Work Abroad but earn in USD

Thursday, April 14, 2005

Property Investments in Buenos Aires

A reader wrote in with the following comment, which I will post and then address. With all the posts recently about the negatives of investing in Argentina, I think there may be a little spell of pessimism going around.

Reader's Comment

I'm really enjoying your writings on your blog. I'm learning so much. Just today a local merchant/friend warned me not to invest in any property in Argentina because a friend of hers had her farm consficated by the government.

Safely Investing in Property

Although I don't know the details of the reader's friend's farm, I can only wonder whether all the taxes were paid-up and whether the land was being put to productive use. Foreign farm ownership is a very touchy issue in all of Latin America. Wars and revolutions have been fought over farm ownership in Latin America. United Fruit Company, anyone?

Despite all the negative things being said about real estate in Argentina, allow me to put forward a few positives. If you deal with reputable professionals, you will greatly reduce your risk. Make sure you use a good notary who will validate the title of the property. You want to make sure you will be getting proper legal ownership. If you are renting apartments, it may be smart to go with a management agency. These companies will investigate the tenants and require them to obtain a guarantee of payment. I went through one of these agencies when renting our office and believe me -- they really do check you out.

When signing contracts with local companies, make sure that as a foreign person or foreign company that you will have legal standing to enforce contracts within Argentina. I was surprised to learn that foreign individuals without a DNI essentially have no rights within Argentina. That's one of the main reasons I got my DNI -- to ensure that I would have the same rights and legal protections as citizens.

Get a second opinion. Ask around and see what people think about an investment idea you have. Have a knowledgeable third party look over the investment numbers and see if it makes sense. Before entering into any investment, it may not hurt to pay a lawyer $100 to look over everything and get his or her advice.

Doing business in a foreign country can be risky, but also very rewarding. Don't just write-off the country as "too risky". If you do your homework (or pay others to do it for you), you can limit your risk on any investment. Jumping into any investment without proper research is a good way to lose your shirt, no matter where in the world you happen to be. So, let's all not be so negative on Argentina. There is risk, but not so much more than anywhere else.

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Anonymous Anonymous said...

declaring that a farm was confiscated without saying why is sinmply pure rubbish and rumor mongering

5/03/2005 01:46:00 AM  
Blogger ABA said...

There are tremendous opportunities with real estate investments in Argentina. However, take the time to use professionals that have a good reputation, understand the laws and won't cheat/lie/steal from you.

I am also an expat that quit my executive career in the USA to move to Argentina and start a corporation here. I have found the vast majority of the people down here don't have a clue. I researched the laws here and interviewed (Paid for surveys) foreigners that purchased property here in Argentina. Almost every single one made mistakes or were lied to.

There are tremendous opportunities here but understand the laws. Even well known realtors that have been around forever try to cheat you. I do real estate consulting and I run into Americans every single month that were cheated or lied to.

Know that you must have a CDI (equivalent to our Social Security # in the USA) or tax ID number to purchase property. You can get it yourself. You basically go to a police station with your passport and apply for a CDI. You must use an address of where you are staying. An apartment or hotel will suffice. They will send an officer out the following day to verify that you are there. He/she will give you a paper that you must take to the AFIP (equivalent to the IRS) tax office.

You need to have 2 copies of your passport with you along with this paper. You get a number and wait in line. (I waited in line 2 hours). They will give you a # on the spot. They give you a paper that they stamp with their official seal. This is your CDI number. Voila. You have a tax ID number.

The most common way to get cheated here in Argentina by your realtor or lawyer is for them to charge you the 2.5% stamp tax. There is something called a "stamp tax" that is 2.5% of the purchase price. That stamp tax however, is waived for your first property purchase. Many lawyers charge this and they pocket this money. I have caught several lawyers that have cheated Americans. I have personally met many Americans that were charged this tax.

Please if you buy property in Argentina, do some research. It's not like buying property in the USA. I'll try to post more helpful advice as the internet is lacking with information on buying here properly. I own several apartments here and I didn't get cheated on any of them because I took the time to learn the laws and researched good people including realtors, lawyers, money transfer firms, accountants, etc.

Good luck.


5/12/2005 09:55:00 PM  
Blogger ABA said...

PS. I just started a Blog to help people that are interested in purchasing real estate here. I hope it answers and helps many of you. No one helped me when I was buying so I hope it helps.

5/13/2005 08:22:00 PM  
Anonymous Anonymous said...

I just purchased an apartment in Buenos Aires and what apartmentsba said about watching out that you don't get swindled is completely true. I didn't have to pay the stamp tax because I was lucky enough to have a good real estate agent and enough knowledge of the situation. However, one thing he didn't mention was the question of sales tax or IVA. I'm talking about the sales tax anyone pays on a good or service in the country. The truth is, it is EXTREMELY discretionary in Argentines' eyes, meaning sometimes they charge you it, sometimes not. However, no matter what, you can be sure they are not paying it back to the government, but are more likely pocketing it. Therefore, it is good to know that it can almost always be negotiated. My notary wanted to charge it to me for her services at closing, however, I complained that she wasn't going to pay it herself and we came to an agreement that I wouldn't pay it but that she then wouldn't furnish me with a "formal" receipt for her services. I encountered this in many other instances too, such as making large furniture purchases. If you are willing to pay cash or go with out a receipt, you will most likely get a lower price. I'm convinced nobody pays taxes in this country! Many of my friends have told me they even throw away their property tax bills when they come! In any case, as has previously been posted, be extremely careful in any business transaction you conduct in Argentina. Many people will try to take advantage of you at every turn.

6/16/2005 05:12:00 PM  

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