Being a landlord in Brazil and investing in Real Estate

On the federal and state level in Brazil do the laws heavily favor landlords or tenants? For example, in New Jersey and California it can be hell being a landlord when you get tenants that decide they aren't going to pay rent. They could end up living in your house rent free for over a year while you flip all the bills. In a state like Florida it's easy to kick out deadbeat tenants.


I would specifically be looking to buy a lot of real estate in Santa Catarina if the laws heavily favored the landlords rights.

I have never successfully kicked out a long term tenant in brazil.  I (think) understand the process a bit.  I had a situation in Curitiba where I bough an apartment. Former owners wanted to stay 30 days longer in order to arrange their move.  They never moved out.  I hired an attorney for BRL$5k to process the case.  We won after about 6 weeks then the court gave them 15 days to move, after which they'd send the police to remove them.  On the last day of those 15 days they filed a counter suit which extended the process.


I have a friend who is retired living off real estate rents.  During this process I asked him 'how difficult is it to kick out a tenant'.  he told me it was easy but didn't go into detail (his investments are in SC).


I have in-laws who have many properties in PR and SC and they have done pretty decent and which relatively few tenant issues.  They rent a mix of short and long term.


That's all I know. 


For me personally, I would tend to steer away from long term rentals for two reasons:

  1. Yield seems to be low in Brazil, compared to US mid west, for example.
  2. Related, it's difficult, if not impossible, to increase yield via leverage because debt is so expensive.
  3. I don't want to go through the process of kicking people out.


Having said that, I have a short term/vacation rental.  It rents during summer season, quite well.  yields are still low but I get to enjoy the property when no one is their.


This is not advice, but in my observation, appreciation of the property value is the way to make money on real estate here.  I know many folks who have bought apartments 'on the plan' and profited as construction progresses.  Flipping distressed properties seems like a viable strategy as well.  Of course in a down market that could work out poorly.

@BRBC Thanks for the fast input.

@john8670 Hey John. By chance today I signed as a witness a rental contract here in Sao Paulo and can tell you that: it's very important that the contract is well designed by a very good lawyer. The updated 'Lei do Inquilinato' (Law # 8.245 of Oct 18th 1991 related to properties renting) provides a juridic balance, most important is how the contract is designed. The law is valid nationwide. What changes from one state to another state relates to regional and cultural subjects. If you need some technical assistance, although I am based in Sao Paulo capital, let me know: [link moderated]

Moderated by Bhavna last year
Reason : External link to own website
We invite you to read the forum code of conduct

I have been a landlord in the USA for thirty-five years, in two states, Oregon, and California. I have been a landlord in Brazil for fifteen years, (just one apartment at first, then two). In the USA, we use a very basic rule for ROI, Return on Investment. For me, the monthly rents collected must be at least 0.6% of the estimated sale value of the home/apartment, and I like 0.7% much better, (I get 0.8 to 0.9% from one trip-plex). If you cannot get 0.5% or more, sell, sell now. So, as an example, a $200,000 home needs to rent for $1,000 a month or you need to know why not. Yes, of course, this varies by area, taxes, HOAs, costs, etc. but this is a starting point for rental investment for a lot of landlords. Income tax issues are of huge concern in the USA. We do not get the deductions we used to and capital gains can just kill you. Some states are better, such as Washington where you do not pay a state income tax, but property tax rates are very high.


Rent control in the USA varies hugely by state and county. Know all of the rules very well before becoming a new landlord. The newer eviction laws in California, especially for non-payment of rent, are now seriously favoring tenants, and I got out. It is not uncommon in California to spend four to six months forcing a tenant out through the court system for non-payment and then have to PAY the tenant's 3-months rent to leave. No thank you. In Oregon, IF you are fast, know the rules, and are proactive in enforcing them, you can still get out a non-paying tenant in a month. In any case, all costs will be on you. You can seek to get court costs paid by the non-paying tenant, and some judges will award them to you, I doubt you will ever collect them.


