Strength of Dollar Brings Huge Real Estate Discounts in 4 Latin American Markets
If you’re holding U.S. dollars, 2019 is the best year in a long time for harnessing your buying power abroad.
The dollar’s current strength is creating some amazing bargains in countries that trade properties in their local currency. I call this temporary distortion a “currency discount”… and, right now, we global property investors are enjoying some of the best currency discounts in decades.
Here are the top four countries, comparing exchange rates from today with exchange rates on Jan. 1, 2013.
Currency: Brazilian real (BRL)
Currency Controls: Yes
Exchange Rate: R$3.95 per USDIncrease past 12 months: 15.2%
Increase in buying power: 83%
Currency: Colombian peso (COP)
Currency Controls: Yes
Exchange Rate: COP 3,252 per USDIncrease past 12 months: 9.9%
Increase in buying power: 77%
Currency: Mexican peso (MXN)
Currency Controls: No
Exchange Rate: MXN 19.03 per USDIncrease past 12 months: 3.4%
Increase in buying power: 50%
Currency: Chilean peso (CLP)
Currency Controls: No
Exchange Rate: CLP 679 per USDIncrease past 12 months: 12.2%
Increase in buying power: 43%
#1 Brazil: One Step Beyond Latin America
The currency champion this year is Brazil, which now offers a whopping 83% increase in the U.S. dollar-holder’s buying power… a buying power that’s increased an impressive 15.2% since last year alone.
Brazil is exciting, romantic, and diverse. It’s “one step beyond Latin America,” as its culture and language are just a bit more unfamiliar and romantic to North Americans.
Brazil’s beautiful beaches offer a wide range of climates. This means you can choose between a year-round warm climate or a changing climate with seasons opposite those in the Northern Hemisphere.
Brazil is also culturally diverse, from its German regions and wine country in the south to its French and Dutch influence in the north.
One cumbersome aspect of buying here is that Brazil has currency controls. This means a few extra steps when transferring money, but it’s a process you can learn to manage.
Historically, another disadvantage has been that Americans and Canadians need a visa to enter Brazil as a tourist, which was a time-consuming, and expensive process. But Brazil now offers an e-Visa, which you can obtain online for only $40, plus a marginal service fee.
Also, new for 2019, Brazil has a new residency process, whereby a real estate purchase can qualify you for permanent residency. In Northeast Brazil, the minimum investment is 700,000 reals, which is about $188,000 (U.S.) at today’s exchange rate.
Brazil’s economy has faltered in recent years, so you stand to gain twofold… from the recovery of the economy as well as the currency. When the recovery comes, the economy should help to raise prices in reals… while the recovering real should further raise the value of your investment in U.S.-dollar terms.
#2 Colombia: A Big Currency Discount With Good Upside Potential
Colombia is now offering an impressive 77% increase in buying power since 2013. In just the past 12 months, the increase has gone up by 9.9%.
Medellín, Colombia, offers the best city living I’ve found in the Americas. Its El Poblado neighborhood is safe, clean, and attractive, with shady streets, upscale shopping, and more restaurants and cafés than you could experience in a lifetime. The city also offers cultural activities, from open-air festivals to orchestra and theater.
Medellín’s El Poblado offers the best lifestyle for the money in Latin America.
Colombia also has a Caribbean coast that’s popular with expats and Colombians alike. Cartagena is the most popular with North Americans and international visitors, while Santa Marta is favored by Colombians.
Colombia still suffers from the negative stereotypes left over from the days of Pablo Escobar and the Medellín Cartel of more than 25 years ago. But this bit of ignorance has resulted in some of the most undervalued markets you’ll find anywhere.
You can gain in two ways in Colombia. First, prices continue to rise nicely as people forget the old stereotypes. Plus, you could profit from the currency’s rebound.
One final benefit is that Colombia is one of the easiest places to obtain residency. They have 17 visa options available, and requirements are minimal. I got my visa solely by using information from the ministry’s website, in less than one hour (at the ministry in Bogotá).
The only disadvantage I can think of are the currency controls. Like Brazil, wiring money into and out of Colombia requires extra steps and takes a bit more time, given that the money has to be “declared” when entering and exiting. Also, you can’t spend U.S. dollars in Colombia and cannot have U.S.-dollar-denominated bank accounts.
These minor drawbacks aside, I believe that Medellín, Colombia, is the best value in Latin America for a sophisticated, elegant lifestyle–especially at today’s exchange rate.
