currency crash, best time to buy real estate in Brazil?

I work and live in Europe, with my Brazilian girlfriend who studies our language. 1 euro trades for 6.16 reais today, which is historical. We are preparing a life here, saving money to buy a house. But if the real keeps falling (let's say 7-8 reais for 1 euro or worse) I think it becomes very interesting to buy real estate in Brazil. In her name, because she holds the nationality and has her own property there. We are not married yet.

https://www.mupload.nl/img/d6f7a71anzat.32.47.png

She bargained for the price of her own apartment and got it down to 350 000 reais, à vista (no mortgage) about 5 years ago. The asking price was 500 000, but you get much better deals when you can buy without a mortgage.

When 350 000 reais represents about 50 000 euros (not impossible with the real coming down so fast) I consider buying an other apartment à vista in Sao Paulo and renting it out. We would make some money as rental income but I think the true value comes when the real regains purchasing power and becomes stronger to the euro and dollar. If it gets back to 3.5 reais for a euro, my euro investment is doubled when I sell.

Do you think this is a good idea? Are there rental companies out there, securing that tenants pay rent to the landlord each month? That there is no damage to the property?

Is it a good idea to buy 50 000 euros worth of reais and just hold on to the currency?

Can we trade euros for reais at this point without Brazilian banks taxing the shit out of us?
About 6 years ago there was a similar situation in Argentina. Their peso traded at 13 pesos for a euro but the bank would only give me 8. So I took my cash to the street and got the real value there.

It is harder to exchange in BR and only way to do this in bringing euros into BR and us a cambio (many have been shut down due to they did not pay proper taxes}. Many banks do not exchange. BOB does but they ask for a lot of information. Any wire of euro convert to reals and wire fee and the BR bank does take a small handling fee. (not a tax, just a fee)

You can also put your name in the property together with hers. Or you alone. You should come to Brazil and negotiate and then wire the money direct to the sellers account. Easier. You might want to wait a little for the reais to fall more. There´s govt
trouble brewing and I think you´ll get a better rate later.

robal

Imobiliarias can manage properties for rental and they do order repairs if necessary.

You can also buy reais and hold on to it but it takes longer for the wait (capital gains).

You're probably right that the real hasn't hit bottom yet, so buying reais for euros and holding them doesn't make a lot of sense.  Personally, I  expect the real eventually to stabilize at some lower level, but not to regain much of the ground it's lost for the foreseeable future

robal :

You can also put your name in the property together with hers. Or you alone. You should come to Brazil and negotiate and then wire the money direct to the sellers account. Easier. You might want to wait a little for the reais to fall more. There´s govt
trouble brewing and I think you´ll get a better rate later.

One of the things that I really felt during my 2 years in Brazil, is that I paid gringo tax everywhere. And lots of it (taxis, street shops, anything that involves bargaining) Brazilians seem to think that Europeans are rich, and set their prices accordingly. I've seen quite a few videos about this.
When we buy an apartment, I will never be present for inspection and the seller or the estate agent will never know that there is a gringo involved.

GringoLouco :
robal :

You can also put your name in the property together with hers. Or you alone. You should come to Brazil and negotiate and then wire the money direct to the sellers account. Easier. You might want to wait a little for the reais to fall more. There´s govt
trouble brewing and I think you´ll get a better rate later.

One of the things that I really felt during my 2 years in Brazil, is that I paid gringo tax everywhere. And lots of it (taxis, street shops, anything that involves bargaining) Brazilians seem to think that Europeans are rich, and set their prices accordingly. I've seen quite a few videos about this.
When we buy an apartment, I will never be present for inspection and the seller or the estate agent will never know that there is a gringo involved.

Yeah, I know where you´re coming from. Then let her do the dealing if she bargain for the price.

abthree :

You're probably right that the real hasn't hit bottom yet, so buying reais for euros and holding them doesn't make a lot of sense.  Personally, I  expect the real eventually to stabilize at some lower level, but not to regain much of the ground it's lost for the foreseeable future

That gives me more time to make a decision, which is good.
I'm shocked to hear how many friends of my future wife have already lost their jobs because of the corona crisis, and it is just getting started. I do believe that this crisis may deepen further, but I wonder how low the currency can go. They say that Brazil is one of the emerging economies, and that the currency will rise. But I don't see this happening in the coming decade.

