International Living

Bonus Reports
Prepared by the staff of

International Living

International Living

Bonus Reports
Prepared by the staff of

International Living

www.InternationalLiving.com

Copyright 2005, Agora Ireland Publishing and Services, Ltd., No. 5 Catherine Street, Waterford, Ireland. All rights reserved. No part of this report may be reproduced by any means without the express written consent of the publisher. The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed.

Table of Contents
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i

Re port One:

HO W T O RE TI R E T O PA R A DI S E T WI C E A S RI CH A ND F I VE T IM ES H A P PI ER . . . . . 1 PanamaRetiring here is not an expense... . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A safe stable government--with investment incentives . . . . . . . . . . . . . . . . . . 2 Pacific paradise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Current real estate opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 The world's most appealing program of benefits for pensioners . . . . . . . . . . . .4 The legal incentive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 How to apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Important notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The world's best offshore bank haven . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Report Two:

HOW TO EARN 500% OR MORE OUTSIDE THE STOCK MARKET . . . . . . . . . . . . . . . .8 Chapter 1: EcuadorRock bottom property prices ... . . . . . . . . . . . . . . . . . . . . 9 Trouble equals opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 South America's oldest democracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 What dollarization means . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 That's what dollarization can mean for Ecuador...what does it mean for you . . . . 10 Your dollars go a long way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Otavalo--home to the most successful indigenous group . . . . . . . . . . . . . . . . . . 11 Sample opportunities in Otavalo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Crucita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Chapter 2: MexicoThe world's top retirement destination... . . . . . . . . . . . . . . . .16 Mexico is the world's most popular retirement or relocation destination. .. . . . . . .16 The best coastal bargains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Rosarito Beach--Haven for Californians who can no longer afford California . . . . . .17 Mazatlan--famous for fishing and more... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Protect your investment with title insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Puerto Vallarta...the Pacific Coast's most "romantic" destination . . . . . . . . . . . . . 18 Funky, fun, beautiful Puerto Escondido. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Charming, safe, elegant, affordable Mrida. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 At what cost elegance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Mexico's best kept secret . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Campeche: Gulf coast jewel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Lake Bacalar: Yucatan's answer to Lake Chapala, minus the crowds... . . . . . . . . . . 2 1 Easy access to Chetumal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Year-round water sports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Investment opportunuty: The best Caribbean beachfront buy is 140 miles... . . . . . 22 San Miguel de Allende: One of our favourite places . . . . . . . . . . . . . . . . . . . . . . . .23 Why San Miguel is suddenly attracting even more attention . . . . . . . . . . . . . . . .23 So are property prices going through the roof in San Miguel? . . . . . . . . . . . . . . .24 The best places in Mexico to buy real estate (and enjoy life) . . . . . . . . . . . . . . . .24 Fountains, flowers, and Old World charm . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Mexico Insider: detailed information, reliable real estate contacts, and more . . . . .24 Real estate contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Chapter 3: NicaraguaThe best pacific coast beach buy in the world . . . . . . . . .26 Why investment makes so much sense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Investing with few restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Run your tourist business tax-free for up to 10 years . . . . . . . . . . . . . . . . . . . . .26 A straightforward law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Property overlooking the glorious Pacific: $40,000...or less . . . . . . . . . . . . . . . . 27 The good news . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 The best deal in the world on Pacific beachfront property .. . . . . . . . . . . . . . . . . 29 Your own Pacific oceanfront home for about $140,000 . . . . . . . . . . . . . . . . . . .30 Our place in the sun--friends of International Living only . . . . . . . . . . . . . . . . . . .30

Report Three:

BETTER THAN BURIED TREASURE--INTERNATIONAL BUSINESS OPPORTUNITIES THAT COULD MAKE YOU RICH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Ways to profit from your travels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Two distortions that remain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Turn your passion into profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 The $14,000 Rolls Royce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 1,900% pillow profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Free hotels, rooms, and meals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 The Big Mac index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Taking care of business--Ecuador style . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Logging on the coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Laying nest eggs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Saints preserve us. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 The cure for what ails you . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Growth Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 What's your idea? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Ecuador business opportunities by the bucketfull. . . . . . . . . . . . . . . . . . . . . . .37 A rocky past . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 The road to recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Choices, choices, choices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Money for buttons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Shrimp tales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Thinking outside the box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Another brilliant idea. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Bigger businesses for bigger profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Living the dream in the South of France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 The Stone House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 No. 7 Avenue de Pezenas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Setting up shop in Brazil--the pros the cons, where's, hows, and whys . . . . . . . . 44

