'll say in Argentina it can be more problematic sometimes as I think Argentina has a higher percentage of problems vs. first world countries. You don't really have to worry about things like the electricity going out on your block in the summer in the USA yet in Buenos Aires it can happen several times when it's hot.

I think you have to keep all these factors in mind when thinking about investing anywhere and know what type of investor you are. Also, I still don't buy real estate anywhere in the world in less I really enjoy that city and go there over and over. I don't think that is a hard and fast rule but personally I'd never buy real estate just to buy real estate as it's cheap. I like to own a place where I really enjoy and will use the property over and over.

No matter what anyone says, I will still make the case for owning real hard assets with no debt on them that are producing cash flow. No one is saying real estate in Argentina is the best investment in the world but on the other side of the coin over the past few years I can think of far worse investments.

The stock market has taken a huge huge hit and some stocks will eventually come back. The problem is that some stocks went to $0 or will go to $0. Lots of small cap stocks went under or will go under in the next 24 months during the severe worldwide recession. So it's not even a matter of "buy and hold" with these stocks. The recession will force many publicly traded companies to go under.

Cheers all.

PS Also, something else that I found interesting and recently started is home exchanges. I've never done that before my last trip. My wife and I usually always stay in nice upscale hotels but recently someone mentioned the possibility of using the apartment rentals I own and exchanging them for time in other properties in other cities in the world. This has turned out to be really amazing. There are websites like www.homeexchange.com where you can exchange your property for another property all over the world.

Within 24 hours of posting my property I had about 10 requests for exchanges and made an exchange literally within 24 hours of posting it. I went to Los Angeles and exchanged for a really high end property. Cancelled the hotel for those 6 nights which was u$s 2,700 saved. Also, we are going to La Jolla and exchanged for a property for 2 weeks in March. We are heading to Europe this Fall for over 1 month (London, Paris, Amsterdam, Monte Carlo) and have exchanged luxury properties in each city. Hotels for that time period would be $20,000 + for that time frame yet we just did them for an exchange of our flat in Buenos Aires.

I look at this money saved as ROI as well. I was really impressed with the experience in Los Angeles and so far communications with the March exchange has been wonderful so I'd recommend this as well for anyone that owns a rental property.

I've also exchanged for the future (not sure when I'll have time to go) 2 more weeks in La Jolla, 1 week in Ireland, 1 week in Miami and 2 weeks in New York (Manhattan). Anyone that travels frequently should look into this.

Cheers all.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 91
Registered: 9-2008
Posted on Saturday, January 17, 2009 - 11:54 am:   Edit PostPrint Post

I would strongly echo Mike's comments about Argentina not being for everyone. The A-Factor, as we call it, can drive a person mad. Having patience and a good sense of humor in this country is a requirement. Just yesterday we spent the better part of 5 hours getting fingerprints for the second time, having them certified, etc for our Zona de Seguridad.
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Arial
Advanced Member
Username: Arial

Post Number: 312
Registered: 10-2006
Posted on Saturday, January 17, 2009 - 12:32 pm:   Edit PostPrint Post

I think this does not belong here but since the conversation started here I will post a follow up, always in the hope that someone else will benefit.

You experienced ones will be saying "What a dummy" but I did not know the US has a Social Security Admin office in Buenos Aires (DUH!) That was all I needed. I went there and got a letter affirming my income, took that with two recent bank statements from my US bank showing the direct deposits of the same amount, to Imigraciones, returned a few days later for my DNI and I was done. As stated above, I also got a letter from SS stating that they cannot legally transfer money directly to a non-US bank and Imigraciones accepted that and dropped the requirement.

I am "legal" again for another year with a lot less fooling around than if I had done it elsewhere. I didnt even have to have the documents translated since they were already in castellano!

Arial
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 678
Registered: 5-2005


Posted on Saturday, January 17, 2009 - 5:03 pm:   Edit PostPrint Post

Arial,

I agree this probably isn't the best area and Roberto can remove it if he wants but yes there is a Social Security Administration office at the US Embassy in Buenos Aires. I've been in the Embassy many many times for numerous things (renewing my passport, constantly adding more pages to my passport, document certification/notarization) so I've always seen the SSA window (the furthest window on the right hand side).

They are VERY efficient. When my daughter was born I applied for her Social Security card here. I remember reading on the application it could take up to 4 months to get the card. But I found it ironic that they said that a US citizen applying for a card outside of the USA gets it much quicker as they don't go through the usual cue of people waiting in the USA. Sure enough 10 days later we got her card in the mail sent to our home in Buenos Aires. I was amazed with their speed and efficiency.

I can't say enough good things about the US Embassy in Buenos Aires. When my daughter was born here in Buenos Aires and I had to apply for her USA passport, the Embassy had the passport sent to us within 10 days of turning in the paperwork. Amazing turn around. On the other side of the coin, applying for the Argentina passport for the baby involved a 5 hour wait at Immigrations. Waiting, waiting for paperwork to fill out, waiting for the photo for the passport, waiting for the fingerprint of the baby. Then it took over 2 months to get the passport.

I'm not sure if they do it for everyone but the US Ambassador sent a personal letter to our home congratulating us on the birth of our baby. I've always had good experiences with the Embassy in Buenos Aires. They are a helpful bunch of folks.

Living in Patagonia - LOL. Funny! I never head the "A-Factor" before but that certainly is a great word for it. I don't think people that don't live here understand just how difficult things are here sometimes. Many seemingly simple things here take forever and there is a line just about everywhere.

Living - I went through the "fingerprint" process every year for the past 3 years each time I had to renew my DNI. It's a good feeling getting permanent residency and never having to go through that process again. Terribly frustrating.

There are certainly positives and negatives of Argentina and people have to be prepared for both. I've lived here 5 years and I'll still say that the quality of life here can be very high if you are already moving here with savings or retiring here with on-going incomes/pensions in dollars/pesos/Sterling.

I know many that have retired here. Although the costs have skyrocketed upwards over the years, it's still more affordable than living in the USA/Europe but some things can be very frustrating. (Waiting in line for everything, especially supermarket, trying to retrieve a package at the post office, the horrible traffic and the worst drivers in the world, pedestrians not getting the right of way, a horrible banking system only to name a few).

But all in all it's still a great country.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 92
Registered: 9-2008
Posted on Saturday, January 17, 2009 - 7:55 pm:   Edit PostPrint Post

I have some excellent examples of A-factor I have kept a note of that will make others laugh. Do you think it would be appropriate to start a thread? I await the board and moderator's response.
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Mark
Member
Username: Lostintheandes

Post Number: 61
Registered: 10-2008
Posted on Saturday, January 17, 2009 - 9:33 pm:   Edit PostPrint Post

Mike,
vacation seems to have done you well. Your replies were great and minus the defensiveness you sometimes show. Great answers although i won't be buying an apt soon.

You said the easy money had been made in financials....true but the credit card debacle is hitting the fan and I am short COF(as well as GS). I outlined my thinking on COF and any who followed are now in tall cotton as it is down 40%. I say anyone who espouses an opinion such as you on BA RE but has no skin in the game should just shut up. If I could short BA RE I would. You cetainly have skin in the game. In a year when Patagonia and I open a bottle of the good stuff perhaps you will join us. cheers,m
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Georgio Armani
New member
Username: Georgio_93

Post Number: 15
Registered: 1-2009
Posted on Sunday, January 18, 2009 - 1:01 am:   Edit PostPrint Post

Yes, I have gotton some percentages wrong regarding the BA taxes but that is only because they change so much. Argentina is so unstable and the fact that Mike stated that his electricity bill went up 300% is yet further proof.

I lost lots of money in stocks in the past... stocks are for suckers unless you have insider information or are a stock broker who makes money by volume and with other peoples $$$. I only have gold, real estate, treasuries, and munies (munies can be dangerous if states are in a deficit/not insured).

I am advocating the black way of doing business in Argentina only if you have a DNI and therefore are not considered a foreigner. Doing things in the black as a foreigner is setting yourself up for a world of hurt. And yes I will advocate cheating so long as the system is setup to reward them. Besides, in Argentina you learn that in one regime it is cheating but when the other takes over all the rules change and therefore it doesn't matter if you were abiding by them in the past.

I believe Mike was born in America so it is no surprise he is brought up with the American mentality of (don't lie, cheat, and pay all of your taxes). This is true, you MUST follow these values in America because the American government watches and knows when people cheat and you are harshly punished for doing so. America only cares about one thing.... money. They don't care if you are black, white, asian, illegal imigrant or whatever. They welcome everyone and anyone so long as you bring your money, make money, and pay taxes.

Europe and S. America are classed based societies despite all of their socialist retoric advocating peace, free love, and equality. Europe is not equal. In Italy there is a high level of nepotism. You have to be important or come from an important family to land a good job. Europeans, Canadians, French and even Argentinians are highly anti-semetic. My French friend and family are atheist but they put Roman Catholic down on his ID card because they descriminate when it comes to jobs. Think that is another one of my generalisations? Just look up the embassy bombing in which many Jews were killed in Argentina and the underground NAZI migration after WWII. Argentina is like the Idaho of S.America lol. There are very few minorities in Argentina and Brazilians feel it everytime they visit. Also, Argentina and Uruguay wiped out all of the indiginous people on purpose.

As a European/S. American you HAVE to cheat or else you don't survive. Unfortunately, the wealthy in this world do not follow the same rules as everyone else. If you are filthy rich I guarantee they are doing something illegal. I admire Mikes passion for changing the mentality of Argentines and Europeans but you are preaching to societies of ancient ingrained habits. The only way Argentina will change the mentality of its people is if the government sets the example of being honest by changing their tax code and judicial system to reward the hard worker, investor, and wealthy instead of trying to bleed them dry with these rediculous taxes while keeping revenue for themselves and leaving the crumbs for the poor in the form of social programs to shut them up so they continue to vote for their constituency.

America is a new country and it has really only been recognized as a super power since the end of WWII. It has only been 60 years since then and the decline of America is already becoming apparent. If Obama turns this country socialist (which he can do with a democratically controlled congress) and the creation of a North American Union takes place, I guarentee you will see people starting to live like Europeans and S.Americans.

If I had to choose and recommend a country to retire in right now for those of you who are close I would highly advise Malta. They speak English, have affordable real estate (so long as you buy an apartment ~150k US, no property tax, no garbage tax, no HOA/maitenance fees and (tv, internet, mobile phone, regular phone is about 60 euro/month). Stable parliament government, temperate weather with sunshine all year round with no snow, and one of the top healthcare systems in the world ranked 5th. Can't do better than that.

PS- I am glad there are people on this board that disagree with me. I guess you can say I am extremely malcontent. I really hope the majority of the world thinks like Mike instead of me. But most Europeans and S.Americans agree with me and that is why we have poor economies... we don't spend because we don't trust each other. Also, the US breeds a lot of ignorent people with their poor education system and embrace of illegal immigration which is the only reason capitalism survives.
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Benco
Member
Username: Benco

Post Number: 59
Registered: 4-2007
Posted on Sunday, January 18, 2009 - 11:00 am:   Edit PostPrint Post

Georgio, your posts have certainly revived the discussion here which is great. And some of your thoughts are interesting indeed, although I had to switch to internet-reading mode in order to find them - scanning through lots of questionable statements trying not to miss the better points.

One point I would like to comment on is the issue of paying taxes, since you insist on "advocating the black way of doing business in Argentina". Similar to ApBA I think this just isnīt right. Whether you may get caught or not is one thing, whether it is right or not another. I am wondering if your next advice would be to rob a bank (honestly I sometimes think they deserve it...)

It is correct though that one should not be naive about this issue. If you are facing serious competition from companies who evade taxes then you either do the same or you are out of business soon. More than 40 percent of the workforce is employed in the black, which illustrates the magnitude of the problem.

And of course, corruption and bad government do not help convincing people to obey the laws. Look at what happened to the pension system, where the savings of future pensioners are now dished out to boost consumption (and the AFJP were not any better with their administration fees of 30 percent). When you employ someone in the white, 20 percent of your cost goes into the pension system. If people feel they are not going to see this money again, then nobody should be surprised about their preference for partially working in the black.

If the owner of a small retail store evades some taxes because he needs to stay in business and feed his family, then I wonīt blame him - he may not have much of a choice.

But of course, a foreigner who deliberately decides to come to Argentina has a choice, and certainly can not justify evading taxes as a necessity. And many Argentineans also have a choice, and too often decide against public interest.

With respect to any investment project, there is no doubt that one needs to carefully analyze it according to the special situation here. My advice would be to look for something that is out of reach for the informal sector and does not depend on the state. For example real estate is okay, construction probably not. Providing services to foreigners is okay, while hoping to provide services to public institutions is unlikely to work. Competing on price is tough, while competing on reliability and quality of service may be possible.

Despite all the problems, I am convinced that in Argentina there are still tremendous opportunities that can be explored while living with self-respect and without compromising your moral standards. After all, I would not have come here otherwise.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 680
Registered: 5-2005


Posted on Sunday, January 18, 2009 - 3:25 pm:   Edit PostPrint Post

Georgio,

Thanks for your follow up post. Really, like I said before. I enjoy your posts and it's VERY clear that you have a good understanding of Argentina and how it works. I don't disagree with everything you say and in fact I will say that you make some good points.

Yes, Argentina has its fair share of problems. There is no doubt about that. And to be completely honest, the longer I live here the less optimistic I am that there could be a sweeping change in the near future.

I guess I like to think positive and believe that change can be achieved over time if you have enough good and positive forces in play. Although I'm optimistic I've always been a realist as well. In fact, I think I'm more realistic than I am optimistic. Argentina has many challenges. And coming back from a long vacation to see that utility rates went up literally 300% is a reminder of that. Granted, they haven't raised rates for the past several years and by most worldwide comparisons electricity is still affordable here. A 300% increase from one day to the next will cause chaos.

I think those that want to live here need to understand the unstable aspect of Argentina. Certainly when I decided to move to Argentina I understood that nature of the country and accepted it.

Georgio, I wouldn't go as far as you as saying "investing in stocks is for suckers unless you have insider information" but I will agree that people understand now that the market doesn't just move up in a straight line and "paper" isn't worth what they thought it was. I agree with you that owning hard assets like real estate (not being over-leveraged or not being leveraged at all if possible), gold and some treasuries is wise. You made a good point about municipal bonds. I pointed out last year all the problems that States would have and many are essentially bankrupt and we are seeing that play out today.


I understand your point about recommending going "black" if you have a DNI. You are right that foreigners MUST obey by the laws are they will really suffer the consequences later as the government has two sets of rules. They have one for locals and another for foreigners which is a travesty of justice, in my humble opinion.

You are right that the system rewards people that cheat or are "black". However, I'll say that I've had my DNI for several years now and I haven't changed my thought process. Do I get frustrated?? YES! On a daily basis. I don't honestly think one day goes by that I don't get frustrated in some way by this system. I didn't have this frustration doing business in the USA.

Georgio is correct that it's almost impossible to make money operating in "white". I said it before and I'll say it again. Argentina is NOT the country you move to try to get rich. It's an extremely difficult country to make money in when you work in "white". I should know. All of my employees are in "white" and we operate in "white" which puts us in a huge disadvantage with other companies in the same industry. People don't realize the tremendous taxes that are in place both on corporate taxes and especially on employees. For every $1 you pay in salaries there is something like 47% in various taxes, mandatory insurance/benefit programs, government fees, etc.

Georgio is spot on target when he says that most companies operate in the black because it's so difficult to make money here due to the system the government set up. Many companies pay their employees under the table to reduce their tax exposure. I don't operate that way and it causes huge amounts of taxes.

I know some companies locally that are in the same line of business and they have no office, working out of their apartment, they don't have any corporate structure set up in Argentina, their employees are paid under the table, they pay no taxes, they own no property here, they only work with locals (who also don't pay their taxes). Several foreigners working or living here have no DNI and are here on tourist visas that are renewed over and over. This is illegal.

Yes, Georgio I was born in the USA and lived there all my life until I moved to Argentina. I guess that is my problem. Ha, ha. The USA government has trained their citizens well. You are essentially right that the system here in Argentina is broken. However, I think that much of the problem is that most locals think the exact same way you think. I do think that there needs to be a fundamental change in the laws here and the way they structure things. I'm hopeful it will happen in my lifetime.

I'm not trying to preach to anyone Georgio as some of your points are accurate about Argentina and how it operates. I guess my point is that there must be individuals that also change their actions and the way they do things or "change" will never come.

Georgio, you are right that the USA is fairly a new country. Like you, I believe things are rapidly changing there and the decline in power and importance of the USA already started. I don't think anyone can argue with that. The USA will always be an important player in the world but there is no denying their influence and power is declining. I do agree with Georgio that depending how bad things get in the USA in the future you could see big changes and Americans starting to live like Europeans or people in South America.



I am American and certainly proud of that fact. I still think that the USA is probably the best country in the world to live in. And from the fact that Georgio lives there it sounds like he does as well. The USA has its fair share of problems but every country does. When I found out I was going to have a baby in July 2008 I could have had her in any country in the world. I thought about having her in the USA where I am from and where I lived almost my entire life, before moving to Argentina. But I chose to have her born in Argentina and I'm happy with that decision. I knew that she would automatically get citizenship in the USA because I'm American and lived there my entire life. If I couldn't have gotten that for her I would have flown to the USA and had her born there.

But I'm happy that she also has citizenship in another country as well. I'm happy to give her the opportunity to pass a USA passport as well as Social Security # as well as a passport and DNI from Argentina. People get this wrong idea that gaining permanent residency in Argentina is some easy feat. That is wrong. You would think that a poor country like Argentina would welcome foreigners from the USA/UK/Europe with open arms but that isn't true. Going through the DNI process and getting permanent residency here was a difficult task that I wouldn't want to repeat.

Georgio - I hope you will continue to share your opinions. I think it's ok to disagree with people as long as people are doing it respectfully. I think the world would be a very boring place if everyone agreed with everyone else. Good luck.



Mark - Yes, it was a really great vacation and coming back and playing catch up will take some time. Toughest part of a vacation. No problem with you not buying a property here. Certainly no one is trying to talk you into buying anything. You somehow make it sound like at times someone is trying to talk you into buying here which isn't true. The thing I've said more times than not is real estate investment here isn't for a majority of the people out there.

There is nothing to be defensive about. I've given my opinions for several years and the truth of the matter is that I was right. I've said that for 2009 there probably isn't a rush to buy real estate anywhere in the world. In times of worldwide recessions real estate prices in most parts of the world will most likely decline.

Benco - it sounds like you and I would get along. I've read your past posts as well as the last one and you sound like minded.

Best to all and a great 2009.
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Arial
Advanced Member
Username: Arial

Post Number: 314
Registered: 10-2006
Posted on Sunday, January 18, 2009 - 3:31 pm:   Edit PostPrint Post

These are really interesting posts. I will read them more than once. It seems like a window into the Argentina culture. I think what Georgio writes is important. I came here from the US thinking things were done the same everywhere (DUH!) and almost really messed up one lawyer because I had no clue that something might be a little shady. I think Argentina people assume that others of us know how things are done. Maybe THEY think things are the same elsewhere as here. After all, I recall Roberto wrote that he got stopped three times in the US for not stopping at stop signs before he realized that in the US STOP really means stop.

Although APTs BA and perhaps Benco advocates doing things in the "white," it is my experience that not too much in Argentina is in the white.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 681
Registered: 5-2005


Posted on Sunday, January 18, 2009 - 3:58 pm:   Edit PostPrint Post

Arial,

Yes, there are great comments here and I think people can learn from them.

Yeah, I think foreigners should do everything in white. And even locals as well to potentially avoid problems. I know I'm in the minority but I'm the type that even has my maid in my house in white and pay taxes for her as well. I can't imagine that is too common.

Funny about Roberto and the stop sign. I didn't see that before. Funny. Although I advocate the "white" you are right that most of the country doesn't operate in the white. And I will admit once when a police officer came up to my car when I was parked in a loading zone area and he said I shouldn't be there. I explained to him that I was just waiting to pick someone up and they were coming down soon. The funny thing is that he said well I will write you a ticket but maybe I could be convinced to change my mind. Then he asked me if I had change for a 50 peso bill. LOL. He didn't come out and ask for a bribe but it was pretty obvious what he was getting at.

I have to be honest and say that I did give him "change" for his 50 peso note only he never gave me any change back and he did change his mind on giving me the ticket. LOL. I guess this would be considered "black" but most locals just consider this normal.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 93
Registered: 9-2008
Posted on Sunday, January 18, 2009 - 4:38 pm:   Edit PostPrint Post

Along with mate, futbol and waiting in line, not paying taxes is a known Argentine past time. So some might argue, when in Rome,.....
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Georgio Armani
New member
Username: Georgio_93

Post Number: 16
Registered: 1-2009
Posted on Sunday, January 18, 2009 - 5:36 pm:   Edit PostPrint Post

Yes, I live in the US. My family made money here that they would never be able to make in any other country. That is the beauty of the US. If you come from nothing... or in our case if a government of a foreign country strips your once acquired wealth because of communist/socialist uprisings (Ahem... Argentina), you turn to the US as your only savior.

If you are fairly educated and work hard in the US you can make a lot of money. But I would like to point out that the US is ONLY good for making money. (There is no culture, the food stinks, fashion is out the window, the arts are pathetic, and there is really no social life for most because we are working all the time)

The US rewards the young ambitious hard worker but punishes the old, ignorent and sick. What this means is that if you work hard and make a couple million dollars in your lifetime and you retire in the US you will lose all of your money in retirement with the cost of healthcare, constant rise in cost of necessities such as utilities and food, and the need to maintain a vehicle and property taxes.

Property taxes in the US is the real wealth killer. Some people in the US on the east coast need at least a revenue stream of 10k per year JUST TO PAY PROPERTY TAX. Also if you own a home you need to constantly pay for repairs because the homes in the US are made of spit... wood and cardboard. Natural disasters can wipe out your flimsy house so this means you NEED insurance which will cost you another 2k per year on TOP of your property tax. Between utilities, property tax, insurance, repairs you are looking at around 15k per year just to breath the AIR IN YOUR HOUSE! That is unacceptable which is why when you retire you are basically FORCED to leave. The US government WANTS this! As soon as you become UNPRODUCTIVE you are financially forced out of the country. The NAZI's did the same thing accept they were overt about it. In truth I understand the system and it is really the only way capitalism can survive.

Also, defaulting property tax can mean losing your home and all the equity in it! Socialist countries cannot take away your home for defaulted taxes. They can only receive defaulted taxes when your home is sold or transfers to your heirs. Also, in Europe you don't need wills and trusts (especially Italy). Everything goes to your family and the government doesn't tax or have probate.