Laws and courts in the US generally favor the tenants, period. I have never lost in court. I will also say I have never collected ANYTHING after going to court. Like just about every US landlord I have horror stories I could share of destroyed homes, razor knives taken to all flooring, every appliance destroyed, appliance doors forced so far as to bend them, destroying the range or fridge, rags stuff in garbage disposer and runs until burned up, every door kicked in, every wall in every room, kicked in, hammers taken to porcelain bathtubs and tile work...  Yes, I have had these things happen and worse. You have to beg the police to even file a report. Insurance claims won't be paid unless you can prove the damages were just done and not ongoing. Yes, you can deduct the costs, but you can never make it up in ROI. If you do the work yourself, the IRS goes nuts if you attempt to deduct your own labor at anything higher than $20 per hour, which today are fast-food wages, not contractor wages.


I only know a few rental property owners in Brazil, but the same ROI rule seems to apply, it does for the two I own. Although to Americans, the rents in Brazil seem very low, you still need to do the math and trust numbers. Everyone's situation with taxes in Brazil is hugely different, so take that into account. The two apartments I have returned 0.49 and 0.53%. I use a property manager in Brazil, so I have to pay them, which lowers that percentage. I still live half-time in the USA. One good aspect for me to own a rental in Brazil is that I can deduct the cost of one round-trip per year, along with partial living expenses, etc., between the USA and Brazil on my US income taxes. In the years I have owned the rentals in Brazil, there is not been any tenant damage, and the units are returned clean and ready to re-rent. something to take into account when calculating RIO. However, taxes in Brazil are not the same, and tax preparation is very different. We also have monthly taxes to pay called DARF, this also lowers your ROI.


In short, your ROI in Brazil is very low, but with little property headache. You have to ask yourself why you want to own rentals in Brazil, and you need to have a good answer, mine is diversification.

@rraypo Thanks Rraypo.

On the federal and state level in Brazil do the laws heavily favor landlords or tenants? For example, in New Jersey and California it can be hell being a landlord when you get tenants that decide they aren't going to pay rent. They could end up living in your house rent free for over a year while you flip all the bills. In a state like Florida it's easy to kick out deadbeat tenants.
I would specifically be looking to buy a lot of real estate in Santa Catarina if the laws heavily favored the landlords rights.
-@john8670

Santa Catarina is not my territory, so i am not vested there.


Overall the laws have changed a bit since Bolsonaro's and that tilted favorably landlords.  As a cold hard bastard he was, at least he got this one right. 


The old eviction system was curbesome, and costly.  The new one, is quick and expedictious, and allow you to get rid of dead beat tenants.  One call, they are out in max 15-30 days.  Repeat offenders, 48 hours.  That's for non payment of rent, so you need to make sure to bring proof of delinquency.


And the Co-Signer does no longer need to be tied indefinetively.   


There are not many, if any at all, State Laws.  Brazil is a Federalist Country.  States don't enjoy the luxury to create laws as in the US. 


You might as well consider Cities or States where there's strong demand for rentals due to economic activity and job creation.    In Santa Catarina might mean Joinville, Crisciuma, maybe Florianopolis, and certainly Blumenau ( Brazi's Software Factory cluster ) .

On the federal and state level in Brazil do the laws heavily favor landlords or tenants? For example, in New Jersey and California it can be hell being a landlord when you get tenants that decide they aren't going to pay rent. They could end up living in your house rent free for over a year while you flip all the bills. In a state like Florida it's easy to kick out deadbeat tenants.
I would specifically be looking to buy a lot of real estate in Santa Catarina if the laws heavily favored the landlords rights.
-@john8670
Santa Catarina is not my territory, so i am not vested there.

Overall the laws have changed a bit since Bolsonaro's and that tilted favorably landlords. As a cold hard bastard he was, at least he got this one right.

The old eviction system was curbesome, and costly. The new one, is quick and expedictious, and allow you to get rid of dead beat tenants. One call, they are out in max 15-30 days. Repeat offenders, 48 hours. That's for non payment of rent, so you need to make sure to bring proof of delinquency.

And the Co-Signer does no longer need to be tied indefinetively. 

There are not many, if any at all, State Laws. Brazil is a Federalist Country. States don't enjoy the luxury to create laws as in the US.