INTRODUCTION
How to Live Betterfor Less Travel Farther Have a Lot of Fun And Maybe Make a Lot of Money
Dear International Living Reader, For 25 years, International Living has operated on a simple premise: We believe you can live better...for less...travel farther...have a lot of fun...and maybe make a lot of money...when you expand your world beyond U.S. shores. Our job is to help you discover places that are undervalued...under-appreciated...under-developedplaces that the masses have yet to find. And then to help you understand how you can take advantage of the opportunities these places offerto improve your quality of life...to lower your cost of living...and to invest for profitable returnbefore the rest of the world catches on. You can travel to see each of the countries described in this report with us. Part of our service to members includes what we call our International Living Exploratory Tours program. Throughout the year, we organize trips to countries we think make good sense for expatriates looking beyond their own shores. These unique Exploratory Tours allow you to investigate destinations that interest you...in the company of others who share that interest...as well as International Living staff. On these trips, youll be introduced to real estate agents who can tell you about the local market...and take you to see properties currently for sale; expatriates already living in the country...who can tell you why they decided to make the move and what they like (and dont like) about their adopted homelands; bankers; economists; attorneys; businessmen. In short, youll make all the contacts youll need if you decide to take the next step. These International Living Exploratory Tours are unique. No one else offers these kinds of programs, customized for the would-be expatriate, retiree, and investor. You can find out more by speaking with our Travel and Conference Director, Kelly Carbaugh, tel. (866)381-8446 or by email at Conferences@InternationalLiving.com; website: www ildiscoverytours.com. But you dont have to travel with us. Maybe youd prefer to go it alone. We may be able to help, nevertheless. This report is a good starting point. Youll find more help and information on our website, www.InternationalLiving.com. If you have a specific question, please contact our web editor by e-mail at webeditor@InternationalLiving.com or by sending a letter to her attention at International Living, 5 Catherine St.,Waterford, Ireland.

The worlds top havens

The collection of reports you hold in your hands, therefore, introduces you to the best places in the world right now for travel, retirement, a new life, or a smart investment: Nicaragua, Panama, Honduras (specifically the Bay Islands), France, Brazil, and Ecuador. Each of these countries is ripe with opportunity...in different ways and for different reasons. Generally,though,these places offer you a low cost of living, low taxes, interesting business opportunities, undervalued real estate, and, perhaps most important, improved quality of life. In the places we recommend for living and retiring in the pages to follow, the cities are safe...the people are friendly. The thing to remember is that these reports are only the beginning. If you think you might like to livefull- or only part-timetravel, retire, or invest in another country...well, its a big world. Where exactly would you like to go? Its a question of priorities. Whats most important to you? The weather? The cost of living? Cultural offerings? Beautiful countryside? Healthcare? Business opportunities? Taxes? Language? History? Architecture? We can tell you which countries in the world make most sense for travelers, retirees, and investors in general...but youre going to have to do a little work yourself to shorten the list to match your personal priorities. Once youve done that, we recommend you make plans to visit each country on your list. No amount of reading or research can replace personal experience. A place may make good sense for you on paper...but you might visit to find it just doesnt feel right. i

City of light
Yes, weve moved to Paris. This citys charms are not entirely lost on my husband. And he recognizes that the apartment weve bought is as much an investment as a residence-to-be. Itll be highly rentable. Weve been assured by experts we know in the local rental market...at a rate that, even given what were putting into the renovation work, we would net a 5% return per year or better. Modest but enough.

Local offices
Six years ago, we opened our International Living editorial office in Ireland.