My advice about Argentina was nothing more than "When in Rome, do as the Romans". I understand why Mike has to be legit in Argentina, after all, he is running a company. But for a little ole individual cutting a few corners is not going to land you a prison sentence in Argentina.

Personally I wouldn't invest in Argentina at all. If I had to move to S.America I would probably buy something in Montevideo or Punta del Este and just take a ferry to BA when I wanted to have fun and enjoy the exciting city. Basically... Spain has been extremely unaffordable and most spaniards are moving to Uruguay to retire NOT Argentina. There probly is a logical reason for this.

Malta seems the best bet right now for reasons I explained above on my last post. It is also just a boatride away from Italy so traveling and seeing Europe becomes much less expensive. All you need are boats and trains to see Europe from Malta. Retiring in Europe is more pleasurable.

In short, I guess what you can take away from my opinionated posts is that if you have no money and you want to make it, the US is your only option. If you already have money, you will live a much more fulfilled life if you live in Europe.
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Living in Patagonia
Member
Username: Soulskier

Post Number: 94
Registered: 9-2008
Posted on Sunday, January 18, 2009 - 6:12 pm:   Edit PostPrint Post

Georgio, try not to hold back and tell us how you really feel.
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Benco
Member
Username: Benco

Post Number: 60
Registered: 4-2007
Posted on Sunday, January 18, 2009 - 7:00 pm:   Edit PostPrint Post

And keep bashing *ignorent* people, please.
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AMARAGGI
New member
Username: Amar

Post Number: 23
Registered: 12-2006
Posted on Sunday, January 18, 2009 - 8:26 pm:   Edit PostPrint Post

Georgio, your description of US is quite apocalyptic. And I am not sure it is right. I guess they are plenty of well educated people working very hard and being poor. Do you really believe that because they are people who succeed from various communities that there is no racism and class stratification? I feel this is a very violent country with also a violent history not to mention the usual killings oF youngsters by their class mates. Corruption is everywhere (look at the Siemens case) but what makes the difference with Argentina is the separation between the different "powers". I mean justice and the parliament structure. Laws are inforced and there are enough medias of different opinions to bring cases to the public (remember watergate). In Argentina there is still this survivance of peronism which is a remain of the social organisation under fascist and national socialist regimes. Their economies at that time was also generating a huge inflation that they accomodated through wars and looting. But since facts are stronger than lord maires, I believe that rather soon the Argentinan economy will normalise. In fact having people paying the right price for electricity is rather good news. Maybe they will consume energy and water and ressources more normally. I believe that if a decent governement comes to power the total profit for Argentina and investors will be bigger than playing the black market and organising a weak state. Look at the most prosperous economies Sweden, Germany, Japan they work around a solidarity system and organised democracy.
As far as playing the market I must say that I really enjoy taking lessons from Mike, Mark and Mendoza. I tend to agree with you that this is probably a casino game. I remember having read Edward O Thorpe "beating the market" about hedging but that was about mechanical relations between warrants and stocks in very particular situations, very far from betting. But I am a complete ignorant on these matters.
What I can say is that this is my fifth trip to Bs As and I enjoy it more and more.It is a fabulous city and country.I bought a small house here and if it brings back 6% I will be perfectly happy. I think like Mike that on the long run I will also make a profit when will come the time to sell it.In Malta it would be like the waiting room of death.
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Mark
Member
Username: Lostintheandes

Post Number: 64
Registered: 10-2008
Posted on Sunday, January 18, 2009 - 9:28 pm:   Edit PostPrint Post

What a great exchange..I am learning more each day

Mike,
I will be buying.....I just hope for your sake its not distressed apartments in BA

Georgio,
Sorry about your stock market experience but I guess if you asked a guy about to jump out the window in 1929 and Warren Buffet what they recommend you would get different answers. Bottom line there are more self made millionares from the stock market than working at a job or from real estate.

Patagonia,
Never change your principals...only your habits.

Everyone else,
Black and white...it all seems grey. Covey says you can't break the basic universal principals, you only break yourslf against them. It seems this is the Argentinans curse; because you refuses to follow a higher code of ethics you are doomed to live in a system that has no higher code of ethics.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 17
Registered: 1-2009
Posted on Sunday, January 18, 2009 - 9:36 pm:   Edit PostPrint Post

Better to bash ignorance than wealth right? Quite frankly, breeding ignorance just makes it easier to "legally" steal money in our capitalist society.

I believe the American economy will plateau for 5-10 years before it rises again but I can be wrong. But the formation of a Union and introducing socialized healthcare will force the cutting of our military budget. If you cut our military budget you can't wage wars... and empires are forged upon wars. Therefore, one can deduce that the introduction of socialized healthcare is the destruction of our empire. We simply cannot tax 80% of peoples income to maintain both. Europe depends on the US to save them when terrorism occurs... they spend little to nothing on military, it all goes to social programs.

Sometimes I spell words incorrectly when I am speed typing. Sorry for that but English is not my first language. I am sure everyone on this forum has made a spelling error at one time or another. Hardly a way to measure one's intelligence.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 18
Registered: 1-2009
Posted on Sunday, January 18, 2009 - 10:19 pm:   Edit PostPrint Post

Nice analysis Mark. If I represent black on this forum, Mike represents white and you represent gray. In truth the world really is grey. I just sometimes focus on the black while others are more optomistic and focus on the white.
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Benco
Member
Username: Benco

Post Number: 61
Registered: 4-2007
Posted on Sunday, January 18, 2009 - 10:33 pm:   Edit PostPrint Post

Mark, it all seems grey to me too. Even if you try to do things right, it often is not clear at all what is right and what not. A large company in Argentina will always depend on the benevolence of the tax authorities, for example. If they want to find something, they will - and Moreno has repeatedly used tax inspections as a threat. Grey areas and corruption go hand in hand, and sometimes I wonder if there really is the political will to change this situation or not.

Keeping people in grey areas makes them vulnerable and dependent, it is a form of constructing power. Even the wealthiest families in Argentina are not really free, or in your words, they are doomed to live in a system that has no higher code of ethics. Unfortunately I donīt see this changing - the most recent example of things actually getting worse may be the appointment of Echegaray as the new head of AFIP.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 19
Registered: 1-2009
Posted on Sunday, January 18, 2009 - 10:53 pm:   Edit PostPrint Post

I agree Benco. The US is pretty grey. It is not as "capatalistic" as it used to be and Europe is not as "socialist" as it used to be.

Most of us Americans don't factor in that when you are done paying 25% federal, 9% state, medicare, social security, and city/municipality tax you have around the same 40-50% income tax as Europe. Most high income earners in the US are paying 50% already. So yeah I agree, when the system is grey everyone is getting taken advantage of. Oops, I ended my sentence with a preposition. Don't think I was supposed to do that. Shrug
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Arial
Advanced Member
Username: Arial

Post Number: 316
Registered: 10-2006
Posted on Monday, January 19, 2009 - 3:44 pm:   Edit PostPrint Post

Georgio, your analysis of the US is great and on target. I enjoy your comments. One thing I love about Argentina is the construction of the buildings in the cities. My word for what houses in the US are made out of is ticky-tacky. Which is probably closely related to spit, cardboard and whatever else you said!

However, you have one thing seriously wrong. The U.S. is not a capitalist country. It is sad that so much of the world thinks it still is. The US is now socialist-fascist.

I know that will make some folks angry but it is the truth. One congressman quit about two years ago and publicly announced he was quitting because Congress is a joke now, because corporations were making the law, that they were even writing the legislation now and Congress rubber stamps it. It is now government by corporation (the definition of fascism.)

I am old enough, though, to remember when it was free-market capitalist. When people didn{t have to pay 50% of their wages in taxes because we did not have all the socialist programs. You could afford doctor visits. The average man could get a job and support his wife and children, with someone home when the kids arrived from school. He could own a car and a house, and send his kids to college without going into debt. That was before the government started siphoning off so much to pay for the encroaching socialism and graft--which always accompanies socialism.

But that time is past and we are now living on what our grandparents built and what they built is being badly depleted. You are going to see big changes in the US. I can tell that people here in Argentina have no clue what is happening and most younger people in the US the same.

I have seen changes in America that I would never have believed could happen when I was 25. Now it seems to me to be gathering steam like a snowball rolling downhill.
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Arial
Advanced Member
Username: Arial

Post Number: 317
Registered: 10-2006
Posted on Monday, January 19, 2009 - 4:18 pm:   Edit PostPrint Post

I like to ask Argentines for their opinion about the corruption here. Argentines tell me they like it this way because it is always possible to get things done. If most of the population likes it, perhaps that explains it.

There are things I am tempted to post here but suspect that I am not supposed to. For example, I have had certain advice from several Argentines. Lately I mentioned that advice, just in passing, to a lawyer and he looked alarmed and said, "Dont tell that to ANYONE. That is against the law." And then he gave me hints about how to do it! I am NOT making this up!

But none of my advisers warned me that it was illegal or not to mention it to anyone. Could it be that they dont understand that we dont know better?

Honesty would serve the country much better, but as someone already mentioned, maybe an honest person is unlikely to be able to compete successfully. Vicious circle.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 682
Registered: 5-2005


Posted on Monday, January 19, 2009 - 4:46 pm:   Edit PostPrint Post

Some very interesting comments here on this section. I know some of it has gotten off track but definitely interesting nonetheless.

Actually Georgio makes some interesting comments and some I agree with. Not all of them but I do agree with him that the USA is still the best country in the world where someone that is a hard worker, takes the time to get a good solid education and has the will to work can make money.

The USA is probably the easiest country in the world to make money in. Although I do think that it won't be as easy in the future to make lots of money even if you are a hard worker and are well educated. Especially in times of severe recession or possibly a depression.

Georgio is pretty harsh about the "no culture, the food stinks, fashion is out the window, the arts are pathetic and no social life for most". LOL. Hopefully most Americans aren't offended by that. :-)

Still, the USA is still a wonderful country. There will be massive changes but it will always be one of the best countries in the world. I do think to have a really good quality of life in the USA you have to make lots of money. I think that will get even tougher in the future.

However, each country has their fair share of problems. Certainly no country is without it's fair share of problems. No country is perfect. The liberties people enjoy in the USA, the protection of free speech in the USA are pretty darn amazing.

For example, my wife and I were recently in Santa Monica, California for the holidays. And there was a woman (I assume from Palestine) and she was yelling at the top of her lungs things like "Hitler was right! Jews must be killed!" and other really really horrible things I don't want to repeat here. She had this poster board which I can't even remember what it said but she was yelling really horrible things out in a very crowded Third Street Promenade.

Finally one guy went up to her poster board and tore it up as he was so upset by what she was saying. The lady took her shoe off and threw it at him. I mean really, in how many countries would you see such levels of free speech? In many countries this lady probably would have gotten beaten up or possible even worse....

I agree with Georgio that property taxes in the USA are a real wealth killer. And remember what I posted last year. I said that states would be forced to raise property taxes and that is exactly what we are seeing across the USA. Think about it. With sales taxes falling off a cliff and property values falling which in turn causes property tax intake to get reduced the USA will be forced to raise property taxes and continue to raise them. Many States and municipalities are broke or going broke.

I don't necessarily think this is limited to the USA. I think many countries will use property taxes as sort of a "wealth tax". Here in Argentina I pay quite a bit of wealth taxes. Although I have my DNI and won't have problems selling my properties since I have permanent residency I still think it's the right thing to do.

Georgio is correct when he points out that there is a dual standard with citizens who mostly don't pay wealth taxes on their properties and foreigners that do.

I remember 2 years ago a gentleman hired me to help him with a property sale transaction. I didn't know him and never met him. He formally lived in Argentina over 10 years ago. He was originally from the UK. He had been renting out his property for like 6 years but never reported the income from the rental nor did he pay his property tax for any of the years he owned his property.

It would have been impossible for a foreigner to have sold their property without catching up on their taxes. I relayed the information to him that he would need to catch up on the taxes before he could sell. The buyer by law got to select the lawyer (Escribano). And the buyer told him that he would find an Escribano that wouldn't force him to pay the back taxes or rental taxes. The lawyer said "hey, this guy has a DNI and the government won't check nor cause a problem".

I told the lawyer my opinion on it and made him sign a letter saying he would take all responsibility on the transaction and he did it. The lawyer for the buyer closed the deal and only for the mere fact this seller had a DNI he didn't pay any of the back taxes. Now a foreigner would NEVER be in this position.

As far as Georgio saying he wouldn't buy anything in Argentina and would live in Uruguay and just come over to Buenos Aires when he wanted excitement. I'd say that Uruguay is really really organized compared to Argentina. Their government, their banks are all great. Things are a breeze compared to Argentina. However, I'd say that I couldn't live in Uruguay full time. It's too boring for me to live in full time. What I enjoy about Buenos Aires is well...Buenos Aires!

At the end of the day I'd still much rather own a flat (with no mortgage) in Buenos Aires that might be $2,000 - $2,500 a sq. meter that is generating positive cash flow vs. paying 100% cash on a property in a city like Manhattan for over $10,000 - $12,000 per sq. meter. Or Paris or London, etc. I'm talking real estate with no leverage nor no debt/leverage. Buenos Aires is still appealing to me.

As far as where to retire. I've never been to Malta but I'd probably find it boring like I would find it boring living in Montevideo or Punta del Este (all year round). I do agree Europe is pretty amazing but again, the fact that Georgio lives in the USA still speaks volumes to me.

I do agree that the healthcare system in the USA is pretty much broken. Houses there are not high quality for the most part either. But then again lots of new apartments in Buenos Aires are not as high quality as the older buildings that are really really solid.

Mark - as for your comment on you hoping it's not "distressed property". I've been pretty much been hearing comments like that for the past few years. I'm not worried over the long term. Remember what I said. I invest in real estate for the long-term. And I still say real estate prices don't get as cheap as after the crash.

But even if it did it wouldn't' be "distressed" to me. I hold no mortgages on the properties I own. I have no debt on them and they are generating positive cash flow and the ones I bought many years ago have almost paid for themselves in rental income. So the truth remains the value on them could fall to $0 and I'd still be ahead on them which is more than I can say for some stocks. And you and I both know that property here will always have a value. It will never go to $0. Not by a long-shot. Buenos Aires is one of the largest cities in the world and a very vibrant and exciting city. I wholeheatedly agree with one of the posts Simon made where he said that the government will respect private property rights on real estate owned. I agree with that and do not see that ever changing.

Now, over the short term I do agree property prices in parts of Argentina can fall. I'm not disputing that as I think they most likely will fall in most parts of the world with very few, if any exceptions. However, over the long term I'm very comfortable and I think when these properties pass on to my kids they are going to be worth quite a bit.

Argentina is a pretty unique and dynamic place and I think that real estate will still always be the only true asset of any safe value in this country. Forget about the stock market here, forget about investing in start ups or any type of business. I still say over the long term "bricks" and land in Argentina will be the one true asset for the locals.

Arial - I would argue with you that the USA now is already a socialist/facist country. But I would agree with you that it's heading more towards that direction. Who knows when and if leans more towards that direction and makes a conversion but I certainly hope not.

As far as the government I think in most countries around the world they have become more of a joke. Congress/Senate in the USA has become pretty much a joke. The approval ratings are so low for Congressman and Senators in the USA.

The changes in the USA have already begun. The massive bail outs have been an eye opener but I've been saying since I moved to Argentina 5 years ago that the changes we are seeing would start. I wish I could say that everything will turn out ok there... I can't. I still do think it will always be one of the best countries in the world and I'm very proud to be American but I think you can't ignore reality and what is taking place there.

A snowball rolling downhill is a good appropriate term....
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Georgio Armani
New member
Username: Georgio_93

Post Number: 20
Registered: 1-2009
Posted on Monday, January 19, 2009 - 11:44 pm:   Edit PostPrint Post

Your right, the US really isn't capitalist anymore in terms of tax structure but the fact of the matter is that it is still the most powerful country out there and it is often confused for a capitalist country because of the many institutions that still exist still generating wealth. Jobs are more readily found but times are changing and it is getting more difficult. I wouldn't go so far as to say it is fascist. I do think we try extremely hard to emulate the Roman empire with our military bases throughout the world and our globalized vision of it but we will not be able to hold on to it as long simply because we never do all that is necessary.

I am sure some fellow Americans will disagree with me about the no culture statement. Our so-called culture is limited to bbq's and ballgames which is in my opinion hardly a culture. Some may disagree. It isn't our fault though, we are too new of a country to really have an established culture.

I like Malta for the tax reasons. It is a fantastic home base for Europe except without the excessive taxes. I am not an advocate of buying one mansion in one country but rather an advocate of buying many inexpensive properties all over the world, some for capital appreciation and some for tax shelters. It is just as important to be diversified in real estate as it is stocks. I like to travel a lot so I like to buy cheap real estate all over the world in places where the taxes for it are low so that I don't have to worry about maintenance when I am not there. Also, having established residences all over the world makes it easy to travel without hotels etc. When one country is facing political and financial dispair you can just pick up and leave to one of your other locations. You can still find property in Europe and S.America for 50-80k. You don't need to invest a lot to make money.

Lately, the media and some stock gurus have been advocating buy high and sell higher. (These are the same people shouting that Google was going to go to $1000/share from $400 haha) I almost died laughing at this statement. I always buy cheap but in areas I know have a future.
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Arial
Advanced Member
Username: Arial

Post Number: 319
Registered: 10-2006
Posted on Wednesday, January 21, 2009 - 12:34 pm:   Edit PostPrint Post

It{s okay to argue with me, Apts. I dont even mind!

But I hope you do not think the US is still free-market capitalism. I think it is important to call it what it is because, otherwise, when the economy has been completely destroyed by these people, nations around the world are likely to think that capitalism does not work--because they falsely consider what we have today capitalism.

The fact is that capitalism made this country incredibly successful. But the US left free-market capitalism and became socialist sometime between when I graduated from high school and now. To be honest, it snuck up on me until one day I realized. Corporate governance was added more recently I think.

The reason I consider it socialist/fascist is that almost the entire country is owned by 5 corporations. Of course hardly anyone realizes it because one corporation owns others that own others. These corporations sponsor and send their own people to DC to make the laws.

Since these heads of those 5 corporations have also bought up about 90% of the media (TV, newspapers, magazines) they control who is offered you to vote for, whether we should be involved in a war (from which they are making a fortune) and so on. If there is a candidate running that is not in their hip pocket, they dont criticize him. If they did that it would call attention to him. They ignore him and make a big deal over the ones that they approve. They do not care if you vote democrat or republican, just so you vote for the menu they offer. If there is a real candidate, you will not even know he is running--unless you make an effort to know!

And who owns the real estate in the US? I dont claim to own real estate in the US but, for example, my friends claim to own a home that should be worth about $150,000. The taxes on it are $9,000 per year. This amounts to renting their house from the state. Can I prove that? Well guess what happens if they dont pay their rent! The real owner will evict them and rent the house to someone else!

And what if they need to install a new roof, or maybe a new driveway--or what have you? They have to go humbly to the real owner and get permission, plus pay a hefty fee for the owner to send someone out and see if they approve of what my friends are doing to their (the states) house. If they dont, they will make them take it down. In Ft. Lauderdale, you cant even decide what brand of nails to use on their roof! I am NOT making this up

The same is true in business. Regulations passed that make entry into a business so needlessly high that it would be difficult or impossible for any newcomer to offer competition.

Well, I could develop this thesis further but you get the idea. I am not sure what you call it, Apts. But I certainly would not call it free-market capitalism and I hope you wouldnt. I still have hope that someday what I consider real freedom-defending Americans will awaken from slumber, realize what has happened, and decide to make a difference.
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Mark
Member
Username: Lostintheandes

Post Number: 70
Registered: 10-2008
Posted on Wednesday, January 21, 2009 - 8:31 pm:   Edit PostPrint Post

It all sounds a little conspiratorial....not sure I believe the idea of the 5 corporations owning everything. Also I don't know of any 150K houses with 9K taxes. No disrespect but I'm not buying it. Mark
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Georgio Armani
New member
Username: Georgio_93

Post Number: 21
Registered: 1-2009
Posted on Thursday, January 22, 2009 - 1:38 am:   Edit PostPrint Post

Arial does sound a bit conspiratorial but some of the points made have reflected my viewpoints that I have mentioned earlier.

You never own property in the US. I always laugh when I am watching HGTV and I hear these first time homebuyers finance their home 90%, get their set of keys, look into each others eyes and say "We finally own our own home!". If you have financing then the bank owns and controls the property. After you are finished paying your mortgage it then becomes the states property upon default of property taxes. Sometimes shear eminent domain can force your eviction or even powerful corporations that want to build a wallmart where your home is.

My friend is a lawyer and he told me once that this country is all about controlling assets... NOT owning them directly. Ever wonder why most doctors and lawyers who make easy six figure salaries never buy a house or car even though they can easily afford them? Because if they were to ever encounter a lawsuit with their risky businesses there will be nothing to take because they rent or use family limited partnerships to transfer ownership in their child's names. Rich people also use charitable trusts to have their stocks earn interest tax free so long as they distribute a small 10% to a charity upon liquidation. 10% seems like awefully little in comparison to the 15% that everyone else has to pay every year without free compound interest.
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Arial
Advanced Member
Username: Arial

Post Number: 322
Registered: 10-2006
Posted on Friday, January 30, 2009 - 9:22 am:   Edit PostPrint Post

Mark, sorry you doubt my credibility but I accept that gracefully. However, my friendsīhouse went up to an incredible figure in valuation during the bubble. He told me at the time that he knew what the house was really worth, but if someone was willing to pay what they were going for, he was going to sell! He tells me that he had buyers but they did not want to commit to the taxes per year so they rode it back down again. Those houses were going for $150k before the bubble and probably is down to $150k now. In fact, with the huge pop in Florida, these same people tell me houses are almost being given away in that area. My friends do not pay that tax but if the new people had paid the price, according to their investigation that would be their tax. I am so far removed now I dont know if that has changed.

And by the way, I AM conspiratorial without apology! There has been a propaganda fear put into us that someone might think we are (horror of horrors) a "conspiracy theorist!" I have too much confidence in the intelligence of those "we" elect to office to believe that our government is as stupid as they appear. Therefore, the only possible explanation is that they have a different agenda. One that we might not want to admit possible because it makes us feel uncomfortable and afraid.

I worked for a Fortune 500 company for several years. The conspiracies that exist in those places for advancement, getting rid of the competition for advancement, control of more departments and so on, are awesome. There are a thousand conspiracies. The question is: which ones will be successful. I am not deficient enough in reasoning power to think that if those people were to run for office and get elected, they would suddenly become honest, upright people.