You might as well consider Cities or States where there's strong demand for rentals due to economic activity and job creation.  In Santa Catarina might mean Joinville, Crisciuma, maybe Florianopolis, and certainly Blumenau ( Brazi's Software Factory cluster ) .
-@sprealestatebroker



Overall the laws have changed a bit since Bolsonaro's and that tilted favorably TOWARDS  landlords.  As a cold hard bastard he was, at least he got this one right.




The old eviction system was cumbersome, and costly. The new one, is quick and expedictious, and allow you to get rid of dead beat tenants through legal eviction . One call, they are out in max 15-30 days. Repeat offenders, 48 hours. That's for non payment of rent, so you need to make sure to bring proof of delinquency.



And the Co-Signer does no longer need to be tied  indefinitely to the Lessee/Tenant. They can change co-signers after the first lease term expired.

And there's another thing..


If you purchase a house, single family home, whether it is a rowhouse or a townhome. you are due to be around. 


Brazilians, at least in my neck of woods are, on the whole, saving some exceptions, prone to....


1.Not caring after the leased dwelling as well as you might

2.Making unauthorized changes to suit their tastes and lifestyles. some very frivolous ones.


And your Real Estate Agent/Lawyer, often overlook this, as for as long as the rent is in, they won' even bother to check and enforce in lieu of your presence.  They get their 8-10% in , they won't even bother to knock doors every now and then.


This issue is lessed if you own apartments, flats, or hotel rooms. 


Flats and Hotel rooms, in many ways you lose control of the upkeep, yet, tenant's can't move a straw. Management keeps things in check.   


If you are an absentee landlord, it matter little where you reside, when it comes to hotels and flats.  That is as close to passive income as it gets. 


There are issues with these forms of ownership, it's not all rosy and hanky dory. Ongoing costs are higher, often masked by the fact net income is under the pool /shared system, and what was once great might eventually fade out.

@sprealestatebroker Thanks for the heads up!

@sprealestatebroker Thanks

You are welcome.


Also, dismiss all future income projections  from the listing or showing broker.


Unless they can produce you past receipts with gross rent, ongoing and extraordinary expenses, anything they say is to be taken with a grain of salt.


I can go any time with American CRE portals, and every listing with an offer memorandum has your spreadsheet format on Rental Roster, Rental History, Itemized Expenses..... 


Getting this from a Brazilian Landlord is like pulling a tooth, never mind they do not do a good job on keeping tallies. 


Short of fixed fees ( tax, condo rates ) , everything is fair game in Brazil, as far as pricing goes.   


Since there are no MLS comps here, rental rates and closing price on comps are unreliable.  Actually, brokers don't even bother to cull comps.  They wing on everything.


In negotiating the property, this is your homework ( and damn you if you don't )


-Make your own comps

-Figure back and forth on a bona fide offer might net you a 5-10% discount at most.

-Use a brokers as often as possible, if you want to score a real deal, and get them to do due diligency.This will give you an insight on the seller's ulterior motivation ( needs money, change of lifestyle ). 


This also allows the broker to pull paperwork ( which you could do on your own, but the read would be compromised ).


-In looking for fix-it-uppers, you will need to develop new ski sets.  Back home, you would ask to see the basement first ( seepage, structural problems, boiler ). In Brazil, basements are almost non existent.


So, you change your checklist a bit.  Since you mentioned single family homes, this is what you need to look after. ( WRITE IT DOWN!!! ) 


1). If built on a slope ( hill, think about San Francisco iconic rowhouses  ), or if the lot is  negatively sloped towards the backyard, you must see what kind of foundation it has. 


A lot of people here were used to build on clay with nothing else.  Those are time  ticking bombs waiting to happen, specially during heavy rain seasons. Smart builders shore the land, and use a concrete pad to make sure it won''t be subject on mudslides. 


Stay away from those! 


2.) Wall bricks.  Most of brick walls are covered with spread stucco.  You want to know what's inside the stucco ( A.K.A. Argamassa and or Reboque ).   Cinder /Concrete blocks are fine to save money, and provide even leveled walls.  Yet they are awful to create the ideal thermal envelope through cold and hot days.   


It gets worse.... They are prone to cracks and seepage that creates mold. 


