Blindness and stupidity when investing in Brazil

[Sao P]

Boa noite Sr. Bush ,

I have read many of your replys in previous threads, and i have the feeling that you are a man of insite and good sense regarding what is happening "on the ground" in the North East of Brasil. There are a few other bloggers ( not very many) who I find seem to know what they are talking about too i.e. good business pracrice. You all have this same thing in common.....you base it on your experiences LIVING here in Brasil. And when I say LIVING, I mean you spend many more weeks / months here when taking the annual leave from the boring job back home. As you are well aware, before making any type of investment or substancial asset purchase here in Brasil, or in any other country, you need to at least learn about the people, the language, their habits, and they way they conduct business. Many gringos ( not all) who have invested in this area of Brasil are just winging-it and praying for the best. They dont want to admit it, but its true.

Unfortunately after many threads I have read, the magority foreigners who believe they will be making the investment that thes tiny pieces of land are gong to NET them fortunes, are living in fantasy land too. I loved the person who said in a previous thread " do you think Braislian people will want to live in a grand community with EU and American ex Pats ?" NOT ! If this were to happen, all restaurants an bars will be charging in Euros / Dollars ! No disrespect to the Gringos, being one aswell, but they have not thought about this angle. Another thing is about these guaranteed rents ?? !! My god, this is soooo laughable. What a sales pitch. Did these investment property sales people tell gringos that brasilians will be begging to rent thier properties from them throughout the year ? Obviously they did from what I have been reading. They got suckered easily ! As all know who live in Brasil, we are a very big country, with soooo many places to go on holiday. We do not swarm to Fortaleza and Natel on our anual leave, which is once, or max twice a year at most. There are so many more options we consider i.e. Rio, Santa Catarina, Bahia, Mata Grossa do Sul, Serguipe etc...
And Europeans holidayers... you think they are all going to be banging on your door too paying premium rents ? People, come over here, and learn. You will save youselves alot of money.


I think investors will make a little money from what they invest in these areas, but not the gold mine that they have been EASILY BRAINWASHED to believe. If you really are an investor for thr long term and want to make some real money, invest in the stock market, a good investment fund, or just put it in a Brasilian Bank and collect the interest ! In ten years you will have guarnteed to have doubled your money.


Look forward to all constructive comments.

Sao P

 

[JMBroad]

Hi Sao P and welcome to the forums.

You dove right into possibly the most contentious thread on the Brazilian forums today with no regard! Congratulations to you for a brave spirit.

I personally think investing in the right project in the right location in Brazil will be a gold mine. I also wouldn't go near the stock markets in this volatile global economy. Except possibly the Bovespa, but even that, I don't have the experience in that market to make as much as I can in real estate.

An investment fund may well end up investing your money into real estatefor you, be it commercial, alternative or residential.

 

[debzor]

Surely the most important point that Sao P makes is the one some of us here have been harping on about all the time - DO NOT BUY WITHOUT VISITING FIRST...

 

[Sao P]

Hello JM Broad,

Yes I do agree with you your views. I should have clarified better. I do believe you can do well here with property, but only when excercising the basic fundamentals of property investment i.e. taking the time to do your local reseach, and being patient to find the right deal.

I am certainly not claiming to be an expert, but have learnt from a few personal mistakes and will never make them again. Check everything three times, make sure you know what cards the other player is holding, and if it sounds too good to be true, it always is !

 

[JMBroad]

Hello JM Broad,

Yes I do agree with you your views. I should have clarified better. I do believe you can do well here with property, but only when excercising the basic fundamentals of property investment i.e. taking the time to do your local reseach, and being patient to find the right deal.

I am certainly not claiming to be an expert, but have learnt from a few personal mistakes and will never make them again. Check everything three times, make sure you know what cards the other player is holding, and if it sounds too good to be true, it always is !

