The bean counter is back in the blog seat with some hard and fast figures that tell you what to expect in terms of annual costs and returns when investing in Buenos Aires real estate.
Andrew’s last blog, ‘why Argentina?’ really made some very good points about Argentine real estate investment, but what really interested me, and should interest you too, is what happened between 2001/02 when the economy suffered meltdown.
Andrew’s graph showed Buenos Aires real estate appreciation since 2000 and in particular, he demonstrated what happened to real estate values 2001/02 during the crash.
Andrew’s reasons for investing in Argentina and my own, we base on our experience. Unlike many advisors and websites that sell Aregntina investments online we talk from our own personal experience, we actively invest in Argentina.
I own both commercial and residential units in Buenos Aires and I am very happy with both my annual return and real estate appreciation since 2006.
The real estate investment figures in this article demonstrate the true cost and return investing and managing your affairs in ‘white’. In Argentina, white means legal.
The other sound advice you got via this Buenos Aires real estate investment blog is to think small and keep it simple. Of course, you are free to increase your Argentine investment portfolio when entirely comfortable.
The value real estate in Buenos Aires does not tend to be new builds that often sell for a premium. We have seen some good deals off-plan, but we tend to buy in older well-managed apartment blocks. Our criterion is tested and proven, speak to our clients, it works and we know where and what to buy.
We try not to spend over USD$150,000 on apartments for our investors. Usually we spend between USD$60,000 and $90,000, but when people are looking for a second home and not just an investment property we often spend a lot more.
Of course, we manage lots of apartments and some with a price tag of over USD$4,000,000 check out the Kavanagh Penthouse.
Our style of management is proactive. We share our managed apartment with 60 quality agents in Buenos Aires and over 200 agents worldwide. Our marketing team also target many lateral businesses and our search engine marketing is extremely effective.
Back to most people’s reality, we recently spent $62,000 on a 34sqm one-bed apartment on the borders of Centro and Recoleta.
To furnish our Centro/Recoleta apartment well with flat screen and a quality modern look cost us USD$5000.
A small rental apartment like this would attract clients who want to pay us$350-us$400 per week, about us$1100 to us$1200 per month. This category of apartment is most widely rented and has an 80%+ occupancy rate.
How do we know, see Luxury BA Stay and Buenos Aires Stay two of Buenos Aires’ most respected rental agents specialising in international vacation rentals – our claim to have some of the Buenos Aires’ best Internet property marketing portals is no boast.
Of course, there are the running costs, agency fees and taxes, but these need not be a headache, I will take care of all the administrative and pay your bills, handle of contacts and marketing – you sit tight and just wait for your monthly returns.
Let us examine some figures:
| Rent per week us $350USD | $14560 (80% occupancy) |
| Running costs per annum | USD$2953 |
| Booking agency fees (20%) | USD$2662 |
| Managers Fees | USD$1200 |
| Legal and accounting | USD$500 |
| Argentina Taxes | USD$2099 |
| Net Profit | USD$5146 |
This represents a 7.3% return on your initial investment of USD$62,000 and more importantly it comes from running your business legally in white.
There is very little in the way of credit in Argentina, most people still pay for real estate with hard cash, this has helped prevent the credit fueled boom and bust seen in the US and UK housing markets.
What if you want your money back in a hurry – well there are no guarantees, but small apartments sell remarkably quickly and although the property prices appear low to outsiders, to a local earning USD$400 per month the prices are just as high as in London or New York.
Small and quality Buenos Aires apartments are always in demand.
The law allows foreigners to buy Argentine real estate without restriction provided the buyer can prove the source of the funds (a money laundering requirement) and you transfer money into the country legally.
Mainline Security Estate Management and its associates can provide expert advice and guidance to make the purchasing and management of an investment real estate in Argentina both painless and secure.
If you want more advice on Buenos Aires real estate investment and property management contact me.
Read more about Buenos Aires real estate investment.
My next article will take you through the Buenos Aires real estate purchasing process in more detail and outline some of the costs.
Many people fear owning a property, let alone owning an investment property out of state. Real Estate
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[...] Buenos Aires property investment costs and returns. [...]
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