But obviously the majority of the U.S. does believe in miracles. I believe what I see. There was a time in my life when I used to feel confused. "How could they be so stupid?" was my question for years. Then one day it dawned on me that they arenīt that stupid. It is just that I refused to accept the obvious.

This doesnt mean I think you have to agree with me. I dont think anyone has to agree with me. But I wonder how much those still living there will put up with before the light bulb in their heads turns on.
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Arial
Advanced Member
Username: Arial

Post Number: 323
Registered: 10-2006
Posted on Friday, January 30, 2009 - 9:40 am:   Edit PostPrint Post

One more thought, Mark. I know you are a smart guy. I like your posts. But I am so impatient with Americans who just say I donīt believe that because they have no facts in their heads to support the idea!

I do not understand that attitude. If someone tells me something, even if it seems unlikely, I never reject it outright. I may remain neutral if it is not important enough to verify. But I will not reject it until I do the work to find out whether it is true. Please feel free to disagree with me, but to my thinking this is the only path to logical thinking. Even if a cursory check does not support it, I still will not reject it until I have done some serious research on both sides of the issue.

What I wrote about the corporations that own the news media is accurate whether you believe it or not. And it is something that anyone can find out if they just make the effort.

There is a simple answer to knowing for ourselves who owns the news media in the United States. It is called "research!"
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 696
Registered: 5-2005


Posted on Friday, January 30, 2009 - 1:28 pm:   Edit PostPrint Post

Georgio,

I got a good laugh when I read your post about the HGTV and how people THINK they own their homes when in reality it is the banks that really own it. They do NOT 'own' it until they have the title deed in their hands which very few Americans do these days. Even the ones that have been paying for 15, 20, 25, 30 years...many of them have refinanced and gotten home equity loans. Heck, some that have been paying for 15, 20 years owe more on it now then at the beginning as they pulled out so much equity and the value has since plummeted.

I have filmed several shows with HGTV over the years as both the buyer and the realtor agent and I've always mentioned that fact to the producers when they are filming. I will never forget a few years ago when I was buying a house in Punta del Este, Uruguay. I paid 100% cash for it and the producer was telling me how he lived in California and how he only had to pay the interest only on his house. He said he put like 5% down. I warned him that this was not smart and told him that house values in the USA were going to fall drastically. I also told him about how there were too many people like him that couldn't really afford their homes and no equity was being built up.

He was a really great guy but he laughed off at what I was saying. This was in mid 2007. He, and subsequent HGTV producers that I've worked with over the years couldn't imagine buying a home free and clear with 100% cash like they do in Argentina, Uruguay and other places around the world. It is THESE people that really *OWN* their homes. Not the people that put down next to nothing and paying $X amount for 30 years or more.

Arial - you make a lot of good points and I'm not even arguing with much of what you write as it's clear to me you have a pretty good idea what is taking place in the USA and what has taken place over the past few decades. My only point is I disagreed with your assessment that the USA is already a fascist country. IMHO, it's not.

Every country has their fair share of problems and the sad truth is that the USA has more problems than people thought before but many are getting a clearer picture now that things weren't as good as they thought. Things change quickly and this financial problem is showing people that for many years "the Emperor had no clothes on".

The USA is a great country full of wonderful people but to deny there are serious problems is wrong. I think it's great to have different opinions.

Arial you are correct that owning the home in many states might feel like you are "renting" from the state. Many states are essentially bankrupt like California to name one. California is the most populous state in the USA. They are broke. When you get the State Comptroller saying things like "there is no money to even mail back income tax refund checks" that should scare people about the sad reality of things.

Think about it. People that overpaid their income tax return and the State is saying these people might not get their tax rebate on time because the state is broke? Ooops. Not good.

Also, California is trying to get public employees to work 2 less days a month so they can save money. Also, the USA Postal Service is thinking about only 5 days a week service as they too are struggling and they need to save money.

These kind of things are a sign of what is to come ahead.

I think Arial's point is "QUESTION AUTHORITY" which I'd agree with. It's clear that things aren't as people thought.
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AMARAGGI
Junior Member
Username: Amar

Post Number: 26
Registered: 12-2006
Posted on Friday, January 30, 2009 - 2:26 pm:   Edit PostPrint Post

Mike,
What is amazing is that this way to use the credit in the US has generate such huge worlwide crisis. When I was reading your posts I thought you were too pessimistic. I still find difficult to believe that a proportion of default in the US can bring to zero the value of paper that received AAA notation from Moodys.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 697
Registered: 5-2005


Posted on Friday, January 30, 2009 - 2:45 pm:   Edit PostPrint Post

Amaraggi,

Yes. It is pretty amazing but I've always said this would have a chain reaction. Granted this is even worse than my forecasts back in 2007 and even 2008. Many people the past few years thought I was being too pessamistic but now they are seeing how spot on the forecasts were. I do some advising and consulting for some hedge funds and some of them early last year thought I was too pessamistic but those that followed my advice made lots of money shorting the financials and banks.

I kept telling them that the information that Bernanke and Paulson were giving people was just totally false. That the numbers that the banks were throwing out were all wrong and false. They were using best case scenarios when it was clear they should be using worst case scenarios. It is sad and I truly wish I was wrong but I knew it would be ugly.

But Amaraggi make no mistakes. It wasn't just the debt in the USA. Banks the world over allowed too many people to overleverage on their homes. Look at the UK. Look at Spain. I flew to London several times over the last few years and I was always amazed that the realtors that showed me flats always bragged they had several rental properties they bought and almost always all of them bought with 100% mortgages or even 110% mortgages where banks let them finance more than the cost of the properties so they could buy furniture as well!

I specifically recall one girl telling me that she never had to place any money down at all. No down payment and they even financed her furniture. At the time I thought she was exaggerating but I've come to find out that that was often the case. I don't know how many people were in this situation but UK banks/lenders it seems might have been even worse than USA lenders.

Same with Spain. One realtor I met claimed to have owned 8 flats that he bought with all 100% mortgages. The writing was on the wall there in London. I posted in detail (read my old posts) what was going to happen in the UK. It's all playing out now. Also, countries like Spain are suffering tremendously as well.

The thing is you can't trust Moody's. Lots of AAA was junk (and still is). Look at companies like GE that are being bogged down by the GE Capital unit which is toxic waste. I don't trust the ratings agency at all. It's all games. People can't rely on the ratings agencies anymore to do their due diligence. You have to do it yourself these days.

I wish I could say I thought 2009 will improve but I see the tremendous unemployment that I saw coming last year. The chain reaction is still playing out.

And the carnage isn't over. Remember what I said last year about credit card debt and default rates. We should see that start to really emerge as a problem in 2009 and 2010 as well. As millions more the world over start to lose their jobs (millions already have and millions more will lose their jobs). You are going to see credit card default rates start to increase as they have done the past few quarters. Many people that were making lots of money before are out of jobs and many are living off credit cards. You will see them stop paying once reality sets in. Or credit card companies continuing to reduce credit lines or totally shut down credit lines.

The credit card game will be similar to the housing market game where it was all just one big lie. Default rates will be ugly in 2009.

Tourism should fall pretty much everywhere. I'm seeing DIRT cheap flights to just about everywhere. Yesterday I was on American Airlines website and I was seeing flights from San Diego to Buenos Aires or Buenos Aires to San Diego, California for $899 including all taxes/fees. Just last year those were about $1500. There were flights from Dallas and New York to Paris and London for $490 including the taxes/fuel charges, etc! Simply amazing!


Also, I will mention this here but for those of you that get really really high utility bills in Buenos Aires you should challenge it and talk to the utility companies. On a few properties I saw 1,000% increases and knew it couldn't be correct. We kept trying to call the utility companies and couldn't get through. Days waiting in line and finally today we successfully challenged several where the utility bills were 2,000 and 2,600 pesos where the cycle before it was 260 pesos! Turns out that the utility company many times doesn't even go out and read the meter at your building. In many cases they are just guessing!

On some that we challenged, they denied and said that it was correct. Some bills went up 500% from the same period the year before but it's a good feeling that so far the ones that we had for 1,000% increase are wrong. Those of you that own properties here should go down and challenge it. It seems the utility companies are just putting whatever # they want on the electricity bill and often times not even sending someone out to the building to check it! So keep in mind to be careful on that.

It's clear to me that in many many cases the electricity company Edesur is just putting whatever they want for usage. You have to be VERY careful with this as they severely raised rates for those using over 1,000 kw hours per cycle. Most of the apartments I own I did see the rates raise about 200%-300%. Granted the prices here were dirt cheap but the thing to realize is in some of the cases the electricity company didn't even go out. And the shocking thing is they must know right away when they don't go out because the agent my employee talked to, knew right away that no one went out and they just manually put in a # of kilowatt hours used. They told him that definitely there was a mistake but they said they needed to actually send out an agent to record what the usage was which they will do next week. FYI for those that are seeing obscene increases in their electricity bills.

Best to all.
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Mark
Member
Username: Lostintheandes

Post Number: 78
Registered: 10-2008
Posted on Friday, January 30, 2009 - 3:31 pm:   Edit PostPrint Post

Ariel,
One way I learn is by challenging any who put ideas on the table that are new to me. I don't for a minute doubt your sincerity only your understanding of the facts. You said it was a 150K house. If the market says otherwise and your friend did not sell that is his loss. I'm sure that now the market says 150K again then his taxed are back in line.
Imagine a place where their are no taxes...the house would be worth much less because their would be no infrastructure, no schools, no fire service, no roads. Ah but we don't have to imagine it many third world countries have house with very little value. Those owners would gladly pay taxes if they could then sell their houses at US prices.

Also I am open to any facts you would like to present on these 5 businesses. m
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Arial
Advanced Member
Username: Arial

Post Number: 324
Registered: 10-2006
Posted on Friday, January 30, 2009 - 3:38 pm:   Edit PostPrint Post

Apts, you are good at calling things the way they are. You are close in boiling down what I think except that I donīt say QUESTION AUTHORITY. I say QUESTION EVERYTHING! Including what I already believe if someone comes up with new information.

Often we accept something as true because it is what we have heard and what everyone else accepts. And the herd mentality itself can play into it. Then we resist new information because it doesnt agree with what we already think we know. But what if there are facts I donīt have yet? Or possibilities that I am not willing to consider because I decide that it "couldnīt be so?" Or maybe psychologically I donīt want to consider it because then I would have to deal with it.

So I consider it important to deal with all those possibilities and . . . if someone challenges my thinking on something that could be important then I need to question even what I have already accepted.

There are some good thinking people on this forum! I appreciate and enjoy you all.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 698
Registered: 5-2005


Posted on Friday, January 30, 2009 - 3:46 pm:   Edit PostPrint Post

Arial,

Sure, "Question Everything!" is even better.

I agree with lots of things you have posted in the past.

I do agree with you that many people don't want to look at reality as they are too scared to think about the consequences of it all. Many people (especially Americans) think the banking system is totally stable because they don't want to think about a banking system that is fragile and weak where their funds are at risk.

People don't want to think about the possibility of financial institutions like Citigroup being insolvent. But then again people didn't want to think about companies like AIG, Fannie Mae, Washington Mutual, Freddie Mac Lehman, Bear Stearns and the list goes on and on basically going belly up neither.

Many times truth is stranger than fiction.

I think it's good that there are people that are strong in their convictions and beliefs. The world would be a very dull place if we all agreed with 100% of one another.

Variety is the spice of life.
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Arial
Advanced Member
Username: Arial

Post Number: 325
Registered: 10-2006
Posted on Friday, January 30, 2009 - 3:49 pm:   Edit PostPrint Post

Mark, I am currently in South America. I have file drawers full of stuff in the States but not here.

You can find that information yourself if you decide to go looking for it. Those five corporations actually own much of America, but they own corporations that own corporations that own corporations and therefore most people donīt realize how few there really are at the top.

When I get back to the States I will try to remember to give you some leads to verify.
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Arial
Advanced Member
Username: Arial

Post Number: 326
Registered: 10-2006
Posted on Friday, January 30, 2009 - 4:00 pm:   Edit PostPrint Post

Okay, Mark, I just did a little check and maybe this will help you begin some research. As I wrote, the information is readily available--not hard to find. I found this at http://www.corporations.org/media/ If you pursue this you will find that there are even charts available showing who owns what and the entire "family tree." Here is the article I found for you.

Media Ownership

In 1983, 50 corporations controlled the vast majority of all news media in the U.S. At the time, Ben Bagdikian was called "alarmist" for pointing this out in his book, The Media Monopoly. In his 4th edition, published in 1992, he wrote "in the U.S., fewer than two dozen of these extraordinary creatures own and operate 90% of the mass media" -- controlling almost all of America's newspapers, magazines, TV and radio stations, books, records, movies, videos, wire services and photo agencies. He predicted then that eventually this number would fall to about half a dozen companies. This was greeted with skepticism at the time. When the 6th edition of The Media Monopoly was published in 2000, the number had fallen to six. Since then, there have been more mergers and the scope has expanded to include new media like the Internet market. More than 1 in 4 Internet users in the U.S. now log in with AOL Time-Warner, the world's largest media corporation.
In 2004, Bagdikian's revised and expanded book, The New Media Monopoly, shows that only 5 huge corporations -- Time Warner, Disney, Murdoch's News Corporation, Bertelsmann of Germany, and Viacom (formerly CBS) -- now control most of the media industry in the U.S. General Electric's NBC is a close sixth.
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Arial
Advanced Member
Username: Arial

Post Number: 327
Registered: 10-2006
Posted on Friday, January 30, 2009 - 4:07 pm:   Edit PostPrint Post

Mark, well, you and I approach it differently. You challenge the other person. But I challenge my own position. I do my own research, though I will often ask someone if they remember where they got information--then I go looking. That is, if it is important. None of us has time to research the whole world. But I do not reject something new just because it is different from what I already think I know. Or at least I try not to. I think that is a trap any of us can fall into--including me.
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Mark
Member
Username: Lostintheandes

Post Number: 79
Registered: 10-2008
Posted on Friday, January 30, 2009 - 4:18 pm:   Edit PostPrint Post

I will jump on the ship that 5 own media...I can think of another 5 who own the oil industry, another 5 who own the banking industry, another 5 who own the auto industry, I'm up to twenty and I haven't touched real estate, steel, commodities,shipping,preciouse metals, retail. Come on Arial If you just repeat what you've heard without facts you'll be challenged. be assured though, its with respect, mark
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Benco
Member
Username: Benco

Post Number: 62
Registered: 4-2007
Posted on Friday, January 30, 2009 - 8:12 pm:   Edit PostPrint Post

Arial, when I look at your chart it strikes me that it does not even take into account the internet as part of the media. Not a good chart to post on the internet... Also one should look at the global market instead of the US only, because information spreads easily across borders nowadays. There is also hope that rather independent journalists are working at the newspapers "controlled" by large corporations.

Mark, you are perfectly right. Every industry may have its big players, which actually makes sense economically because of scaling advantages (building a car for the mass market is simply not possible with a small company, so the fact that only a handful of car companies exist is certainly no evidence for conspiration). But as you say, looking at the whole economy with its large number of industries gives a very diverse picture. And there are millions of individuals owning real estate and small or medium sized businesses.

And that is only the private sector. The government may be influenced but certainly not controlled by corporate interests. Even less so the judicial system. Nor public schools and universities. What characterizes the US are strong and independent institutions, and respect for the rights of individuals. If only I could say the same about Argentina...
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Arial
Advanced Member
Username: Arial

Post Number: 328
Registered: 10-2006
Posted on Saturday, January 31, 2009 - 10:45 am:   Edit PostPrint Post

Benco, I didnt present that information as the sum total of the evidence. That is the first time I saw that particular article myself! I went on a google search for about 10 seconds and picked up the first article that popped up, just to show Mark how easy it is. Plus I told him what he could find if he looks.

Of COURSE those 5 men do not control the Internet. I didnt say that they did. The Internet is a blessing at this time in history because it provides access to information and resources that you could not easily find without it.

I will add that I worked as a correspondent for one year for a Gannett daily newspaper. You are not there long before you find out what you can write and what you canīt. Other reporters have reported the same. In fact, there is a book written by a seasoned reporter on the subject entitled Into the Buzz Saw if anyone is interested. The evidence is abundant--not sparse! It is not even just "evidence." It is public record! You can trace these corporations in the public record if you want to do the work.

I cannot understand the resistance to this subject. Or why anyone wants to argue it. If you donīt want to know, thatīs your privilege. Just ignore it. But anyone who wants to know has enough information to go and find out for themselves.

End of subject for me.

Arial
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Mark
Member
Username: Lostintheandes

Post Number: 82
Registered: 10-2008
Posted on Saturday, January 31, 2009 - 11:17 am:   Edit PostPrint Post

Bueno, I agree with what you said, "But anyone who wants to know has enough information to go and find out for themselves". You don't know enough about the subject to discuss it so perhaps you can go and find out for yourself. When you do I will be happy to research any ideas you thow out on which you are versed and can therefor discuss intelligently.
Respectfully, Mark
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 374
Registered: 7-2007


Posted on Wednesday, February 11, 2009 - 1:06 am:   Edit PostPrint Post

Arial, I could not agree more about all the attempted conspiracies out there, and how only so many actually make it through, and many by accident or half-ass planning, and also real good planning too. I would not like to believe I am a conspiracy theorist, but rather that I am a realist and regretfully acknowledge that it does happen
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Arial
Advanced Member
Username: Arial

Post Number: 331
Registered: 10-2006
Posted on Thursday, February 12, 2009 - 4:14 pm:   Edit PostPrint Post

You are right. It is NOT a theory. Reality is a more accurate word. "Conspiracy theorist" is a hot button that is repeated over and over in the media, with derision, until folks psychologically shrink back from a subject for fear that "someone might think I am one of īTHEM!ī"

But of course you are a realist and the truth is, so am I.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 724
Registered: 5-2005


Posted on Friday, February 13, 2009 - 9:08 am:   Edit PostPrint Post

I don't think you need to place a label on it. I think we will all agree that things go on that are manipulated or attempted to be manipulated by corporations, government officials and individuals. Again, no labels need to be on that process but I think everyone will agree that it goes on.
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Mark
Member
Username: Lostintheandes

Post Number: 86
Registered: 10-2008
Posted on Monday, February 16, 2009 - 2:29 pm:   Edit PostPrint Post

I'll pipe up again...I agree that manipulations go on but please throw us a bone with a fact or two; or give us an interesting theory with your reasoning behind it. Then we can have an intellectually honest discussion. But Please don't throw out a idea and then say we are hiding from the "truth" if we don't go try to prove your point.
You sure give them a lot of credit to say this mess was manipulated. I think it would have taken a lot of brainpower and then somehow get everyone to buy in to overextending themselves...and for what gain? an extra bonus that they shouldn't have gotten. No I think this mess is a big screw up by people who were trying to avoid paying the piper. The longer you put it off the worse it is. But- open to anyone's information otherwise.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 10
Registered: 1-2009
Posted on Sunday, February 22, 2009 - 4:01 pm:   Edit PostPrint Post

A good start would be to turn off your Television LCD "flat line screen"
Better still, sell it. people.
The USA/UK are corporations! not counties, and corporations are all run for profit.
We the people are all employies of the corporations, from the moment we get registered at birth. Everything that is registered to the company is therefore the property of that company. Believe it or not we are actually traded on the stock market as BONDS haha we are their PROPERTY.
Forget gold, we are what this money system is valued against, without us there would be no money system to control. AMERICA will become a communist run nation, it will be run to sustain the "BANKING SYSTEM" There will be lock down on its people so that they will have enough to sustain there lives, but will find it virtually impossible to move above the eat, sleep, work order.
Georgio, you dont realize how lucky you are, you have your health, it could be worse you could be searching through rubble looking for your family after your house or apartment has just caved in on top of them.... like some places this has just happened to..... California be warned.
Do you think that many people in california will be filing TAX returns this APRIL ? ? ?
california is the USA's golden state, this will have massive implications.
Not to mention the comming wave of Commercial real estate collapse! which will dwarf the housing claps, citi bank, credit cards etc .. the banks are already collapsed
We the CONSUMER/people cannot sustain their game anymore, get ready to lose your shirt AMERICA, you have served your purpose.
Time to turn off your TV sets, and wake up.
And how does ARGENTINA compare to AMERICA ? "The Wild West " ?
dont be fooled ARGENTINA is run by the very same people.
Get ready for all that slack to disappear Soon !!!
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EAST WEST 3000
New member
Username: Eastman

Post Number: 11
Registered: 1-2009
Posted on Sunday, February 22, 2009 - 4:11 pm:   Edit PostPrint Post

On the EDISUR topic,
What better way for the government to generate massive income! What did you say Mike 200 - 2000 % for the unsuspecting user ? ? ?
As you know EDISON is the USA equivalent.

EDISON or EDISUR ? ? "sur" is french for "on"
ever wonder why they call this place the Paris of South America ? ? ?

Penny dropped yet ?
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 391
Registered: 7-2007


Posted on Tuesday, February 24, 2009 - 9:20 am:   Edit PostPrint Post

Gee EW, feeling a little gloomy and sad? lol.

What's your time line for your forecast? next week? jaja

Never doubt the resilience of populations in general, or be too convicted in your beliefs.

Hope you get over your stomach ache. Cheers.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 392
Registered: 7-2007


Posted on Tuesday, February 24, 2009 - 9:22 am:   Edit PostPrint Post

It's been a year since Patrizio came out with his 2 year forecast that BA real estate will lose 60% in value.

Can anybody, including Patrizio himself, provide some insight as to we are looking here at this halfway mark? thanks
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Simon Fawkes
Member
Username: Expatba

Post Number: 79
Registered: 1-2007


Posted on Tuesday, February 24, 2009 - 9:40 am:   Edit PostPrint Post

As of early Jan, realtors were saying that nothing significant had really happened to prices in the previous 6 months. A lot of money has been repatriated as people fear failing banks, but so far people seem to be holding off buying real estate with this cash (which would exert an upwards pressure on prices), presumably whilst waiting to see what prices do.

A small no. of foreign owners have sold, presumably needing cash.

I've not heard of anything happening with prices this month.

Simon Fawkes
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 0557001927 http://www.amazon.com/exec/obidos/ASIN/0557001927

(Message edited by admin on February 24, 2009)
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 740
Registered: 5-2005


Posted on Tuesday, February 24, 2009 - 9:45 am:   Edit PostPrint Post

Good old Patrizio. I never saw him respond again after that. It's very clear his forcast of properties here losing 60% of their value was very wrong.

It's clear the market has slowed way down in activities but then again I know many sellers that just took their properties off the market. I do think property prices all around the world can fall in 2009 with severe recession conditions but property prices have done a pretty good job so far of maintaining their values. In some area the demand is far fewer.

