May 16, 2005

"You are a Visionary" - A Summary

BA blur Posted by Hello

The comment I have probably heard the most since moving here from the locals is that I'm a "visionary". I'm flattered when I hear that. It is true that I have been perceptive when it comes to the real estate market. My biggest regret is that I did not purchase at the bottom immediately after the crash in December 2001. When everyone was moving all of their money outside of Argentina I was taking a serious look at the potential of real estate in Argentina. Experts say the best time to buy is when there is blood on the street. I tend to agree with that but I feel more comfortable that I formulated a business plan over the course of 2 years instead of jumping in and rushing to purchase real estate. I thought it through.

After the devaluation, I saw that just as the peso was artificially overvalued for 10 years, the US dollar was overvalued when it was approaching 3.8 pesos to u$s 1. I took a significant portion of my savings and starting purchasing Pesos. The locals told me I was crazy. Americans told me I was crazy. Many told me how the rate would hit 5 to 1. I have been publically posting since 2002 that the rate was fairly valued at between 2.75 to 3.25. That has proven to be correct over the past two years. I took all the Pesos I purchased at close to 3.8 and I started purchasing back dollars after I moved here in 2004. I purchased the u$s back at a rate close to 2.95 which I deemed to be fairly valued.

There is a reason I got into the real estate market here in Argentina. Real estate will be around till the end of time. Presidents, governments and politicians, financial crises all come and go but real estate will be around forever. With the unstability of the banking system here in Argentina it makes real estate even more attractive. Real estate will always be a safe haven for citizens of Argentina. Buying an apartment is not like buying 1,000 shares of No fortunes are going to be lost by purchasing real estate here in Buenos Aires. Now with foreign interest in real estate here -- prices are going up even at a faster rate.

I made a significant amount in the US stock market in the late 1990's but with the meltdown in the stock market I lost more than I ever made. I wish I discovered real estate earlier. In fact, many of my clients are not millionaires with money to burn. The average consulting client is a hard working professional that has worked hard most of their adult lives. Many were fortunate to have purchased real estate in the United States and the UK that they feel was tremendously overvalued. They sold their properties at a tremendous profit and they were looking for a place to diversify their investments. Many of my consulting clients didn't have plans to invest in Argentina before they came here for vacation. Many of them came to Buenos Aires and stayed in one of my owned or managed properties and were impressed with the quality of service and the properties. They could clearly see that I was on to something and this was a good business to be in.

I have never approached any of my consulting clients. These clients could see the price they were paying to stay in a hotel vs. a 5 star apartment. They much preferred a luxury apartment at a fraction of the price of an expensive hotel. People pay $300+/night to stay at nice hotels because they know what to expect. Good service, good location and no uncertainty. Many of my clients used my company every time they came to Buenos Aires and began to see that they knew what to expect in one of our luxurious owned properties. No hassles, no lies, no games and they always got their security deposit back. In fact, something that we are really proud of is that we have never had to keep a security deposit since I founded the company back in 2002.

The capital appreciation potential alone was worth purchasing real estate in Argentina for me. The tremendous rental income is just icing on the cake. Tourism is booming here in Argentina and I see no slowdown for the foreseeable future. We are not resting on our laurels though. We are not just marketing to tourists but businessmen/corporations, Embassies and now I started marketing to cosmetic surgery patients. My vision was to create high occupancy with a number of different groups year-round. That vision has become a reality.

People call me a "visonary". Maybe I am one. I do know that in what I am doing no one loses. I only purchase properties that will be highly desirable properties for rentals. My business plan is very simple. Besides a nominal monthly fee to manage the property, we make a percentage of all rental bookings. Of course we never make any guarantees or promises on the occupancy rates but if we don't rent out your property, we don't make any money. It's that simple.

Unlike a realtor that only wants you to buy an expensive piece of property anywhere in the city, my only goal is that you buy a good property that is rentable. We are in a partnership with each property management client. They make money and we make money so we have an incentive to keep the property filled. I'm in the unique position of being a property owner instead of just a website that books apartments like every other website in Buenos Aires. I know what is important from an owner's perspective.

As I mentioned, there are no losers. My clients are buying wonderful properties that many of them use when they are here. The value of the investment is not going to plummet. In fact, I believe the reverse is true. Argentina wins with tourism dollars flowing into Argentina with both property owners that are purchasing properties and clients that are renting properties. Our company is single handedly responsible for bringing millions upon millions of dollars into Argentina every year with foreign investments and tourism dollars. I would argue that besides the big hotels here in Buenos Aires, my rental clients collectively as a group, are spending more money within Argentina then almost any other group. My clients are dining out everyday, shopping, getting expensive medical procedures, and taking multiple trips within Argentina.

I have outlined the reasons why owning property here in Buenos Aires is a good investment strategy. People not only hire me because they want to make money but also because they want to save money and make sure they don't get cheated and pay fair prices. No one knows the real estate buying process and has a better list of contacts than I do. I hope that many others share in my vision.

What I have created is basically a real estate limited partnership. I am the 'General Manager 'and each of my consulting and property management clients are 'limited Partners'. I have been extremely successful in the past. I am experienced and knowledgeable with the local rental market and trends. I myself am an owner of several properties in Buenos Aires. My objective is to assist you in many possible ways. I am an expert in this matter. At the same time, I welcome comments, suggestions and questions. I not only tell you how much you are making and manage your property but I help keep you updated on market trends, the condition of your property and the capital appreciation of your property. Your objective is to make a profit on your investment. My job is to also help keep my 'limited Partners' stay focused and on track. I do not let you get distracted by things that do not affect the overall bottom line and investment objectives. I can offer many client testimonials to give other new investors an idea of what I have done for them.

For more information on becoming a consultant client and Partner and sharing in our vision, please contact us.

May 15, 2005

Capital Gains Taxes when Selling

Capital Gains Taxes when selling Posted by Hello

One of the true benefits of exiting your investment and selling your property once you want to sell it is that there is a 0% Capital gains tax here in Buenos Aires. Yes, you read correctly. There is no capital gains tax. There is a 1.5% tax called the "Transfer tax". It is 1.5% of the sales price listed on the title deed. Locals can get this waived if they are using the proceeds immediately and purchasing another property here in Buenos Aires. For foreigners it's almost impossible to get the 1.5% transfer tax waived so expect to pay this when you sell.

Remember that the 0% Capital gains tax is only if you purchased the property as an individual. If you purchased the property as a corporation, your capital gains tax is as high as 35% of the capital gain on the real estate transaction.

People often ask me why a country that is in desperate need of cash does not have a capital gains tax. You have to keep in mind the system here. As I mentioned earlier in my report, the one thing the affluent have in common is that they own multiple properties.

The other thing to keep in mind is that even if there was a capital gains tax, the locals are masters at tax evasion. I mentioned this before but I'll repeat it. Many locals do not report the actual purchase/sales price on the title deed. Many will only sell their property if you agree to record a false, lower amount. There is not a huge risk to you and in fact you will pay less property taxes but I recommend against this as the upside benefit is not significant.

