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Real Estate Without Borders
The Surprising Truth About Why Foreigners Are Flocking to Argentina’s Real Estate Market
00:30:29
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- [00:01]
A
All right, Max. I am, I'm joined here by Max. Is it guts? Is that correct?
- [00:08]
B
That would be. Yeah, that would be the way I usually say Gotts. But yeah, that would be the way
- [00:13]
A
I, I have a lot of Swiss people in my family, so I'm familiar with the, the umlab. And. Yeah. Tell me a little bit about yourself and what you're, what you're doing and. Yeah, just curious about what's happening in the market in, in Argentina as well.
- [00:29]
B
Okay, well, I'm real estate professional licensed for the city of Buenos Aires and the province of Buenos Aires. So I own and operate a real estate firm here in Argentina. I am Argentine, I was born and bred here, but my family is from the United States. So I've kind of been dabbling in both cultures for pretty much all my life. And we operate as, sure, just a regular real estate firm, but what we predominantly do is cater to the foreign crowds, expats, foreign investors who are looking to purchase real estate in Argentina or anything having to do with real estate, managing or helping them sell or whatever, but predominantly consulting and helping from A to Z with the process of purchase of real estate, which of course can be daunting in any place around the world, but more so when you're a foreigner looking to invest in a country which is not your own. So yeah, we, we, we become like a kind of an Amazon to where in the same location, under the same umbrella, we have everything that the client might need. The consultancy service, the brokers, the showing of the properties, accountant, lawyer, notary, etc.
- [01:52]
A
So, and your clientele, would it be mostly be domestic or do you do a lot of international stuff given your connection to the us?
- [02:01]
B
Well, both, both. I would say predominantly international. I think 90% of our client base is international and within that percentage, mostly us, Canada, Western Europe, sometimes also Asia. But given I think the cross cultural thing, most of our clients are either from the US Or Canada.
- [02:20]
A
Fair enough, most of them. So like, you sell more property to people outside of Argentina than domestic?
- [02:28]
B
I would say so, yeah, as I mentioned, we operate as a local real estate firm and you know, we advertise on the equivalent of Zillow and what have you here. So we have all, obviously a local clientele, but where we stand apart is we cater, I would say predominantly. And yes, maybe some 80 or 90% of our client base is in fact foreign.
- [02:50]
A
Right. Interesting. What seems to be the draw for foreign investment in Argentina?
- [02:57]
B
Well, we actually, believe it or not, we ran the numbers on what the draw is and we Did a pie chart of it over years. There is of course, the, the investment side of it, the being, the wanting to diversify. But first of all, it's important to know that what you can buy in terms of real estate in Buenos Aires or Argentina in general, you can obtain at a fraction of the price of what you can get in other world class cities. And Buenos Aires is a world class city, to be sure. A lot of people also like to say that they become pleasantly surprised when they arrive in Buenos Aires. I don't know if you've ever been, but it's a city which is, has a very European flair, is very open to everyone, to foreigners and et cetera. And then lately, over the past several years, we've heard continuously, I don't like the direction my country is going in. That could be the us that could be Canada, that could be pockets of Europe. People keep on saying, I'm concerned about how things are in my country or the market here is crazy. It's incredible what I can do here with $100,000, $200,000. So all those reasons kind of mesh into people becoming interested, interested in having a second home here or even relocating over time.
- [04:16]
A
Yeah. So you see, like it's a bit of a citizenship play. Like people maybe get like a cottage there, like a summer home or a winter home, I suppose would be.
- [04:24]
B
Yeah, that too, that too. And we work with immigration attorneys because more and more people are looking into residency. For example, I recently was told by a German national that they are bringing back the draft because they have a concern about the spread of communism and Russia and whatnot. Mandatory draft, 19 to 49 years of age, I think. So, you know, some of them are really interested in getting out of Dodge.
- [04:53]
A
Right? Yeah, I mean, I guess similar things sort of like happening in the US with talks about, you know, that and people being engaged in a war that they may or may not, may or may not agree with. It's interesting though, like when you talk about like politics and people maybe leaving a place, like, I think I didn't know anything about Argentinian politics until Javier Milei arrived on the scene. Right. And obviously, you know, a character and a brand and.
- [05:20]
B
Yeah.
- [05:21]
A
What seems to be like, you know, like, I guess domestic opinion of the, the direction and, and leadership and I know like, you know, it would obviously be probably relatively split on people who, you know, would be attracted to that versus not attracted. And it seems like that's most places in the world. Like, you know, there's big political divides in most Democrat, Democratic Places.