Agree with the above plus, if possible, try and be the bank - bank always wins

 

[Golfingworld]

Sao P I think you are absolutely right and now that some of these crazy claims by Property Agents are starting to get exposed as nonsense reality is coming into the market and this is good for all naive foreigners who for some stupid reason think that they can just sit in front of their pc pay a few deposits and property fortunes will roll in!
Well in this day and age the real fortunes will be made when foolish investors bail out of the market in places like Spain and sell for half the price they paid to get out as soon as they can! It cannot be possible here on these resorts as the greedy developers and agents already conned their customers into stupidly high prices which will remove any possible profit for the stupid investors!

 

[Sao P]

GW, over the past month, I have read and leanrt a lot from your posts. Very interesting stuff and views. I felt the need to speak my bit too. Maybe I should mention, I do not live in Natal / Foraleza areas, I am living in Sao Paulo.

It concerned me that some of these people pump up this false market so much. Maybe some of these overlly excited "internet property speculators" are still riding on a wave from some success they have had in thier home markets. Now they have a bit of cash, they just throw it at a cool place like Brasil to see what happens and wish for the best. I dont know .

 

[JMBroad]

GW, over the past month, I have read and leanrt a lot from your posts. Very interesting stuff and views. I felt the need to speak my bit too. Maybe I should mention, I do not live in Natal / Foraleza areas, I am living in Sao Paulo.

It concerned me that some of these people pump up this false market so much. Maybe some of these overlly excited "internet property speculators" are still riding on a wave from some success they have had in thier home markets. Now they have a bit of cash, they just throw it at a cool place like Brasil to see what happens and wish for the best. I dont know .

Sao P,

How long have you been living in Sao Paulo? Long enough to have seen what happened outside Sao Paulo on the coast? Living in a city with an offplan property explosion like what happened in Sao Paulo how can you agree with the negativity GW exudes?

 

[Sao P]

Sao P,

How long have you been living in Sao Paulo? Long enough to have seen what happened outside Sao Paulo on the coast? Living in a city with an offplan property explosion like what happened in Sao Paulo how can you agree with the negativity GW exudes?

HI JM Broad

Its fair of you to question why feel the way i do when regarding this so called Property Boom in the Natal / Fortaleza. I have been living in SP for 4 years now, and previously in Salvador for 1 year. I am not saying I am qualified specialist of this area, but all I have heard and researched locally just gives me a gut feeling , that I should not buy there "as an investment". To buy just to buy to "live", is a totally different issue. Sure people can find a great place and be happy. But if I did by for myself, it would be far away from any Gringos communities. Sounds like its going to be an extension of Europe !
Thats why I came to Brasil, to escape ! I wouldnt go into the developments with the preception that I am going to walk out in 10 years with a 300 % profit. I can do that in other more reliable investment vehicles.

My main concern is that I see in these threads its that some foreigners are going in throwing their hard earned savings around at Projects that they have not researched very well. I know what its like not to do enough research, and I did pay a price for it in the past. I would like to help others avoid doing the same thing. Only to say to them "Think, and use your head." "This is not your home country, this is Brasil. Buyer beware."

 

[surfingbrazil]

Hi Sao P and welcome to the forums.


I personally think investing in the right project in the right location in Brazil will be a gold mine. I also wouldn't go near the stock markets in this volatile global economy. Except possibly the Bovespa, b

A “Gold Mine” for corrupted politicians and some land owners managing to convert useless sand dunes into “luxury resorts with rental incomes”., for sure

The good investment is to buy urban property where intelligent Brazilians with means buy it:

Meireles / Iracema in Fortaleza

Capim Macio & Ponta Negra in Natal

Vieira Souto Av. in Rio ( if you can afford it )


Those are places, given only as an example.
There are many others Ok in another cities near the beautiful Brazilian beaches….

Common to all of them is that they are not a “GOLD MINE”, only a good long term investment for the Brazil lover.This is the reality, the rest is “agent talk”.

Since you mention risk and stock markets….

