Investment and Asset Allocation Advice: Where to keep your money secure and profitable

10% yield property investment in Rio de Janeiro

January 10, 2012 5B9566B4 investments in emerging markets Brazil

Rio de Janeiro will host the final of the world championships of soccer in 2014 and the Olympic games in 2016. And where will be the the main location of the games?

The olympic village is being constructed in an area of the western zone of the city, between Recreio and Barra da Tijuca. The new metro line which will be ready 2014 will connect the western city zone to the touristic spots in the southern zone and the center of the city.

Prices in Barra da Tijuca and Recreio have soared during the last 5 years. I believe actually they doubled. However, this is not the core point of my analysis. I just want to show here that an investment of 300000-350000 R$ (currently 165-195 kUS$) will realistically return annually 36000 R$ (means currently 20000 US$) which is a yield of 10%.

You buy an apartment in one of the better condominios. 95 sqm, 3 bedrooms, 2 garage places, veranda, for 300000R$. Including costs of buying you end up with 321000R$ to pay.

Here is an example offer in one of the biggest portals for properties in Brazil:

http://www.zap.com.br/imoveis/oferta/Apartamento-Padrao-3-quartos-aluguel-RIO-DE-JANEIRO-BARRA-DA-TIJUCA-Rua-Henrique-Cordeiro/ID-2794075

Then I go searching for rental offers, looking for an apartment of the same size and in the same area. Here you go: http://www.zap.com.br/imoveis/oferta/Apartamento-Padrao-3-quartos-venda-RIO-DE-JANEIRO-BARRA-DA-TIJUCA-/ID-2566442

They ask for a rent of 3100 R$. The tenant needs to pay condominio charges, here 750 R$, and usually the property tax.

Show me an investment of similar security and yield !!?? It is very likely though not guaranteed that the value of this apartment will rise even further at least until the Olympic Games 2016. Perhaps it’s a good strategy to buy now and sell short before the Olympics…

No comments High yield investment, property investment in Brazil

Property investments in Brazil

January 8, 2012 5B9566B4 investments in emerging markets Brazil

Brazil seems to become investor’s darling lately. Knowing the country and mentality of Brazil and Brazilians after living here for 5 years and having already purchased property, I can say:

Yes, it offers good opportunities with yields above all higher developed countries. The yields from renting out residential property are in many areas close to 10% per year, sometimes even higher. Furthermore, in some locations appreciation is steep upwards since years.

However, you better know the market well before investing any substantial amount. Especially foreigners are more often than not ripped off with overprized apartments which do not nearly yield the promised rental. Especially Rio de Janeiro, due to the coming olympic games in 2016, is in some areas already clearly overpriced. You need to know, where.

Since I live in Rio de Janeiro and have good contacts to Belo Horizonte, the capital of the state of Minas Gerais, I feel confident to supply some significant interesting research results which answer the above all important question:

Where should I buy in order to ensure I can with most probability rent out reliably?

Additionally,

What are the costs of buying?
Do I need to travel to Brazil for buying property?
Commercial vs residential property vs tourism-related property?
Do I have to pay tax on income in Brazil?
What do I need to know about currency exchange factors, how to assess the brazilian Real?
Is inflation an issue?
What kind of tenant to prefer?
Is there a way to ensure the rent gets paid by the tenant?
What to know about legal stuff, f.e. rights of residential tenants
In short: How to make an informed decision taking into account all relevant facts?

Soon to be continued…. example of a 10% yield property investment in Rio de Janeiro

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No comments emerging markets, property investment, property investment in Brazil