What I've found interesting is the past several properties I've sold were to locals not foreigners. Lots of locals brought back cash to Argentina the past few months (billions and billions of dollars). And realistically this money is sitting under their "mattress" NOT in local banks.

I know some owners of money transfer firms here in town and they reported to me of locals literally showing up with briefcases pulling out all their money from USA/Europe and getting it in cash and sitting in their house. There is really nothing left to invest in Argentina besides land and real estate. I do believe that this money will eventually go back into the real estate market.

Lots and lots of money on the sidelines. I do think 2009 here in Argentina will be a tough time just like most places in the world but people are finding what I wrote a while ago. The market here with a VERY small percentage of credit and mostly all cash is different than the bubble markets in the USA, UK, Spain and other areas where 0% down mortgages are rampant.

PS - Simon is right. I just noticed his post as we were posting at the same time. I've purchased hundreds of properties over the years for investors and the only ones that are forced to sell really have been ones that had problems in the USA/UK. The vast majority however are in no hurry to sell, bought for a long-term investment and are very happy that they cashed out of the stock market a few years ago to purchase here and diversify.

I look at real estate as a LONG TERM investment and so do most locals that live in Argentina. In fact, more times than not I've heard from many wealthy locals that I know that lost a fortune in the USA stock market, European stock markets, USA/European real estate market, etc. They told me they wished they just stuck to buying properties here.

Again, certainly I think 2009 will be a tough year but many many locals waiting on the sidelines with lots of money waiting to see how this year plays out. I do think this money will eventually go back into the real estate market. It could take until 2010 or 2011 but I stand by what I said that there isn't much safe to invest in Argentina besides real estate.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 12
Registered: 1-2009
Posted on Tuesday, February 24, 2009 - 6:00 pm:   Edit PostPrint Post

MTMendoza.com
Yeeess, It is a bit Doom & Gloom isnt it ...JaJa .. unless you been stuck under a rock the last 6 months. However, You can bet your last Dime that this year will be the year. AMERICA is still yet to crash my friend.
What we will see is all countries having to conform to a new order of things, post crash. like nice new sidewalks and handicapped access at pedestrian crossings... ahahah! dont want any LAW suits do we......?
As you were .....
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 397
Registered: 7-2007


Posted on Wednesday, February 25, 2009 - 2:18 am:   Edit PostPrint Post

wow EW what a perfectly sinister and diabolical plot you have stumbled on to, I congratulate you for your detective work. How enjoyable it must be to be aware of this dastardly situation of the NWO before most people, especially those without internet access to the top secret websites that are informed on this topic! Got your Ameros yet?

In all seriousness, may I ask what country you currently live in, and have lived in, and what sources you consider to be the primary feed for your daily digest of USA information?

Also, can you specifically define the "crash of 09" so I can consider your bet in a serious manner?

No doubt there are vast pockets of pain going in in the USA at the moment, and I don't dare speculate that it can't get worse before better. I also recognize, although unable determine to what degree, that simple to complicated fear mongering has played roles in this debacle. There is so much scared cash on the sidelines from wall street to main steet (and with good reason!), you could build multiple stairways to distant galaxies with all those greenbacks, and that doesn't even count the greenbaack printing press!. Upside surprises could indeed appear many many times in different industries and economies over the next many, many months. Cheers!
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EAST WEST 3000
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Username: Eastman

Post Number: 13
Registered: 1-2009
Posted on Wednesday, February 25, 2009 - 8:24 am:   Edit PostPrint Post

WTMendosa, Its actually quite frustrating watching Criminals that pretend to have peoples best interest at hand. Don't you think? all those corrupt congress officals & bankers on wall st!
Ameros, Euros ? apples, oranges... its all paper. representing what? tell me if you know WTMendosa.
Places I reside ... Whites Row, Newbury and Santa Monica ,B.A, does that serve any relevance to you? or do you need more residences. I would have to say apart from the media my good judgment on the world around me as regards to my sources.
"Crash of 09" : When the Dow hits 5000 ! and the blood in the streets is up to knee high. ...you like that ?
It is good that you agree on the economic situation in USA, yes there is a problem of where to safely put funds and im sure there are sectors that may flourish in times of crisis. The point is here, is that ARGENTINA is not a safe haven for investment based on the fact that everybody deals in cash so therefore everything here is immune from economic depression including property. Lets not forget people have credit cards in ARGENTINA too and with an inflation rate into double digits im sure this will only add to the problem, Unfortunately the people in ARGENTINA are suffering from the same condition as people everywhere in the western world , Greed.and its time to pay the piper!
Good news is ....Mcdonalds is Hiring !!!! yeah! Wooow"smiley happy people...yea!"
Gracias!
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WTMendoza.com
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Username: Welcometomendoza

Post Number: 398
Registered: 7-2007


Posted on Wednesday, February 25, 2009 - 9:28 am:   Edit PostPrint Post

Hi EW - , okay so you were referring to the USA Dow stock market crashing down to 5000, which of course is completly possible (although fairly doubtful). I thought you were referring more to main street, and if you were, could you throw out some prediction inicator numbers that can back up "blood up to your knees":-)

RE Argentina, I thinks it's safe to say that lack of mainstream fluffy mortgages over the years have and will continue to prevent massive downsides on real estate prices, especially in sought after areas. On the other hand, every owner/seller has his or her personal financial conditions which influence sale prices also. And I don't think anybody on this forum has expressed that Argentina is immune from economic downside...on the other hand, economic crashes and adjustments every decade certainly has almost gotten there everybody used to it. JaJa.
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Mark
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Username: Lostintheandes

Post Number: 99
Registered: 10-2008
Posted on Wednesday, February 25, 2009 - 3:14 pm:   Edit PostPrint Post

Well I never said 60% but I am looking for a correction. I have a friendly wager on over under 10% in BA. If you want to see phase one please check hotel prices. They have dropped in mendoza but I don't know about BA. Mike what are you seeing since I'm sure you monitor that.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 745
Registered: 5-2005


Posted on Wednesday, February 25, 2009 - 3:54 pm:   Edit PostPrint Post

Politicians the world over are pretty inept I've found. Whether you are talking about USA, Argentina, Europe. Wherever. Corruption is rampant in the political scene.

As far as Argentina being "immune" it most certainly is not. I don't think anywhere around the world is immune from this plague in the banking/financial situation. I've always said that most places in the world are going to suffer in 2009. Really there will be few if any exceptions around the world. These days it all has a ripple effect chain reaction.

Mark - absolutely tourism will suffer and is suffering from the severe worldwide recession going on. ANYONE that tries to pretend that it isn't is fooling themselves. I've seen severe decreases in occupancy compared to last year and especially 2007. Hotel occupancy rates are down quite a bit as well. I was getting my hair cut the other day and my guy that cuts my hair also cuts one of the managers of the Alvear Palace Hotel and I overhead that occupancy is down tremendously from the past.

I myself see it in all the properties I own/manage. Corporate travel is down tremendously. Most companies are saying to just do conference calls and I see with my own corporate clients they aren't traveling as much. That trend should continue throughout 2009 as corporate profits are suffering. Tourism the world over should suffer in 2009. I see very few exceptions. Many places in the Carribbean are down drastically as well.

Absolutely I still think 2009 will be the year to "ride it out". I predict very poor economic conditions pretty much everywhere throughout 2009. I think probably it will be 2010 before things start to recover.

You can also see it in airline prices. Before the planes were packed to Buenos Aires. Just about every route. I fly back and forth to the USA fairly often. Flying from Buenos Aires to Miami, Dallas and New York and always before the end of 2008 it was fairly packed and it wasn't always easy to upgrade to first/business class. Now it's a piece of cake and many flights are empty. With airlines really discounting the seat prices to keep the planes full.

A ticket in Coach in 2007 and early 2008 could be as high as $1,500. Now if you check some are as low as $750 or $800 with taxes! I'm flying to San Diego (La Jolla) next week again for vacation and up until a few weeks ago it was fairly empty (flying via Dallas on American Airlines). But then they started heavily discounting it and it's almost full now. But it took discounting to fill it up. Pretty amazing prices in coach. I bought it many months ago and it was $1200 in coach and the other day when I checked it was like $880 with taxes.

No doubt tourism is suffering tremendously all over the world. Argentina won't be any exception. Something I found interesting is before 2007 I knew many Argentines that wanted to go to the USA and they had a hard time getting a tourist visa. Some would get it but they would only get 90 days or so. Now I know many people that are applying and they are getting 10 year tourist visas! I found that interesting. I guess the USA can use the tourist dollars. I've written a letter for many of my employees to visit the USA and so far none of them have ever gotten rejected for a tourist visa as we work with the USA Embassy but I found it interesting they are now giving several 10 year visas vs. the old 90 days or 1 year.

As far as real estate prices. I already posted my opinion. I think that real estate prices the world over can fall in 2009. Again, I don't think Argentina is any exception to that. Argentina is a dynamic market however with the wild card factor of locals using their properties as "piggy banks" to store their savings.

I know many many locals that got burned VERY badly in the stock market in the USA and Europe and they have sworn off the market. Their families have always owned many properties here locally but they wanted to get money OUT of Argentina which is a good idea but they have found that "paper" isn't as safe as their money in real estate here.

I'm not sure how much it could fall and when it will recover. Honestly I look at real estate as a LONG TERM investment. I don't buy to flip, not leveraged, nor hold any mortgages on properties I own. While occupancy is down a bit, they are still generating positive cash flow and a good diversification for me and I'm still glad I sold off stocks to pay for them.

Again, I still say that real estate investment in Argentina is NOT for MOST people out there. But for some people it does make sense and I think ALL of my clients would agree they are very happy they diversified their portfolios to add to it. I certainly will NEVER see a scenario where real estate prices fell 50% in one year like you saw in broad stock market indexes.

I will continue to advice that real estate investment (no matter which country you are in) is a long term investment play. Am I saying you can sell off if you have a quick gain? Sure. And I've done that before. But I believe that real estate is a very serious investment and it's not a short term investment. I also think those investing here have to take a serious look at why they would want to or why they should or shouldn't.

So far, the only people that I've seen that had problems here with their real estate purchases were people that should have never bought them to begin with. People that were over leveraged or leveraged to buy here. I've gotten some phone calls from Americans that were in that situation and desperate. Fortunately, my clients aren't in that situation.

It is pretty shocking some of the emails I get from foreigners that want to hire me to help them sell their properties. Typically I don't even work with anyone unless I know them. But some of the stories will shock you. Some are Americans or people in the UK that didn't have ANY money and they got home equity loans to buy their flats here and now they are struggling. This is NOT the profile of people that should buy here.

In fact, the first thing I do during a consultation is try to see the financial situation and if someone should even be buying here to begin with. Like I said before, the majority of investors out there are simply NOT in the position to pay 100% cash down on a property.

Mark - I'm not sure if you will win your bet our not nor the time frame of your bet but it's wise to note much just depends on the areas as well.. You will find that in many areas property prices haven't moved at all except for those that HAVE to sell. Lots of locals that I know (and myself personally) won't sell unless I get the price I want and even then I might not sell.

In December while I was in the USA I got an offer to purchase one of the properties I own. It was for close to the asking price. I opted not to accept the offer. It's a nice position to be in not to be forced to sell if you don't have to.


It's still generating good income and now with vacation home exchanges I'm deriving a really high rate of return. I figured that occupancy rates probably will go down in 2009 for rentals so I signed up for home exchanges and mostly hitting very expensive areas and exchanging with amazing houses and flats in Europe so I'm getting a much higher rate of return when you factor in I won't pay a penny in hotel bills for my next 8 or 9 vacations. I've already done future non-simultaneous exchanges with amazing properties in La Jolla (going next week and exchanged for another 2 weeks in another oceanview home for 2010), Los Angeles house owned by a movie producer, beautiful flat in London (Kensington area) for 1 week, 10 days in Paris in a beautiful flat, 2 weeks in an ocean view flat in Monte Carlo, beautiful apartment in Amsterdam.


Cheers all.
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WTMendoza.com
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Username: Welcometomendoza

Post Number: 404
Registered: 7-2007


Posted on Wednesday, February 25, 2009 - 9:10 pm:   Edit PostPrint Post

Mendoza hotels prices on certain properties have ratcheted down some recently because they went too north starting about 18 months ago as the area enjoyed a bustling 2007 Venidmia together with the ever strong wave evolving reputqation of wanting to become a 5 star destination of a wine country, offering plush and pampering services, and geographical splendor. Targeting the upscale.

As financial reality starting hitting last fall across the world, combined with impossible oil prices resulting in high airfares, the hotels started scratching their heads wondering if they should make their lower adjustments or not. Getting an Argentine too lower a price is quite a task, and they just took too long to lower them. Now they are wondering why tourism is down and making more panic adjustments. I love Argentines but they clearly think very short term for the most part (can you blame them? lol) and many of them actually think that all foreigners make their travel plans at the last minute.

Mike, I'm laughing - did you say you may not sell if you even get your price? Now I think you have been here too long then, that's an Argentine classic, no?
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 113
Registered: 9-2008
Posted on Wednesday, February 25, 2009 - 10:42 pm:   Edit PostPrint Post

Mark, we probrably should fine tune our gentleman's bet. I think we should use Recoleta or Palermo as the case study. Why, because I think that most represents the investment sector of BA real estate. Es decir, many of the other barrios are more for residential living and less for investments.

Mike, BTW you have been chosen as statistician for our friendly wager, gracias.
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 101
Registered: 10-2008
Posted on Thursday, February 26, 2009 - 7:38 am:   Edit PostPrint Post

I'm ok with that...It will be difficult I think for Mike to get accurate numbers but I think we will pass the 10% by a margin large enough that accuracy won't matter.

WTM , Mike is not becoming Argentinian, he is suffering from the same blight that has me holding thousands of shares of a company I used to work for that are now close to worthless. I held them all the way down. You also have a touch of it when you say with conviction oil is going down but you hold etfs that you bought significantly higher. We get to close to our investments and they become projects. Our thinking can be so clear when it is not personal but look at all the people who held their 401Ks all the way down. cheers
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 405
Registered: 7-2007


Posted on Thursday, February 26, 2009 - 9:17 am:   Edit PostPrint Post

I don't follow you Mark, if you put something up for sale, and someone offers you your asking price, what does that have to do with holding on to losing investments?
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 747
Registered: 5-2005


Posted on Thursday, February 26, 2009 - 9:25 am:   Edit PostPrint Post

WTM,

Yes, I am saying that I may not sell this particular property in the end. I wasn't really keen on selling it to begin with but as has happened before, one of the rental guests inquired if it was for sale. I said no but typically when I get an offer I'll list it. I don't live in any of these. I understand your point about "classic Argentine" but in my particular situation it still makes sense for me to hold it. I'm in a unique situation as I live in the same town and I pay no management fees which is really thet highest expense in a rental property.

Yes, I am saying even if I got the asking price I might not sell it. The reason is because I've done future home exchanges on it now so it would be a bit complicated. I could always pay the new owner for the weeks that I swapped but the thing is that many buyers now are Portenos that are just buying and not renting or buying for their kids. So, no I might not sell it. The value of the home exchanges I'm doing has been really great. I admit this is a unique situation.

Soulskier - sure I'll be happy to be your statistician but prices are still all over the board really but I'd be happy to give you an honest assessment at the one year point whenever that is.

Mark - I hardly think you can compare your "almost worthless" penny stock to my situation. LOL. When I bought many of these properties it was at MUCH lower prices. In fact, some of them have almost doubled in value. To boot, in some of them even considering rental taxes, property taxes, expenses I've almost paid off some of them that I bought many years ago. And they are still earning plenty of cash each month.

So you can't compare it to your situation of your worthless stock and holding it still and making no income on it. If that stock is almost worthless than the chances are it will probably go to $0. That is far from the case with real estate that has no mortgage. It's like night and day.

I would still rather own the real estate I do vs. buying a property in many many areas of the USA. Prices in the USA still have room to fall and millions more foreclosures on the horizon. Also, many cities/municipalities/States are broke and they will be forced to raise property taxes and other taxes. It will be inevitable. Not just in the USA but across the world we should see this happening.

Best.
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 102
Registered: 10-2008
Posted on Thursday, February 26, 2009 - 9:59 am:   Edit PostPrint Post

Mike, please take no offense but that is where you are wrong, for you see one year ago,,"When I bought many of these properties(stocks) it was at MUCH lower prices. In fact, some of them have almost doubled in value. To boot, in some of them even considering rental taxes(broker fees), property taxes(uncle sam), expenses I've almost paid off some of them that I bought many years ago(with the generated profits)" And you see just like you I knew we were headed for a short term rough time but these were my babies. The market will be back and so will the stock. But I could have sold and bought back at 10 to 1. You have stated you know we are headed into a correction in BA, but your properties are your babies. If you sold you might be able to buy back 3 for every 2 you sell but even if its only a 20% correction you are taking a huge risk. Yep I think we all have our blind spots. m
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 749
Registered: 5-2005


Posted on Thursday, February 26, 2009 - 10:16 am:   Edit PostPrint Post

Mark,

No. I take no offense. I just think you are comparing apples with oranges. Selling stocks isn't the same thing as selling real estate and then buying the same thing back. It's MUCH different and you can't even compare it.

The property I'm selling I gutted and took 7 months to renovate. So it's not as easy as just selling it and buying the same thing back later. Often times when I sell a unique property it's impossible to buy the equivalent in the same area, same view, etc.

It's not the same thing. I'm glad that your stock will recover but many won't if they are "worthless" now. I see buying and selling stocks and buying and selling real estate as totally different. We can agree to disagree and I take no offense. It's just that it's two TOTALLY different types of investments.
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EAST WEST 3000
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Username: Eastman

Post Number: 14
Registered: 1-2009
Posted on Thursday, February 26, 2009 - 3:08 pm:   Edit PostPrint Post

Like restoring an old car... it has a sentimental value...and no lease!
I have a question: Can someone refresh my memory as to why the property market in
2001-2 collapsed in ARGENTINA due to the devaluation of the peso and what would happen in the event of a collapse in the US dollar?
Gracias
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 105
Registered: 10-2008
Posted on Thursday, February 26, 2009 - 6:32 pm:   Edit PostPrint Post

I am not an expert but have read a few books on it. Basically the peso collapse as you called it put the economy in a tailspin where no one was buying anything. So the people that had to sell their property for whatever reason had to take less and of course no foriegners were intersted because the country was too unstable. I suppose it would be similar if the dollar crashed. The upper end market in my opinion is driven largely by foriegners and thats why I say this world downturn will negatively affect Argentina. Mike and Roberto says Argentinans have no mortgages and will not have to sell. But I say someone always has to sell and values are what the houses that are selling are going for regardless of how many people are sitting on the sideline. Interesting thought though about what if the dollar collapses. I'll think on that one. mark
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 406
Registered: 7-2007


Posted on Thursday, February 26, 2009 - 6:39 pm:   Edit PostPrint Post

EW, good theoretical question, but hardly feasible as any collapse of the US dollar is highly improbable in my opinion.

Even in spite of all the money printing and digital dollars being generated, the forces that control the dollar know how to manipulate M1, M2, M1+M2, and the Monetary base so much, and combine that fact that the dollar is the leading reserve and international currency used by so many countries (despite recent fears) that even if a decline does happen, it will most likely be such an orderly decline in slow motion, that it just is not significant in the context you describe. In my humble opinion.


Hey EW, you never gave me your detailed description of "blood in the streets up to your knees". Could you elaborate your prediction? Thanks
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 114
Registered: 9-2008
Posted on Thursday, February 26, 2009 - 7:41 pm:   Edit PostPrint Post

WTM, I hope your correct but not so sure. have you guys started seeing properties listed in Euros around Mendoza. I have only seen it for a couple nice leather couches thus far.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 407
Registered: 7-2007


Posted on Thursday, February 26, 2009 - 8:36 pm:   Edit PostPrint Post

I saw a spike of property listings in Mendoza euros in 2007 , when the euro was flying high and the dollar was riding low. But that quickly disappeared in the latter half of 2008 when the euro fell off a cliff.

In fact, speaking of the EURO, this currency could weaken before the USD, it is a recipe for problems, being printed in various presses around Europe, and being used as a single currency by multiple cultures with historic fundamental economic and social differences. A recipe for pain in my opinion. This is probably why some conservative European nations have, to this date, been reluctant to convert to the euro currency despite having joined the EU.
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EAST WEST 3000
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Username: Eastman

Post Number: 15
Registered: 1-2009
Posted on Thursday, February 26, 2009 - 8:50 pm:   Edit PostPrint Post

Mark, Thanks for the post. I think it interesting when you say "The people that had to sell their property" had to at a loss. I would imagine that in those times there must have been a huge collapse in commercial real estate due to business's going under, I think a common mistake that some people overlook here is that the two are very much connected. Could we see a wave of vacant stores in Buenos aires ? the answer is yes and that would mean many retail business's going under.

"Hardly feasible as any collapse of the US dollar is highly improbable in my opinion"
Someone check this mans pulse ! WTM I think you need to understand that AMERICA is run by a corporation and if that corporation decides to pull out its interest and place it somewhere more profitable it will. As i mentioned before it is the people of a nation that keeps the wheels turning so to speak, as im sure your well aware of the MASSIVE rising unemployment so that would be a good indication that money flow is not flowing in, thus stalling the system.
"Blood on the streets, Knee High" That would be a term for social unrest that is already underway in some parts of the world only to get worse and coming to a street near you this summer, as we are told by the main stream media news now.
AMERICA is in very scary position right now of epic proportions, and ironically has much to learn from the history of ARGENTINA.
P.S KFC is hiring
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WTMendoza.com
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Username: Welcometomendoza

Post Number: 409
Registered: 7-2007


Posted on Thursday, February 26, 2009 - 10:27 pm:   Edit PostPrint Post

EW, people woke up one morning in Argentina in December 2001 and had a 75% haircut on their savings and operating accounts in the banks. Then they didn't have access to it for many days. Just imagine how that would impact you and your community you live in. There would be a lot of pressure to sell assets to take care of things.

Regarding Dollar and blood in the streets.
Okay we agree to disagree on the dollar, and we shall see with time. Where appropriate, I tend to be optimistic more than pessimistic, and you clearly tend to be dramatically doom and gloom.

If the recession deepens in the USA, which it looks like it will, there will be more crime, and real-life protests will start appearing in the streets. This is very expected as it happens every time there are hard times. No doubt it will be stronger if happens worldwide simultaneously. It will be good for Americans to get off their computers and in to real life action. How long have you spent time in BA, EW? This population is fairly civilized and have lived through several recessions and depressions over the last 30 years. And it shows. Both the good and the bad.