- [05:39]
B
Absolutely.
- [05:40]
A
A lot of people from. Absolutely the left who maybe, you know, say, oh, I'm moving to Canada or moving, you know, and then, yeah, it switches and then the rights, the people trying to leave. So talk to me a little bit about that.
- [05:51]
B
Well, what's interesting to me is. And yeah, that does happen a lot, but in Argentina, we don't have this thing about, I don't know, I can't stand Donald Trump, so I'm leaving the country kind of a thing. You know, you may like the president here in Argentina, you may like the president, you may not, but the option of leaving the country, the option of starting over in another country is not something which is very commonplace for us as Argentines. So there isn't that. But you're right, there is. I mean, there always is a divide in terms of politics with whomever might be governing. Our current president is a character, to be sure. He has been making a policy of trimming the fat because we've had years and years and years of excess and government spending and Argentina was basically a dying patient in the hospital room. So. So tough choices have been made and we are seeing certain improvements. We're slowly curbing inflation, which has always been an endemic problem of Argentina. But sure, it's not without its problems, of course.
- [07:04]
A
Is there, like, I would imagine, any sort of massive austerity. You're pretty far into it now, though. It's been, what, two, three years? So probably short.
- [07:13]
B
Two years and change.
- [07:14]
A
Yeah, yeah, short term, I imagine painful. But I think he was pretty successful in getting inflation down and kind of creating economic growth. So is it like the economy, does it feel like it's on a better path now than it was previously for most people?
- [07:25]
B
Well, the inflation, to be sure, is being curbed slowly, but it's being curbed in terms of the economy. And I'm not an economist, but I would like, based on the day to day of what I see out and about, I would like to see for the economy to reactivate itself a bit more quickly. I'm sure we all would, but we are seeing influx of foreign investing. We seem to be on everybody's lips in my line of work, real estate. We're seeing more and more people interested in Argentina, not just for the real estate, but also because of other things they can do with energy and job production and things like that. Argentina is, you have to understand, it's the eighth largest geography in the world. Eighth largest country in geography in the world. One of the largest lithium deposits, potable water deposits. It's big on energy. And so. Because now they're opening the floodgates for all of that. You know, I don't know if you read this, but just as a silly example, Peter Thiel was here very recently. He bought a $12 million home.
- [08:33]
A
I did not hear that.
- [08:35]
B
Yeah. And in that same vein, a lot of people are, you know, coming to, to Argentina and just checking it out. And from a cultural standpoint, which I forgot to mention, a lot of people like the whole loose feel of it. It's very, I would say, relaxed. When you compare it to other, other cities around the world, very relaxed.
- [08:59]
A
That's good. Big fan of relaxing personally, so it makes sense. So let's go through, like, sort of the mechanics of this whole thing. If a foreign investor calls you, they want to buy property there. Maybe it's Peter Thiel. He went on vacation and he, you know, he, he loved it and he wanted to buy a property. What does it look like? Like, you know, you understand how real estate works in, in the U.S. and most of our audiences is from the U.S. how is it different? How is it similar? Like, what should somebody expect? Take me through the whole process.
- [09:30]
B
Well, first of all, there are cultural differences depending on the type of person you might be. They can be daunting or not. We have people who sometimes have said, I'm a seasoned investor of 20 years and have invested all over the world. And we like to say, this is Argentina, it's a different animal. So be prepared for certain cultural divides when it comes to what the process is. A lot of what the process is like is not unlike what you would see in Canada or the United States to where we might send you the list of our properties, our in house properties. And let's say that there's one that you like which goes for $200,000, and you're going to make an offer of $175,000. After you've seen it and you like it and all that, a letter of intent will be drafted where the buyer will say, I want this and I want this and I want this, and I want to offer 175 along with earnest money. Not a whole lot of money. Maybe $1,000.
- [10:31]
A
Really?