You want walls that are built with either solid clay or hollow clay bricks.  They are more expensive as far as materials and labor to lay them up, but they will reward you with a home that is cozy and warm during frigid winters, and cool on steamy summer nights. 


Concrete blocks are heat sinks.  Clay bricks are refractary.   


3.Plumbing  - PVC pipes are fine.  Top of the line is Tigre, and being the company from Santa Catarina, there is no excuse to cheapen it out with copycats.   


4.Roofing. Clay roofing is fine.  If the tiling is wavy and in large pieces, it might be fibrocimento ( OK), or

amianto ( Not OK, that's asbestos ).


5.Water storage.  Most single family Brazilian homes are fitted with a large container ( the more it has,, the better it is ).  That is called a "Caixa D'Agua " . Again, no Amianto!!!.  These containers should be spaced above the roof liner and beneath the roof gable.   


6.Structure. Reinforced concrete is a recent trend, from the 70's.  Short of any water damage, it should hold ok. Older houses lacked beams and columns , but they still can hold well. 


7.Old fashioned structures.  Fair disclosure.  I love old buildings, and I loathe the modern stuff.  Yet, I have to acknowledge that older buildings might bring issues.   If the building is landmarked ( in Portuguese  Tombado ) , you can't touch it without the supervision of a properly trained architect.  And the repair, while more rewarding in accomplishing it., tends to be more expensive, and time consuming. 


8.Doors, Windows, Shutters.  Don't throw away everything that is old!!!!  If the frames are made out of wood ( they used to be made of a redwood called peroba ), and they are not rotten to the core, they are worth salvaging.  Steel and Aluminum, if worn and sagging, they are scrap,  Get new ones. And the Brazilian made ones out of aluminum are often lame ducks.  They are leaky, double panned  and double glazed with inert gas practically nowhere to be found.


9.Issues with lead.  Non-existent in Brazil. You won't have to deal with this here.


10.Single standing x rowhouses .  If this is a renter, i\ would go with the rowhouses. Single standing structures are favored by Americans, but easy to be burglarized. 



That's all I can think for now.


Good luck

"7.Old fashioned structures.  Fair disclosure.  I love old buildings, and I loathe the modern stuff.  Yet, I have to acknowledge that older buildings might bring issues.   If the building is landmarked ( in Portuguese  Tombado ) , you can't touch it without the supervision of a properly trained architect.  And the repair, while more rewarding in accomplishing it., tends to be more expensive, and time consuming. "


Your broker also needs to find out if the structure has any landmark edit in it.   That is your job to ask, and his/hers to pull this out./. I can do this in Sao Paulo's Capital with a few keystrokes.  Santa Catarina town's you must call in to sort this information.

And lastly...


Always think like a builder. 


You get showcased a place with all whistles and bells, and it is easy to be swooned by the glitter. 


I dealt with seasoned home buying pros back in the US.  Investment grade buyers.  No Janes and Harriet. s


All of them have one thing in common....



They look after the fundamentals first.



-Floor Layout

-Rooms Volumetry ( floor space and ceiling clearance, the more the merrier on both )

-Sunlight Exposure

-Wind Exposure

-Floods in the neighborhood.  ( avoid lowlands and river basins like a plague )

-Street manholes, and rain fall drainage points.

-Curbside appearance.  No litter. 

-Non convoluted architecture. Seek for clean and elegant lines, and a consistent design plan.  All that noveau riche with over the top designs for one upmanship against the Joneses won't win you new tenants. 

-Large Window Frames if all possible.  Or redo them.

@Claudia.Realtor.BR  Hi I'm Ali

Hello niazali2389,


Could you please tell us how we can assist you?


Your message is off-topic here.


Do you have something to say about the OP's request?


Cheers,


Cheryl

Expat.com team

Squatters are abundant in rural Brazil and so it depends on your tenant where they are from and the mentality they have to paying the rent on time.

Squatters are abundant in rural Brazil and so it depends on your tenant where they are from and the mentality they have to paying the rent on time.
-@jc1234



Rural Brazil is a problem.