#3 Mexico: Still the First Choice for Americans and Canadians
If you’re buying in U.S. dollars, your buying power in Mexico is now 50% greater than it was in 2013, and your buying power has increased 3.4% since last year.
Mexico is still the #1 overseas destination for fellow North Americans, with more than a million American expats calling it home, myself included. Also, about 500,000 foreigners own homes in Mexico. These expats are enjoying a low cost of living at today’s exchange rates, while new arrivals are getting some good property bargains.
Properties trade in U.S. dollars or Mexican pesos. The latter is where your increased buying power lies.
Mexico offers well-developed coastlines along the Pacific, the Gulf Coast, and the Caribbean. The options for coastal living are limitless, despite the widely held misconception that foreigners can’t buy coastal property here.
Mexico’s Durango offers low property costs and exclusively peso-priced properties.
Mexico also offers a wealth of well-preserved, Spanish-colonial cities. Climates vary from cool highland and mountain environments to warm beaches on both sides of the country.
Mexico offers some practical advantages, too. First, there’s more English spoken in Mexico than any non-English-speaking country I’ve visited.
Their residency process is among the world’s easiest, even easier than Colombia. I received my visa about 20 minutes after applying at the Mexican consulate in Phoenix. Better yet, they accepted English-language documents, had English-speaking agents, and did not require apostilled certifications.
You can drive to Mexico. So if you’re planning to bring a household or travel back and forth, its proximity can save you a lot of money and hassle.
Also, for those who are eligible for Medicare, remember that you can’t use it overseas, but in Mexico, you can drive over the border to get your health care in the States. Quite a few expats in Ensenada, for example, receive their major health care across the border in San Diego.
Finally, they’re a culturally familiar neighbor. Having lived in South America since 2001, I’d forgotten Mexico’s familiarity, which shows up in many small ways. You can eat enchiladas instead of guinea pigs, and you’ll see full-size, V8 American pickups and SUVs on the road instead of those wimpy Chinese pickups. You’ve also got familiar stores like Sam’s Club, AutoZone, Walmart, The Home Depot, and OfficeMax.
Mexico is my choice for the most hassle-free country in which to retire or own a second home abroad.
#4 Chile: A First-World Option That’s Once Again Affordable
Chile enjoys a 43% increase in buying power to the U.S. dollar-holder for properties priced in Chilean pesos. Your buying power increased by 12.2% this past year.
Chile covers a long latitude, so there are plenty of options for seaside living in a wide range of climates. One of Chile’s big selling points is that it has four seasons that are opposite to those in the Northern Hemisphere. So if you have a second home there, you can enjoy your favorite season twice each year. It’s also diverse, with mountains, lakes, deserts, a long coast, a wine region, and great cities with plenty of skiing, fishing, and wildlife.
Chile is a first-world choice with an honest culture, low corruption, and low crime. It’s a place where you can enjoy drinkable water, excellent highways, and a strong economy.
Over the past 17 years, since my first trip to Chile, the only complaint I’ve heard from potential expats was that it’s expensive. But at today’s exchange rates, property and cost of living are a bargain for the lifestyle you get.
Properties in Chile trade in pesos, a monetary unit called UF, and sometimes in U.S. dollars. The “currency discount” in Chile only works on peso-denominated properties.
Residency is relatively simple in Chile. You can apply for residency by mail, and there’s no minimum income requirement to get started. I went to the do-it-yourself kiosk in Santiago and found the agents to be very helpful.
If there’s a disadvantage to Chile, it’s the distance from the States. The flight takes over nine hours, although the airlines serve a good number of U.S. cities from Santiago.
Each country also has a strong expat history, which eases the transition for future expats.
Personally, I think Colombia has the quickest upside potential, combined with a healthy currency discount. I believe Brazil has slightly more upside potential but over a longer term than Colombia.
Chile offers the chance to buy into a first-world country and strong economy at prices that we haven’t seen in a long time. Mexico comes in as the most culturally familiar choice… not to mention its cross-border convenience.
In reality, they’re all good options… it’s just a matter of seeing which one best fits your needs and preferences. The important thing is to take advantage of today’s strong dollar while it lasts.
About the writer
Lief Simon has lived and worked in seven countries on five continents, managed businesses in 10 countries and owned property in 21. He is the editor of the Offshore Living Letter, a publication of Live and Invest Overseas and co-founder of Live and Invest Overseas.