But I reject the doom and gloomers drastic point of view, they always are wrong in the end. Show me one part in history where they have been right. But I know, you say it's different this time. Okay we shall see.

We have some very interesting times coming, but as I said before, don't underestimate the resilience of civilized populations.

Good luck and hope you get to relax soon!
(you must get a total thrill out of Glenn Beck, no? I know I do and I am not even doom and gloom. LOL.)
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Roberto
Board Administrator
Username: Admin

Post Number: 1839
Registered: 12-2004
Posted on Thursday, February 26, 2009 - 11:39 pm:   Edit PostPrint Post

Mark is correct. There is always someone needing to sell in times of crisis. In Argentina, these are the small mom and pop shops that run on tight working capital and confiscatory debts. Not underwater homeowners but small merchants. Although credit is limited or non-existent, it is not difficult to find a lender (a friend, an uncle, someone you heard of) willing to finance you at very high interest rates (usureros) making your life miserable.
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EAST WEST 3000
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Username: Eastman

Post Number: 16
Registered: 1-2009
Posted on Friday, February 27, 2009 - 8:41 am:   Edit PostPrint Post

WTM, No I did not know who Glenn Beck was ? but i do now!
Very well said: " a 75% haircut on their savings & Operations Accounts". I believe that would just about do it. Again there is the all important link between Commercial & residential property.
Sorry if I reflect these current times so clearly to you WTM, But i am the sort of person that likes to clearly mark out where all the pitfalls are before i make my move, I am far from Doom & Gloom.
I have to say I am very impressed with how society in B.A has handled the crisis, I find people for the most part very cordial. Unlike some Species in the UK & USA .
Humbling times ahead for USA indeed ..... There is going to be some grinding of teeth for sure.One Last thing .. For all those people that now keep their cash under the mattress in ARGENTINA presumably in US Dollas, It would be wise to remember that what their actually holding are I. O. U notes.
Graci
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WTMendoza.com
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Username: Welcometomendoza

Post Number: 412
Registered: 7-2007


Posted on Friday, February 27, 2009 - 9:29 am:   Edit PostPrint Post

I am proud of Fox for allowing Glenn Beck, and this supports my thinking that Fox is not all the bad, like some people say it is.
On the other hand, he helps spread fear, potential fear that may be inappropriate, but that is hard to tell at this stage in the game. The important things about GB, is that he peels back the layers on so many current issues, and he does it with passion in a mainstream environment. I bet the USA congress absolutely hates him LOL.

Yesterday he put up on TV an excellent chart that a Yale professor developed. A very excellent chart - take a look. I don't necessarily agree with the dotted line portion projection but anything is possible these days.

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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 751
Registered: 5-2005


Posted on Friday, February 27, 2009 - 10:01 am:   Edit PostPrint Post

East West,

In addition to what WTM mentioned not only did the government take a big chunk of their savings but they also restricted access to it and it was more than a few days. In many cases it was several months. In many cases people were limited to only withdrawing $300 US per MONTH from their accounts of THEIR money.

So you can imagine a scenario where even millionaires that had a lot of money in the bank yet they were prohibited from withdrawing those funds. You had a chaotic situation where even people that owned several properties and had lots of assets in the bank couldn't get access to it. Of course there were those that already withdrew their money or the wealthy that already had their money in the USA, Uruguay, Switzerland, Frankfurt and other parts in between but many got caught up in this.

So you had a situation where many were forced to sell their properties to raise cash to pay their bills and just survive. It was a pretty horrible situation.

It's a basic supply and demand type situation. Even people that had money couldn't buy property because their access to their funds was restricted or limited completely. So you had many people selling properties and no one buying properties.

People get this false information that it was only the foreigners that drove the real estate market up here. That is NOT true. Of course foreigners didn't hurt the situation with starting to buy here after the crash but it's the LOCALS that mostly led the recovery of prices.

Remember after the horrific actions of the government, the locals never again will trust the banks and the government. So the big difference after the crash was that people don't trust the banks. You had many many Argentines that rather than putting their life savings into bank accounts, they started buying real estate. Then you had a situation where many people throughout Argentina preferred buying real estate in Buenos Aires (the capital) vs. other cities and it led a rather quick recovery in prices.

So the thing that is VITAL to understand is this phenomenon of the locals essentially using real estate as their "piggy banks". It's very rare for many locals to store lots of their money in savings accounts in Argentina. And many still keep all their cash at home in safes. In fact, it's not uncommon to read about locals that got their houses robbed of hundreds of thousands or even millions of pesos.

For many locals, real estate is the safest form of investment in Argentina. I don't think that will change anytime soon. However, I do think just like many other countries around the world the government will raise taxes on those with the most assets. It seems every few years they keep raising the tax rates on those with lots of assets.

I think that trend will continue all around the world in most countries as tax in take is drastically reduced.

I agree with Roberto in that yes of course as with any crises people have to sell. That's obvious and a given. The thing that I found unique in Argentina is that many people with means and funds were forced to sell as they couldn't get access easily to their funds.

I personally know some people here locally that literally got phone calls 1 or 2 days before the crises and were advised to withdraw ALL their funds. Also, many of the locals that are wealthy got even wealthier after the crash as they already pulled out all their funds ahead of the crash in dollars and then exchanged alll into pesos at rates as high as 3.8 after the crash.

Roberto is also correct that although credit is almost non-existent here via traditional means, I've been amazed at the amount of non-traditional lending that goes on between family and friends. Especially family. I've seen so many cases of that. Also, I've also participated in what I would consider "micro lending". I've given out several no interest or low interest loans to people for a number of different things including starting businesses or just simple things like buying a car. I've personally given out loans in the past to people like doormen in buildings where I own units. I could have charged high interest rates but I didn't. In most cases I didn't charge any interest or very low interest more to help them rather to make money. I've done the same with employees and local friends.

The facts are that most people really don't understand how the local system works and just how broken the banks are and that link to real estate by locals. Almost NO locals mess around with the stock market. Many have always considered it a type of "gambling". I know many CEO's of local corporations that did invest heavily in USA and European stock markets only to get totally slaughtered in the stock market. Yes, it will eventually come back (Dow, Nasdaq S&P 500) but many individual stocks have gone under or will go under and many others just barely hanging on. Some that I talked to swore off the stock market completely and I think if it falls another 1,000 points you get a whole wave of people that swear off the stock market for good.

At this point many people aren't even thinking about capital appreciation. They are thinking about capital preservation.
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 106
Registered: 10-2008
Posted on Friday, February 27, 2009 - 2:05 pm:   Edit PostPrint Post

WTM,
i reccommended Schiller and his understanding of the housing market in my posts months ago. He is so right on and if APTBA ever read his work he would know why I twist his arm so much. "Nothing is new under the sun"(wise king Solomon). We know exactly what all real estate markets will do...there is no guessing. We only don't know the timing. If you say oh but this time is different because(fill in the blank(no mortgage in BA for example)) it simply does not matter..no time is different- housing always reverts to a historical mean. This is fundamental and anyone in RE needs to study Schillers work. His book predicted exactly the mess in the US with housing. m
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 753
Registered: 5-2005


Posted on Friday, February 27, 2009 - 2:59 pm:   Edit PostPrint Post

Mark,

I'm well aware of Schiller and his research/work.

Once again, I'll say that there are lots of reasons why I am in real estate. I've gone over it in detail many times over the past few years. There are many different reasons including asset diversification, estate planning, asset allocation along with many other reasons.

And again, I've mentioned that I've invested in real estate (in a number of different countries) now for the long term. Some I might sell but others I plan to hold probably forever and it will pass on to my kids. I don't hold any mortgages or debt on ANY of them. And almost all of them are earning income each and every month. The only real estate that isn't earning cash flow is land that I've purchased in a few different spots, although they have really increased in value over the years and I am in no hurry to sell them neither.

I'm not sure why you can't understand that aspect of the equation. I wouldn't want to hold all of my assets in any one type of investment whether that be stocks/paper, gold, cash, real estate, oil, commodities, you name it.

As far as Schiller, I didn't need to read his book as I came up with that conclusion on my own long ago. Somethings you don't need a book to tell you what is going to happen. It's simple common sense. Long ago when I saw the lady that cleans my house, the guy that cuts my grass, the doorman in my building at my office (all of whom could barely speak English, had very low incomes) buying $300,000+ houses it was easy to see what was going to happen. Seeing lots of people taking out home equity lines of credit to finance their lifestyles. Seeing banks continue to give out oodles and oodles of money on equity lines of credit and seeing people use their homes as virtual ATM cards.

You can read my past posts over the years. I think you will find most of them have been pretty spot on target. You can also see that I've maintained for a long long time that real estate investment in Argentina is NOT for the masses, and in fact I've argued for a while it's NOT for most people.

The mess in the USA isn't over yet. Nor in the UK nor in Spain and other places where they simply gave out too much credit to buy properties.

I know some of your posts are light hearted and in good spirit but sometimes it seems as if you act like I've said to place all your money in real estate which is far different than what I've mentioned over the years. My message has been for a broad diversification of assets which I think you would agree with and couldn't argue with.


Cheers.
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 107
Registered: 10-2008
Posted on Friday, February 27, 2009 - 3:40 pm:   Edit PostPrint Post

Its ok to not agree...But when WTM posted that chart it just hit me again. Don't know your specifics so we are talking in generalities. So when I address you i address a large group of BA real estate holders that you talk about who use RE as savings or are convinced that rental multiples this low don't mean anything because this time is different. Since the topic is overpriced RE in BA than I think my comments are perfectly justified and I mean no personal offense. I understand this is your lively hood and it is an important subject for you too but I have read all of your posts and think you are wrong. Doesn't mean I don't think you are a smart person. Arguing that BA RE should be a part of a balanced portfolio would be like me arguing Citibank should be part of a balanced portfolio. I'm sorry but a bad investment belongs in no ones portfolio. So if you want to say its a good investment I'll listen to your arguments but I totally disagree that at this time it is right for anyone. RE yes BA no. m
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 756
Registered: 5-2005


Posted on Friday, February 27, 2009 - 3:58 pm:   Edit PostPrint Post

Mark,

Sure, I agree we can disagree. I just don't want you to get the wrong idea. I understand your point but when you mention me specifically I will give my take on my personal situation with real estate.

I'm not saying my clients are using real estate here for savings accounts. I'm just saying overall locally that is the case. If you talk to Roberto or just about any other local I think they will agree with that scenario. I'm not making this up. I was speaking about locals not foreign investors just so we are on the same page.

Sometimes it seems as if you think that foreigners were the only ones buying from 2002 - 2009 that drove prices up and that is certainly not the case. I own properties and I've purchased properties in literally hundreds of units in Buenos Aires and in just about every single building it's mostly owned by locals. There are only a few buildings (mostly newer highrises) where several foreigners bought but most of the buildings it's all locals.

Sure, we can disagree and that is fine. I agree with you it doesn't make sense for most people and I think most people need to see their specific situation. NO, I most certainly did not imply that BA real estate should be a part of a balanced portfolio of the average person. I'm just saying for me it is.

Absolutely I think you should always give your opinions and I think it's good to have different opinions. I just wanted to give my specific situation as you have singled me out in a number of posts.

Cheers.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 17
Registered: 1-2009
Posted on Friday, February 27, 2009 - 5:42 pm:   Edit PostPrint Post

WTM, When you see a chart like this it really brings home the absolute negligence of Federal Reserve and Alan Greenspan (as you know was Knighted by the queen of ENGLAND for that little task) for dropping the interest rate over night from 7% down to 2% and not one mention of inflation for the last 10 years. Of course everyone felt wealthy and went on a mammoth shopping frenzy .
APTBA your detailed description of the Argentina crisis again shows the outright corrupt nature of this banking cartel.
So what we are left with as you say is a Jittery Argentinean public that has lost all faith in what is left of its banking system that has resorted to hoarding up US Dollars some of which prefer to "keep safe" in Property.

Looking at this never seen before world Financial crisis wouldn't you have thought that your average Argentina citizen would be putting all those paper Dollars into "bricks and mortar" right now.?
Truth is this is not happening, the figures are not showing that at all and things are slowing down here. It would be interesting to know just how full those safes at home are, preserving all that capital.
I think the line between Savings and much needed cash is evaporating fast and what we will see is as mark put it is "people that need to sell". We are going to see a knock on effect from the crippled export sector into retail, resulting in unemployment.
Then we will see how much "Cash" the average Person in Argentine society has.
Who knows maybe they ll have to resort to using there property as an ATM and sell it!
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 108
Registered: 10-2008
Posted on Friday, February 27, 2009 - 5:46 pm:   Edit PostPrint Post

Fair enough....this is a message board titled- Overpriced Real Estate market in Buenos Aires, so I mean no harm in singling you out. But as one who has been quite vocal on the subject I am challenging the ideas not you as a person. Feel free to go on the Market blog and give me a good poke about my positions. I have made some pretty bone headed calls in the past and probably will again in the future. Like after riding LEH short all the way down from 2007 and then going long at 4$ the Friday before Uncle Sam dropped LEH on its A__. Those shares are now worthless. m
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EAST WEST 3000
New member
Username: Eastman

Post Number: 18
Registered: 1-2009
Posted on Friday, February 27, 2009 - 6:06 pm:   Edit PostPrint Post

APTBA, We are not disputing the right to own, sell or hold.
What needs to be said here is, The majority of Buenos Aires real estate is over valued due to a mass influx of funds to the sector over the last 5 or so years driving up demand and value creating a bubble.
On top of that you have an overvalued US DOLLAR, which is due for a huge correction in the coming months (watch for polarity with the euro)
and finally not forgetting that the Argentinean population is in decline.
gracias
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Gloria Melgar Estevez
Member
Username: Glorita

Post Number: 100
Registered: 12-2007
Posted on Friday, February 27, 2009 - 7:02 pm:   Edit PostPrint Post

Hi everyone! Long time no see. I've been busy with the kidos running to and fro with them so while I have come by on and read the posts and enjoyed the the interactions you all have been having, I have refrained from commenting due to my schedule(husband was beginning to think I was married to the computer...lol)

Well, before going on I want to congradulate the new daddy on the forum. Mike congratulations! I had no idea you were cooking up a little one.

I wanted to give my take on what I think and have read and talked about with other Argentines on where RE is heading in my country. I'm of the belief that in many places RE in Argentina is "somewhat" overvalued. I think the big dominating factor as to it's "possible" price decline, will be the world financial crisis. It seems that while Argentina had some trouble brewing before all this took hold here in the US and it eventually took hold as we all now know throughout the world. And despite Kristina Kirchner's forecast that "this will not affect Argentina", well we can see how wrong she was/is. So, things being as they are it would come to no suprise that "things happen"....for example people lose their jobs and so they turn to their tangible assets(bricks being a big one for Argentines) to make ends meet. As more and more turn to selling their primary homes or vacation homes(because they have to), eventually the demise in prices begins.

But in Mike's defense, I must say that he is right about Argentine's having safes, mattresses and God knows what other secret compartments in their homes which stores large sums of cash. I have many many many family and friends that practice what I like to call "self-banking". One of my friends currently told me he has $200,000 US dollars in his home. Clearly, for me this is scary and somewhat insane. But knowing how Argentina operates and it's "turbulent history", it is of no surprise. So, while prices may fall, I doubt they will fall too far because their is alot of cash on the sideline waiting for such an opportunity. I must say, that I'm one who would buy should the prices go down significantly. As Mike has said many a times, their is no place safer FOR AN ARGENTINE to invest their money then in RE.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 757
Registered: 5-2005


Posted on Friday, February 27, 2009 - 7:50 pm:   Edit PostPrint Post

Mark,

Fair enough. :-) Yes, I've been vocal on the subject but I feel I've been very realistic over the years and subjective AND Objective on the topic. I've accurately posted real estate investment in Argentina is NOT for the masses and I stand by that call.

People have to take a really deep look at their motivations of buying here. I believe that now more than ever.

Mark - definitely I can relate to your story about not always being on the right side. I think EVERY investor has made their share of mistakes. You know my feelings on financials but I also "gambled" and lost on one play. I shorted Washington Mutual (WM) down. Then I started day trading it long and short. The day before it basically failed I went long for a quick day trade. I was in a meeting and didn't dump it and then that night it failed. I lost about $100,000 in one day. That hurt. So I can relate to your LEH play.

Even though I lost what I made shorting it..losing $100,000 in one day on one stock hurts no matter how you look at it. I hated financials but took a gamble and lost on that play. It happens to the best of us.

East West - Sure, I'm not debating property prices here might fall in 2009. I've already said in this kind of environment with recession/depression like conditions, real estate prices will probably fall all over the world. Certainly I don't think Argentina is any exception at all with that. Argentina has it's fair share of problems and Christina is in severe denial if she thinks Argentina is sheltered from this mess. It's simply NOT the case.

I do agree with you East/West that all this printing of dollars by the US government will have severe consequences in the future.

Gloria - Good to see you! Long time. Thanks for the congrats. Really being a father is the greatest joy in my life. It certainly changes your life and your outlook on life. I love being a daddy and I think it's the one thing that makes you want to be a better person each day. The little one is growing so fast. I think I may try for another one next year. In many respects, life just begins when you have kids.

As Gloria mentioned, Argentina certainly won't escape the economic problems just like the rest of the world. Tourism is going to suffer in 2009 (occupancy rates are already drastically down), airplanes are empty even with really discounted prices and also routes getting cut (American cut Chicago to EZE last year). Unemployment has already started in Argentina and it's hard to know the true numbers as you can't trust the #'s the government puts out. Their inflation #'s are a joke.

Also, the government in many industries prevents the company from laying off employees. I got a good laugh the other day when I was reading an article in the paper. It talked about a textile company owned by a Mexican company that said due to worldwide problems they were closing their plant here. The employees response? They said they would strike. LOL. A company that announces it will shut down soon and the employees solution is to strike.

Certainly I'm realistic enough to know that Argentina will have it's fair share of problems in 2009 just like most countries in the world. Let's just hope that the recovery around the world begins sooner rather than later.
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 118
Registered: 9-2008
Posted on Friday, February 27, 2009 - 8:06 pm:   Edit PostPrint Post

I had a long talk with a multi-millionaire yesterday at his lakefront estate here in Bariloche. He says it's time to be a vulture. I asked him to elaborate and he said "Time to start buying income producing properties at a huge discount"
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EAST WEST 3000
New member
Username: Eastman

Post Number: 19
Registered: 1-2009
Posted on Friday, February 27, 2009 - 8:10 pm:   Edit PostPrint Post

Gloria, This is all starting to sound like an old Urban Myth,which i presume started around a post crisis era, How can your average ARGENTINE acquire $100,000 's of dollars when supposedly they have just been cleaned out by the banks 75% or so.
Also taking to account that property prices crashed and probably took till 2005 to recover to value pre crash. It may be true to say that the wealthier individuals and groups in the real estate Business were throwing large amounts of cash around but apart from property inheritance and the sale of ones on property i doubt there is the abundance and cash in average ARGENTINE home that you are talking of.
The reasons for this real estate bubble is due to an influx of both foreign and domestic investment. So i really doubt this scenario of an abundance of loose cash waiting on the side lines at this point in time.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 20
Registered: 1-2009
Posted on Friday, February 27, 2009 - 8:16 pm:   Edit PostPrint Post

Good luck with finding good residential Rental property my friend
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 119
Registered: 9-2008
Posted on Friday, February 27, 2009 - 8:35 pm:   Edit PostPrint Post

EW, I have found it, want to invest some cash in a "sure thing" in Patagonia?
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EAST WEST 3000
New member
Username: Eastman

Post Number: 21
Registered: 1-2009
Posted on Friday, February 27, 2009 - 8:51 pm:   Edit PostPrint Post

Patagonia! Does it have oil or gas drilling potential ?
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 120
Registered: 9-2008
Posted on Friday, February 27, 2009 - 8:57 pm:   Edit PostPrint Post

EW, puede ser, nunca se sabe en Argentina.
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Gloria Melgar Estevez
Intermediate Member
Username: Glorita

Post Number: 101
Registered: 12-2007
Posted on Friday, February 27, 2009 - 9:19 pm:   Edit PostPrint Post

East West, well I never said all or even most Argetines had an abundance of cash stashed away in their homes. But I know for sure and have seen and heard many cases of people having cash in their homes. My mother in law was one who bought a her second home for $80,000+ US dollars. She even traveled on the "colectivo" with such sum to the escribanos office. My friend who now has $200,000. in his home, inherited that money. I know these cases may sound perhaps far fetched and "myths" as you state, but they truly are not. Of course while there are alot of people with money at home, probably most don't have such large figures. And now with the dollar increasing in value, Argentines are going crazy trying to buy as many dollars as possible.....and guess where they are putting those dollars?

In my case, I live in the US so I have money saved and in a bank. You have to know that there are many Argentines abroad waiting for such an opportunity. I wouldn't buy a home in Argentina for investment purposes however. Rather, should the price decline substantially I would most certainly buy because both myself and my husband are Argentines and our "long term" plans are to retire in Argentina. My goal was to now buy my second home here in the US but prices have not declined enough in my opinion(perhaps I'm being a bit too greedy).

Only time will tell if property prices will recede. If/when they do, this "unknown" will determine how far prices will go.
My mom has two houses in Rosario. One of the houses(her residence six months out of the year) is now worth $170,000 US. Now, I don't know many Argentines who can buy such a home at such a price and as you probably know, mortgage loans are rare. Well, while they are rare there is now a debacle with loans given to people with adjustable rates during Nestor Kirchner's term...are you all aware of it? I don't know what percentage of people took these loans but now rates have shot t through the roof. So should prices fall, I do believe those Argentines both living in Argentina and those abroad will be buying.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 760
Registered: 5-2005


Posted on Saturday, February 28, 2009 - 8:59 am:   Edit PostPrint Post

Living in Argentina - I think your client is probably a little early as I think it's still not time to be a "vulture" yet. If you look back at past posts I've advised to stay on the sidelines a little longer to purchase in the USA and I still will wait on the sidelines as I still see millions more foreclosures ahead.

The tax incentives certainly will help but many high income Americans can't quality for them as they make too much. I do think that real estate prices throughout the world in 2009 will fall.

I heard the same thing as you Living in Argentina about Bariloche. I sold a franchise down there a few short years ago and it's growing like crazy! I've heard of some investment opportunities there that are making amazing returns and I personally know the people making the returns so what you are saying is true. I'm flying down there in May to look at some different opportunities and also for a nice vacation with the family. It's gorgeous down there. I might buy a vacation home down there and rent it out when I'm not down there.