Property is property though so when you go to sell it, odds are it will be sold for the going rate of the price per sq. meter and not the purchase price that you paid. This is just one of the examples of the "white" and the "black" system. The "black" system is so embedded into the society and especially the real estate community that sometimes it's impossible to avoid. I've walked away from several deals because the owners would not sell the property unless you recorded a much lower price on the title deed. I wasn't willing to do that.

Still, in each instance that I passed, another foreigner was happy to purchase the property. In fact, several times through 'it's a small world' - I have run into the buyers of each respective property and they are often surprised and amazed as I know the exact terms of their deals and what they falsely recorded the property for as I passed on the deal.

Keep in mind as a foreigner you also must get a special permit from the AFIP office when you decide to sell your property. You can't just sell your property when you are ready to sell if you don't have residency here. As long as you are up to date on all your tax obligations it will not be a problem. There is a mountain of paperwork that you will need to provide to get the permit. You must have an accountant working on your behalf to file for the permit.

AFIP will check to make sure you are up to date on your required asset/property tax (1.25% of the price listed on the title deed when you bought it) each year that you owned the property, as well as rental taxes if you have been renting out the property. I have seen it take as little as 30 days and as long as 75+ days so keep this in mind when you go to sell a property as a foreigner. You can't apply for the permit until you have an offer to purchase the property.

If you need a referral for an expert accountant, please email us as we work with the best accountants in Argentina that can usually get this permit in 30 days.

Remember that as a foreigner, you must have a local or a local Argentina corporation registered as your local tax representative. It's very important that you are up to date on all your required tax payments while you own your property. Many foreigners don't know all the tax requirements and they mistakenly think they are being taxed to sell when that is not true. They simply were not making the required tax payments so AFIP is requiring all back taxes plus penalties and interest fees.

Our office has handled several transactions for clients selling their properties. All our clients have successfully sold their properties as our office was also the registered agent on record for them and we have been paying their property/asset taxes each year as well as their rental income taxes. This has enabled them to successfully sell their property with no problems. There is a lot of misinformation out there about capital gains taxes or special taxes for foreigners. If you follow the law and pay your proper taxes, have a registered agent to pay your taxes then it will speed up the process and help eliminate problems. I have sold many properties here and by following the laws described above I have not had a problem and did not have to pay any penalties or additional taxes.

AFIP is also changing the way they deal with the locals as well. As I mentioned before, most locals are masters at evading taxes. Before November 1, 2006, a local owner of property at the closing could tell the Escribano (lawyer) that they are using the proceeds to purchase another property and avoid the 1.5% transfer tax. The law never made the Escribano ask for any kind of verification and most people didn't pay this 1.5% tax at the closing of their property. Now, when the sellers go to sell, unless they have a special permit from AFIP showing they are buying another property, the Escribano is obligated to withhold the 1.5% transfer tax at the closing. Also, many locals have never paid their asset taxes on their property and AFIP is cracking down to make sure they have paid all past asset taxes on their property.

Also, keep in mind there is 0% Capital Gains taxes only if you purchase as an individual. Many foreigners are advised to purchase as a Corporation but their lawyer or realtor never explained to them they will face a 35% Capital gains tax when selling if they purchase as a corporation. Keep this in mind when you go to purchase your property.

There is a stamp tax "impuesto de sellos" that is 2.5% when you go to purchase a property and it is split 50% with the buyer/seller. Each sides splits 1.25% for the seller and 1.25% with the buyer. Some sellers ask the buyer to pay for the entire stamp tax and they have that right. If nothing is specified on the offer, the tax is legally split between both parties.

For the most updated information and updates on tax laws, visit our direct website at

© The content on our page is copyrighted material. Please do not try copying it and pasting it to your own website and trying to pass the content off as your own work. Please email us to request permission to repost the material and you must cite our website and President of our company as the source of the material.

Annual Property Taxes

El Cabildo Posted by Hello

For those of you that aren't familiar with Argentina and the local Porteños, they HATE paying taxes. None of us likes paying taxes but these Porteños tax tax evasion to a new level. I have traveled around the world but I've never seen anything like the system here.

Basically there is a "white" system and a "black" system that the locals talk about. Many businesses in Argentina have two sets of books. A "white" one which is the legal income they make; and a "black" system which is undeclared income. I can't say that I blame them for their thinking. The government has been stealing from its own citizens for centuries. The locals tell me that if they actually saw the money going towards legitimate projects then they would pay their fair share. Instead, they feel like any money they pay will only go into the pockets of the government and its politicians.

Again, I don't blame how the locals feel. Transparency International is a well respected organization that is devoted to combating corruption around the world. It is a non-governmental agency that is known for helping to improve against corruption in civil society, business and governments. Transparency International lists Argentina as one of the most corrupt countries in the world to do business in. Only worse are countries like: Libya, Ethiopia, Zimbabwe, Iraq, Angola, Congo, Nigeria and Haiti. Argentina always tries to compare itself to Europe but they are listed with some fairly shady countries in this survey.

Before I moved to Argentina I saw this survey and told myself there is no way that report could be accurate. After moving here and doing business here I am wondering if Nigeria and Haiti should be rated higher than Argentina. Yes, it is that bad.

When I asked many locals about the annual property tax (asset tax), they told me they don't pay an annual property tax (asset tax). It was mind boggling to me that there was a property tax (asset tax) that some locals seemed to pay and some did not. It's technically an "asset tax". It doesn't really matter what you call the tax, there is a tax that is due each year based on the value of your property or assets owned in Argentina.

As amazing as it is to think about, there is no actual property/asset tax bill that you get in the mail or delivered to your property. In the USA, we dread getting that property tax bill every year at the end of December or the beginning of January. Those of us with no children (or those that have children and sending them to private schools) always complain about how life is unfair and we are paying too many taxes. Complain as we might, we are still accountable to pay our fair share of our property taxes. Here in Argentina, you don't get an actual property tax bill. It is YOUR responsibility to pay this tax to the AFIP (tax office).

As a foreigner that is purchasing property in Argentina, it is ESSENTIAL that you pay this property tax. When you go to sell your property you must get the blessing of the AFIP office via a certificate/permit saying you are up to date on your property taxes. If you aren't up to date you will not be given this certificate. Not only do you have to pay the back taxes but there is a penalty of up to 25% for each year that you didn't pay the property taxes.

For all the economic problems in Argentina going on, one would assume the government would make paying this tax very easy. WRONG. The government won't allow you as a foreigner to pay this tax. Yes, you heard this correct. You must hire an accountant to prepare this property tax for you. Most of these accountants can easily prepare it for not a huge sum of money but not cheap either. I use one of the most respected accounting firms in town and I was charged about u$s 500 to prepare mine.

There are cheaper accountants out there but I tend to use the best in the business when I do business in Argentina. You might think you are saving money by using someone with a cheaper fee but more times than not it will come back to haunt you when it's all said and done with most professional services here in Argentina.

As a non-resident you must have a local resident or corporation in good standing assigned as your local "tax representative". Our company can recommend ethical accountants that can act as your agent.