- [10:32]
B
And then from there. Yeah, and then from there, three things could happen. Offer could be accepted, offer could be rejected, or the offer could be countered. If the offer is accepted, you know, you're off to the races. That's a binding contract. If the offer is rejected, you get your money back and that's it. If the offer is countered to where the seller might say, eh, 175 is not great, but if you can go to 185, we have a deal. And if that, that counteroffer is accepted, once again, that's binding. There is only one instance where a buyer might lose that money and that is if an offer they make is accepted and then the buyer changes his mind or her mind at that point they would lose that money because there was a binding contract. So let's assume that the offer is accepted. A whole series of due diligence done by both our office and the notary public starts to take place, including title study stemming back 20 years and certain reports which have a name in Spanish which is neither here nor there. But basically what they say to you as the buyer is that if I am the seller, okay, this says that I am who I say I am and that further, I have no liens or embargoes and I can sell this property. So that tells you as the buyer from the notary side and from our office's side, okay, Daniel, you're good to buy. Everything is in order. Let's see now how we're going to work on the logistics. And the logistics you've got, I would say two ways of actually. Well, first of all, let me, let me double track one moment. We don't have very many instances of 20 year mortgages or bank loans. Property is purchased cash on the barrel head or just a one off payment. The property has a price of $175,000. You will need to pay $175,000 right then and there. You can't put 30% down and the balance over time. There are certain financing options for off project or new construction developments. But for the purposes of being succinct in what one might expect, what your audience can learn and what they might expect, let's just take a general day to day example. You need to get the money more often than not into Argentina. So again, there are two ways of actually conducting payment. What we try to do is for the most part we try to play matchmaker to a buyer and a seller, both of whom will have a foreign bank account. So let's say that you, Daniel, the property that you want to buy is owned by another fellow in Canada. That would work wonderful because you can send from your account in Canada to their account in Canada and it's pretty much instant and at the same time the deed is signed here, right then and there, or when the money impacts in your account. Because of the fact that culturally US Argentines what we like is to be able to see the money, touch it. It's a very 19th century cultural thing which still remains. The transactions are done predominantly in cash, which is to say the buyer comes with the stacks of dollars. They sit at the bank or at the office and they count them more often than not with a machine, sometimes without a machine. So you're there just doing, counting the money. And once that's counted and the notary make sure that everyone is in agreement, the title is signed, the deed is sent to the county registrar's office, recorded to your name and that's it. And right then and there you get the keys, you take possession and the property is yours. And getting the money into Argentina, one way of doing it, which is the way that we always recommend that people do it and that we're working with is a bank which will open accounts for foreigners. It can even be done remotely and it can even be done by virtue of power of attorney. Wire the money from your account to the account in Argentina and that's pretty much it. You have the money here and you're able to pick it up, maybe sign the deed right then and there at that bank or take it to wherever it is that the signing will take place. It's a multi step process. And again, and we've written an ebook on it and we have a collection of information that we like to send people so that they know not just the mechanics of it, but the cultural aspect of what to expect. Because any number of times we have people saying oh but in Holland it's this way or in Canada it's this way, or in the United States it's that way and it's very different. So you know, again we like to do, we call it hand holding. Okay, like Daniel, now this is going to happen. Okay, now Daniel, this is going to happen and now you're going to be expected to pay this and now you're going to expect to do that. And so, you know, so, so we, we go through the whole process and explain it in detail.
- [15:45]
A
Okay, makes sense. It's, it's interesting. My co host on the show, he's usually on here is he, he does that like moves money internationally. So I'll connect you guys after and maybe he can, can help you out. But sure. With any of that. But you know, I guess the next piece of the puzzle becomes like what are your incentive, what's your incentive structure like in that market? So can you talk to me a little bit about, you know, you mentioned you do some reports and Ebooks and stuff. Like, what's price growth? Like, what are prices like? Like, is, is that the, another major draw factor for people when they're coming from, you know, less affordable markets like the U.S. canada or Europe? Like, you know, what can somebody get for a million USD or half a million USD or a quarter? Right?
- [16:34]
B
Oh, yeah, yeah. Let's start from the bottom up. A quarter of a million, $250,000 will buy you a very nice apartment in the better areas of the city of Buenos Aires, let's call it Recoleta, which is like kind of a mini Paris if you walk around it. Palermo, soho, Palermo, Hollywood, Canitas. These are areas which are desirable in the northern section of the city of Ba. And you can find two bedroom, three bedroom, sometimes even a standalone smaller house. So 250 is a very, very healthy budget to work with. Half a million dollars, even more so. And a million dollars, you know, is you can, you can do just about anything within the city, within reason, because there are areas where the cost of meter is far more expensive. But to give you an idea, the average price of our foreign clients for when they buy is, I would say about 180 to $220,000 is, is what they're looking to buy. We've got people, we've had people over time who spent 1 or 1.2 million. We've had people spend 70 or $80,000. A couple of weeks ago we had a fellow from Spain who bought an apartment for $55,000. We've got all sorts of things, but you could, depending on exactly what you wanted, you could spend between 150 and 300, exaggerating 300, and do well with getting a nice piece of property which is yours, which is fully owned, which no one can take away from you, which is deeded, which is recorded and with which you can do whatever you want. You want to rent it out, you want to Airbnb it out, you want to use it five months of the year to get out of those Toronto winters. Anything you want.