East West - No, it's not urban legend. It is reality. Of course the majority of the people here don't have lots of money. Buenos Aires proper is huge and out of the 13 million people in the surrounding area there is about 3 million in the "Capital". It's this segment that has more of the money and then figure that a % of these 3 million have quite significant sums of money.

I'm no expert on Argentina and don't claim to be but I'm a fast learner. From my time living here the past 5 years I've noticed alot of different things in Argentina. For one they aren't the CONSUMERS like Americans are or Europeans. Granted there are exceptions to the rule but I'm speaking in generalities here.

Many of the population doesn't go out and spend money like crazy and have to own the latest iPhone, LCD tv, latest model car, latest expensive gadget. They are "savers" compared to their American counterparts. I see it daily. They tend to really save. Most of the kids live at home with their families and many until they are adults. I know many people that are still living at home and they are 28 years old! So this means they have NO expenses. No rent, no food, no expenses, etc.

It's different then first world countries. So this allows people to save more. I have employees that save save save then buy cars. No credit/loans. They bought with cash. I admire this quality of the locals.

East West - I'm not saying everyone has loose cash around. This isn't the case. Lots of poverty in Argentina and Buenos Aires but there is a lot of wealth as well. Never forget that Argentina was one of the wealthiest countries in the world at the turn of the century and a LOT of wealth was created by a lot of families and that wealth was passed on from family to family. I have no idea what the numbers are like because there is a total lack of information with the system being so "black" here.

I do know that lots of locals have lots of money. I posted this before but I'll post again. Locals have hundreds of billions of dollars stashed overseas OUTSIDE of Argentina. Most will probably keep it there. But several billions of dollars did come back to Buenos Aires. In the month of November 2008 alone billions came back into Buenos Aires with turmoil with the stock markets and banks around the world. Many locals brought cash back to put under their "mattress". The rates to get US Dollars here for a brief period shot up to 6.5% then when exchange houses didn't have enough bills for the demand.

I do believe this money will actually get put to use in the real estate market because there is nothing else to invest it in here in Argentina. Certainly these locals could eventually ship it out of Argentina again. That might be a possibility but I have seen evidence that locals are buying vs. sitting with it in their homes.

The past 4 properties I've sold were to locals. One across the street from the Alvear Palace Hotel which was a u$s 300,000 property was purchased by a local. We were successfully renting it out well. We asked him if he wanted to continue and he said no. He is still paying us to pay his bills but he uses it about 2 times a month. He has a big house in the Northern Suburbs and works downtown so sometimes uses it if he is working late. Others were locals buying for their kids.

Even in my building where I live which is a pretty swanky building. I've been renting it for the past 4 years. The owner put it up for sale late last year in December 2008. It sold at the asking price within 7 days and it was purchased by a local. And over the years some have sold in this building and almost always purchased by locals. There are only about 2 other foreigners (Americans) that live in my building.

My point is this... lots and lots of locals have money and the only place they seem to put it is in real estate. I always found that very interesting.
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Roberto
Board Administrator
Username: Admin

Post Number: 1843
Registered: 12-2004
Posted on Saturday, February 28, 2009 - 3:42 pm:   Edit PostPrint Post

> Locals have hundreds of billions of dollars stashed overseas OUTSIDE of Argentina.

Mike, Morgan Stanley's assessment last year was that argentines hold a little less than 2/3 of the GDP abroad. That would be north of 200 billion. Stunning.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 761
Registered: 5-2005


Posted on Saturday, February 28, 2009 - 4:01 pm:   Edit PostPrint Post

Hi Roberto. I didn't see that Morgan Stanley report but I've read others in the past. Also, I personally know some owners of large money transfer firms and also executives at banks. Also, I know private bankers in London, Frankfurt, Switzerland that have their own systems of seeing how much money is held by Argentine citizens. From the best of my due diligence I could do over the past 5 years (but keep in mind NO ONE knows the real amount of actual amount held by Argentines overseas).. I would estimate probably between 200 - 300 BILLION dollars held by Argentines overseas. Who knows. Maybe even more.

I'd guess the majority of this is spread out in banks in Uruguay, USA, Switzerland, Frankfurt, Caribbean. Of course the world banking system isn't what it once was. "Offshore" or "private" banking isn't really what it once was. You can see the examples of UBS turning over the names of their American clients as one example.

I think in the near future there will be no such thing as "private banking". Everything seems to be intermingled these days and that is probably the trend that is coming in the future.
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EAST WEST 3000
New member
Username: Eastman

Post Number: 22
Registered: 1-2009
Posted on Sunday, March 01, 2009 - 9:38 am:   Edit PostPrint Post

Yes, that is a ridiculous figure. But apart from institutions and very wealthy individuals i doubt that those figures apply to the General public of ARGENTINA.
I think it true to be said world wide that large wealth is held the hands of few.
I would imagine that your average ARGENTINEAN don't have offshore/private bank accounts. I was Under the impression that Most ARGENTINEAN LOCALS keep money
under their mattresses ? ? ? as mentioned in the last few post, I would not be surprised if next you told me that they had their own printing presses.
Well i guess all we can do is wait and see how all that Abundant LOCAL money will bolster residential real estate prices in the next 18 months or so, After ARGENTINA takes a nasty little hit her EXPORTS, AUTO & RETAIL Which will have a devastating ripple effect through the commercial and eventually residential property sectors.
ARGENTINA my still be used as an out sourced labor force for more years to come.
Gracias
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 111
Registered: 10-2008
Posted on Sunday, March 01, 2009 - 1:35 pm:   Edit PostPrint Post

EW...in a country of 40 million if 1% have the money in under matresses or abroad it can be a large number. However I don't think it will matter because when their is a sudden fall in prices people don't rush to buy they become paralyzed financially speaking. Look at the bolsa no one is rushing in to buy. The RE phenomenom in BA took 1 to 2 years after the 2001 crash before the frenzied buying began. Besides many of those people will be using that money to prop up businesses or lifestyles. m
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EAST WEST 3000
New member
Username: Eastman

Post Number: 23
Registered: 1-2009
Posted on Monday, March 02, 2009 - 4:58 pm:   Edit PostPrint Post

Mark... i totally hear you, in theory it is easy to say that property is bought and sold in cash and people in ARGENTINA are all cash rich, so everything will be ok. Truth is there is many more factors to an economy than that. like unemployment etc.
Again we'll see what happens when this dollar bubble finally pops! which isnt far away now. I suppose this time ARGENTINEANS will be stampeding to the bank to change their dollars into another currency and getting caught high & dry again.
Gracias.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 22
Registered: 1-2009
Posted on Monday, March 23, 2009 - 7:54 pm:   Edit PostPrint Post

I have to agree with apartmentsba on this one. Private bank accounts will eventually cease to exist or cease to have any general purpose or meaning. This will keep the US in charge of capital for a long time to come since people will just buy US treasuries and have the same security as a swiss bank account (in fact swiss numbered accounts are not even insured to begin with) which makes the only reason to bank with them to avoid taxes which already they are slipping up on. The future of the world is the unionization of North America like Europe is today unfortunately. Then the further unionization of Europe and North America under one currency. History repeats itself. The civilized world was segregated then unified under the Roman Empire and then segregated once again and now starting to unify again. This unification will take decades and maybe even centuries to come to fulfillment which is why it should not be a concern for our generation.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 440
Registered: 7-2007


Posted on Tuesday, March 24, 2009 - 12:31 pm:   Edit PostPrint Post

Georgio, the concept is easy to argue and fairly easy to visualize at first glance, but I highly doubt it will be that easy. While history does talk, it also reflects that unification does not work in the long run. But you are probably right as far as the attempts to do so, and yeah the attempts will be easier than ever with so much technology to help. Your post does underscore the slow motion rel effect of things, and that things do not happen overnight, which leaves plenty of time for counter forces to act.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 23
Registered: 1-2009
Posted on Tuesday, April 07, 2009 - 12:42 am:   Edit PostPrint Post

"Those who forget the past are condemned to relive it."

This happens to be one of my favorite quotes. It is only through educating our public that we can have some chance to prevent future unionization.

Globalization, unified currency, and language is culture destroying. Globalization promotes illegal immigration and a homogenous society which I do not think will be healthy for future business. Honestly... I cannot understand how Europe is going to survive with all of this illegal immigration from Africa, Romania, and other 3rd world countries under their current socialist system. Eventually they will be bankrupt. It only slides by with America under a capitalist system where exploitation can outway social benefit costs (so long as we do not become more socialist ourselves). Luckily Argentina doesn't have this problem. They are rich with natural resources, have virtually little illegal immigration. They just need a stable political system that favors a more capitalistic approach to encourage small business so that people can raise themselves above the poverty line. Argentina has so much potential but socialism is proof that you can take a country that was once one of the most expensive and prosporous cities to live in the world and bring it down to the 148th out of 150 major cities to live in.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 24
Registered: 1-2009
Posted on Friday, April 10, 2009 - 2:48 am:   Edit PostPrint Post

I just noticed that the dollar is now 3.67 peso. Can anybody that is currently living in BA give some insight as to the cost of the basic necessities?

The following were the prices as of Nov 2007. Does anyone have something current?

Cost of Living in Buenos Aires, Argentina
Last updated November 2007.

The exchange rate was around 3.12 Pesos per 1 U.S. Dollar.

These are "reasonable" prices. You can always pay more if you try.

Eating Out
Tenderloin steak: 8 to 25 pesos
Bottle of wine : 6 to 70 pesos
Liter of beer : 6 to 12 pesos
Salad : 4 to 12 pesos
Chinese food : 6 to 12 pesos per dish
Indian food : 15 to 25 pesos per dish (only 2 restaurants that I know of)
Hotdog : 2 pesos
Hamburger : 2 to 3 pesos

Supermarkets / Produce Stands / Misc. consumables
1 Pound of steak : 4 to 6 pesos
1 Chicken : 13 to 20 pesos
1 Pound of oranges: 2 pesos
1 Pound tomatoes : 1 to 2 pesos
1 Dozen Eggs : 3 to 4 pesos
Bottle of wine : 2 to 20 pesos
Liter of beer : 2 to 4 pesos (plus 1 to 2 peso bottle deposit)
Bottle of Vodka : 6 to 12 pesos (similar for Rum, Gin, sugary alcohols)
Pack of 20 smokes : 3 pesos
Deodorant : 8 pesos (Dove)
Razor Blade : 3 pesos (Gillett Sensor Excel)

Nightlife / Bars / Clubs
Club entrance : 5 to 20 pesos
Club w/ open bar: 30 pesos (Club Amerika)
Cup of beer : 2 to 10 pesos
Spirit : 6 to 20 pesos
Bottle of water : 2 to 4 pesos

Housing (per month, including utils)
Bedroom w/ flatmates : 300 to 800 pesos
Studio apartment : 500 to 700 pesos
Studio, trendy place : 1000 to 2500 pesos
Gringo apartment : 1800 to 2700 pesos
Long term hostel room: 500 to 700 pesos

Services
Haircut : 6 to 15 pesos
Private spanish tutor: 12 to 15 pesos per hour (request on craigslist)
House cleaning : 6 to 15 pesos per hour
Massage in your house: 15 to 25 pesos

Travel
Local bus ride : 0.80 pesos
Subway ride : 0.70 pesos
Cab ride : 9 pesos typically, 3 peso minimum
Bus across country : 130 pesos (to Mendoza)
Bus to Brazil : 270 pesos (to Sao Paolo. 50 hours.)
Ferry to Uruguay : 50 to 100 pesos (to Colonia. Slightly more to Montevideo.)
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 28
Registered: 1-2009
Posted on Wednesday, May 06, 2009 - 5:12 pm:   Edit PostPrint Post

BIG Mac Value Meal : $20 Pesos !
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Roberto
Board Administrator
Username: Admin

Post Number: 1853
Registered: 12-2004
Posted on Wednesday, May 06, 2009 - 10:52 pm:   Edit PostPrint Post

Yes, I hear that things have gone up substantially. Like a trip to the grocery may end up leaving you with a few hundred dollars less in your wallet.
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 135
Registered: 9-2008
Posted on Wednesday, May 06, 2009 - 10:54 pm:   Edit PostPrint Post

I have two as of today.

Our cleaning lady, 15 pesos/hour and our massage therapist (who is very good), 50 pesos for 75 minutes mas o menos.

I never thought McDonalds prices in ARG where condusive to the rest of the country's prices.
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ivan G
Junior Member
Username: Ivagagio

Post Number: 35
Registered: 5-2008
Posted on Sunday, May 17, 2009 - 5:27 am:   Edit PostPrint Post

Hi Guys...I tell you my truth as individual investor and not as a company who make profit above the others. Argentina is a GREAT Country. Buenos Aires is a beautiful city BUT...There are NO rules. I mean...in some areas of Buenos Aires people occupy apartments or houses and the police can do nothing (or don't want to do anything). I have some friends who went to the supermarket. Just 2 hours out their house. They came back and their house was OCCUPIED. People come in your house with children and NOBODY can kick them out... This is one of the problems...so...Great place for tourism but...be careful when you invest. A friend of mine has an apartment in PALERMO Area. Well...3 moths ago her neighbhorood broke the wall of her apartment and took a part of it!!! Can you imagine something like this in Europe or USA? NO WAY....but in Buenos Aires that's possible!...Now she took a lawyer...but I mean...in Europe you don't need a lawyer for that...you just call the police! In Argentina the Rights are...."Flexible"!!!...That's the reason I wouldn't buy here for more than 1.000/1.400 US$ per sq meter...and believe me....if you are good...you can find some nice places for that amount. BEFORE BUYNG CONSIDER THAT: The REAL VALUE of a property is mesured by the possibility of the local people (Argentinean in this case) to buy it. NO ARGENTINEAN can efford to pay more than 1.500 US$ per sq.meter so if you pay more is because you are a FOREIGN...So...there is SPECULATION...I mean....if tomorrow the foreign decide to go away to inVest in BRasil or Costarica...what's happen to the real estate market in Buenos Aires if the Argentinean cannot efford to pay more than 1.500 US$ per sq meter?...BE SMART!
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 457
Registered: 7-2007


Posted on Sunday, May 17, 2009 - 3:24 pm:   Edit PostPrint Post

Gosh Ivan, interesting post that sparks allot of questions, but shame on you for making such generalizations of painting a picture of complete chaos.

I assure you that your friends that went to the supermarket and came back to find their apartment occupied, has a very detailed story behind it, details that you are not posting here.

Same with the hole in the wall, and same with your other tales.

There are rules, and they can be enforced, it is just not as timley as USA and Europe are used to.

Other blatant stuff that you paint wont happen. Foreigners dont just decide in unison to leave one day, and the Argentines are not completly worthless or helpless either.

I urge you...to be smart, before posting generalized stuff like this

Happy living...cheers
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Roberto
Board Administrator
Username: Admin

Post Number: 1854
Registered: 12-2004
Posted on Sunday, May 17, 2009 - 4:24 pm:   Edit PostPrint Post

There is some truth in that illegal occupancy can be a problem in Argentina but I agree with WTM in that this seems a generalization. Buenos Aires is probably where it is most noticeable. For anyone who understood the changes in politics in the most recent years, Police inaction is not suprising. Neither is illegal occupancy. Smart argentines keep a thorough record of all utilities and taxes paid on properties in case they need to fight those in litigations. We had one many years ago and won it. And yes, it took time. But that the judiciary system is slow is not news either. My grandfather's bk (1960's) was finished by me, after he and my dad were already dead.

As for foreigners fleeing at some point I am thinking the next few years may see a renewed wave of people looking for greener and safer pastures, literally. Specially, if 3 to 4 years from now we start hearing about a potential China/US war. This one might be tough for expats, as there is a chance that the entire latinamerica -except for Chile, Mexico and Costa Rica- may take sides with the other guys.

One thing to bear in mind... Argentina may be broke and may have "argentines" but the wild card is Brazil which will pull Argentina up as long as the global commodities/resources play continues. Sooo... demand for real estate may actually firm up.
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ivan G
Junior Member
Username: Ivagagio

Post Number: 36
Registered: 5-2008
Posted on Sunday, May 17, 2009 - 5:24 pm:   Edit PostPrint Post

The Story of the 2 persons is saddly right and there is nothing behind. But that's not the only problem. Most of the buildings are sold with the "Porteros" included and...they choose the porteros (The "guardian" of the building) There is a kind of Mafia of the Porteros and it's even worse with the Administrators of th Consorcios...and you can do NOTHING to change them....and if you have some problem...and you go to the court...something like this take at least 10 years in Argentina. The real Estate companies most of the time decide before who'll administrate the building. I have some apartments in Europe and in Argentina too and I assure you that the expenses are higher in Argentina!!!...That's crazy if you consider that the cost of the life in Argentina is lower. The MINIMUM you pay is 300 pesos but if you have a portero, in a normal building (no swimming pool or extra, you easily can pay 500/600 pesos. Some Building with few apartments can even pay 700/900 pesos per month. In Europe it's less expensive. I have an apartment in Italy with no portero,in the center, with just a lift and I pay 26 € per month (around 125 pesos) 1/3 of the minimum I pay in Buenos Aires and it doesn't make any sense!
I have good experiemce with apartments around and believe me...(at least in this moment with the actual situation in Argentina) the Real Estate in Buenos Aires worth ONLY if you pay NO more than 1.400 US$ per sq mt. Every US$ you pay more is overpriced. ...and if you want...you can find. I have no interest to write that ... I just want that people understand how things work in Argentina and especially in Buenos Aires. GO ALWAYS with a local cause if they know that you are foreign...you'll always pay much more....Than SORRY....but I cannot overpay an apartment just because of an Hypotetic war China/USA....cause anyway in that case....I don't think that there will be a secure place if you consider the Nuclear Weapons! I prefer to buy ow at the RIGHT price.... If Argentinean cannot efford more than 1.500 per sq mt I WON'T buy for more....and if Real Estate market will go to high...well...I'll sell and I'll buy in another country...and believe me....I am not the only one who think in that way ;o) Oops...I forgot...Last March the Real Estate Market in Buenos Aires lost 20% ! http://www.inforegion.com.ar/vernota.php?titulo=Ca y%C3%B3-m%C3%A1s-de-un-20%-la--compraventa-de-inmu ebles-en-Capital-Federal&tipo=N&idPub=87652&id=181 668&dis=1&sec=2. Be Smart.
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Georgio Armani
New member
Username: Georgio_93

Post Number: 25
Registered: 1-2009
Posted on Sunday, May 17, 2009 - 6:24 pm:   Edit PostPrint Post

I am Italian as most people already know on this board and I can tell you Italy and Argentina are alike. Both countries have secure real estate contracts but extremely poor and currupt judicial systems which take years to solve anything legally. I have an ongoing lawsuit in Italy that my family started 8 years ago and it is just getting started now and this was for a major thing (an Italian bank allowed a caretaker to forge my signature and liquidate a $10000 account if in posession of a bank book). If anything happens to you in these countries you can literally die before you see justice. Thievery is big in Italy and Argentina. Italy has no where near the same amount of murders and violence as the US but they LOVE to steal. This is why most people trust the mafia over law enforcement because if you pay them I guarantee no one will rip you off and if they do the mafia will do something about it but the police are incompetant.

As for purchasing real estate in Argentina, location is key. Wealthy neighborhoods have all the protection so buy in Recoleta or Puerto Madero or be in a gated community in pilar or la tigre. Then nothing will happen. As for maintenance fees, make sure you negotiate a low amount when you sign the contract and if they raise it simply don't pay. It isn't the US, nobody can foreclose on you or evict you and if the building threatens a lawsuit just say "go ahead" they will most likely not even file for one because waiting 10 years is a waist of everyone's time and money. Ciao
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Simon Fawkes
Member
Username: Expatba

Post Number: 80
Registered: 1-2007


Posted on Monday, May 18, 2009 - 4:05 am:   Edit PostPrint Post

Ivan

That article says the number of real estate transactions dropped 20%, not that real estate prices themselves dropped 20%. There is a big difference.

Simon Fawkes
Author, The Complete Guide To Real Estate Investment in Argentina, ISBN 0557001927 http://www.amazon.com/exec/obidos/ASIN/0557001927
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ivan G
Junior Member
Username: Ivagagio

Post Number: 37
Registered: 5-2008
Posted on Monday, May 18, 2009 - 6:09 am:   Edit PostPrint Post

Simon...If Transaction Drops 20% it could be a BIG problem for the next future real estate market.It means that sellers want to much money and buyer run away! I mean...If you were one of that 20% that wanted to sell and couldn't do it cause nobody wanted to buy your house...you could have a broblem. Don't you think? I repeat. I HAVE NO INTEREST to suggest to pay the Right Price and I repeat...in this moment EVERY US$ you pay more than 1.500 US$ per sq meter is OVERPRICED. Than....you can even buy at 3.000 US$. I mean....When the Nasdaq was at 5000 People bought shares at 200 US$....and everybody was sure that it was a great price....pity that now the same stocks are at 10 US$!!...I don't want to offend anybody but I know the market and I ONLY BUY at the price that the local population can buy...I'll never buy at the price of the Foreign. That' all. Cheers
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Gloria Melgar Estevez
Intermediate Member
Username: Glorita

Post Number: 102
Registered: 12-2007
Posted on Monday, May 18, 2009 - 10:55 am:   Edit PostPrint Post

Hi everyone. I couldn't help but to jump into this conversation as to the "rules", "laws", in Argentina. While Ivan's stories may have more to them then meets the eye, as an Argentine I need to chime in and to defend his advice, to "be smart", because absolutely these scenarios happen. I know as most Argentines do that houses do get occupied. My aunt's father-in-law has two homes. One he rented out, and the tenant one good day said, "I can't pay"....this continued for YEARS...to make a long story short, she had kids and he couldn't get her out. He is up in age with alot of health issues so he didn't pursue it. Another case, my older brother has a good friend who also was renting a house and the tenants also one good day stopped paying. He didn't "waste" time with the police. He payed someone to brake into "his own home" to kick out the "occupas" .... case closed! Argentina does live by the law of the jungle, and that's why I live in the good old USA(with all its problems, it's still moons better than Argentina).

As for the prices of real estate, I just finished reading an article at the Bloomberg website that predicts a 2.5%
contraction...it's biggest since its last contraction of 3.4% in 2002. Inflation is notely increasing, and unemployment is increasing. This to me signals that there is no money for Argentines to buy at "current prices", and many Argentines may need to sell some of the properties they have to make ends meet. Perhaps, its wishful thinking on my part because I want to buy something in Argentina.