I'm about to take on a mortgage for my first house in Europe, and it will take me about 10 years to pay it off. Ideally I'd buy real estate in Brazil after that, but I hope that the currency will be as beneficial as it is today

An emerging economy with a GDP of 3 trillion dollars. If their stock market crash it would reverberate worldwide bringing down economies of other countries with it. The reais has been losing value for the last few years because of the prolonged recession. Now there´s govt problems brewing, also a possible impeachment and then COVID-19 which is putting great strain on the economy. How then can the currency rise? Will take a while to recover.

robal

robal :

An emerging economy with a GDP of 3 trillion dollars. If their stock market crash it would reverberate worldwide bringing down economies of other countries with it. The reais has been losing value for the last few years because of the prolonged recession. Now there´s govt problems brewing, also a possible impeachment and then COVID-19 which is putting great strain on the economy. How then can the currency rise? Will take a while to recover.

robal

Many investors and economists are convinced that China is "the rising star of the 21st century". Like Europe and North America were prosperous during the 20st century. China is at the top of the list because they produce everything. Brazil, or the B in BRICS (Brazil, Russia, India, China, South Africa) is there because of its natural resources, I think. Not because of Chinese working ethics.
For Brazil to improve, I believe that the key is education. I don't know which institution is responsible for the inequality in the education system. My girlfriend went to one of the cheaper private schools for roughly 300 USD/month, but her friends went to public schools where they barely learned anything by the age of 18. None of them speak a word of English and are now working minimum wage jobs. I don't see how any of them create opportunities for themselves.

In my homecountry, the government invests in free quality education for everyone. Because children are the adults of the future and educating them creates prosperity.
Friends of my girlfriend think that the government created this policy to keep the masses dumb, so they can be controlled.

I'd love to see numbers of tax revenue that the Brazilian government collects, and a pie distribution of how this revenue is invested. Education, health care, infrastructure, the political apparatus...

I found this, but didn't get much wiser. It surely doesn't look like health care and education represent a big part

https://www.mupload.nl/img/vjktybsck5.53.42.png

I am one not to pass judgement on a country, unless I have lived there for a long time. If I did not enjoy it, I would leave/
I sure would not invest in real property in an unknown country with knowing it.
Over the years here I found many that always talk about politics, (what country doesn't). I take it with a grain of salt and do not criticize if I am a guest in the country and second it is the best way of not being welcomed. With the negativity, you may be better off living somewhere else.
Many investors and economist have really missed their marks many times, especially this year.

Texan Brazil, well said!!

Texanbrazil :

I am one not to pass judgement on a country, unless I have lived there for a long time

I sure would not invest in real property in an unknown country without knowing it

I've lived in Brazil for 2 years and have many contacts with locals there, including all ex coworkers of my girlfriend. I think that gives me a realistic view of the country, allowing me to have an opinion. It is also based on feedback of many locals that I became friends with

If I did not enjoy it, I would leave

I never said that I didn't enjoy it. This is a negative assumption and I don't know where you got it from. My experiences in Brazil were great (culture wise) but there are issues with the government, and national issues to be overcome (inequality). The only reasons why me and my girlfriend chose my homecountry to live in, are education and health care opportunities for our children. We have a Brazilian friend group in my country, involving 4 families with small children and they came here for the same reason.

I intend to go back to Brazil when I retire in my homecountry.

Over the years here I found many that always talk about politics, (what country doesn't). I take it with a grain of salt and do not criticize if I am a guest in the country and second it is the best way of not being welcomed. With the negativity, you may be better off living somewhere else.
Many investors and economist have really missed their marks many times, especially this year

Criticism (a negative word for feedback) can be constructive and it's sad that it gets taken personal by some people, when it is not even about the people. Mine is about the government and it is based on opinions and experiences of locals I know very well. I have not met 1 Brazilian who did not complain about the government and national issues that need to be solved. My girlfriend has been in my country for about a year now, and is very welcome to share her experiences here, positive and negative, without being called negative or being suggested to live elsewhere. That's almost North Korea style.

I just think that some people should learn how to handle criticism better.

robal :

An emerging economy with a GDP of 3 trillion dollars. If their stock market crash it would reverberate worldwide bringing down economies of other countries with it. The reais has been losing value for the last few years because of the prolonged recession. Now there´s govt problems brewing, also a possible impeachment and then COVID-19 which is putting great strain on the economy. How then can the currency rise? Will take a while to recover.

robal

Looks like it's on....

https://youtu.be/hHCzxB9eAns........4.8% The Recession has Begun......

Been there Done That....glad to be living abroad....

Can you check that link? It's giving me a 404.

The link is on the USA economy at a recession/depression point 4.8 % , all economies are in bad shape.

This link works: https://youtu.be/hHCzxB9eAns

Interesting topic! — expat.com is the only community forum that I have found that provides clear information on my current situation 'Living in Brazil'. The regular contributors have a wealth of knowledge and I can not thank you enough for your generous shares. Now, I am not exactly an expat, I am living on a wage  and income and have been working in Sao Paulo for the past 2.5 years, enjoying it tremendously with no hesitation to want to stay here forever - BUT I can relate to some of the OPs sentiment. I am now with a Brazilian partner and as much as I love this place, if I want to give a future family any chance of a good head start ( we simply don't have the cash or family behind us to pay for a private education), It might be wiser for us to return to the UK and make the most of my citizenship and free education, whilst looking forward to return trip holidays and the time when it comes when I can move back for good and become a real expat. Thanks Jay

bloomboy :