Then, three years ago, we continued our local-level expansion. We moved to Granada, Nicaragua, to open the first of what we call our Local Offices. A couple of months later, we opened an office in Quito, Ecuador. And two months after that, moved to Panama City, Panama, and opened an International Living office there. We also have offices in France, Mexico, Argentina, Honduras, and Italy. In other words: Weve taken International Living on the road. We have identified, in recent years, a handful of countries that we believe make the most sense for expatriates looking for a new life or a place to invest and prosper. Places that offer a high quality of life at a very affordable cost plus opportunity for the entrepreneur and the investor with a little initiative and spirit of adventure. We have plans to open additional Local Offices in the future...in other places youll read about in this report. We know from experience that the only way to capitalize on an opportunity is to be connected locally. You cant act on something if you dont know about itand you cant know about it unless you are known and trusted in the local community. This is our objective. We have settled in these cities and become a part of the scene. Were the first to hear about properties for sale and for rentbusinesses on offermarket changespolitical problemsnew developments, and so on. Read on. Sincerely,

Kathleen Peddicord Publisher, International Living

ii

Report 1

HOW TO RETIRE TO PARADISE

Twice as Rich and Five Times Happier

PANAMA
Retiring here is not an expense, its an investment. The place is poised to boom.
by Kathleen Peddicord

Known mostly for its Canal, Panama is, in fact, an undiscovered tourist paradise.
Boston Globe
First, some background on Panama. To start: No more Noriega. No more U.S. army bases. Panama today is a safe, stable nation that (because of the great and extended U.S. military presence) is more like a First World country than a Third World developing nation. In Panama, things work. You can make an international phone call (at very reasonable rates) anytime you want. You can send an e-mail message every time you try. The roads are paved and pothole-free. The Panama City skyline will take you by surprise. At least, it took me by surprise the first time I saw it. Skyscrapers and bright lights spread out along the harbor. I had to remind myself I was in Central America. Panama City is the most affordable First World cosmopolitan city certainly in this hemisphere. In fact, its our top choice in the world if youre looking for inexpensive First World city living. There are restaurants offering any kind of cuisine you could have an appetite for...shopping malls...dry cleaners...pizza delivery...first-run movies...top-drawer hotels...in short, every imaginable necessity, amenity, and luxuryall at a fraction of the price you might expect to pay. In addition to Panama City, Panama offers affordable Pacific living (on the island of Contadora) and one of the worlds best mountain escapes (in Boquete, in the inland Chiriqui region). We at International Living have been so persuaded by what Panama has to offer, that five years ago we set up an International Living Local Office in Panama City. Here, our team is in residence full-time to help International Living 2

readers interested in traveling, living, or investing in their adopted homeland. They have started a new life in Panama, and they would love to be able to help you do the same. One more thing: Panama is one of the best places in the hemisphere for a private offshore bank account, a multinational corporation, or a new business.

A safe stable governmentwith investment incentives

When we first started investigating Panama around 10 years ago, we expected to find a rough and unstable government. We expected shabby, squalor conditions. We expected a lot of anti-American sentiment. We found the exact opposite. We believe that Panama is the safest, most stable place in Central America. And were not the only ones. For the past eight years, the Panamanian government has focused on getting foreigners to put money into the countrys economy. The government realizes that foreign investment will help the country as a whole...and so it has passed more than 40 laws protecting foreigners investment rights, including the Investments Stability Law, which guarantees all foreign and national investors equal rights. Major companies in Panama include Federal Express, DHL, Price Costco, Bell South, Kansas City Southern Railways, Continental and American Airlines, ICA (construction), Cable & Wireless, Evergreen, Warranty Company of the Americas, and Hutchinson Whampoa. Plus youll find just about every American franchise you can imagine on the streets of Panama City. Plus, Panama uses the U.S. dollar as its legal tender, which insulates its economy from global shocks. During the Asian monetary crisis of 1998, Panama became one of the healthiest economies in Latin America.