So much so, if you plan to retain a deeded property in Brazil, you are going to get your  resident keeper, and provide decent shelter and privileges to him/her.  it's called the "Caseiro" , a National Institution.   And don't forget paying some cash on the side. 


In Brazil there is an organized non profit  called Movimento Sem Terra https://mst.org.br/ which host Rural Land invasions.  That's for farmland. 


A small dwelling estate, or home, you are still going to need a in loco person to handle your affairs. 


And don't forget shady brokered deals made through unscrupulous brokers, where you buy something that latter can be contested in courts.   


Caseiros are present even in Urban Dwellings.  I've seen my fair share of them in places where the the facto owner holds a lot of property.


There is a reason why absentee landlords, if not "staffed" ended up with apartments and hotel/flat units.  It's either that, or you have to get either a decent hands on property management firm ( a rarity ), or staff your own. 

In Porto Alegre a very large city there are squatters along the river and huge mansions built with no land deed or property taxes since the government does not pave roads or patrols there or any public services. Someone wanted to sell their house that's about 4000 sq feet with a pool and boat dock. I thought that was wild in such a large city.

In Porto Alegre a very large city there are squatters along the river and huge mansions built with no land deed or property taxes since the government does not pave roads or patrols there or any public services. Someone wanted to sell their house that's about 4000 sq feet with a pool and boat dock. I thought that was wild in such a large city.
-@jc1234


Porto Alegre is an estuary city.   Along the Rio Grande.  The far out reaches on Rio Grande has a Trade Free Zone , the City of Rio Grande. 


The farther out of the City Core, at the North''s tip enf of the Estuary, the denser it is.  So these sprawling acres must be further south.

@sprealestatebroker


Bom dia!

I'm absorbing your information and see that you recommended buying Apartment/hotel room so tenants don't remodel the property completely.

Is this still your opinion?

I'm searching for properties now, and will focus on rent income.

I use a property manager in Brazil……

-@rraypo


Bom dia,

Was it hard to find a good  property manager in your area?

I was thinking of buying homes instead of apartments.

I use a property manager in Brazil……

-@rraypo

Bom dia,
Was it hard to find a good property manager in your area?
I was thinking of buying homes instead of apartments.
-@antonioggriffin


Without doubt the first, and most important, rule about investing in any type of property that you plan to rent is to identify a good property manager BEFORE buying anything. Good ones are extremely hard to come by, especially in Brazil, and the best are often not Brazilians.


It is no good buyinmg in one town and then finding a good property manager 100 miles away...

On the federal and state level in Brazil do the laws heavily favor landlords or tenants? For example, in New Jersey and California it can be hell being a landlord when you get tenants that decide they aren't going to pay rent. They could end up living in your house rent free for over a year while you flip all the bills. In a state like Florida it's easy to kick out deadbeat tenants.
I would specifically be looking to buy a lot of real estate in Santa Catarina if the laws heavily favored the landlords rights.
-@john8670


I am not sure whether I've already responded to this inquiry, then anways, here's my two cents as a licensed Real Estate Broker in Sao Paulo,Brazil .


On the federal and state level in Brazil do the laws heavily favor landlords or tenants?

To a certain degree, yes they do.  There's a common denominator pertaining to tenancy laws . Brazil is a Federalist Country.  Unlike the US, where States set forth directive for residential tenancy contracts, with the only exception being Federally Mandated " Fair Housing Laws" those designed to curb Discriminatory Practices. 


It is noteworthy to mention there are no "Fair Housing Laws" equivalent in Brazil in the books. Landlords are still liable to provide housing without overtly discrimination in Brazil. 


"They could end up living in your house rent free for over a year while you flip all the bills. In a state like Florida it's easy to kick out deadbeat tenants."



A new Federal edict was promulgated at the end of last year, 2022.  There is approved legislation that has become a game changer.  In broad strokes, a landlord no longer has to provide two eviction notices to ratify an eviction proceeding.


Now landlords can give a single eviction notice, no moratorium, and the delinquent tenant must turn keys in  no longer than within 15 working days.    A second offense on the books shortens the grace period to 7 days. 


Also changed are rules to cosigners.  Under the old rule, a tenant and landlord were stuck with the same designated cosigner from day one until the end of tenancy.   