Ciao!
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 140
Registered: 9-2008
Posted on Monday, May 18, 2009 - 12:13 pm:   Edit PostPrint Post

Seems to me inflation is being offset by the declining conversion rate to the dollar, at least for those lucky enough to earn dollars but live on pesos.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 458
Registered: 7-2007


Posted on Monday, May 18, 2009 - 12:16 pm:   Edit PostPrint Post

Hi Gloria - glad to see you around again - I just have to comment again that there are far better laws that just emerged just even in the last 5 years regarding this topic - it would be expected for Argentines living abroad to remember dastardly tales from the past , which I agree are indeed dastardly. And also for foreigners presently that maybe did not do everything correctly during the purchase. So as someone else pointed out, if you dot your i's and cross your t's before a purchase these days, and keep great records, - you are pretty much set and do not have to worry about these kinds of tales. As Apts BA pointed this out, this market is not for your average investor, and also I never recommend trying to handle a purchase on your own - contract good non-biased legal assistance and make it a part of your investment cost. Even locals get burned often as they think they can do it on their own.
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Gloria Melgar Estevez
Intermediate Member
Username: Glorita

Post Number: 103
Registered: 12-2007
Posted on Monday, May 18, 2009 - 3:16 pm:   Edit PostPrint Post

Hi Sean. Nice to see you again! I occassionally drop by the forum to catch up on the good, bad, and ugly updates of Argentina...LOL. But, time just isn't my friend as I often feel like a chicken without it's head running around with the kids, to school, the beach, the pool, their practices, and on and on. But truly I love this site!

Now, while I'm an Argentine, I'm absolutely no expert on legal, nor political issues pertaining to Argentina. In fact some of you Gringos know more than me. I've been here in the states likeeeeee, well forever pretty much. What I know is what I have seen on my visits to my country and my family and friends experiences. I just thought that Ivan's advise was an important one regardless on the accuracy of his stories.
Lord knows that if/when I go to buy over there, I will seek out a very good attorney.

By the way, I just finished reading the Clarin and the first story has to do with the real estate decline. It talks about the need for mortgages for the middle class. Great read if you all get a chance.

Bye!
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 26
Registered: 1-2009
Posted on Tuesday, May 26, 2009 - 2:48 am:   Edit PostPrint Post

Like I have been saying in my previous posts... real estate outside the US is bogus... there is no "market value". It is just how much someone is willing to pay and this is not the same thing because there are no protectionist policies involved such as appraisals, equity assurance departments etc.

Honestly... the best way to invest in Argentina (if you had to invest) would be to buy a fixer in Recoleta for well under market value for the square footage. There are some bargains and there is a lot of room to negotiate. In some cases you can offer 50% off the asking price because they are inflated that much. Then rennovate professionally for 25k or so and you can have a really nice place with a low tax burden(if you so choose to not acquire a DNI and pay the "foreigner" wealth tax). I always find it amusing when I see people here in the US offer more than the asking price... hilarious.
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 141
Registered: 9-2008
Posted on Tuesday, May 26, 2009 - 9:14 am:   Edit PostPrint Post

Georgio, I would argue real estate in the US is bogus, look how much it has dropped due to speculation. As I am sure you are aware, in ARG something like 93% of properties are owned without a mortgage, thus no bubble to burst, como EEUU ahora.
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 461
Registered: 7-2007


Posted on Wednesday, May 27, 2009 - 8:10 am:   Edit PostPrint Post

Georgio, wow lol I am surprised about your "bogus" comment - you must be having a bad time at it, I hope things get better.

People who know the the Argentine real estate market know full well that negotiation occurs at the levels related to the financial condition of the seller, which often is stressed.

Just trying to clue you in a little. Cheers
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 29
Registered: 1-2009
Posted on Wednesday, May 27, 2009 - 10:44 am:   Edit PostPrint Post

Actually Argentina property sales are down 40% from last years figures.
Add to the fact that The US Dollar is over valued and has been pumped up 30% since last year, meaning that Argentina property prices are 30% over valued as its all in US dollars on top of 2007 peak "Bubble" prices.
We are going to see a flooded property market over next few years, add a good measure of unemployment to the mix and watch those prices come tumbling down.
" House rich, cash poor" ? go figure !!
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 142
Registered: 9-2008
Posted on Wednesday, May 27, 2009 - 2:42 pm:   Edit PostPrint Post

Vamos a ver!
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Gloria Melgar Estevez
Intermediate Member
Username: Glorita

Post Number: 104
Registered: 12-2007
Posted on Wednesday, May 27, 2009 - 5:20 pm:   Edit PostPrint Post

Georgio, I wouldn't classify Argentina's real estate market as bogus. Real estate fluctuates and it does so everywhere. God knows that if we are to say that Argentina's real estate prices are bogus how should we then classify what went on with real estate prices here in the states? However, I would classify Argentina as a "bogus" country politically. Let's take into consideration the meaning of the word bogus......"counterfeit", "sham", "non genuine". Unfortunately, the workings of a bogus political system has far reaching distructive implications on its citizens, and real estate is not an exception. I just finished reading Cristina Kirshner's mortgage loan deal and it made me very angry. The loans are supposed to target the "middle class", yet the requirements are no where near a middle class families reach.
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 30
Registered: 1-2009
Posted on Wednesday, May 27, 2009 - 6:31 pm:   Edit PostPrint Post

looks like a Puerto Madero BAILOUT Fund !!!
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 27
Registered: 1-2009
Posted on Friday, May 29, 2009 - 3:10 am:   Edit PostPrint Post

The US housing market is not bogus... it is a market and it fluctuates in value either by fundamentals or speculation. The fact of the matter is that you can make money using fundamentals or speculation and what makes that "REAL" is the "liquidity factor". If you can't sell your home within one month at fair market value... you don't have a market at all which is what Argentina and Europe has now except for maybe the UK, Germany, and Switzerland. I look at property all the time in Europe and S. America and I see the same properties for sale for years on end... that is not a real estate market.

Mendoza, not having a bad time at all, just stating that Argentine real estate is not in a buying investor position which is why I believe another Argentine crash is coming soon and what will make it worse is that the US won't be able to bail Argentina out since we are too busy bailing ourself out.

I agree with EastWest 3000. This is true and Obama spending is going to increase the inflation factor which is why I am hedged in Gold and Energy right now.

Gloria, Argentina real estate prices are not based on anything other than "I am asking for X, maybe I can catch a naive American or Brit into paying 1st world real estate prices for 3rd world real estate". You can buy a 160k brand new house in Austin, Texas where jobs are plentiful and you have US conveniences on tap. Why would anybody spend double that to live in renovated real estate in the best part of BA unless you have friends or family or a bunch of cash to blow on a vacation pad.
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 31
Registered: 1-2009
Posted on Friday, May 29, 2009 - 10:38 am:   Edit PostPrint Post

Yes, It would be interesting to see what happens when the US Dollar starts hyper inflating to see how Argentine property market factors that in. I doubt very much that they will offset the weakening Dpllar by putting the prices up! When their property market is already flat!
Double wammy !
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 143
Registered: 9-2008
Posted on Friday, May 29, 2009 - 12:33 pm:   Edit PostPrint Post

Georgio, what I think personally makes Argie Real estate appealing is the potential for purchasing income producing properties.

It makes sense for us to focus on purchasing assets, aka cash flow properties, more than speculation these days.

I am not aware of too many places in the world where the purchases prices are low but the demand for rentals, ie rental income, is strong. This model can also work in the farming business, however that is harder work than rentals, based upon our experiences.
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 32
Registered: 1-2009
Posted on Friday, May 29, 2009 - 3:59 pm:   Edit PostPrint Post

L.I.P..(Living in Patagonia)
I think that back in say 2005 ... this was the case to your average foreign investor.
But i think we can safely say from looking at the figures that it is all a different story now.
just take a look at the growth rates in tourism over last five years.. etc etc.
It was really attractive back then because you could pick up an beautiful property for peanuts on top of that property prices were on the up in a BIG way.
Those days are over my friend.
Ask old Mr Koh how many foreigners are trying to drop their properties "like yesterday"
Check out Greece area for next rental gold rush!!!
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 146
Registered: 9-2008
Posted on Saturday, May 30, 2009 - 9:19 am:   Edit PostPrint Post

EW, though this is a BA thread, I know of several homes outside Bariloche (Llao Llao) in the low 100's that would make at least 10-12K/year on the long term rental market.

While it might be true BA has an excessive amount of rental inventory, long term rentals in Bariloche are very limited. This is mostly due to the owners preferring to rent it out during the two high seasons for a lot more money.

Again, not in BA, but land prices to grow grapes, plums, olives, etc are still very well priced in many growing areas. But farming certainly isn't for everyone, as I can report first hand, second if you count our encargado.

Saludos, LIP
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 33
Registered: 1-2009
Posted on Saturday, May 30, 2009 - 11:51 am:   Edit PostPrint Post

LIP, I can see that Bariloche has potential, If the figures are there ..... why not ?
and im sure that land prices around these areas are very low in relation to the product that can be produced on them. olives grapes wine etc.
All in the name of fun.
cheeers
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 463
Registered: 7-2007


Posted on Saturday, May 30, 2009 - 12:31 pm:   Edit PostPrint Post

This is the same situation in Mendoza, as LIP describes.
I have a feeling EW and Georgio are not having a very good time it at the moment, which is not unexpected, not everybody thrives - lots depends on insight, quality product, marketing, customer service, efficiency, and a good reputation. These are super important parameters. These markets are just like the stock markets, for every winner there is a loser. You HAVE to excel if you want to make money doing this kind of thing. A down economy especially worldwide) tends to shake things up, the strong will indeed survive and thrive.

By the way I would not touch Greece with a 1000 kilometer pole. It is the ignition point for chaos in Europe. Where did you come up with Greece EW? Argentina is about as far away as you can get:-)

Meanwhile, if you step outside of BA, Argentina becomes even more magical, and if you are considering it for retirement, part year living and/or frolicking, etc - there are wonders that abound. Good luck!
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 34
Registered: 1-2009
Posted on Sunday, May 31, 2009 - 4:29 pm:   Edit PostPrint Post

"Insight, quality product, marketing, customer service, efficiency, and a good reputation. These are super important parameters."
Uuur.... Unfortunately Argentina has "none of the above"...... come on now!
Lets refresh our memories again:
Back in 2001 Argentina was in a real mess to put it mildly. There was a complete break down in society for at least a month or so .... it got real ugly !! so ugly that it would make the scuffles in Athens Greece look like a "Kiddies tea party"
Now who would have thought Argentina would be such a sound investemnt for the following 5 years, where you could make a ton of money ?!!!
Maybe your right WTM, step outside B.A. and it just gets better and
better and better and better,the further you move away.
Gracias
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WTMendoza.com
Advanced Member
Username: Welcometomendoza

Post Number: 465
Registered: 7-2007


Posted on Sunday, May 31, 2009 - 11:08 pm:   Edit PostPrint Post

Hi EastWest,

I kinda feel sorry for you based on your response - and maybe you are realizing Argentina isn't for you. Maybe most places arnt for you - maybe you should look back home? no doubt there is opportunity for you in your own language and comfort zone.

The parameters I mentioned are common place in good business. Good business is not restricted to a country, it is is based on you and other business folks that put forth in any society. But I hope I don't havber to remind you of that.

And if you think France and Greeces in 2008 were mere scuffles, then I urge you to put your ear to the ground just a little bit more:-)

Good luck!
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 28
Registered: 1-2009
Posted on Monday, June 01, 2009 - 2:43 am:   Edit PostPrint Post

I am not sure why Mendoza keeps mentioning that I must be having a difficult time... I am not invested in Argentina at all and I most likely never will although I have lived there for a little while renting and that is all I would do there. My grandparents and parents were the ones that got burned in Argentina many years ago in the 60's where we lost our whole shoe factory as I mentioned earlier. Argentina hasn't been prosperous since the early 20th century and it has declined ever since. You can make money in Argentina... hell you can make money anywhere but I must warn people that it is a rogue country and there is high risk. People keep asserting that because Argentina doesn't have mortgages that people don't have to worry about a real estate bubbles. In truth, it is the fact that they are devoid of a financial sector in entirety that underscores a dismal future.

Now don't get me wrong, Argentina is a great place to retire, vacation, or study in for university exposure but that is it. There are a few sectors where you can make money in so long as you export your products to 1st world countries. I have heard of many success stories where American farmers have increased their profit margins significantly by purchasing land in Argentina and growing wine or soybeans and selling them back to America.

Bariloche shouldn't be used as an example since we are primarily talking about BA's real estate market but Bariloche is basically an extention of a US vacation resort where most all transactions are done in US dollars making it significantly more expensive than anything in BA.

On a third note, I would like to hear from Michael Koh/apartmentsba.com to see what he is up to now. I see more properties on his website trying to sell and most of the rental properties are not filling up in occupancy. He should have taken whatever he was offered to buy his franchise but I bet investors are backing out of that deal now that the global recession is prevailent.
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 35
Registered: 1-2009
Posted on Monday, June 01, 2009 - 10:56 am:   Edit PostPrint Post

WTM,
Dont get me wrong, Argentina is a fun place, Yes I do own property here, which was purchased back in '03 .. as a place to stay when we visit my wifes family. not as an investment as such.
Argentina has the mentality that "give it an inch, and it will take a mile" as G.A
says it is a rogue nation. (see the current bond issues retirement fund in New york right now)
There are great areas and lots & lots of room for development. But unfortunaltey there is not enough regulation, because the corrupt officials dont want to change the laws as to "Expose" themselves. even on a basic level. Public land registry etc etc.
Yes the Parameters you mentioned are of course important i dont dispute that.
As far as stablitiy... France and Greece beats Argentina Hands down!!
Can you imagine Argentina Holding (and preparing) for the Olympic games ? ? ?
it would be like watching a set of clowns in a circus !!!!
Have Fun !
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 148
Registered: 9-2008
Posted on Monday, June 01, 2009 - 7:13 pm:   Edit PostPrint Post

GA, I don't think nightly rental prices in Bariloche are much higher than BA across the board. I do think there is a lot less of them, at least at an internationally accept standard.

BTW, I am in Puerto Madryn at the moment and the area we are staying (just south of the city) appears to be booming. No ideas on prices, but this seems like another excellent place to have rental property for the foreigners. And the marine life is epic.
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 29
Registered: 1-2009
Posted on Wednesday, June 03, 2009 - 4:44 am:   Edit PostPrint Post

Yes, I hear there is a lot of tourism in Puerto Madryn and penguins too! I also heard of a lot of Canadians who have vacation homes in mar del plata because of the cold winters that they can escape.

As for Bariloche... you are right about the rental prices but I am talking about living expenses like food, clothing, etc where I beleieve people pay much more for and in American dollars. I can be wrong on this but that is what I heard.

Argentina is cheap if you get a DNI and not pay the "foreigner wealth tax" a.k.a "property tax #2". Pay cash for a 150k flat and have a residual income from investments of about 2k per month and you are set. Also, if you have social security and union pension adding up to about 30k between husband and wife you live better than engineers and doctors lol. All im saying is that I wouldn't invest there simply because there are many other places that are more attractive and waaay less risky.
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Living in Patagonia
Intermediate Member
Username: Soulskier

Post Number: 150
Registered: 9-2008
Posted on Wednesday, June 03, 2009 - 8:37 pm:   Edit PostPrint Post

GA, I don't think the cost of living in Bariloche is any higher than BA for most things. Maybe clothing, but honestly, I don't shop for new threads in Patagonia. Then again, your last name is Armani, so I am obviously out of my league.
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Mark
Intermediate Member
Username: Lostintheandes

Post Number: 127
Registered: 10-2008
Posted on Wednesday, June 03, 2009 - 10:41 pm:   Edit PostPrint Post

wow..haven't been here in a while. Nice to see thriving blogs...where is AptBA....hmmmm
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ivan G
Junior Member
Username: Ivagagio

Post Number: 38
Registered: 5-2008
Posted on Thursday, June 04, 2009 - 11:06 am:   Edit PostPrint Post

ANOTHER BIG PROBLEM: LOS GASTOS de Consorcio - The expenses are ridiculously high in Capital Federal....I mean...it doesn't make sense. The "guardians" that do NOTHING are too paied and general expenses are too high. I spend more in Argentina than in Europe...and that's crazy!!! Most of the Lawyers are bad so...you cannot get anything!! I am still looking for a very good lawyer (please, if you know one very good let me know) but the unions of the Guardians are like a Mafia and they are very strong...In most of the World Guardians of the buildings don't exist anymore and in Argentina which is a poor country people continue to pay these persons for services that they don't get. This is another BIG problem in the Real Estate market in Buenos Aires.
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Roberto
Board Administrator
Username: Admin

Post Number: 1860
Registered: 12-2004
Posted on Thursday, June 04, 2009 - 5:54 pm:   Edit PostPrint Post

> people continue to pay these persons for services that they don't get...

Argentines pay for a lot of services they don't get. On the other hand, they also get a lot of services for which they don't pay and are supposed to. Besides this, consorcios can be a real black hole way too expensive to maintain. You got that right.
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 30
Registered: 1-2009
Posted on Sunday, June 07, 2009 - 4:25 pm:   Edit PostPrint Post

Instead of trying to fight the system and get rid of these "guardians", just don't pay your expenses... There are no foreclosures in Argentina and you yourself can't get a lawyer. Do you honestly thing these "guardians" are gonna find one to make you pay? Last time I checked the only enforcement of expenses is an honor system.
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ivan G
Junior Member
Username: Ivagagio

Post Number: 39
Registered: 5-2008
Posted on Tuesday, June 09, 2009 - 11:15 am:   Edit PostPrint Post

Hola Georgio Armani...Interesting point of view...but I mean....if I decide don't pay or just pay partially I'll go against the administration od the building...do you really think I can do it? Do you know a very good lawyer? Consider that there are only 7 apartments and the majority (an old woman who owns the 55%) wants that the "Guardian" make 90 extra hours per months and they are SUPER expensive!!! ...and anyway he is only paid for that but he doesn't do it!!...I am upset but I have no idea what I can do!!! Do you have a suggestion? Thanks to all!
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 31
Registered: 1-2009
Posted on Tuesday, June 09, 2009 - 8:15 pm:   Edit PostPrint Post

Lets put it this way. You only have a few options.

1) Sell your home and move to a more favorable building with better management and cheaper expenses. Make sure your contract does not allow them to rais expenses and if they do make sure there is a cap.

2) You can try and fight the system with a lawyer, wait 5-10 years and still lose.

3) Or you can not pay and just say that you are poor and can no longer afford the expensas. There is nothing they can do to you... they cannot evict you from your home, they can not foreclose on you. Basically, they would have to get a lawyer to sue you which will take the same 5-10 years and they will either give up or keep the lawsuit in progress. The worst they can do in the end if they win the lawsuit is attach a lien on your property from the amount you owe and maybe some interest. So long as you never sell your property you will never be obligated to pay. This is pretty much how Argentina work. Good luck!!
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ivan G
Junior Member
Username: Ivagagio

Post Number: 40
Registered: 5-2008
Posted on Wednesday, June 10, 2009 - 4:27 am:   Edit PostPrint Post

Hola Georgio...thanks for your advices...That's one of the reasons I said that the Real Estate Market in Buenos Aires is overpriced...if someday most of these problems will be solved with clear rules...maybe there will be room to grow...but now...everything you pay more than 1.400/1.500 US$ per sq.meter is overpaid.
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EAST WEST 3000
Junior Member
Username: Eastman

Post Number: 36
Registered: 1-2009
Posted on Saturday, July 18, 2009 - 3:13 pm:   Edit PostPrint Post

Where is Michael Koh ? ? ?
We miss your Sanctimonious posts !!!!
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 32
Registered: 1-2009
Posted on Monday, October 12, 2009 - 4:35 am:   Edit PostPrint Post

I am not sure where Michael Koh is.... he could be very busy. We all enjoy his optimist view of the Argentine real estate market or lack thereof. I periodically check his website and I see the same real estate for sale so maybe people will start taking my advice to heart.
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Apartmentsba.com
New member
Username: Saint

Post Number: 768
Registered: 5-2005
Posted on Saturday, November 07, 2009 - 5:45 pm:   Edit PostPrint Post

"Georgio Armani" I posted this in the other forum but I'm reposting it for you. Unfortunately I don't have the time to post much these days. It's nice to know I've been missed. :-)




_________________________________


Hi everyone. It's been a long time. I've been incredibly busy the past several months traveling throughout Europe with my family, finishing some big projects and high rise towers, moving family to Buenos Aires and expecting a new baby in a few weeks not to mention I had a new baby not long ago.


Needless to say it's been very very busy. I haven't read this board in a while and probably won't have time to post much and also I am doing consulting work for hedge funds and investment funds and they don't seem to like paying someone to give free advice to the masses on a message board. ;)

I WILL continue to point out that just about every single forecast I've made over the past several years has been totally accurate. If you go back and due the due diligence on this board as well as others, just about everything I predicted around the world has come true.

I covered on my massive short positions a bit early but you can see it was before the massive rise in the market again.

As far as my predictions on the USA real estate market... let's just say I think that speaks for itself. It has turned out exactly as I said it would. I'm still holding out on buying as I don't think the bottom has truly been reached yet. The USA government is still massively artificially supporting the market. Without their intervention, home prices would be much much lower.

Go back and see what I said I think over a year ago on my prediction credit card companies would eliminate and cut down credit lines. It's spot on as I predicted.

Also, I read a few posts where people questioned my continued investments in Argentina. I'll reiterate that even today I own even more real estate in Argentina than at any point before. In fact, I just closed on 2 new properties a few months ago and they turned out really beautifully.

www.apartmentsba.com/uno22

If you want to get an idea how it turned out. Already getting rental requests on it.

Yes, the real estate market sales volume this year has been slower here but I predicted that it would be, just as it was all over the world. Sales volume is a fraction of what it was last year and the year before. However, something that sets Buenos Aires apart from other worldwide world capital cities is real estate prices here hasn't really fallen much from peak levels.

And the market is starting to pick up again. We've sold 6 properties within the past 2 months. And something interesting...who are the buyers? Not foreigners but LOCALS. They know real estate here is a safe asset. They have their cash under their "mattress" and it's safer with a property. Also, the government did an amnesty program to get many locals that are holding their cash offshore and not declaring it to wire it back in for only 1% if they buy real estate. Surprisingly, MANY have taken advantage of that program including some people I know.

And the reason why? Because of what I said years ago. I explained how the lack of sub prime and the almost all cash purchases make this a REAL investment instead of the sham in the USA with 0% down, all interest loans, etc. Even today the USA is in the nasty habit of trying to offer mortgages to people that should NOT be buying a house.