The property tax is 1.25% of the fiscal value of the property (based on what amount is recorded on your title deed). Here is where things get tricky. You might be asking yourself, "what is the actual fiscal value of the property"? That is a good question. You will find this phenomenon when purchasing property here. The sellers many times don't want to record the actual purchase price on the title deed.

They want to evade paying taxes on the actual amount so many times I have had the seller tell they wouldn't sell the property without recording a title deed of as low as 50% of the purchase price! I don't feel comfortable doing this and I've always paid the full price I paid. A few times I have actually had to pay the seller more just so I could close at the legal price I paid of the property.

So assume you purchase a u$s 100,000 property. You would be paying a 1.25% property tax bill. So you would pay an estimated $1250 per year in property/asset taxes, which is quite affordable compared to many places around the world.

Also, keep in mind there is an annual Tax called ABL Tax which you can pay annually in January of each year or if not it is billed 5 times a year split up in payments. It's easier to pay it once per year. The tax is not much. A few hundred dollars per year. This tax is charged to all properties in Buenos Aires. It goes towards garbage pick up, street cleaning and lights in the street. See the actual ABL bills from 3 apartments in Buenos Aires below.

I never liked paying taxes but always paid a lot of taxes in the USA. I use to always complain in my early years after graduating college. Then one day it dawned on me that if I was paying a lot of taxes it meant I was making a lot of money. I would rather make a lot of money and pay taxes then make no money and pay no taxes.

* I must point out that no realtors told me about this property/asset tax or explained this annual tax. Like most things, I had to research things myself to find out the answer. You will find that most realtors don't want to say or do anything that would cause you not to purchase property. I like to lay all the cards out on the table with my clients and explain everything in detail to them.

Some clients have read this website and thought I was foolish to explain everything in detail. I'm charging money to provide consulting where I give all my clients this information. If you are reading this website in detail, you will understand why it's important to have expert consultation when buying real estate here. You need someone to assist you so you don't overpay, refer you to ethical realtors, lawyers, money transfer firms, furniture stores, architects, plumbers, and painters.

Here in Argentina, you are a victim waiting to be scammed by each of those people that I mentioned. Paying an expert for consultation to avoid problems is the best money you can spend. Read our testimonials section to see how satisfied my clients are.

For the most updated information and updates, visit our main page at

© The content on our page is copyrighted material. Please do not try copying it and pasting it to your own website and trying to pass the content off as your own work. Please email us to request permission to repost the material and you must cite our website and President of our company as the source of the material.

--- Monthly Condo Fee Bill

Condo Fee Breakdown Posted by Hello

This is a monthly building "condo fee" bill that every apartment in Buenos Aires has. It lists all the property owners in the building by their name and apartment number. A bill comes every month and is given to the property owner. This is an unedited bill except for editing out part of the owner's names.

As I mentioned earlier, all the affluent families that I know here in Argentina have one thing in common. They all own multiple properties and most of them are renting them out. This is very evident when you look at a monthly expense from each building. On this one you will notice several people or familes own several apartments in the building. In this particular building, one person owns 5 individual apartments and another property owner owns 4 with a few people owning 3. I myself am in the process of attempting to purchase an entire building. I have made offers to every tenant in the building to purchase their property. It will take some time but slowly I believe it will happen over the next several years. I already have purchased several in this building. I approached the individual owners privately thus avoiding the 3% realtor's commission.

Something interesting to note on a condo fee is that it lists the "saldo anterior" (previous unpaid balance) for each property owner. It's a way to basically shame the owners into paying on time. If your neighbor is behind on his bills, everyone in the entire building will know. Of course, some owners simply don't care what their neighbors think. I own a few apartments where the owners haven't paid a condo fee in several years. It is frustrating dealing with these kind of people. They don't pay it because they know that if the building condo association wants to take legal action they must initiate a suit in court. The legal system here is so slow that it would probably take 2 or 3 years before it would be heard.

As I noted previously, the bigger the apartment the more you will pay. In this particular building I pay 204 pesos (u$s 71) per month. All monthly condo fee bills are very similar to this one.


This blog is many years old. If you want to see an updated page with recent examples of bills from November 2010 you can see them at this link below:

--- Telecom (Telephone) Bill

Telephone Bill Posted by Hello

This is my last statement for an apartment I own in Recoleta. It is unedited except for removing the personal information and the phone number from it. The two main phone companies in Buenos Aires for residential and business service are Telecom and Telefonica. Both are priced similarly. Both companies are a nightmare dealing with if you are having a problem or trying to get something changed on your account. I will go into an experience I had below. First the important details of this bill.

The phone bill is billed monthly. You can see this one is 40.54 pesos (u$s 14) per month. My phone bills are usually exactly the same every month because I have what is called a "controlled line". I lease out my properties so it's important that I block my clients from making calls to cell phones and long-distance calls. We provide a cell phone for those type of calls. Only calls to local numbers are permitted with this kind of system. There is a pre-determined credit every month (usually around 30 pesos). Once that credit/time is used, the guests need to buy pre-paid calling calls to make calls but they can still receive calls unlimitedly.

Dealing with the phone companies is a frustrating process. When I first moved here, even though I had met some local friends that could do things for me, I purposely did everything myself so that I could learn how the system works here in Argentina. The system is broken. Just to make a simple change like getting a controlled line you would think you could request that over the phone. That would be logical. Right? Very few things are logical in Argentina. You must go to the Telecom office where you don't even talk to a representative. You go to their office and guess what? They send you to stand in line so you can use their phone to call in to their office and request the change.

YES, you heard that right. You can't call to request the change from your home/office but you must go to Telecom's office to get on a phone. Ridiculous but this is how many things are done here in Argentina.

--- Edesur (Electricity) Bill

Electricity Bill Posted by Hello

This is an actual bill from my last statement for another apartment I own in Recoleta. It is totally unedited except for removing the address and the account numbers.

You can see that the utility bill format is quite similar to a typical electricity bill you would receive in the USA. (Of course the utility bills in the USA are much more expensive). The electric bill is billed every two months so you can see that the past two months of usage was only 75.85 pesos (u$s 27) for TWO months of usage. This is for an apartment that is about 750 sq. feet. It has an average monthly occupancy of about 23 days per month with short-term rentals.

Notice the usage bar chart on the bill. If you are wondering how much the former utility bills were. In March 2005, I received the two month cyle and it was only 96 pesos (u$s 33) which covered the hot summer months. I had high occupancy those months as well so the Air conditioner was running everyday. The two month cycle before that was 69 pesos (u$s 24).

--- Metrogas (Gas) Bill

Gas Bill Posted by Hello

Above is an actual gas bill I just received for one of my properties. It is totally unedited except that I deleted the name on the bill and the account number. The gas bill comes every two months. Most apartments have a gas water heater in the apartment that heats the apartment and also the hot water. Some apartments have central services that control the heat and the hot water but moretimes than not, it is individual.

You can click on the photo to enlarge it. Notice the very affordable fee of 25.79 pesos which is less than u$s 9 for two months. Keep in mind that it is just starting to get cold now as our seasons are reverse of that in the USA. Look at the usage bar chart on the bill. You can see the high usage months are July/August and September/October. Even then, the total gas bill is very affordable.