With the new rule, you can change the co-signer mid lease, at the end of a lease's single term, or 12 consecutive months. 


The article is lengthy, and worth a review, I am sure to have it stored on my files, but for what is is worth, that short answer you seek. 



I practice in Sao Paulo, so therefore, with no impact on your chosen State, Santa Catarina. Your best course of action is to procure a property with a licensed broker, and make sure their office handles rentals and sales altogether. 


The better established practices have their own in house legal departments, and as such you won't get any discount rates at that caliber. Yet they might be well worth the money spent. 


The standard retail rates for sales brokerage are at 6%, albeit such rate has been de-regulated.  Rentals, figure the landlord foots the bill at a rate of 1 month's rent ( minus condo and tax charges )_. Management fees, typically hover around 8-10% of net rent. 


The cost of pre-screening documentation is footed by either the real estate firm, or the landlords. Tenants in Brazil never pay to apply.    You might get your Experian Report ( No Equifax, nor TRW ), and the report in itself, is not as thoroughly detailed as in the US.   It is just a clearing report, black and white. 


Also, you can't take escrow deposits for ales or rentals, as it is illegal.  Every process assumes good faith between the parties.


On tenancy screening, it is ok to ask for references, a banking account extract, credit report, and a letter of employment issued by the employer. Or Tax Returns.  The rest, you must rely on the Real Estate Broker's diligence, expertise, and good faith. 



As for branded franchised operations, such as Remax,, skip it.  You need to go after a locally established office, with decent community roots. 

I use a property manager in Brazil……

-@rraypo

Bom dia,
Was it hard to find a good property manager in your area?
I was thinking of buying homes instead of apartments.
-@antonioggriffin

There are tell tales of a good property manager.  And I dealt, as a landlord, with my fair share of bad property managers while in absentia with single family homes delegated to these sheeps in wolves' skin..


1.Locality matters.  You want someone closer to your geographically chosen piece of property. it goes beyond servicing the property. On court based decisions, territoriality matters.  Lawyers do vouch for this. 


2.If the company has no company car, or truck, or van, they are then less resourceful to handle your own surrogate on site inspections.  Property Management Companies that only handle collections are not a good fit.


For one reason, and specially with single family homes, Brazilian Tenants have the knack to make unauthorized modifications to your property.  If you give your property manage carte blanche to execute changes at their discretion , the line of what is permitted or not is as gray as it can be.    Your repairs might end up costing you more than what you collected on rent. 


3.Why is a good thing to have a property management company with a legal department, lawyers tend to go to extremes in generating fees.  Eviction notices are not free. You can be nickeled and dimed to death on this racket. 


4.You must be thorough in your search and evaluation process. If you are to sign off on a company and hand over them the keys, make sure you go through a sample of their portfolio of managed properties. 


5.Always be mindful that a Property Management Company makes money on management fees  and brokerage fees. The better ones pay other brokers the full fee to bring in tenants.  So, it is in their best interest to get it rented quickly, which at times, can lead to taking short cuts in the screening process. 


6.Companies that have their own wholly owned portfolio can be biased. Theirs first, yours last.   



7.Avoid going into the luxury property bracket.  They bring out the worst tenants you can fathom with a loathsome sense of self entitlement.  Rather contemplate your working class and middle class type of enclaves to scout for buying opportunities.  Working class stiffs are scared to their wits to have derrogatory credit, and , with all the exceptions, have that working class chip on their shoulders, call it pride if you may. 


8.The absentee landlord game is not suited for single family residential  properties. If you are going to became an absentee one, apartments, hotel rooms, and flats are your best choice.    And if you are local, then, make a point to only grant contracts after a pre-screening interview. 


9.I mentioned hotel rooms, and yes, in certain regions, on recent years, it is possible to buy in hotel rooms, in a branded property ( most likely Choice International  or Accor flags  ), and collect rent. The only downside of this strategy is that you will relinquish any management claim to your unit. It's theirs to handle management.  While management contracts go bad, and you have a choice to exit the pool, the ongoing charges for iddle units can eat you alive. 



Pick your poison.