I can't help but to laugh at some of these posters that posted on various message boards back in 2004/2005/2006 how "dangerous" it was to buy real estate in Argentina and how "safe" it was to buy in the USA. One such poster told people how it was wise to buy in places like Las Vegas or Arizona instead of Buenos Aires. I think we all know how that turned out for him. Yet, all these types of posters years later seem to forget about what they posted or just disappear. I assume they feel pretty silly.

If you take a good look before it was the banks and financial institutions giving out these 0% down loans. Now the USA government has replaced these banks. Look at what the FHA is doing giving loans to people with as little as 3% down and also allowing them to use the $8,000 Federal Housing credit towards their down payment! This is totally treacherous. I'll repeat again what I said so many years ago... if you don't have a significant down payment of at least 20% down. You simply should NOT and can NOT afford to "own" a home.

Odds are many of these people that the USA government via the FHA program are going to end up defaulting as well. Just like the sub prime mortgage holders and even the prime mortgage holders now are defaulting as they are out of a job.

I read another comment that said that many of the apartments on my website are still for sale for long periods of time. That may be true but the reason is because my clients are NOT so motivated to sell and they hold NO mortgage or loan against their properties. They paid CASH for it, have no debt on it, it's cash flow positive. So they will wait until they get their price.

I'm one of those people. I have a few properties for sale and I've received some offers close to the asking price but I'm not in any hurry to sell and won't unless I get my price. I hold NO mortgage or debt on these properties. Yes, rentals are down this year with the severe recession but even accounting for rental taxes to AFIP, yearly asset taxes with AFIP, utilities, insurance, expenses I'm still cash flow positive on them. I do think it will take a bit longer for tourism to really significantly increase while the unemployment rates of Americans and Europeans is so high. But tourism is down all over the world. I was in Europe for 6 weeks and it was noticeable everywhere I went.

In Florence which is usually totally packed in summer it was relatively dead. I stayed in a suite at The Savoy Hotel which is the nicest hotel in town and I think I only saw 2 people the entire time I was there. No need for restaurant reservations and crowds were down. Stores were empty. In the main Prada store in Milan (flagship store). My wife and I were the ONLY ones in the entire store!

Look at www.apartmentsba.com/fsa30 It just sold after the owner rejected many lower offers over the past few months. He got the price he wanted and sold.

Look at www.apartmentsba.com/fsap8 It sold in just 3 DAYS after listing it for almost the asking price. (We listed it on October 19, 2009 and it sold on October 22, 2009).

Yet other owners like www.apartmentsba.com/psx3 listed their property to sell. He was asking $285,000 US for it. I found a buyer for it that offered the FULL asking price and the owner decided NOT to sell it as it's renting very well.

I myself earlier this year had www.apartmentsba.com/ax1 for sale at $250,000 fully furnished. I got an offer for the FULL asking price and I decided not to sell as it's generating amazing returns and rented year round. Interest rates on CD and other safe investments are paying almost nothing so I'll just keep renting it.

I bought a bunch of small units in the same building as www.apartmentsba.com/uno22 a while back. I sold one of them. Well it just sold a few months ago. The price per sq. meter? u$s 3,100 per sq. meter.

So again, you have to understand the market here is so much different just as I explained so many years ago.

Now, I realize that many of you like to post anonymously and it's easy to try to play "monday morning quarterback". But I think anyone that has been following my posts for the past several years can't dispute that I've been very accurate in my investment advice and forecasts just as I've been pretty much since I started investing after finishing University.

I don't mind reading dissenting posts. I think that's healthy. But again, it's important to post accurate information and not conjecture.


I will post the same information as I posted so many years ago. I believe real estate investments to be a long term investments. Although I've flipped properties I generally believe they are best to buy great properties, in quality locations and hold them for longer periods of time. I believe it's good not to buy them with too much leverage. I believe that in the future hard assets are going to be extremely valuable vs. "paper".

I will continue to hold a totally non-leveraged real estate portfolio, avoid debt and continue with the same game plan. I will start picking up quality properties in good locations in the USA. I still don't think the USA real estate market is done falling. There are still millions of properties in a "shadow inventory" in the USA that will eventually be foreclosed on.

I've been watching some properties in Miami Beach and it's amazing watching the decline there. I know some clients that didn't take my advice and started buying there last year and this year and they have watched as prices continued to plummet. One property I've been watching sold in November 2005 for $460,000! I've watched it fall over the past 1.5 years to $250,000 then $200,000 then $175,000 then $165,000 then $150,000 now at $122,000. Imagine the people that kept trying to "catch the falling knife".

Meanwhile, compare a property like www.apartmentsba.com/uno22. It took 4.5 years for the developer to finish that project (2 years later than they said it would which is frustrating). But consider when there was a hole in the ground prices for these high units were only $49,000! Want to know the price we've been selling the same units for? $118,000!

And we bought the penthouse for a client. Want to know the price per sq. meter he got it for? $1,300 per sq. meter. It's going for $3,000+ a sq. meter now. So, please when you post about real estate here or your opinions, I think it's important to stay accurate. Do I think properties will continue to go up that quickly? No I don't and I've posted earlier this year that there was NO rush to buy real estate in times of severe recessions. But I continue to believe that the world is a different place and I would rather own non-leveraged real estate and other Hard assets vs. paper.


I miss the board and miss reading many of your posts. I do wish all of you the very best of luck in all that you do and hope you all are very prosperous and have a great holidays.

Mike
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 769
Registered: 5-2005


Posted on Saturday, November 07, 2009 - 6:07 pm:   Edit PostPrint Post

Oops. I just noticed. I didn't realize I had two profiles under my email. It's been so long I forgot my username and password.

"Georgio Armani", again, so you understand the main difference with Buenos Aires and MANY sellers in the USA is the sellers in the USA not only have $0 equity in their properties but something like almost 35%-40% of people that hold mortgages are UNDERWATER and have NEGATIVE EQUITY. Zip, nada, zilch.

So while the desperate sellers in the USA are desperate and have to sell their properties, owners in Buenos Aires aren't in any hurry. Both locals and foreigners alike can sell when they want or sell when the price reaches the price they are comfortable with. It seems some of you just don't understand that concept.

Yes, tourism has fallen and the short term rental market has slowed way down. But owners of properties can rent to the local market and get guaranteed incomes that are MUCH higher than what any safe investments are paying. CDs are paying almost nothing these days. We've recently rented out several properties and converted them from short-term rentals to longer 2 year rentals to LOCALS. All of whom have guarantors co-signing, they are paying all expenses including condo fees (except ABL, and asset tax each year.. heck we even made many pay the annual insurance premium). Look at PH1, PH14, PH15, AP15, AP35, AX4 and several others. All rented out at 2 year rentals.

Yet other owners are turning away the 2 year rentals because they come down and use their properties several times per year. As I posted before, many people have various reasons for buying here. Many use it as a second home and come down and use it when it's winter in the USA/UK/Europe it's summer here. Others use it throughout the year for holiday or home exchanges.

Have you heard the term "jingle mail"? In the USA they are simply mailing their keys in to their banks and saying, "keep the house I don't want to make payments and don't want it. I have NO equity in it and in fact negative equity". Not only that but there are many, many people that haven't made a mortgage payment in over a year or two and still not foreclosed on. The banks would rather keep someone in it, even if they aren't paying vs. letting the home get abandoned. Do you realize that?

And that percentage is sure to go up as property prices in many areas continues to fall. The locals in Buenos Aires almost all have 100% EQUITY in their properties here in Buenos Aires. A fact which you and others seem to want to ignore.

I have many many many friends in the USA and I have many many many friends here in Argentina. Something ironic is my friends in the USA make much much more money yet none of them really "own" their properties or hold the title to their properties. The banks all "own" their properties. They THINK they own but they are "renting".

My friends in Argentina make a fraction of the money as my friends in the USA yet they all really OWN their properties. That is a really really important point that all those that don't live here need to realize. These local friends will NEVER go through a foreclosure here. The property will be theirs forever or most likely stay in their family and pass down to their family.

That's the reason why property prices here have not fallen off a cliff like in other parts of the world. You simply MUST realize that locals use their properties as a piggy bank.

And as I always mentioned, while real estate investments in Argentina are NOT for the majority of investors out there. Those that did invest hear years ago are darn glad they diversified. It's simply a HORRIBLE idea to keep all your assets in "paper" and it's a HORRIBLE idea to keep all your assets in your home country, especially if it's the USA, which will have more and more problems. They are simply printing too much money and that's going to have consequences as I posted so many years ago.

So, while I don't mind your disconsenting opinion I still say stick to facts. And while you are at it, I'd love to see some of your past background and accomplishments. It's quite easy to come on a public form and almost attack someone. It's easy to make up names like "East West 3000" or "Georgio Armani" yet quite another to do what I've done over the past decade.

Cheers.
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 770
Registered: 5-2005


Posted on Saturday, November 07, 2009 - 7:13 pm:   Edit PostPrint Post

Public record of purchase price in November 2005


Can you say falling knife?


For those of you like me that like to see actual proof.

I whitened out the last name of the seller for privacy reasons but it's all public information anyway. You can see the same information by looking up the property price yourself. Every city in the USA has a similar page to see what properties were bought and sold for.

http://www.miamidade.gov/PA/

This is just one of dozens and dozens of examples I have in Miami. There are others in Las Vegas and California as well. This is just one example to show you what has happened in the USA just as I predicted it would a few years ago.

You can see from the email from realtor.com I'm actively considering and following 82 properties in the USA and been following the market there fairly closely over the past 5 years. It's so interesting to sign up for updates. Just about every week I get email updates saying "Price Reduced".
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 771
Registered: 5-2005


Posted on Saturday, November 07, 2009 - 8:45 pm:   Edit PostPrint Post

OK...one more post for tonight before I have to go and finish this project I'm working on.

As I mentioned, what was going on before with people that can NOT afford to buy a house in the USA is STILL going on. The only difference is the banks for the most part have learned they do NOT want to loan out money to people with low FICO credit scores, bad credit, no stable job history, history of foreclosures/defaults/bankruptcies, etc.

So instead the burden and risk has shifted away from the banks and financial institutions to the USA Government! They are backstopping alot of JUNK! People just don't realize how it all works. They are printing endless amounts of money, they are more dependent than ever on China and Japan and other nations to finance our massive amounts of DEBT!

I do tons and tons of research when investing. Tons of analysis and look at many trends. I probably go through at least 3 or 4 hours per day of just analyzing data and trends.

Take a look at boards like this one below:

http://ficoforums.myfico.com/fico/board?board.id=loans

I mean this is the typical story of what is going on in the USA. You have people with horrible credit, bankruptcies, foreclosures all looking to still get a "piece of the American dream" and buy. Do yourself a favor. Spend a few hours reading some of these posts. Because I have for a long time now.

You will actually laugh at some of the posts as it seems like many of the people can't afford to even come up with a down payment for a house so they are using the fact to buy a house just to get the $8,000 tax credit. Never mind they can't afford the house! I've never seen anything like this..... mind boggling. Spend some time going in and actually reading some of these people. I'd say the vast majority simply can't afford to really buy a house. And the sad thing is I think that many Americans are in this situation.

I remember back in 2005 I told anyone that listened that the subprime mortgages was going to collapse the market. Few wanted to listen. Even on this board/forum back in early 2007 I told what was going to happen and what was coming. Even though all the signs were there.

Look at the link I provided. Many of them are people trying to figure out the best way to put the smallest amount of down payment and buy a home through a USA governmental program like FHA or VA loan or other programs that allow lower credit scores and almost NO down payment.

You would think people would have learned their lesson from before but this is the EXACT same problem that we had before and what helped cause this mess that we are in. Too many people buying homes they couldn't afford to buy.

The same thing is going on today in the USA. Let me tell you something. In Argentina NO ONE is buying a house they can't afford to buy. You know why? Because they are paying CASH for it. They save up, get help from their family and wait until they can really afford to "own". Quite a different story from what is taking place in the USA.

Look at the $8,000 tax credit. Do you know how much fraud and abuse that program has??? Did you realize that even IRS agents are getting caught lying trying to scam the government out of the $8,000?! So far I heard from my friend that works at the IRS it's up to over 100 cases of actual IRS employees that have got caught lying and basically stealing OUR taxpayer dollars with this program. So you have to ask yourself. If IRS agents/employees are scamming the government out of money you have to assume the average Joe on the street is definitely doing it.

http://online.wsj.com/article_email/SB10001424052748703574604574501253942115922-lMyQjAxMDA5MDIwOTEyNDkyWj.html


Happy reading!

Here are some other interesting links:

http://www.reuters.com/article/ousivMolt/idUSTRE58K29E20090921

http://www.businessweek.com/magazine/content/09_39/b4148028475445.htm

http://housingstorm.com/2009/09/whats-the-real-reason-that-banks-arent-foreclosing/

http://www.usatoday.com/money/markets/2009-10-28-economists-stocks-red-flags_N.htm

http://www.bloomberg.com/apps/news?pid=20601087&sid=aa71n7jSFj80


http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/20/MNOR19N2B1.DTL&type=business&tsp=1

http://www.bloomberg.com/apps/news?pid=email_en&sid=aEp.Jgd28LSU

http://www.escapefromamerica.com/2009/09/the-fdic-is-in-trouble/

(and it's interesting..sign up at the FDIC website and you can get an email update every time a bank fails in the USA. Almost every single friday night for the past few months I get an email like clockwork emailing me which USA banks fail. I got 3 emails on Friday night alone!)

http://www.marketwatch.com/story/home-prices-wont-regain-peak-this-decade-moodys-2009-09-18

http://www.theglobeandmail.com/report-on-business/crash-and-recovery/we-still-have-the-same-disease/article1286246/

http://www.bloomberg.com/apps/news?pid=20601087&sid=aw6_gqc0EKKg


I mean this is just a few. I have hundreds and hundreds of links like this. For kicks, just put in "strategic defaults" in Google. That should keep you busy reading a few days.



(Message edited by admin on November 08, 2009)
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Georgio Armani
Junior Member
Username: Georgio_93

Post Number: 33
Registered: 1-2009
Posted on Sunday, November 08, 2009 - 12:04 am:   Edit PostPrint Post

I love taking a stab at Michael... its the only way I can get information out of him lol. Nice to hear from you again. I was starting to think this board was dead!
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 772
Registered: 5-2005


Posted on Sunday, November 08, 2009 - 8:16 am:   Edit PostPrint Post

Hey Georgio. Again, I don't mind disconsenting opinions on this board. In fact, I think on any topic it's good to get the other side's view as long as it's done objectively and is accurate and respectful.

It's ok to say things like "I think anyone paying more than $1,500 per sq. meter is overpaying". That's fine like "Ivan" did.

But in real estate it doesn't really matter what individuals think. The market is always what tells us what is the true price. As I've said for years, it's supply and demand and market forces that tell us what a property will go for.


"Ivan" may think paying more is not worth it. And the locals probably wish they could pay that little for good properties in Recoleta, Palermo, Barrio Norte, Puerto Madero. But reality says that will not happen. Good property in good areas is much higher than that. As I mentioned, I sold a property a few months ago at u$s 3,100 per sq. meter. Now granted it was in a high rise tower on the 20th floor with probably the best view of the city. With 24/7 security, a pool, gym, sauna, 5 modern elevators and a huge garden. But when you listen to someone like "Ivan's" post saying don't pay more than $1,500 a sq. meter you have to think objectively.

On the flip of the coin look at the example I posted above in Miami Beach. That seller THOUGHT his property was worth more. Just because he paid u$s 460,000 less than 4 years ago doesn't change the fact that even taking a 70% haircut it's NOT selling at $122,000. And I hear from my realtor there are 4 more in his building coming on the market soon.

So you have to look at things objectively and subjectively but most important accurately.

Many of you here and other locals I know have been screaming at the top of their lungs that the real estate market was going to crash here. They said it in 2004, then 2005, then 2006, then 2007 then 2008 in 2009. What they fail to see is there are NO other viable investments in Argentina and people are figuring out that "paper" isn't as ideal as they thought. Many simply don't want to enter the stock market as it's too volatile for them and savings accounts and CD's are paying almost nothing.

Many that tried diversifying out of Argentina (which in principle is a good idea) did it at a bad time and bought in Miami at the top of the market.

So where are these people investing again? You guessed it. Back in their own "backyard" in Argentina. I'm not saying that everyone should be rushing to invest in Argentina. Quite the contrary. I'm saying just as I said years ago, it's a good idea to be well diversified and hold at least part of your portfolio outside your home country.

All the turmoil over the past few years should show people, especially Americans that there most likely will be big problems ahead for America.

Good luck all.
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ivan G
Junior Member
Username: Ivagagio

Post Number: 42
Registered: 5-2008
Posted on Sunday, November 08, 2009 - 10:52 am:   Edit PostPrint Post

Dear Apartmentsba...I am sorry but the REAL MArket is made by the local people...all the rest is just SPECULATION...I mean...If you buy and SELL FAST then you can buy even at 4.000 per sq.meter but if you buy for a long term...DON'T BUY WHAT LOCALS CANNOT BUY. You cannot buy in a place just cause tourists buy...cause if tomorrow Foreigners decide to go away from Buenos Aires the Price in Puerto Madero, Recoleta, Palermo...will drop 60%!!!

Then of course you can do what you want...but I don't make Real Estate Speculation so...I ONLY buy at the right price and if you pay more than 1.500 US$ per sq meter it's OVERPAID...Argentina situation is not good ... so...you are adviced...1500 is ok...but more it's risky...much more is very risky...if you buy in Puerto Madero...(where 90% of buyers are people that works with the drug, weapons etc)...it's very very risky...Like the persons that bought the NASDAQ in the 2000....do you remember? There were people that said that the prices were still very cheap and you had to follow the market...well...who followed the market in the 2000 is still CRYING!!!
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Apartmentsba.com
Senior Member
Username: Saint

Post Number: 773
Registered: 5-2005


Posted on Sunday, November 08, 2009 - 11:08 am:   Edit PostPrint Post

Ivan G,

Well I guess then the last 7 properties we sold the LOCAL (Argentine) buyers overpaid. Because all of them were purchased by locals not foreigners. And you know what? All of the 7 that bought aren't renting them out short-term. They bought them and living in them. Your logic is off because foreigners do NOT make up the bulk of the buying here. They never did in the Capital.

The property I personally sold for $3,100 US per sq. meter was also an Argentine not a foreigner. Please do point me to a great property, in good condition that needs no renovations in Recoleta, Palermo, Puerto Madero because I'll gladly buy it at $1,500 per sq. meter. Sorry...those deals just don't exist for the most part.

Maybe an old apartment that isn't in the best of condition or suitable for a luxury rental but those I wouldn't be interested in. The key thing to look at is your "all in price". That is, the amount of money per sq. meter you will spend after all the renovations are done. Many, many times I've bought properties with good floor plans really cheap and gutted it.

Look at this for example:

http://apartmentsba.com/renovation-decorating-furnishing-services-96/-p609/

Look at the before and after photos. I bought it for a fairly cheap price per sq. meter several years ago. (But even then OVER 2 years ago the price on it was OVER $1,500 per sq. meter) But then I totally gutted it. I spent over $65,000 US renovating it and then another u$s 35,000 furnishing it.

Now, some people told me I was absolutely crazy to spend that kind of money per sq. meter renovating it. But you know what? They were wrong. The ROI has been amazing! It's renting like crazy and has been since I finished. So the key thing is to look at the TOTAL price per sq. meter when all renovations are made.

The u$s 1,500 figure you are throwing around isn't realistic for a high end property. A really quality property that doesn't need to be renovated. You just will rarely find something like that. This property above the price per sq. meter was over your "$1,500 per sq. meter limit then". And prices have most certainly appreciated since then.

Incidentally, this property I gutted above is the one I got the full offer of $250,000 furnished. And while the husband was a foreigner, his wife is from Argentina.

I agree with you that I don't like Puerto Madero as it's a bit soulless for my tastes. For my own personal properties I'm only buying in Recoleta and Palermo which I've always thought are the two best areas to own in Buenos Aires. I thought it in 2003 when I started buying and I still believe that today.

I don't agree with you about Puerto Madero being dangerous however. Actually it's probably THE safest part of the city. They have their own security/police force everywhere there. So it's quite safe. I do agree with you there in Puerto Madero things are overpriced. A while back some properties were even $5,000 a sq. meter which is too much.

Now, I've been hearing the arguments of "if foreigners go away properties in Recoleta will drop 60%" . And you know what? That is just total nonsense, IMHO. Like I said before, we can agree to disagree but you don't make sense because foreigners aren't the majority of who own in Recoleta and Palermo. It's locals.

This isn't Miami and we don't have the situation of what is going on in the USA as I explained in detail over the years.

I'm not saying "prices are cheap" here. Although, I will still say compared to world capital city comparisons it's dirt cheap compared to other cities around the world. But for local income standards it's not cheap, although them using it as a piggy bank definitely changes things. I'm saying that locals are the ones buying. And plenty of them. Most of the foreigners have slowed down as they have gotten hit hard by the USA real estate CRASH as well as the stock market crash.

I don't think anyone is saying prices are cheap in Buenos Aires right now. There has been some great capital appreciation on prices over the past several years. I think it won't appreciate as fast as the past 5 years. In fact, I don't see any big or sudden price swings either way (up or down). I look at it as slow steady appreciation over the next decade here.

Those like you have kept saying it's risky here. The same argument for many years. Yet, those investors like me that bought properties years ago have done quite well. I have a few properties I bought in 2004 that have totally paid for themselves already in the purchase price via rentals. So this "risk" you are talking about is non-sense. The entire place is paid off. I paid cash and the rentals have more than paid for the entire price I paid.

Like I posted back in 2005. These message boards are around a very long time. We can see who was right or wrong but I can tell you property prices in Recoleta and Palermo will NOT fall 60% like you are somehow claiming it will.

If property prices in Recoleta were to fall 60% I'd get a pool of investors together and buy up all of Recoleta. LOL. :-)

(Message edited by admin on November 08, 2009)
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AMARAGGI
Junior Member
Username: Amar

Post Number: 36
Registered: 12-2006
Posted on Sunday, November 08, 2009 - 11:37 am:   Edit PostPrint Post

I completely agree with Mike. i have been searching an appartment for myself in Plaermo that I could rent when back in Europe, well the 1000 or 1500 dol/mē can not be found. I ended up buying a piece of land and having a small house built as I wanted with a pool on the roof. I found that this provided th best investment and quality ratios. Three years ago I visited Palermo Ino, the tower Mike mentionned and it was already above 2000dol/mē. The problem with these new constructions is that they are poorly built. I think they will generate a lot of costs after 5 years, but maybe this is what you consider as long term investment
I on't think that tourist will stop to come to Argentina, I think it will be just opposite at least seen from Europe.
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