Monthly cost of Maintenance & Utility Bills

As if the cash flow from rentals and the capital appreciation potential weren't enough, another amazing benefit is the monthly expenditures of owning a property here are extremely low. In fact, my company has been contacted by several REIT's (Real Estate Investment Trusts), corporations and individual investors throughout the world. Although my company initially specialized in purchasing real estate to use as short-term rentals for foreigners, these investors realized that my company is highly respected in the real estate community in Argentina. We understand the real estate market and are able to evaluate fair prices for a particular property. A realtor's goal is to get you to spend the most money possible. After all, they receive a percentage of the total purchase price. My goal is to help you save the most money possible.

Many investors and corporations that purchase real estate around the world are recently flocking to Argentina and purchasing real estate. These investors have made it clear to me they have no plans on purchasing expensive furniture and lighting and furnishing their apartments. They have no desire to rent them out. Their goal is to simply purchase the underlying property for the capital appreciation potential. They are just starting to see what I realized several years ago. The real estate market here has tremendous upside potential for capital appreciation. The beauty is that because the utility rates are so low and the property taxes are only 0.75% per year, they can simply buy and hold for a few short years and then sell at a tremendous profit.

I personally know several people that are buying and selling and making 10% - 20% profits after only a few months. I have publically posted on various messages boards that I believe real estate prices will continue to go up over the next decade. People in Argentina have called me a visionary for what I am doing. To me, it's very clear and so plain to see. No matter what problems or crises occurs (and Argentina seems to have one about every 10 years), real estate has always been a safe haven if it is purchased in the right areas and you are not overpaying for that piece of property. I believe that traditional mortgages will become available in the future. When this does, property prices are going to continue to escalate just as it has done all over the world. I have traveled all over South America and there is nothing like Argentina. Buenos Aires is a special city.

Add in the fact that investors from all over the world (especially the USA, UK, Europe and Asia) are coming to Argentina and driving up prices. Property owners in the USA and UK have experienced tremendous capital appreciation on real estate they bought several years ago in places like London, New York, California and other cities. They believe the upside potential is limited and have sold their properties and now are looking for the next good real estate play. It's no coincidence that they all are coming to Argentina. The British Sterling and the Euro are extremely strong right now. Consider that all property here in Argentina is priced in u$s and the property is extremely affordable for these Europeans.

Remember that all utility bills and monthly expenses are in Pesos. The exchange rate will NEVER go back 1:1 against the u$s. I believe it will never go 2:1. I publically posted back in 2002 that I believe a fair value was between 2.75 to 3.25 against the u$s. That has remained true. When the exchange rate went as high as 3.8 against the dollar I saw that the dollar was artificially too strong just as the peso had been artificially too strong for over 10 years. I took a significant portion of my savings and I started purchasing Pesos. That proved to be a good strategy. After I moved to Argentina in 2004, I converted all those Pesos back to u$s dollars at an exchange rate of less than 2.95. The exchange rate can't be artificially high with the dollar or the peso. A free floating currency system will always balance itself out over time.

All apartments in Buenos Aires have a monthly maintenance fee. A sort of "condo fee". The monthly fee covers any building repairs, security or doorman expenses, upkeep of the building or painting of general areas, cleaning of the building, insurance and any other general fees. The apartments are individually owned but the tenants all split the expenses based on how big their property is. If you own a garage, you will be expected to pay more than someone that doesn't have a garage. Condo fees range on average for a u$s 100,000 apartment from 125 pesos (u$s 43) to about 500 pesos (u$s 173) for a building with a lot of amenities like a pool, gym, jacuzzi, etc. The average range is around 300 pesos per month.

Some utility bills like the telephone, cable bill, and high-speed Internet bill (if you choose to get that service) come every month. Other utility bills like the water, gas and electric bill come every two months. There is something called an ABL tax that all property owners pay. It comes quarterly and on average it is about 350 pesos (u$s 121) per year for a property valued at $100,000. You have the option of paying it quarterly or yearly. There is also a property tax that I will go into in a separate section.

Make sure you buy property insurance immediately after signing the boleto. Property insurance is inexpensive and will cover you if there is a fire. The building maintains insurance to reconstruct the building but I still always purchase insurance on my apartments and the contents of my apartments. I spend about u$s 25,000 on average in each apartment so this is essential that insurance is purchased from a reliable company. We provide all of our consulting clients with referrals to dependable and affordable companies. The typical cost is about u$s 17 per month.

A phenomenom very strange here in Argentina is that many utility bills come in the name of the previous owner maybe 5, 10, 15 or 20 years ago. Since there is no credit system in Argentina, people aren't worried about leaving their name on their utility bills. If you don't pay for a utility bill, they simply shut it off. That simple. I have changed many utility bills in my name once I buy an apartment but several still don't have my name. Why? Because these utility companies make changing them a nightmare. You have to wait in line personally for up to hours. I can't send an employee to change some of them. I have to do it myself. I don't have time to wait in line hours. The system has been like this forever so people never bother to change their name on their utilitity bills.

These companies make it impossible sometimes. Case in point, dealing with the phone company is a frustrating process. When I first moved here, even though I had met some local friends that could do things for me, I purposely did everything myself so that I could learn how the system works here in Argentina. Simply doesn't work. The system is broken. Just to make a simple change like getting a controlled line you would think you could request that over the phone. That would be logical. Right? Very few things are logical in Argentina. You must go to the Telecom office where you don't even talk to a representative. You go to their office and guess what? They send you to stand in line so you can use their phone to call in to their office and request the change. YES, you heard that right. You can't call to request the change from your home/office but you must go to Telecom's office to get on a phone. Ridiculous but this is how many things are done here in Argentina. It's managable if you know how to deal with these companies and know what to expect. Many foreigners are deluded into thinking everything will be the same as their country. They couldn't be more wrong.

You will notice on almost all utility bills there is a code to pay electronically. Once you open a local bank account you can pay all your bills online instantly. Most people stand in line and pay their bills and it can take hours. It's a very primitive process. I am set up to pay all my clients bills online for them quickly and instantly. You can print a receipt to document that you paid the bill. It's advantageous to set up directly debit with you credit card or debit card with as many utilities as possible.

Several times I have received a notice they were going to shut off my electricity or gas within 24 hours. I never received the bills. It doesn't matter to these companies. In the beginning I did not know how it all worked out. Now I have employees whose only job is to pay bills. It can be a full-time job.

* All u$s price amounts are at the current exchange rate which is 2.89 : 1 with the u$s.

May 13, 2005

Buying with your Head and not your Heart

Different people have different reasons to purchase real estate in Argentina. Most of my clients aren't buying to live in it. They are buying purely as an investment. Sure they might use the property once or twice per year for vacation but they won't be spending the bulk of their time living in it.