Well, there are more risks in buying real estate in Brazil through the internet and proxies than going buying stocks.
After all, Google Earth does not shows the rats and the “jacares”.

At least, companies willing to go public are seriously scrutinized before their IPOs.

 

[KeithBtt]

rubbish.

I find it fascinating, that in a world of such geographic diversification there is a tendancy to follow one another like sheep, into hot spot markets.

Not that I disagree, the entire concept makes sense. A clever person finds a new market, and like they say in my business (marketing, however I have studied real estate investment, and losely some economics),better to be first than best.

Now this "clever person" purchases, whilst the price is low. Hence people purchase in an emerigng market. This person buys in an area where he knows others will follow. The beach is a safe bet, also cities, as expansion is evident unless we have negative population growth, highly unlikely.

Now, we then understand the cycle, you buy a house, house needs a shop, shop needs worker, worker needs a house etc etc etc... they need roads, a supermarket, amenities, etc etc. We then see development.

We then see over development and a change of movement. People move away from the city, where they have seen their success... and move to the country, where they feel successful, this opens up the rural market.

I find it ridiculous that anybody can say north east brazil will not see growth. Sao Paulo has seen remarkable growth. Massive population explosion.

NE is attracting more people than ever before, I can guarantee that the prices will be driven up. It is the only logical direction.

Stock market safer than property, my friend, open your eyes. Bricks and mortar.

IPOs, scrutinised, for what, how to make a profit from the blind market, before it truly has a value. There are more IPOs than I can count properties in london, only a few are very good, and these are found by the best investors. Property allows people to play safely, maximise a profit with a low risk factor, whilst offering itself as a tangible opportunity. That will always have a demand.

The stock markets are in the main part volatile, and in a time like this, it assures it.

I do however enjoy gambling on the market, and often have a lot of profit, or a big loss.

It is not about the rats. It is about improvement, economic reforms, political, etc etc, this can happen short and long term and constant improvements will happen.

Most countries are profiting off the largest growing market sector. Tourism. NE Brazil is a region that can benefit.

Property over stock any day, and NE brazil is the next big thing.

 

[Sao P]

rubbish.

I find it fascinating, that in a world of such geographic diversification there is a tendancy to follow one another like sheep, into hot spot markets.

Not that I disagree, the entire concept makes sense. A clever person finds a new market, and like they say in my business (marketing, however I have studied real estate investment, and losely some economics),better to be first than best.

Now this "clever person" purchases, whilst the price is low. Hence people purchase in an emerigng market. This person buys in an area where he knows others will follow. The beach is a safe bet, also cities, as expansion is evident unless we have negative population growth, highly unlikely.

Now, we then understand the cycle, you buy a house, house needs a shop, shop needs worker, worker needs a house etc etc etc... they need roads, a supermarket, amenities, etc etc. We then see development.

We then see over development and a change of movement. People move away from the city, where they have seen their success... and move to the country, where they feel successful, this opens up the rural market.

I find it ridiculous that anybody can say north east brazil will not see growth. Sao Paulo has seen remarkable growth. Massive population explosion.

NE is attracting more people than ever before, I can guarantee that the prices will be driven up. It is the only logical direction.

Stock market safer than property, my friend, open your eyes. Bricks and mortar.

IPOs, scrutinised, for what, how to make a profit from the blind market, before it truly has a value. There are more IPOs than I can count properties in london, only a few are very good, and these are found by the best investors. Property allows people to play safely, maximise a profit with a low risk factor, whilst offering itself as a tangible opportunity. That will always have a demand.

The stock markets are in the main part volatile, and in a time like this, it assures it.

I do however enjoy gambling on the market, and often have a lot of profit, or a big loss.

It is not about the rats. It is about improvement, economic reforms, political, etc etc, this can happen short and long term and constant improvements will happen.

Most countries are profiting off the largest growing market sector. Tourism. NE Brazil is a region that can benefit.