Interesting topic! — expat.com is the only community forum that I have found that provides clear information on my current situation 'Living in Brazil'. The regular contributors have a wealth of knowledge and I can not thank you enough for your generous shares. Now, I am not exactly an expat, I am living on a wage  and income and have been working in Sao Paulo for the past 2.5 years, enjoying it tremendously with no hesitation to want to stay here forever - BUT I can relate to some of the OPs sentiment. I am now with a Brazilian partner and as much as I love this place, if I want to give a future family any chance of a good head start ( we simply don't have the cash or family behind us to pay for a private education), It might be wiser for us to return to the UK and make the most of my citizenship and free education, whilst looking forward to return trip holidays and the time when it comes when I can move back for good and become a real expat. Thanks Jay

Glad you like the forum. All the best...

robal

Bloomboy,

Good luck to you and your family.  :top:

All the best. Stay safe. Family is number 1.

Here a website that been accurate most the time about the Real
https://longforecast.com/brazilian-real … 21-usd-brl
Like the other people here if you are thinking of buying real estate as investments may not be a good time. If it’s a place you want to live for a long time that’s different. If you want to move money with the least hassle ATM. There is a way to pull large amounts out of ATM. Good luck.

We bought land and built a house in Salvador, Bahia 20 years ago. I saw it as an investment for the future as well as retirement. In retrospect, it's mostly been a liability and loss of investment. Even though its a desirable and growing neighborhood the value keeps falling.  After building it in 2001 we lived in it for a year and then annual visits from Nor Cal. Renting from afar and using family there proved to be not worth it. Trying to sell it has also been fruitless. Squatters move in and out. The retirement dream house has lost its savor and so it just sits, unlived in and unmaintained. Taxes are owed on it and the poor girl sits on a hill with a former ocean view, but now condominiums and hotels block the views.
If I had the cash..I would buy a house on the beach in Praia da Forte and live out our lives. My wife and daughter are both born in Bahia and Ive been a permanent redident card holder for over 25 years.  What would YOU do?

correction
Cardholder for 15 years..not 25. Typo

MotoEspresso

Sorry for your troubles; that's a real cautionary tale.

I've always thought that residential real estate in Brazil is a sucker bet, and I  bought our current apartment fully expecting to lose in USD terms, whatever happens in BRL terms.  The pleasures of living here and the cash flow benefits compared to renting make up for it, if I don't think about the dollars.   So I try like hell not to think about the dollars!

In your case, I'd try to put all the past costs and problems to one side (easier said than done, I know, but they're all sunk costs anyway) and go forward as if I'd just inherited the place and wanted to be shed of it.  That probably comes down to getting the paperwork in order, and taking whatever offer comes.   :(

I agree with Abthree.  Residential real estate in Brasil is tough for investment purposes, for many of the reasons stated above.  Probably best to free yourself of the burden of the place, and move on. 

We purchased a home in Lencois, Bahia in 2007, with the assumption that all of the money we invested in it could simply go away at any point.   We decided that we loved the town and the people and our life there so much, that it would be worth whatever we might lose, if that did happen. 

We sold the house this past year...for what we had invested in it.

Over the past 3 years, we built a new house in Lencois, knowing that we would probably never be able to sell it, or even get out of it what we have invested in it.  It was/is a life style choice, and a risk that is worth taking for us. 

The only sad part now....is when will we be able to get back there?  We are in the US, and pretty much stuck here until travel opens up again.

Robal and kedelinsky,

After reading both your comments and suggestions, I've resigned myself to exactly that. It was more of a dream than investment and dreams can be dashed. The initial building costs are all long gone and thats fine.
In reading this I realize that really it was more the dream itself that was coming true, yet didn't manifest like I had hoped.
Over the years I let it go..then pick it back up again. With global upheaval, plandemics & encroaching old age..I had considered once again to live out life mortage free in that house.
Our daughter is now nine, wife is 57 and Im 68. Where did the years go? Lol
Thanks for the tips and blessing to all.

MotoEspresso :

Robal and kedelinsky,

After reading both your comments and suggestions, I've resigned myself to exactly that. It was more of a dream than investment and dreams can be dashed. The initial building costs are all long gone and thats fine.
In reading this I realize that really it was more the dream itself that was coming true, yet didn't manifest like I had hoped.
Over the years I let it go..then pick it back up again. With global upheaval, plandemics & encroaching old age..I had considered once again to live out life mortage free in that house.
Our daughter is now nine, wife is 57 and Im 68. Where did the years go? Lol
Thanks for the tips and blessing to all.

You built a house to fulfill your dreams and to enjoy it and I´m sure also to free yourself of a landlord´s tyranny of paying his IPTU and evading yearly rent raises and charging you repairs which is supposed to be his own account. So smile because you´ve been right all along. No price tag for that. You must have a wonderful and loving family. Take care and thanks for commenting!

robal

Thank you Robal, you're very kind. You hit each nail squarely on the head!

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