Forbes recently posted an article extolling the virtues of buying overseas property in the current economic climate. The author, Kathleen Peddicord, presents seven arguments in favour of buying outside the US, all of which apply to anyone looking to invest in Brazilian real estate. In fact, the article directly cites beach property in Brazil in two examples.
Investment portfolio cornerstone
Peddicord begins by describing the present state of the economy in the US, characterised by high inflation, “lacklustre results” and an unstable financial market. Many other worldwide economies mirror this situation, particularly those in Europe.
In the face of this instability, the author presents the case for overseas property, “the cornerstone of any diversification strategy”. She calls it a safety net and an investment that reaps “capital growth and cashflow across currencies”.
Brazilian real estate presents discounts for US dollar buyers
As has been the case over the last few years, US dollar buyers are at an advantage when buying Brazilian real estate. Peddicord describes the “extraordinary opportunities” available on the back of the current strength of the dollar.
She says that “the enhanced spending power of the greenback” allows you to add to your overseas real estate portfolio “at a discount”. This super-charged purchasing power has even more effect if the property is already value for money. For example, Brazilian real estate at The Coral starts from just a US$7,500 deposit.
Property in Brazil means opportunities for income earners
Buy-to-let property, whether for long or short-term rentals, allows you to generate cash flow. The extra income can be used to pay for the running costs or “build a nest egg in the local currency,” advises Peddicord.
She mentions that net yields in Europe tend to be lower. As a result, choosing a location with a consolidated tourist market is a must. And with many popular holiday spots back at pre-pandemic levels, double-digit yields are realistic.
Brazilian real estate advantage for US taxpayers
Owners of property in Brazil who pay tax in the US will also enjoy tax benefits because they don’t have to report overseas property as part of their assets. A buy-to-let investment has further fiscal advantages, including deductions for costs and interest paid on a mortgage.
The more varied a portfolio the better
As all seasoned investors know, the best portfolios are as diverse as possible. Having a variety of assets allows you to spread your risk and reduce liability.
Brazilian real estate brings that diversity to a portfolio, particularly if you’ve chosen a buy-to-let. Not only are you adding capital appreciation to your portfolio, but you're bringing income at the same time. As the old adage says, “don’t put your eggs in one basket”.
Residency and nationality benefits from Brazilian property
Like many countries, Brazil has an investor visa option that gives you access to residency as well as nationality later on. To qualify, you need to invest a minimum amount, which in Northeast Brazil currently stands at R$700,000 (around US$180,000).
Peddicord points out that having overseas residency brings myriad benefits to the holder. She calls an overseas property “your plan B” if you need to leave your home country or simply fancy a change of scene.
Low-cost holidays in your Brazilian property
The final reason to invest in property in Brazil is for your finances, current and future. Right now, you can use it for your holidays and enjoy a lower cost of living.
Peddicord mentions that spending the winter in a warmer climate will save on winter heating bills too. She cautions, however, that you should buy somewhere you like and enjoy visiting. Guajiru in Northeast Brazil could well be one example.
(Source: Forbes)