The biggest mistake I have seen people make is buying a property based on them living in it. They typically buy something too big in a part of town that is difficult for rentals. 99% of the real estate I buy for myself and for my clients is as an investment. Because I am specializing in higher end rentors (businessmen/corporations, tourists that would typically stay in a 4 or 5 star hotel and cosmetic surgery patients, etc.), most of them want to be in a centralized, safer part of town like Recoleta or Palermo.
Many foreigners buy a property in a location based on where THEY would want to live vs. where a tourist would want to stay for a week or two. San Telmo is quaint but businessmen aren't looking for "quaint". San Telmo is an area frequently requested by people that are here for tango and students looking for a cheap apartment. It is not the best place to purchase if you are looking for cash flow. However, property prices there are lower and the capital appreciation in the future could be a consideration. Those are the type of considerations you must make when buying real estate as an investment.
People buying property only with their heart is one of the biggest mistakes I've seen as a real estate consultant. An amazing building in a great area that the investor loves doesn't necessarily make a good investment. Buying a property because it has the details and features that YOU like, without examining the underlying economics, is a big mistake. On the other hand, you should not necessarily pass on a property because it is an ugly building or the amenities are lacking. A mistake made by many investors is looking at real estate as if it were to become their personal residence. An investment usually should not be viewed as the investor's home.

It is fundamental to keep these things in mind when buying here. Most people just buy based on whether they like the apartment. There is so much more to consider than the actual property. The three most important things in real estate are (1) LOCATION, (2) LOCATION AND (3) LOCATION. That does not change in Buenos Aires.

Areas like Las Cañitas are trendy and cool but again those areas are routinely requested by a younger crowd that can't afford a luxury apartment. I have consulted clients on the fact that those areas aren't heavily requested areas for my target audience. Still, some opted not to listen to my advice. They liked that area and insisted on buying in that area. The outcome? Their apartments weren't requested too often and they couldn't charge the amounts they wanted to charge. They ended up selling their apartments to purchase in Recoleta or Palermo Soho where I originally advised them to purchase.
I predicted back in 2003/2004/2005 that Palermo Soho would be the "next big thing". I was spot on target. Back then, there wasn't much interest in the area by developers and most locals laughed at me when I told them that someday it would be more requested by tourists than even Recoleta. 7 years later, history has proven that I was exactly right. All the interviews I did many years ago, spelling out that Palermo Soho and the surrounding area would grow and develop was accurate.

Neighborhoods like Puerto Madero are extremely expensive. The area is all new construction which always is more expensive. Some property in Puerto Madero is going for u$s 4,500 to $5,000 per sq. meter (1 sq. meter = 10.76 sq. feet).
They have some amazing properties but the problem is that I find that Puerto Madero has no "soul". It is undeveloped and there are mostly only hotels and restaurants there. There are no grocery stores, taxis are hard to find there and it feels like a ghost town more times than not. I would never live there.
I bought several properties in Puerto Madero after the crash in 2002 and 2003 while properties were very cheap there. But almost all of my investors have sold their properties for tremendous profits and bought in areas like Recoleta and Palermo where rental demand is stronger.
It is too far from places like Palermo. Also, it could be just any city in the USA. It looks the same as any other city. I prefer Recoleta and Palermo because it is very centralized. Everywhere is just a few minutes by taxi. Part of the charm for me of a neighborhood is the surrounding area. Puerto Madero indeed has a bright future and I am sure it will get developed with monster projects like the Faena Hotel and other projects going on. 

There is no need to purchase a gigantic apartment as an investment. The other big mistake people make is they buy a property that is too big. Since property here is priced by the sq. meter, buying a bigger property means buying a more expensive property.
Personally, for myself and most of my clients, I'm not buying anything bigger than 85 sq. meters for the most part. There are exceptions to that rule but I found that buying a property between 70 and 85 sq. meters is perfect for a luxury rental. However, there is a real shortage of 2 and 3 bedroom properties in Buenos Aires so those properties are becoming more desireable.
Also, it is much more difficult these days to find the ideal apartment in the 70 sq. meter to 85 sq. meter size. Many locals and foreigners have scooped up properties in this range because they are more affordable. That is forcing many buyers to purchase larger properties.

The average size higher end hotel room is less than 30 sq. meters. Having an apartment that is 70 to 80 sq. meters is more than double the size of most upscale hotel rooms. Many clients tell me, "but Mike...this apartment is too small for me and my family to stay in". I ask them how many times they have brought their entire family to Buenos Aires. The answer more times than not is "never". Then I ask them how many times per year will they use the apartment. The answer is usually one time per year. If that is the scenario then it makes sense to just rent that one time per year and buy an apartment that will produce a solid revenue stream.

My rule of thumb that I consult my clients is if they will use the apartment at least 3 months out of the year or they plan on possibly retiring and living in the apartment they should buy with their heart. If they will use it less than 2 months out of the year they need to buy with their head.
What I help my clients do is stay on track and find the motivation for purchasing real estate here. I am not in this business for a fast buck. If money was the motivating factor in my life I would have stayed in the USA and made a lot of money. I came to Argentina to improve my lifestyle and be in a city that I love. I love assisting people with purchasing a property that will produce cash flow and tremendous capital appreciation.
I am to the point now of being able to work with only those clients that I deem are a good match for me and my company. I have turned down consulting clients because I didn't think the client was a good match or felt they would be difficult to work with in the future. Life is truly too short to work with people that aren't going to do things the right way. And not everyone is a good candidate to be investing in South America. In fact, more people are probably NOT suited to invest in South America.

I bought with my head and not my heart and it has paid off. I am getting unsolicited offers for my properties that are much higher than I paid for them. The high offers are not only because the underlying real estate is worth the price they are offering. They are making those offers because of the net income that the apartment rentals are spinning off.
Every apartment that I buy for myself and my consulting clients turns into a mini business. I compare it to owning a room in a hotel. You can use it whenever you want without paying a fee and yet you still make the income when it's rented out. The "hotel" rents it out for you, takes care of paying your bills, dealing with guests, the upkeep on the property and you get the rental income every month.
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My First Real Estate Purchase in Argentina

Ok, I researched the real estate buying process for a few years. I built up relationships. I understood the laws and I looked at about 50 apartments before I bought my first apartment. I told myself that I wouldn't get cheated or conned. After walking into a loft apartment, I knew I would purchase it. I was accompanied by my realtor, the seller's realtor and the owner was also there that morning. It barely had any furniture in it. The owner was a young bachelor in his mid-30's. He was very friendly and he spoke perfect English. We started talking and it seemed he was also an entrepreneur. He also quit his corporate life to start his own company. I looked at the apartment and we happened to exchange business cards.

I saw a few more apartments that day but I knew I would be making an offer on the loft apartment that I saw. Still, I asked to see the apartment at the end of the afternoon the following day to see how much natural sunlight it got. This is something that is important. If you are seriously interested in purchasing an apartment. Go see it at various times of the day so you can gauge the level of natural sunlight.

A few days later I had my realtor make an offer on the apartment. They were asking close to $100,000 including a garage. They offered the option of not buying the garage for around $94,000. Garages in a good part of Recoleta sold for about $7,000 - $10,000. I wasn't buying this to live in. I was buying it as an investment for a luxury apartment rental so I didn't need the garage. I made an offer for $90,000 which I deemed to be a fair price. I was there in the realtor's office after I signed the offer and they faxed it to the seller's realtor. I gave them 5 days to think about it.

