Latin American real estate is a rapidly growing market that real estate investors would be unwise to overlook. While there are certain drawbacks to investing in global real estate, such as market risk, exchange rates, and high fees, the advantages of the Latin American real estate market are appealing. Foreign investors, for example, can benefit from less rigorous tax regulations, asset diversification, and currency rate gains. Therefore, in today’s article, we will talk about buying vs. renting in Latin America. Keep reading to get an insight into current real estate market trends!
Why should you invest in Latin American real estate?
Before we get to buying vs. renting in Latin America, let’s start by answering the most crucial question: Why Latin America? The question is simpler than you may think.
The yield rates offered by Latin American real estate compared to other markets are one of the primary factors that make it so appealing to foreign investors right now. For example, average yields in the United States range from 4 to 6%, compared to a wide range of 6 to 12% in Latin America. Take Mexico, for instance – the Mexican peso has been battered in recent years, allowing international investors to profit from the low exchange rate.
Additionally, beautiful tropical beaches, pleasant weather, and diverse culture adorn many countries of Latin America. These appealing features attract tourists and young professionals who want to stay and start a new life there. In general, real estate investors will benefit from lower living costs, lower rents, and more affordable healthcare, all of which make real estate investing appealing. Compared to many Latin American countries, the dollar is strong, allowing for incredible real estate deals and lower salaries for contractors and workers (if needed). Finally, many Latin American economies provide international investors with the same safeguards as their own citizens.
Pros&Cons of buying a property in Latin America
The first dilemma that has to be solved is whether or not you can own property in Latin America as a foreigner. Unfortunately, the answer is not very simple. While most Latin American countries are extremely welcoming to foreign investors, others may have some restrictions on foreign ownership. Additionally, you may have to go the extra mile to buy real estate in some countries if you don’t have citizenship (Mexico, for example). Fortunately, in many cases, you don’t need a residence, only a Tourist Visa. So, let’s see what the pros and cons of buying a property in Latin America are:
Pros
- Good long-term investment: buying a property in a fast-growing market such as Latin America is always a good idea. Since experts predict the peak of Latin American real estate is yet to come, you will probably have a high ROI (return on investment) once the peak happens.
- Lower prices for first-class homes: in many Latin American countries, you can purchase big (even luxurious) homes for significantly less money than in the U.S.
- Landlord-friendly laws: as we have already mentioned, most countries of Latin America grant foreign homeowners the same property rights their citizens have.
- Stable housing costs: once you buy a property, you can maintain it however you want, and you can make changes whenever you want.
Cons
- More obstacles documentation-wise: some countries will welcome you with open arms, but you have to be aware of those that won’t.
- High up-front costs: when buying a home, you have to invest a lot of money at the very beginning.
- Long-term commitment: when you buy a house, you’re signing up for a long-term commitment. If this is a big step for you, think about alternatives.
- Different culture: moving to Latin America can cause a cultural shock for you and your family; If you buy a home and later have a hard time adapting, it can become a substantial financial burden to relocate again.
Pros&Cons of renting in Latin America
When it comes to renting a property in Latin America, the best advice we can give you is to go house/apartment hunting off-season. Why – you ask? It’s simple. During peak season, most areas will try to charge extortionate prices for a month’s rent, and there’s a huge possibility there won’t be available rentals. Now, let’s see what some pros and cons of renting in Latin America are:
Pros
- Low deposit fees: in countries such as Bolivia, Peru, and Ecuador, you will only have to pay the first and last month’s rent up-front.
- Short-term commitment: if you end up not liking the area, you can easily relocate.
- Smaller investment: you won’t have to put in a lot of money at the beginning if you rent a home.
- Low to no maintenance and house repairs: as a renter, you won’t have to worry as much about maintenance; that’s a job for your landlord.
Cons
- High deposit fees: While deposit fees are minimal in some countries, in others, they are pretty high – sometimes you’ll even have to pay six months or even a year’s rent up-front.
- Some countries ask for a ‘guarantee’: a guarantee is a country’s resident who owns a property and will co-sign for you and guarantee your good behavior while in the apartment/house.
- The increasing price of rent: whether you like it or not, rent is increasing annually, especially in countries of Latin America with a fast-growing economy.
Renting while waiting for your home
In some instances, people want to build an entirely new house. In those cases, many want to witness the construction of their new homes. So, to be able to keep an eye on the building process and ensure they get exactly what they want, they rent a place where they will temporarily live. The same happens when the house buyers purchase needs some repairs. They don’t want to live on-site but still want to see how the works are progressing.
Finally, sometimes looking for a suitable home does not go quickly. So, some buyers choose to rent while they wait for a perfect home or a perfect opportunity to invest.
The Best Latin American Real Estate Markets in 2023
Latin American countries bring excellent investment opportunities, although some offer better conditions than others. Once you decide between buying and renting in Latin America, check out what countries you should take into consideration this year:
- Mexico: excellent exchange rates
- Brazil: landlord-friendly laws and rental yields of just over 3%
- Colombia: rental yields of 6.3%
- Chile: low tax rates and no tax fees on your capital gain
Hire reliable international movers
If you are choosing between buying and renting in Latin America, it’s time to start thinking about the moving process. No relocation is easy, especially an international one. That’s why you’ll have to hire a moving company that offers professional international moving services. These experts will make your relocation to this amazing continent as smooth as possible. So, if you want a trouble-free relocation, start asking around for a trustworthy company near you. Make sure to entrust your belongings to someone who will take care of them properly!
The final verdict about buying vs. renting in Latin America
When it comes to buying vs. renting in Latin America, it all comes to one thing – are you ready for a long-term commitment to one place, or do you want to live it up? Additionally, if buying a home is a substantial financial burden for you, consider renting instead. As you can see, there are both pros and cons of renting and buying. Therefore, whichever you choose, you’ll have to make the best of it. So, think about what is suitable for you and then make a smart decision. Good luck!