Are you thinking of buying a beach house in Brazil because of the current exchange rate ?
It is true that there has never been a better time to purchase real estate in Brazil with the US dollar getting closer to 6 reals, Brazilian properties are getting cheaper and cheaper in hard currency.
If you are an overseas Brazilian, have business connections, family ,an investment project or just want to take advantage of market conditions it is a very good idea to make plans and search for bargain buys in Brazil.
The corona virus will pass,restrictions will ease,the economy will get back on track and the Brazilian real will strengthen.This could take months even a few years but it will happen and you will have purchased a property at the right time for the best possible price.
So lets say you do decide to go for it and purchase a property in Brazil. What do you need to think about before, during and after your investment? Here are 5 key factors to keep in consideration when buying a Brazilian beach house
1) Why are you buying a beach house?
Its best to have a definite plan. Are you moving to Brazil,buying to use as a holiday home with possible retirement ,do you have friends and family that will use the beach house when you are not there.Do you have a plan to cover your costs through rentals.If so how many days,weeks,months do you need to rent for?Are you looking for capital appreciation,if so,how much do you expect o make on your brazilian investment?
2) Who is going to look after your property?
For basic upkeep, maintenance, rental management etc,do you have a support network in place of reliable people who can ensure that your home is taken care of.If not this is something you will need to look at during the purchasing process.Having someone trustworthy,living close-by who can keep an eye on things and be in easily reachable is very important.
3) Who is going to pay your bills,running costs?
This is often an issue for first time foreign house buyers in Brazil as it is not easy to open a bank account and/or pay online for utilities,services etc. It is very useful to have someone locally who can cover these costs from your money transfers via transferwise, revolut etc, especially in the first few months post purchase until you find other ways to pay.
4) How are you going to cover your costs ?
It is good to have a plan in place for short-term rentals to at least cover your property expanses.Lets say you need to pay ,a part-time cleaner,gardener,the odd mantainence job,then you have your electricity,water,property tax.perhaps cable and/or condo fees.How much will this come to monthly and how many days would you need to rent to pay these costs and do you have the support network in place?
The biggest reason for owners to sell their brazilian beach homes cheaply is because they no ,longer use them enough and the property becomes a financial liability.
4) How are you going to sell your Brazilian Home For a Profit?
This is the million dollar question! If you buy a Brazilian beach house in a desirable location with good infrastructure at the bottom of the market in terms of dollar,euro,pound value,there is a very good chance you will make a nice profit in 2-5-10 years time.If you can demonstrate that the property pays for itself from rentals,even better and if you are turning over a decent income and profit on the rentals you are in an even better position to maximize your capital gains.
I do believe that this is a brilliant time to invest in a beach property in Brazil simply because it is so cheap at the moment and there are no guarantees it will stay that way.
However buy smart and have a plan to to ensure that your investment works and does not turn into a liability.
Are you planning on buying a property in Brazil this year? Do you have any questions? Any advice you could help us with?
Please leave your comments below.
Mike Smith
Real estate consultant in Brazil
15 years helping foreign investors buy Brazilian beach homes.
www.brazilbeachhouse.com