Imagine my surprise 2 days later when the seller's realtor informed me that the seller rejected my offer. I was a bit surprised since the seller seemed very motivated when I talked to him in his apartment. He mentioned he was starting a "start up" Internet company and needed the money to fund it. His realtor said my offer was too low. This puzzled me. Luckily I had the business card of the owner because we had exchanged business cards. I emailed him telling him it was a pity that he didn't want to sell his apartment for that price as I thought it was fair. He shot me back an email almost immediately telling me that his realtor told him that my offer was for $84,000 instead of $90,000. We were both furious. His realtor had lied to him. My realtor did things properly and never was unethical.

I set up a meeting with the owner where we planned what we were going to do. Keep in mind his realtor was not some rinky dink small operation. His realtor was one of the largest realtors in town that had been around for many years. If this is how the largest realtors operated I wondered to myself how the very small no name realtors operated. It was clear to me to see that no matter how careful you are, you can still get cheated even if you're careful.

I met with the owner and he asked for my suggestion. I told him that he should tell his realtor that he wasn't going to pay them a penny. I told him that in the USA or UK a realtor would lose their license for pulling a stunt like this. Here in Argentina they probably just get a pat on the back. Imagine if I had not emailed the owner. I probably would have increased my offer to the $94,000 asking price.

He informed his realtor that he wasn't going to pay them as I instructed him to. The seller was extremely ethical and a really great person. He told me that he would even lower the sales price and reward me since he didn't have to pay the 3% commission to his realtor. My realtor still had to split my 3% commission with the seller's realtor. You see, here in Argentina the seller's realtor is the important one. Not only do they get the 3% from the seller but the buyer's realtor also must split the 3% commission from the buyer. The seller's realtor essentially gets 4.5% of the purchase price. My realtor paid the seller's realtor 1.5%.

Two days before the signing of the title deed transfer, imagine my surprise when my real estate attorney (who is awesome by the way - probably one of the best real estate attorneys in Argentina) informed me that both realtors made a mistake. I HAD to purchase the garage. He reviewed the bylaws of the building and saw that the garage could only be sold to someone that lived in the building. The owner wanted to keep his garage since he owned a car and parking is relatively expensive. It is the realtors' job to make sure that this kind of thing is mentioned to the buyer when the buyer first looks at the property. Neither realtor mentioned this to either of us. I was stuck at the 11th hour basically buying a garage that I didn't need or want. I was disappointed with the buying process and the lack of professionalism and information.

This is a good lesson that there are so many ways to get cheated and conned here in Argentina when it comes to buying property. Luckily I did a ton of research and avoided getting conned -- but even with all my research I would have been cheated if I didn't exchange business cards with the owner.

A big part of my business now is consulting other foreigners on purchasing property. It's amazing to think about but many of my clients have never even seen their apartments that I purchased for them. They were referred by friends, colleagues or family members that I have purchased for. They know that no one in the city knows the real estate market like I do and no one is purchasing as much residential property that I am for myself and my clients. I have the best clients in the world and I have the best attorney in Argentina. I use trustworthy people and none of my clients have had problems buying and I helped them save a lot of money. The consulting fee they paid me paid for itself many times over.

Most realtors in Buenos Aires now know my company and they know the vast amounts of property I am purchasing. Some weeks I have purchased 3, 4 or 5 apartments. They know that I am an expert on property prices and they know that I know and understand the laws here so they don't even try to cheat me now. Also, they know that I'm a serious buyer and if I am making an offer I am serious and I have the ability to close on the property quickly. This usually results in a substancial savings for my clients.

Money Transfer Process and Fees

As if the realtor's commission and the lawyer's fee wasn't enough.... there is also a cost to get u$s dollars into the country of Argentina. Short of bringing it on a carry on bag (which I do know some clients that have done that), it is impossible to get dollars into the country without some sort of fee.

After the devaluation, Argentina made it difficult to get U$S into the country. Basically the banks all automatically convert every single u$s that comes into the country and they convert it to pesos. The thing is that though that they take a few cents spread. For example: if the exchange rate is 3:1 (3 pesos for every u$s 1) they will only give you an exchange rate of 2.95. So if you transferred u$s 100,000 you would get 295,000 pesos instead of 300,000 pesos. THEN since all real estate is priced in u$s, you must convert the pesos back into u$s dollars. They stick you with another few cents spread. They might charge you 3.05 instead of the 3.0 rate. So you are effectively getting charged two times. This is VERY expensive.

Out of the dozens of surveys that I paid to the foreigners that purchased here, many had problems with the banks here. Some used money transfer agencies and the money took weeks to hit the account. The trick is that some banks and money transfer agencies are using your money and since interest rates are fairly high here, they are using the "float" for a few weeks. $100,000 might not be a huge amount but imagine if they are doing that with dozens of people every month. You are talking about a few u$s million every month in float that they are playing with.

You are probably scratching your head asking yourself, "but why would you need cash"? The answer. ALL REAL ESTATE TRANSACTIONS HERE ARE IN CASH. There are a few exceptions to the rule but I've only conducted one buy/sell where we used a wire transfer. Even when both parties have US or European bank accounts, the seller still prefers cash. The reason why? Because as I mentioned above, there is a cost of getting money into the country and most are using the cash to purchase something else so they would rather have you "pay" to get the u$s into Argentina. The other big reason is these locals don't trust anything but cash.

No matter how many times I buy a property for a client, it always amazes me when the seller is sitting there counting the cash. I have purchased millions of dollars in real estate here in Argentina and every single time except for one was exchanged at the table at the title deed transfer. It is an awkward site. Imagine with the technology we have these days and people are paying cash.

The cheapest and most dependable method of getting cash into the country is by using a "private bank". There are many banks but it's essential that you use a company that is trustworthy. Remember that you literally are wiring money into their bank account overseas somewhere in the USA or Europe and they are giving you the cash. The reputable ones will ask you to sign a document stating that the funds are legal and you need to be prepared to show documentation where the funds are coming from and what line of work you are in wherever you live. The ultra exclusive banks with the best reputations won't open an account for you without an introduction from a known local entity. Our company introduces you to our private bank and they open an account for you. Most transfers only take 48 hours to hit your account.

They all charge a flat percentage rate based on the financial markets at the time of the transfer. For the past several months it has been around 1.5% of the transfer amount. A seemingly steep amount but the safest and most reliable method. I do NOT recommend carrying your life savings on a carry on. All it takes is one phone call from the customs agent going through your bag to his friends to watch you as you go through the airport and rob you on the way to the city. Keep in mind that you are legally required to declare any cash in excess of u$s 10,000 into the country. As mentioned, the customs agent can make one phone call and your money would be in jeopardy. Although the private banks charge a fee, I believe it is the safest and most reliable method.

Importance of Using a Great Lawyer ("Escribano") and the Fees

In the paid surveys that I conducted before purchasing here I found that many foreigners were cheated by their lawyers or realtors. One of the questions I asked foreigners that purchased here in Argentina was, "what mistakes did you make", "how were you cheated", "what would you do differently". A large percentage of them told me that they were incorrectly charged a phantom tax or fee by their realtor or lawyer.

