Chile Forum

Given the amount of knowledge and experience that many of you have on this board concerning investments, properties and the like I wanted to run some ideas by you that my fiancee and I have been toying with.

We are both young, (25/30) and settling into Chile (I'm a gringo, she's Uruguayan). By next year we will be permanent residents and our business well established in Santiago (I've opened one here for my freelancing activities).

We are currently still renting the 1 bedroom apartment in Las Condes for 235 lucas (first thing we found close to family), but as I work from home I'm eager to get into something bigger. We've been throwing around the idea of looking for a 2 bedroom apartment to buy around the end of the year 2.7-3k UFs in Las Condes. The idea being that we'll live in it for a few years, then rent it out and either buy something bigger in the city or (hopefully, our dream) eventually getting land and building somewhere outside of the city on the coast (no idea where) or something that's already built in La Dehesa. The 2 bedroom seems a good size that would be easy to rent, and given what most apartments rent for if we can put a good down payment on a 20yr mortgage here, then rent would nearly cover the monthly payments, and when we're 45-ish we'll own it outright and have some renta income.

Being that I can't predict our financial futures and have zero experience in buying, investing or renting properties I thought maybe some of the folks here could chime in. We won't have a problem with the finances of buying the apartment but we will be buying just a 2 bedroom that, when we eventually start our family in the next few years (hopefully), will be too small - - sort of a gamble in some ways, as we'd have to rent that and move onto another property all over again. The second future apartment/home would be the one we'd actually want to live in longterm... not sure what sort of strength the plan has, or what sort of time-table to get loans on (10 or 15yr? 30yr?).. but it seems like something like this would be a good investment and let us own a property outright at a pretty young age (ill be 45, she'll be 50 after a 20year loan).. and it seems a waste to rent a 2 bedroom for 300 luca when for another hundred or so dollars a month we can own something.

Any advice in wading into this or websites/resources you could point us in?

Thanks

Keep renting for now, I've been looking at the apt market in Santiago for a while and it looks to me as though apts are easy to buy but not so easy to sell. Sounds like you have a lot of variables that need to fall into place 1st. YMMV

Yes, that was my argument - - rent until we definitely have permanent residency approved. We have the nest egg ready and everything else.

Do you think the hard-to-sell element would help to muscle down the price? That's the argument for making a move in the next 6-9 months.

It has appeared to me that "hard to sell" is pretty much always the case there. That's why the first place expats try to sell a property is online, to other gringos.
Hard to see what's going to happen over the next 12 months. IMO it'll be a buyer's market for longer than that.

In my opinion, it will always be a buyers market for apartments in Chile. Most Chileans (those in Santiago in particular) will no look at an apartment unless it is under construction or already build, no Chilean is going to wait around for 14 months for their apartment to be ready… they are to busy waiting around for everything else. So that forces the construction companies to try to out pace demand so that they have something to show and sell when people are ready. In a system like that there is always going to be a little more supply than demand. And that in turn hurts the resale market, because who wants somebody else’s used apartment when they can have a band new one for about the same price.

I think, if you are looking to get into the resale apartment market in Santiago you are asking for head aches… the market is simply over saturated right now… in the foreseeable future. But if you want to hold onto it and rent it out that might be something worth exploring… just be ready for long stretches with no tenants. I think the apartment we were renting was empty for 3 or 4 months before we came along to rent it.

If you buy property in Chile, be prepared to hold it forever. Apartments are always being built, making existing units dated.
Chileans buy new kitchen appliances and light fixtures when they rent. They change appliances every couple of years in their homes. You can't expect to easily sell a second hand house. Their mind set is a little different than ours.
Additionally, real estate agents or salespeople don't have the same level of professionalism you may be accustomed to. I have heard of buyers being asked to pay a real estate person to show them homes. They want to be compensated for their time if you don't purchase.
If buyers and sellers can't meet, there is no market.
Newly constructed apartment buildings, on the other hand, have sales offices on the property. That's also why they sell.

Yes, the one thing I noticed are the numerous new builds popping up all over the place here (as it may effect selling).

I'm also not very thrilled with the current exchange rate, which is taking a loss of thousands for the downpayment compared to if it were a bit higher, around 550-575 again. No idea if that will happen. The UF is also high.