Property over stock any day, and NE brazil is the next big thing.

Mr. B_tt,

Like many posts I see from other "Pro European Enclaves of Natal and Fortaleza" , they are right to defend thier investment decisions in similar form to yourself. Maybe I would act in the same way if I made the same choices as you all did. Obviously, if you didnt talk - the - poitive - talk, it would only assist in driving down prices to more realistic market levels.

I want to ask you a serious question, and I would like a honest reply. PERCENT WISE, and after all admin costs / taxes to the government here in Brasil, how much do you think the normal guy will be able to profit from his original property investment of lets say USD 100, 000 after a period of 10 years ? How much cash are they going to be able fill in thier suitcases after cash-out ?

You make it sound so easy. If so, tell us where to chuck our money, so we can all be rich ! I cetainly want to know..

 

[KeithBtt]

sap, clever with the b_tt... genious. Must be the same gene that shows you your figures and prevents you from doing what "we all do"

so which side of the family is that from//?

Anyway, on to your serious question, money.

Based around steady growth and standard growth, plus the fact that Brazil is continuing to grow, your 100 000 usd will be very easily at the worst 200, 000 USD. If it is not then what the hell have you done with it?

Now the clever investors will make a lot more than that. But you want a normal person.

You would pay out profit as dividends for example, and pay the charges in a proper way. You could reclaim your 8% retentions etc and if you are very clever you could do a lot more. But I wont go into this here.

If that was my 100k it would be worth a lot more.

I invested into property that I have sold out before I have paid more than 30% and made 60% on the total value. Or 200% return. In a year or 2.

It depends what where and how you buy, its not as easy as buy and take your money.

Poor people work for money, rich people have money work for them. I say make your money work.

I guess you are the one at the party who sits there in the cardigan explaining how risky life is, and you definately have the everything package on the old life insurance, well, its true, you could be killed by a cow. When your friend tells you they have bought in Brazil you pull the strained face of agony and sigh, whilst you leave them feeling as if the world is ending, not for any other reason, than to be different.

I refer to goldman sachs for example, and a thesis by Jim Oneill, BRIC, of which I am sure you are familiar. By understanding the growth speed of an emerging market it is easy to see how to capitalise on a market. Especially if that market is emerging. Now Goldman sachs have also stated, that Brazil should no longer be classified as emerging, as it is as pivotal to world economic matters as the UK and the USA, and can not believe they are not present in the G7.

With all of my homework, research, experience, I can assure you, that it is a good place to buy. Just buy smart, and sell smart. I also agree in an approach you may be adopting, as Warren Buffet says, "Be scared when people are greedy, and be Greedy when people are scared".

My overall expectation for Brazil is steady economic growth, 369% e growth since the thesis about 5 years ago, and the stock market up over 200%, which is one of the primary factors on determining the direction of the economy.

I also like the exploded media attention, increased flights, booming population, reforms, education, FDI at an emerging market record high, and improvement of infrastructure.

Then we look at retirement patterns, and the wealthiest retirees are coming to retirement over the next 10 years, with all that disposable income. This group are the baby boomers, who control 70% of the USA wealth, born in the 1940s and the first group retired last June. Increased vacations, new holiday hot spots, cruise points, and retirement homes, as well as people with more time to work their money, and have fun with it.

I could talk all day, and yes there are negatives, but open your eyes, it is good, and the market projections are very stable. THAT is why so many people are buying, it is not going up because people are buying, people are buying as it is going up.

When a market is new it needs to find its value. That is determined by the focus market, as the locals can not afford, we are the market. Like it or lump it. Welcome to the fastest growing property trend.

 

[Sao P]

Hi ... sorry about the B_tt stuff. Appologies. Sincerely.

I really dont want to get too deep about Brasil emerging market, but I agree with you its true. I invest in Brasilian property, but only for enjoyment and in places that I actually use. If I ever chose to sell, any profit would be just to by the beer for the next 10 years.