The most common "scam tax" for foreigners is something called the "stamp tax" (impuesto de sello). The stamp tax is a legitimate tax that is 2.5% of the purchase price. However, the government WAIVES this tax on your first property purchase. Many lawyers charge this tax to foreigners that don't know the laws and are pocketing this 2.5% tax. Some aren't pocking the money but they honestly don't know the laws in detail. Before I purchased, I got conflicting information on this stamp tax. Some lawyers told me you had to pay it and some told me that I did not. I finally went to the tax office to ask them and they confirmed to me that it is waived on your first property purchase. Keep in mind the stamp tax is sometimes split 1.25% / 1.25% between the buyer and seller but you must request this when you make your offer if you already own more than one property. The sellers often times do not split it and ask you to pay for it as a condition of selling the property. I have paid it on some properties and on some I have split it. The important thing if you already own property in Buenos Aires, is you or your realtor make it part of the offer that you split it. If you forget, it's almost a certainty that they won't split it after the fact if you don't ask for it.

UPDATE - 1/18/06 ------- A new law was recently passed making all property purchases over 600,000 pesos (u$s 200,000) non-exempt for the waiving of the stamp tax on the first property purchase. As long as it's your first time purchase and the property is less than u$s 200,000 it is still waived. If the property purchase is over u$s 200,000, AFIP will assess a partial stamp tax.

UPDATE - 1/10/07 ----- A new law was recently passed lowering the amount above from 600,000 pesos to 360,000 pesos (aprx. u$s 116,000) So, any property that is under 360,000 pesos (U$S 116,000) will still be exempt for a first time purchase but if it is over that amount, you must pay 2.5% stamp tax on any amount over this limit.

It is ESSENTIAL to use an ethical attorney that knows and understands the laws. Keep in mind here in Argentina that every single real estate purchase must go through a special attorney called a "notario publico". Basically this notory public is a lawyer with a few more years training. They are specialized in dealing with real estate transactions. There are many lawyers here but I've found that many don't fully understand the laws or they do understand the laws but don't follow them.

Part of the reason that the title system is so stable here in Argentina is because every buy/sell goes through a notario publico and a centralized office that documents every single buy and sell. If there is a lien on the property, a skilled escribano will spot it.

When I decided to get serious about forming a consulting business and purchase significant amounts of real estate in Argentina, I interviewed many escribanos. One important thing I needed was that the lawyer could speak English almost fluently. Not only for me but for my future clients as well. It was essential that he could communicate with my clients. I found an excellent lawyer that was classy, had a great reputation, been in practice many years, respected by his peers, and was ethical.

These notario publicos aren't cheap here in Buenos Aires. The ones I interviewed that spoke fluent English charged between 2.5% up to 3% of the purchase price. It is not like in the USA or Europe. Here the deal can't get done without the escribano so it's very important that you use a skilled lawyer. There are many escribanos that might charge a lower fee but they will charge fantom fees or taxes. Built into that percentage that they charge is the title and document fees that we as Americans pay separately in the USA outlined on the title papers.

Many escribanos claim to have a lower fee of 1.5% but then add on other fees like registration fees with the government, filing fees, Power of Attorney document fees, translation fees, etc. We use the best attorneys in Buenos Aires that are totally fluent in English that have solid reputations (several are ex-presidents of the Notary Association in Buenos Aires). We don't make a commission from the legal fees. We use these lawyers because they are the best in their field. The Escribanos that we use include ALL fees inclusive of registration fees, all power of attorney documents, official English translations, getting your CDI number for you. Others claim to be much cheaper but add on many additional fees.

I can't emphasize enough the importance of using a great lawyer (notario publico). It could be the single most important part of the buying process. I'm quite amazed by the problems that some of my clients have had. Many client have come to me after they have initiated the purchase process or after they have purchased. I have many times discovered that their attorney was incompetent or dishonest. Most of my clients can't speak Spanish and most attorneys here do not speak English. It always amazes me that someone would purchase property in a foreign country without being able to fully communicate with their attorney.

There are attorneys that may be cheaper but there is a price to pay for using a great attorney with a solid reputation that speaks perfect English. Would you go to Africa and buy a property with someone that could not speak English? Exactly. Don't make the same mistake here. Use an attorney that has a solid reputation that speaks English if you are not completely fluent in Spanish.

Another piece of important advice - stay focused at all times. Use common sense. Buying property in a foreign country can be exciting but do not make any decisions or act in a way that you wouldn't act in your own home country. Common sense should always prevail no matter where you are at. Always ask yourself if you would act in a similar fashion in the USA, UK, Asia or wherever you are from. Would you use an attorney that didn't speak English in the USA on an all cash deal? Don't let the fact that you are in a foreign country change your common sense. There is very little or no room for errors when you are dealing with financial transactions in Argentina that are paid 100% in cash.

I could spend hours telling story after story of people that have used bad lawyers that cheated them or that did not know or understand the laws. Remember that these lawyers do not get paid until you close on a property and hand over the cash to the seller so that many times motivates many unethical lawyers to push through on deals that should not go through. The same thing applies to many realtors here in Buenos Aires. The main reason why many selected their attorneys was because they tried saving a few hundred dollars on legal fees. Do not make the same mistake. Make sure you use an ethical and skilled attorney that you can fully communicate with.

Real Estate Buying Process in Argentina

Before buying my first property in Argentina, I scoured the Internet looking for information. I found conflicting information. I emailed realtors and I got 5 different answers to the same question. I talked to lawyers who also gave different answers to the same question. It was very frustrating.

Before moving to Argentina, I starting researching the laws here. I found that owning property here as a foreigner was very safe. Real estate prices have steadily risen over the years - even during times of economic crises (about every 10 years). Like many others, I knew the currency was going to eventually get devalued. It was inevitable.

Property prices have always been priced in US Dollars so even though the currency devalued, property prices have held up their values. I was here during the crash. That was clearly the time to buy. The locals literally couldn't withdraw their money in their savings and checking accounts for months. There were people that were panic selling their properties to come up with cash. I've always been adventurous but I wasn't THAT adventurous to purchase during that crises. Looking back, I wish I did because the property took a tremendous dip in prices and they rebounded quickly.

I started putting ads online and in the paper asking foreigners that purchased property here to email me. I offered to pay them $150- $200 each to fill out a questioneere. I asked them what mistakes they made, how they got cheated, what realtors they used, how they transferred money here and what taxes they were charged. I was amazed at the high percentage of people that got swindled or were given wrong information or charged false taxes. I spent several thousands of dollars in those surveys but it paid off tremendously for me.

When you purchase property here in Argentina your first step is to get what is called a CDI number. The CDI number is the equivalent to our Social Security number in the USA. It's a tax ID number that is required to purchase property here in Argentina. Your lawyer can get it for you but I opted to do it myself so I could learn about the process.

Getting your CDI number is fairly easy but time consuming. You first need to make a photocopy of your passport and go to the local police station. You need to bring your actual passport as well. You tell them you want to apply for a CDI number. You fill out a form and you pay a very small fee of less than $10. You must give them an address of the hotel or apartment you are staying in. The following day, they will send an officer to verify that you are staying there. He/she will give you a paper that you must take to the AFIP office. The AFIP is the equivalent to our IRS office in the USA. It's the tax authority here in Argentina.

