Buying a house in LA & the financing

[doombug]

I'm wanting to buy an apartment in Peru for my wife in the short term, for her mother in the interim, and for later on in the future when I retire.

Anyone here have any tips on how to go about doing so?  Any US banks offer financing for such an endeavor?  Are there any Peruvian banks that have offices in California?  Can you recommend any real estate agents in Lima?  

The property I'm looking at is a new 3-bedroom unit in a high-rise building that's nearly completed in Miraflores.  List price:  $46,000.  

I'm assuming that most of you are home owners, and maybe handful of you having actually bought property overseas.  So, if you have any advice, I'd appreciate the feedback

Thanks.

 

[kented]

... in response to Buying a house in LA & the financing..., posted by doombug on Jan 12, 2005

...is to maintain flexibility.  Once divorced, now happily married, I am still covering my a** a little.  I love my wife, she loves me but I am not willing to assume unlimited risk and liability this quickly.

Marriage is a major committment and my wife also made major sacrifices moving to the US.  I have spent lots of money and did so gladly.  However, having a long term loan locked in seems like a major risk when it could be avoided by renting.  

When you and your wife retire there is when you should buy.  I hate to sound so cynical for a happily married man whose wife has been in the US for 3 1/2 weeks but I believe it would be wise to think defensively.

[kented]

... in response to Buying a house in LA & the financing..., posted by doombug on Jan 12, 2005

I can offer a few anctedotes about Costa Rica since I plan on living htere in five years and explored this.

US banks don't make loans for LA (how would they repossess) and LAS banks don't have branches here for the purposes of making loans in their own counrty.  The big deal in CR is a 20% downpayment is a minimum requirement.

[Brazilophile]

... in response to Buying a house in LA & the financing..., posted by doombug on Jan 12, 2005

My Namorada's ex-husband, from England, had bought a condo for them to live in.  It was a 2 bedroom, 2 bathroom apartment them cost around 75,000 reais.  At current exchange rates that is around 30,000 - 32,000 US dollars.  He paid in full.  I don't know if he took out a mortage in England but he did not borrow money from any Brazilian bank.

I got the impression from my trips and conversation that when the price is not beyond a person's financial reach, the better option is to pay cash in full when buying.  That seems to be true for locals as well.  In Recife, I learned there is a strong penchant for locals to buy land and then build the house themselves.  There are several large Home Depot style do-it-yourself home improvement, small scale construction stores there.

[Heat]

... in response to Buying a house in LA & the financing..., posted by doombug on Jan 12, 2005

Invest that money and keep it handy when you need it.
Use the return from the investment to pay the rent.

I think it's a bad deal in most cases.  Try selling it one day and you'll see what I'm saying.

[doombug]

... in response to Rent...... don't buy., posted by Heat on Jan 12, 2005

I'm mostly concerned right now with just getting my wife and her mom a reliable, steady place to live.  Where they can feel secure, and not be reliant on family members, or susceptible to the whims, cons, and/or temperaments of landlords (or other family members, sad to say).

[Looking4Wife]

... in response to Re: Rent...... don't buy., posted by doombug on Jan 12, 2005


I think Heat has given some wise advice to consider for your situation, as far as renting vs. buying.

If you are unfamiliar with that particular real estate market, renting will give you a chance to kind of learn about the market as you go, without getting into a long term "buying" commitment.  Renting gives you the maximum flexibility to weigh your options.

You could even rent with the option to buy... especially if you can keep any money you (might) pay for the "option" to a minimum (zero is good, one month's rent is next best, if it goes any higher, you may want to find a more "motivated" seller).

I apologize for sounding like a late night real estate infomercial, but this is my area of expertise...

[doombug]

... in response to Re: Re: Rent...... don't buy., posted by Looking4Wife on Jan 12, 2005

I pay rent, someone else profits, I get no equity.  Been doing this for years.  I'm just trying to get advice from anyone who might be familiar with the SA real estate market.  I don't forsee buying a home in California, even with a VA loan, as nearly every market is beyond what I can afford.

That's why I'm focusing on LA.  For the price of a luxury car here, I could own a home there.  

   

[Brazilophile]

... in response to Re: Re: Re: Rent...... don't buy., posted by doombug on Jan 13, 2005

What exactly is your idea of a luxury car ?!?!?!?!?!?

Damn!!! For the price of an AVERAGE car you can own a home in LA!!   A LUXURY car will get you 2 or 3 homes!!!!!!

There is an island near Salvador in Brazil called Ilha Itaparica.  It is a place where Salvadorans go on the week-end to enjoy the beach and a slower pace of life than the city.  Several houses on the beachfront were pointed out to me that were for sale for $5,000 - $15,000 US dollars.