I would also like to ask our great honest members of this forum "who actually live in Brasil" to advise us where they think the wealth and economic growth is concentrated in great this land of ours. I know where it is. Lets get honest and tell are readers. About the airports and stuff... well, many other threads have exhausted this. Again, lets all just pray and see what happens over the next 10 years, like many speculators in this forum are already doing. It's all a real gamble ... right ?? I put my chip on "Natal Bogus Plot # 16".

If I read your prevous message as person looking for adivice on where to invest in Brasil, I think I would say that this area will grow to be like Marbella or Pureto Banus in Spain.
I would say... thats really _ucking optomistic !

Man, this speculation profit game in the hot spots of the NE is about knowing how much the gringo has in his pocket. If you know how much he has, you win everytime.Thats really easy for the Brasilian property guys to figure out, and why we are at todays false prices. But this will eventually correct itself over time. We ( Gringos) are so guilable and believe everything we here. I say this, because I was one of them. Never more.

 

[KeithBtt]

No worries, I do not take it personally. Byt he way its bluntt, not butt

Well, investment is a word that people use incorrectly. An investment is when you put money into an idea with the knowledge that it will go up in value.

Speculation is when you put money in with the aspiration of growth.

I believe brazil makes a great investment.

I have been fortunate enough to have properties in spain, like you stated, I have also owned in morocco, france, uk, india, dubai etc etc...

The one thing these all have in common is hype, and it is needed to make a profit. I am not talking about buying in 5 years or more, I am talking about buying today, and selling to tomorrows speculator. The prices are a reasonable level, and that is because people are willing to pay the price, therefore that is its value.

I also like beer, so therefore I would agree with your statement.

I am buying a project in a very unusual place right now, and am involved in wide spectrums of real estate acquisition.

I have found a good market, I buy into co government construction, where you help to finance the government plans, things like police stations etc. The government then provide you with cast iron lettings, obviously. These are easy to finance, sell on, and the only rental direction is upwards, so the value continues to go up- I have hundreds of very nice investments, and I manage them for clients also. Clients are all HNWI.

I am genuinely not interested in the beaches, distance, roads or population, I am interested in how to make the market profitable.

Brazil is right now in a position where we can "exploit" the market. This is a good thing for future development plans. We assist in financing the countries growth. In exchange we are granted on many aspects.

Friends of mine are buying massive ammounts of land ready to use for agricultural reasons, and things like fuels.

The market is so open right now, that I could stumble there blind and not be able to help myself making a fair few grand from its virgin shores.

Sao P, you will be buying more than beer if you buy in the right place, you can join my on thhe vodka.

And did you know, 12 woman per 1 man there, you dont need beer!!!

I would hate to sound ignorant to the needs of brazil, but investor to investor, this market wants you to make money, and you can. You dont need a degree, you jsut need a few quid and an idea thats different.

How much do you think that 100k is gonna be worth?

 

[RalphJ]

12:1 ratio women to men??

The one thing these all have in common is hype, and it is needed to make a profit.

You said a mouthful there brother.

 

[KeithBtt]

12 to 1, apparently so, I am still to experience that aspect of it all.

It is not the hype that leads to the grwoth. It makes people aware of the growth, and that leads to more FDI and CG.

Investment isnt rocket science, its profiting from putting your money into something that you know you can sell for more. Ralph, I have looked at your websites, you have some interesting projects.

Why have you chosen those areas and what have they been chosen for?

 

[RalphJ]

12 to 1, apparently so, I am still to experience that aspect of it all.

It is not the hype that leads to the grwoth. It makes people aware of the growth, and that leads to more FDI and CG.

Investment isnt rocket science, its profiting from putting your money into something that you know you can sell for more. Ralph, I have looked at your websites, you have some interesting projects.

Why have you chosen those areas and what have they been chosen for?

Firstly, I can tell you that the ratio of women to men in Brazil is nowhere close to 12:1. Matter of fact, here are the ratios...