I went to the AFIP office in downtown Buenos Aires and I waited in line 2 hours. Make sure you have 2 photocopies of your passport with you. I didn't and when I got to the front of the line they told me it was required. I think the employee working there took pity on me and told me to go around the corner and get photocopies made and let me cut back in line. They take both photocopies of your passport and then they give you a paper that is basically your CDI application. They simply handwrite in your CDI number on the paper and then they stamp it with their official AFIP stamp. Voila! You now have a CDI number and can purchase property in Argentina.

Your next step is finding a reputable and knowledgable real estate agent. This is not as easy as you might think. I found that the vast majority of realtors in town don't have too much experience. In the USA and Europe my experience has been that the realtors are very knowledgable and really "sell" that property to you. They give you all the reasons you should buy the property. Here in Argentina, many realtors don't know simple answers to simple questions. For example: which way does the sun set and rise (so you know how much natural daylight there will be in the apartment)? Why is the seller selling? How long have they lived here? The answer to most simple questions is usually. "I don't know".

Also, a MAJOR difference here in Argentina vs. many places around the world is they charge the BUYER a commission to purchase property here. Yes, you heard that right. The standard commission is 3% + vat taxes (21% on that 3%) of the purchase price. So if you purchase an apartment for $100,000 then you would pay a realtor's commission of $3,630 ($3,000 + $630 in taxes as professional service fees have a vat tax on them).

I found it an oddity that many realtors in town are old women. I'm not sure why that is the case. I did find a realtor that is truthworthy and I find them honest to deal with. Still, compared to realtors in the USA and Europe they just don't compare here in Buenos Aires. Also, you will never hear a realtor say, "don't buy's priced too high". Realtors are given a percentage of the purchase price when you buy so it's in their best interest for you to pay the highest price possible. Not once did my realtor tell me, "Mike - this is overpriced. Let's offer a lower price".

Basically, property in Buenos Aires is priced for the most part by the square meter. (1 sq. meter = 10.76 sq. feet). That price per sq. meter will go up or down based on what part of town you are buying, the type of building (new construction vs. older), the floor the apartment is on, view/no view, etc. Mainly though property is priced by the sq. meter. New construction is priced high compared to existing buildings. Property in places like Puerto Madero is as high as $3,000 a sq. meter while property in Barrio Norte can be found for around $1,000 per sq. meter. Property in many areas of Recoleta is selling for around $1,300 - $1,500 per sq. meter.

It's a strange process here going around seeing listings. Unless the realtor is the same for the buyer and seller you almost always have your realtor, the seller's realtor and many times also the owner. I find the system here is very stone-age. No one trusts anyone here. The realtor's are all very guarded in their listings. It's very primative.

Another thing is that each apartment you look at usually has a spec sheet that details the number of sq. meters, the floor, the address, the monthly expenses of the apartment, etc. It also has things like a "luminosity scale" that measures the amount of natural sunlight. Guess what? The seller's agent is the one filling out that 1 out of 10 rating. What her idea of 10 and a normal person is rarely correct. Also, the number of sq. meters is many times incorrect on these sheets. I have seen hundreds of apartments now so I can go into an apartment and basically guestimate within a few meters the actual size of an apartment. Many times the wrong size was listed on a spec sheet. When I called them out on it, they claimed it was a mistake. The number of actual sq. meters is listed on the title to the property. Since property is priced by the sq. meter, it's important that you have an accurate size.

Ok. So let's assume you find your dream apartment. What next? You make an offer (reserva). Typically, most properties are priced a bit high so there is room to negotiate. For example, if an owner wants $100,000 -- they will try asking for $108,000 to give room to negotiate and get their $100,000. Again, it all comes down to knowing the property prices in each respective part of town. I have now looked at over 450 apartments throughout the city so I have a great comparison of what a property should be priced at. Typically, I am able to save my client around 7% on average of the asking price.

You need to place a deposit with your offer. Typically $1,000 is enough. If it's a really expensive property they will ask you to put more. I made an offer on a $800,000 house the other day and they wanted a "reserva" of $10,000. I made another offer on a $400,000 house and $5,000 was enough. Keep in mind the seller isn't getting that money. It's held in trust by your realtor. It basically shows that you are serious about purchasing the property. Once you make the offer the seller has 3 options. (1) accept your offer; (2) reject your offer or more commonly (3) counter-offer. I usually offer under the asking price unless the asking price is already fairly priced (which is rare here in Argentina).

You usually give the seller a few days to a week to think about it. Your offer (reserva) has an expiration date. They must respond by that expiration date. Here is something important to remember. Until the seller comes back with a rejection, they can't show the apartment. If your offer price is too low, the seller's realtor can refuse to take it to their client.

Once you agree on a purchase price after negotiations you have two options. There is something called a "boleto" which is basically a down payment of the total purchase price. Typically it is 30% of the total purchase price of the property. If the sales transaction is scheduled many months down the road the seller will ask for a "boleto". The boleto is basically the point of no return for both the buyer and the seller. If the buyer backs out, you lose that 30% down payment. If the seller backs out, not only do they have to return that 30% but they have to double it and return another 30%. They do this to prevent an owner to cancel and accept a higher offer. The offer had better be much much higher or it wouldn't make sense. I have never heard of a transaction not taking place once a boleto was in place.

You pay all realtor's fees at the time of the boleto. The seller is paid and a date is set for the final title deed transfer which is called the "escritura". The "escritura" is when the title is actually transferred to your name. The legal fee (which I will go into under a separate section titled "Lawyer - Notory Public - "Escribano") is paid at the time of the "escritura".

If both parties can close fairly quickly then they will forego the "boleto" and they will go straight to escritura. Typically though, they will ask you to do a "Sena". A Sena is not a full blown boleto but typically $5,000 to $10,000. It works the same way as the boleto. If you back out as the buyer you lose this money. If the seller backs out they will need to refund your sena and double it.

I still recommend that you use a "sena" to lock in the seller into selling. The last thing you want to happen is a seller to change their mind and lose out on a deal you might have spent a lot of time and money looking for. The sena helps prevent the owner from changing their mind in the form of not only returning your sena but they must return it doubled. If you can avoid the boleto and use a sena that is the best option as the realtor does not have to be paid until at least a boleto is performed. The realtor will help keep things on track as they have a big incentive in the form of their commission.

The process is not easy buying here and it's an expensive process. You should note there is NO free way to get u$s into the country of Argentina so it's expensive. You need to pay a fee. I'll go more into this in the "Money Transfer Fee" section. Keep in mind that virtually ALL property purchases here are in cash. Literally. Wire transfers to the owner or cashier's checks are almost non-existent here. The locals do not trust anything but cash. Every single purchase I have made for myself or my client was in cash with the owner sitting across the table from me at closing counting out the money. Mortgages here are very rare with only the elite with the right family name and the right jobs receiving loans and the loans can be as high as 15% per year. Mortgages are non-existent for foreigners so be prepared to pay cash for your purchase.