The factors we have in play are that 1) we prefer Las Condes and the city for living (especially the missus), 2) we don't want to throw money away on renting when for a fraction of more per month (plus the pie payment) we could be owning. Our idea isn't to buy and then sell again anytime soon, but as was mentioned sit on the property, possibly forever, and rent it out. This of course has its own sets of hassles but I still think it a wise move in the long run, instead of just continuing to rent.

We saw a very nice apartment built by Los Ciebos in the Apumanque region. Very beautiful nook full of gorgeous buildings, actually down the street from where we rent and where the missus brother lives. The build quality was pretty good - - wood floors, great terminations, marble floors in the bathroom, etc... not like the apartment we are in now, built by Bersa, with lots of fake wood glued together. It looks nice at first glance, but after spending 7 months in it, there are lots of cheap flaws, especially the non thermo-pane windows! -BRRRRRRRRrrrrr-

This apartment is definitely out of my comfort zone, but if we could hardball the figure lower we could do it. I also think, after looking at others, the superior build quality and location will make it an easier place to rent (or maybe not, as rent would be expensive) or sell should we decide to do that - - it doesn't look like those apartments you walk into after they have 5 years and everything is crap or out-moded.

This is some confusing, and scary, stuff! Of course for the same money of that 2 bedroom I could buy a very nice house in my hometown where my parents live in the states, not with all the luxurious terminations, of course... ugh.

Take your time. Renting often makes much more financial sense than most people think. Owning property costs money.

Yeah, there's that aspect as well. The other option is just staying in our tiny apartment for as long as we can stand it (which is just around 280 lucas a month with GC) and saving up even more cash and then making some sort of move later down the road depending on where the economy, exchange rate, etc is... that is probably the best route I suppose. Wait for another spike in the peso and move in that window of time.

I am quite familiar with RE investing in the US, where there are presently screaming bargains, especially for cash-flow/buy & hold investors. When we are in Vina this Dec/Jan (very likely at this point, won't buy tickets until August), I mean to take a closer look at cash-flow investing opportunities. When I was last there, prices were high and rents fairly low, looked & felt alot like Florida before the crash. I will be curious as to how much has changed. Owner-financing seems quite common, so we may try and pick up an apartment at a bargain price to stay in when visiting and to rent otherwise, perhaps to family. The other approach would be to pick a low-income rental cheap for cash (low income rentals cash-flow well in US, will have to see if same applies in Chile) and learn how things work by doing. My wife's family is quite entrepreneurial and includes some lawyers, so we do have some resources locally. I am very, very big on due dilligence, which often involves getting out and talking to lots of different people. Easy to do with Chileans, who are generally quite friendly, like to gab and are curious about foreigners. Of course, offers get made through a Chilean with no intro to me in person to avoid the "Gringo Tax". Just some thoughts, could be that we show up and drink enough by noon every day that wine-flow takes priority over cash-flow. Not that such a thing EVER happens in Chile....

I do not know how/if prices/terms for RE have changed in Chile. Right now, patient & savvy buyers in the US can get screaming bargains. Renting presently makes less sense than ever in most US locations.....but "most places" doesn't really address your situation. I will be curious to see how things go for you, ditto Otravers who was in the market for a house some time ago.

John Hyre, Evil Monopoly Landlord with Black Top Hat

BTW, in the US, I avoid 2BR like the plague. With my crowd (generally low income), 3BR+ sells/rents very quickly, 2BR sits for ever. That may be different with say, mid-upper, properties for younger or "hip" tenants. Dunno. Just the idea of 2BR sets off alarms, been burned by them too much, but admittedly could be a case of apples vs. oranges.

For me, it's about cash flow. Which alternative is cheaper, taking all other cost into account. Be sure to include intangibles in "cost" column, such as being able to bail on a rental and go somewhere else on comparatively short notice. Also depends on how patient you are. Bargains on the buying side are generally not quickly found, but once found can tip the scales hard towards ownership. One advantage in Chile to buying a "fixer-upper" is the comparatively low cost of labor. Of course, that involves more work and due dilligence, which impose a cost in the form of time. My personal bias is towards ownership, but facts can overcome that bias.

John Hyre, Still Trying to sell a #%#< NO EMAIL >*!!!! 2BR in %$&*!!! Toledo that I bought so cheap "I couldn't lose money on it".

Toledo? Is it close to the beach?