Sex ratio Brazil

At birth: 1.05 male(s)/female
Under 15 years: 1.04 male(s)/female
15-64 years: 0.983 male(s)/female
65 years and over: 0.697 male(s)/female
Total population: 0.976 male(s)/female (2007 est.)


Now if you're looking for a female of 65 years of age or older then you're going to have an advantage!! But not even 2:1. The rest is basically 1:1. Yet another common misconception that many foreigners have concerning brazil.

I've chosen Aracaju because it basically chose me, another story alltogether. But coincidentally, Sergipe has had the highest GDP growth rate over the last 5 years of any other northeastern state, and better yet the prices have yet to explode (although they're starting to now) unlike most other northeastern capitols. It's also a short 300 km's from Salvador, Bahia, which has already received significant domestic and foreign investment over the last 5-10 years and of all the the northeast capitols is best positioned to continue to do so, imo.

Aracaju, like some other places in the northeast are good investments imo. But, a couple of the keys in all of this, like anywhere, is that one is buying for actual market prices and not "gringo" prices. And is also willing to hold onto the investment for at least a few years.

 

[michaelbush]

12 to 1, apparently so, I am still to experience that aspect of it all.

This was found on the internet
Sex ratio:
at birth: 1.05 male(s)/female
under 15 years: 1.04 male(s)/female
15-64 years: 0.97 male(s)/female
65 years and over: 0.68 male(s)/female (1998 est.) [/I]
male: 83.3%
female: 83.2% (1995 est.)
BASIC STATISTICS and FACTS about BRAZIL
I too have yet to experience the high female to male ratio! there are variations and in some areas there are more females than males, and more recent statistics may reflect this. But 12 to 1!! No way!

 

[Sao P]

Firstly, I can tell you that the ratio of women to men in Brazil is nowhere close to 12:1. Matter of fact, here are the ratios...

Sex ratio Brazil

At birth: 1.05 male(s)/female
Under 15 years: 1.04 male(s)/female
15-64 years: 0.983 male(s)/female
65 years and over: 0.697 male(s)/female
Total population: 0.976 male(s)/female (2007 est.)


Now if you're looking for a female of 65 years of age or older then you're going to have an advantage!! But not even 2:1. The rest is basically 1:1. Yet another common misconception that many foreigners have concerning brazil.

I've chosen Aracaju because it basically chose me, another story alltogether. But coincidentally, Sergipe has had the highest GDP growth rate over the last 5 years of any other northeastern state, and better yet the prices have yet to explode (although they're starting to now) unlike most other northeastern capitols. It's also a short 300 km's from Salvador, Bahia, which has already received significant domestic and foreign investment over the last 5-10 years and of all the the northeast capitols is best positioned to continue to do so, imo.

Aracaju, like some other places in the northeast are good investments imo. But, a couple of the keys in all of this, like anywhere, is that one is buying for actual market prices and not "gringo" prices. And is also willing to hold onto the investment for at least a few years.

Hey Ralph J,

Sounds like you know whats happening in Sergipe and Salvador areas. Before I moved to Sao Paulo 4 years ago, I lived in Salvador for about a year. I feel much more confortable buying there and most likely will in the next year or so. Again, with the intension of doubling my money, but just a nice as a place to live.

I would like to know your opion on the following. I have been looking at the "SalvadorHomes dot com dot br website weekly for the past 18 months, with particular focus on Laura de Freitas. Especially within Rs. 200 - 350, 000 range, newly built, and in closed condominiums, I have noticed many of the homes( 50 - 100) I saw in the site 18 months ago, have still not been sold.

I have read that there is alot of development there too, but even so, and can only conclude there just arent enough buyers if these new houses have not been sold after 18 months.

To be honest, I think its would be very easy to negotiate a great discount from there current listed prices as there are few buyers. What do you think.... is this the same in Sergipe ?