[Pete E]

... in response to Re: Re: Re: Rent...... don't buy., posted by doombug on Jan 13, 2005

I was a realtor in California before moving to Colombia.I made alot of money investing in real estate,more than I ever made selling it.I don't have much of it anymore because I had the bad habit of cashing in and spending my profits.
But I will tell you I would have made none of that money without financing.If you have to pay all cash for a property it not only makes most US purchases impossible but it takes away the number one advantage of owning real estate,leverage.Leverage is what makes$30,000 down payments become $300,000 equities,1000% profit instead of maybe maybe 50% profit over a few years.All cash and the return would usually be not very good in most cases.
And all cash is what you as a gringo are talking about in Latin America.Even for people who are residents of a country financing is expensive,short term and high down payments.
Not to say it can't still be an OK investment,if you are smart about it and your timing is good.Both factors very important here.
First In would suggest looking at the cost of renting vs the cost of buying.Even if you can borrow the whole amount on a place you own in the states at low interest rates usually its a bad place to put the money.For instance,I am paying what is now with current exchange rates $618 a month for an apartment that would cost $177,000 to buy.Yes its not typical SA cheap,but niether is the rent.So the annual rent $7416 diveded in to the price to buy is 24 times.A good purchase pricewould be less than 10 multiplier,if you could get good financing.Even if I could finance it all at 6% 30 years the payment would be $1061.
Here if you could finance it all all it would be 40% down then 21% interest.$71,800 down  and still $2103 a month on a 10 year loan,about as long as you can get,if you could get it.
Plus,there is administration,which I pay wether I rent or own of $192 a month.Plus property taxes,I don't know what that figure is.Also,administration here isjust operating expenseof the building.It does not include reserves for repairs as a homeowners fee would in a US condominium.So some bid repair itewm comes up,all the owner shave to pay up.
Heat mentioned above about trying to sell it.In the USweare used to it being pretty easy to sell real estate.Here it can be a whole different deal.Which brings me to oneway it might makesome sense.Get a real good  buy from somebody who is having no takers selling their property.One of our posters here bought a property in Cartagena for 94,000,000
pesos they were asking 150,000,000 pesos for.And the timing,18 months ago was excellent.Its probably worth the 150,000,000 by now.The 10 years before that it probably would have got you zero appreciation,or depreciation.I think it took the guy a year to sell it and he lost money on it,and he was a Colombian.To do this you pretty much have to live in the country or be  able to spend alot of time there.Or be working with someone who is actually looking out for you,rare in SA situations.
So,bottom line,look at price vs rent.Is this the best place to put the all cash you will need to buy it?If it still looks like it,do a very carefull search for the place to buy.Don't just buy because it seems cheap by US real estate standards.Everything seems cheap by US real estate standards.Think about all the things  that could go wrong that you could just bail on as a renter but are stuck with as a buyer.And you can't get in a hurry,so if there is an immediate need ,rent first whilesearching for the right deal.

[Pete E]

... in response to MAYBE buy,but probably not a good idea, posted by Pete E on Jan 13, 2005

An exception here I think would be very inexpensive SA property,which you would never want to try and manage as a gringo as income property,but it could make some sense to just put the family in it if you could buy it cheap.Like less than $10,000.Which is what alot of propety would sell for.You might even be looking at a strata 3 barrio.Maybe a Strata 4 for $15,000. You could probably buy something for  $2000 -  $3000 in a Strata one barrio.But who wants to live there?Nobody,people who live there have limited choices.One guy I know dated a girl who lived in Siloue,{sp?} ,a very bad barrio..She had to catch a jeep that goes up the hill to get home,they stop running at 10.30.Taxis won't go in.The cops only go in force,I saw a truck load of then heading up there one night.Why do they live there?Because they own the house.

Pete

[kented]

... in response to MAYBE buy,but probably not a good idea, posted by Pete E on Jan 13, 2005

Great post.  I would point out that the seemingly exorbitant 21% interest rate is due to the daily devaluation of the peso in relation to the dollar.  

In CR, you can borrow dollars or colones from CR banks and you pay about 10% on dollars and 30% on colones because you are certain to be repaying colones with less valuable currency due to the devaluation.

[Pete E]

... in response to Re: MAYBE buy,but probably not a good id..., posted by kented on Jan 13, 2005

The rate used to be 15% plus inflation,which worked out to about 21%.Now that the peso is gaining strength it might be less.I have heard of 15% in builder financed new housing.

Pete

[Heat]

... in response to Re: Re: Re: Rent...... don't buy., posted by doombug on Jan 13, 2005

I'm just trying to get advice from anyone who might be familiar with the SA real estate market. """

You just did.  I have investigated it after living in South America for many years. I also have made hundreds of thousands of $$$$ in real estate.  But you can't seem to grasp what I'm saying.

[Red Clay]

... in response to Buying a house in LA & the financing..., posted by doombug on Jan 12, 2005

I have a similar idea. My wife and I will be in Lima in about a month and we plan to research some of this while we're there. I'll email you when I have more time to write, gotta run right now.

We have heard rumors that Banco de Credito has a sister bank in Miami that can handle things like this, not sure but we plan to look into it.

I'll be in touch.