- [18:34]
A
Yeah. It's interesting you mentioned, like, you know, it's yours, nobody can take it away from you. I think this is one of the concerns when people think about real estate in Central America and South America is like the security of tenure, land registry systems, etc. How does it differ from places where people might have those concerns? I'm thinking of like, you know, the case that would like really stand out to me is like, I think in Guatemala, you know, the government took land from like one of the largest Mining companies in the world. Valenco, explain to me the structure and like what makes that tenure stronger than other places in the world.
- [19:11]
B
Yeah, and we've heard those stories. I would say that Argentina stands apart. And in our. We're members of the national association of Realtors. And so we get all the information having to do with what it is like for an American or someone from the United States, that is to own land or property in the Americas. And I know that Canada is also one such case to where when you own rural land, you have to have a Canadian as a co owner. I believe there are most of American countries have rules to that effect. Thankfully, thankfully, Argentina is not one of them. There is no cause for concern that if you are a foreigner, will they expropriate it? Will there be some kind of anti capitalistic sentiment to where they will come and get me and take away my property? None of that exists. The ownership of property. For all of its faults, which Argentina has and all of its problems over the years, economically, real estate has always been a bastion of private property, whether you are a local or you are a foreigner. In fact, it continues to be the single best method of investment for both locals and foreigners alike. See, we Argentines, we grew up hearing from our parents and grandparents and great grandparents, you know, buy land, buy brick by real estate. And I think it's the same in many places around the world. But and Mark Twain said, you know, buy land, they're not making it anymore. So there is that, I think that universally accepted aspect. But to your point, and to allay any fears, you own it, you own it. There is a deed which is drafted by a notary public which is very different from the notary public in either the US or Canada. It is a deed in a publicly drafted, specially numbered piece of paper which says this belongs to Daniel. No one can come and say otherwise because it's right here in black and white, recorded and signed by a notary who was a public officer of the law.
- [21:26]
A
Yeah, it's. So does this create like, is that part of the brand that people from outside are aware that like, you know, I mean during periods of global destabilization, recession, you know, capital contraction, whatever, you start to see a little bit of a flight to quality, right? People will go to places where security of tenure feels strong. Have you seen an increase in demand in real estate in Argentina as a result? And is that the reason?
- [21:58]
B
I think that's one of the reasons. I think again, culturally people come to Argentina, those who are from the United States and Canada are enamored by the fact that it's so different from their modern settings. And those who are from Europe feel a kinship to the old country thing and the, you know, European vibe and the Italian kind of loose, friendly nature of it. So it's kind of cool because it creates like a kind of a Venn diagram of everybody coming down for those, for those reasons. In fact, there is one location in the city of Buenos Aires which is called Puerto Madero, which is the kind of brand new with high, you know, skyscrapers, 40, 50, 60 story buildings. And I haven't once had a client, a foreign client interested in buying something there because it's like the Toronto skyline or the Chicago skyline or the Miami skyline. Why they come is because they like the old vibe of older buildings and classic buildings and marble stairs and that kind of thing which you can't find all around the world. And in the places where you can't find it, you're never going to spend less than $800,000, right?
- [23:18]
A
Yeah, yeah, I would say. I mean even like Central America where you're getting quick flights, I guess you get a bit of a convenience factor. But it's not that far really to get to Argentina, right? Is it five hours from most places?
- [23:29]
B
No, I mean it's a seven hour flight from Miami. I know that Air Canada has a flight which goes straight to Chile and then here. And a sizable portion of our clients are from eastern Canada. So you know, they, they, they purchase there. I think that after the U.S. canada is probably our number two client in bulk of people from that particular country.
- [23:52]
A
And when you say eastern, like Toronto area, like Ontario.
- [23:56]
B
Toronto, Ontario. Exactly. Yeah, exactly.
- [23:59]
A
Fair enough. What, tell me a little bit about the like domestic economy. Like what? You know, like if somebody's an international business person or you know, they are for opportunities to work in the market there as well or like what do most local people do? Like what's the economy there?
- [24:17]
B
Well, I would say it's peppered around. I mean there's professionals, lawyers, doctors, engineers, accountants, everything you might expect a lot of quite a bit still, I think mom and pop stores with people owning their own stores and of course investing in supermarket franchises or other kinds of franchises, it is not the easiest place in the world to make a living more often than not because inflation, as I said, still carries quite a bit of weight. And salaries are expressed in Argentine pesos, which right now the Argentine peso is about 1,400 or the dollar is 1,400 pesos to the dollar. So for Example, property being valued in US dollars as it is, that creates a little bit of a bottleneck with not everybody being able to access housing so they have to rent. So, yeah, not to belabor the point, but still continuing to have an inflationary problem and wages not increasing as much as one would like that, you know, that creates a situation where people still have a lot of the time, a hard time making ends meet.
- [25:38]
A
Yeah, yeah. So would it be sort of evolving as a pretty disparate place? Like. I know, you know, you. Not to say that it's not a phenomena everywhere in the world right now, pretty much. But, you know, the. One of the appeals for a lot of people coming from another country is that their domestic currency has a high buying power and that their domestic salary has a high buying power and they can live a pretty high quality of life. So like somebody, you know, vacationing from the US or Canada probably is going to be in, you know, the upper 25% of society there, if not the upper 10%, and probably experience a pretty high quality of life, I would imagine.
- [26:20]
B
Yes. The short answer is yes. People who either flock to live here for a period of time or because they're relocating, they can get very far with their dollars or Canadian dollars. There are a great many things here which by foreign standards are very inexpensive. Real estate services, meals, other things though, are considered expensive. Sometimes supermarket clothes. But between the quality of life, between the culture, between how at home people feel and how far the dollar will get you, it becomes a no brainer for most people. And this is what I keep hearing over and over and over. So, I mean, I'm not saying it. People who come and see me are saying it, so it must be true, I guess.
- [27:10]
A
Yeah. Is there, I guess when we talk about disparity as well, like, you know, if you have a high concentration of wealth in the top end, low concentration in the, in the. Or, sorry, a large concentration in the bottom end. Is there issues like. I know when people talk about South America, Central America, safety is a, is a concern. Right. Can you talk to me a little bit about that? As a, as a headwind or tailwind, I think comparatively Argentina is quite a bit safer than some other places.
- [27:37]
B
Yeah, absolutely. Yeah. I would say that when you compare it to other major cities, Sao Pablo, Mexico City, I can't speak too intelligently to too many of them, but Buenos Aires is incredibly safe. Like any major city, it's a city of 3 million people. Like any major city, you want to look over your shoulder. You don't want to have your cell phone, you know, sitting next to. On a. On a. On a cafe outside.
- [28:04]
A
Yeah.
- [28:04]
B
You know, you just want to look over your shoulder on time. And there are certain areas.
- [28:08]
A
Petty crime, though, right? Like, not like, exactly.
- [28:11]
B
There are areas you wouldn't want to go to at night or during the day, but again, no different.
- [28:16]
A
That's just kind of part of the. Yeah, yeah. Most. Most US Cities have that. You know, most. Most cities in the Western world have that. Yeah.
- [28:23]
B
Yep.
- [28:24]
A
Yeah. Yeah. It's funny, I feel like people, like, it's a. It's a very convenient thing to ignore for people when they are evaluating places and they don't, like, think about, oh, that's the same phenomenon in the place that I already live. Right, because.
- [28:37]
B
Of course.
- [28:38]
A
Yeah, yeah.
- [28:39]
B
But the question is a fair one, because people tend to put all of Latin America in one same bag and it's not the case.
- [28:45]
A
It's really a shame, right, that that's the case because I feel like, you know, I mean, I think that the world. It's interesting because we live in one of the most peaceful times in history, but we have so much news. Right. Like, we get like, you know, we're getting fed this information all the time, so the world feels like it's becoming more and more violent and less safe, but the reality is we actually live in one of the safest times in human history. And. Yeah, and I would say, like, the gap between the Western world being kind of like safe versus some of the emerging markets being less safe is actually shrinking very rapidly. Yeah. Is there anything that you wish that I asked you or anything you want to leave our audience with before we wrap up here?
- [29:27]
B
No. Just to thank you for your time and just try to put the word out there that Argentina and Buenos Aires in particular, great places to come visit. And it just keeps on coming back to being on people's lips. And it's a great place to check out for vacation, for investing, for real estate. People just continue to flock down and really, really like it. So, you know, hopefully, hopefully your audience will want to check it out.
- [29:59]
A
Yeah, yeah. 100%. Where can people reach you if they want to find you, learn more, buy property, etc. I'll put all your info in the show description as well.
- [30:08]
B
But the best, just the best way to start is our website, which is mgots.com M G O T Z and all of our information, all of our contact information is there.
- [30:19]
A
Okay, amazing. Thanks a lot, Max. I really appreciate your time and looking forward to getting this one out.
- [30:25]
B
Yeah. Thanks so much, Daniel. I appreciate it.