Pacific paradise
Maybe mountain living isnt your thing. Maybe youre in search of sand and sun. Panama has that in a bundance, too. We recommend the island of Contadora, the seventh biggest of the 90-named islands in the Pearl Islands archipelago, in the Bay of Panama, just off the coast of Panama City. Heres what friend and contributing editor to IL Bob Fordi has to say about Contadora: This is the stuff of travel magazine cover photos: turquoise waters, 13 white-sand beaches, secluded coves, bright red and yellow fishing boats, swaying palm and cashew trees, giant coral reefs, coconuts, mangoes, parrots, hummingbirds, pelicans, sea turtles, and bright tropical flowers. I even saw gray and orca whales just off the islands shores. Were so impressed by the Pearl Islands and, specifically, the absolute privacy of the island of Contadora that weve invested here ourselves. Today the island is a closely guarded secret playground for wealthy and famous political leaders, writers, entertainers, and businessmennot only from Panama, but from all over the world. This island is well off most tourists radar screens, which is exactly what the people who come to Contadora want. It has only two resorts, one small condo complex, three small B&Bs, a few small homes...and several dozen large mansions. Its a 650-acre island. During peak times, the population swells to about 1,500. Typically there are not more than 500 people here at any time. Thats not to say the island is lacking in amenities. Theres a small airstrip and daily, 15-minute round-trip flights to and from Panama City cost $58. Or you can take the ferry, which runs every weekend. Theres a new medical center on the island, several decent restaurants, a small 9hole golf course, a few small shops, a scooter rental shop, and a well-stocked grocery store. Plus, Contadora is safe. I would feel comfortable walking anywhere on the island, anytime, even in the middle of the night. At time of going to print, just four units remain. Prices range from $147,500 for a one-bedroom villa to $245,000 for a three-bed. For more information contact Bob Fordi. He is the agent for the Villas at Contadora. Bob can be reached by e-mail: rfordi@worldnet.att.net; tel./fax (240) 465-0523; website: www.InternationalLiving.com/contadora.

The benefits of a multipleentry permit

by Greg Geurin Immigration regulations require that all nonPanamanian residents obtain a permit to leave and return to the country every time they travel. To avoid this inconvenience, and especially if you plan to travel often or unexpectedly, it is advisable to obtain a multiple-entry permit, which is valid for two years. You can obtain this permit through your attorney, who will draft a power of attorney for your signature and to whom you need to give your passport. The permit is normally issued in 24 to 48 hours. If you obtain the Pensionado Visa in Panama, but intend to live most of the year overseas, I advise that you make plans to visit Panama at least once a year (although legally you can be away up to two years). In any case, you must never allow your multiple-entry permit to expire while you are overseas. To do so could be grounds for the immigration authorities to cancel your visa.

On the twelfth floor of Buganvilla, located behind the Intelligent Building in Obarrio near Calle 50, an apartment in an eight-year-old building with four apartments per floor is for sale. Very central location, air conditioning, and some furniture included. Its 1,614 square feet includes three bedrooms, two-and-a-half bathrooms, kitchen, laundry area, living room, dining room, car parking. Monthly fees: $150.00. Asking price: $145,000. On the seventh floor of Vista Obarrio located behind the Intelligent Building in Obarrio near Calle 50, an apartment in a seven-year-old building with two apartments per floor is for sale. Air conditioning installed, central location. Its 2,260 square feet includes three bedroom, two-and-a-half bathrooms, kitchen, laundry area, maids quarters w/bathroom, living room, dining room, parking for two cars. Monthly fees: $180. Asking price: $162,000.

The worlds most appealing program of benefits for pensioners

by Rainelda Mata-Kelly, LL.M. Panamanian attorney-at-law

Current real estate opportunities

On the first floor of Caney Building located in Obarrio, Panama City, near the Bristol Hotel, a four-bedroom, three-bathroom apartment is on the market, selling complete with furniture. Monthly fees come to $260. The twenty-year-old building is in a very central location. Its 3,444 square feet includes a family room, studio, big kitchen, laundry area, maids quarters w/bathroom, living room, dining room, and closed balcony with parking for two cars. Asking price $165,000. 3

Panama is, we believe, the most attractive country in the world right now for would-be retirees in search of sunshine and a low cost of living, offering one of the worlds best programs of special benefits for retirees. In fact, for the past four years, Panama has come out on top in ILs Retirement Index, and this year, comes first in our Safety and Stability category and our Special Benefits for Retirees category, offering what we rate as the best pensionado program in the worldbetter even than Costa Ricas famed (and now defunct) pensionado program of the 1980s.

Panama
Once you become a resident pensioner of Panama under the Tourist Pensionado Visa, you are eligible for the most appealing program of benefits for retirees available anywhere in the world. Now, you may be thinking: Pensioner? Retiree? That leaves me out. Think again. Because the rules for becoming a pensioner and qualifying for this visa program in Panama are probably not what you expect. In fact, anyone over the age of 18 whos receiving a pension may apply and can qualify as a pensionado in Panama. All you need is a guaranteed pension income of only $500 per month ($600 per month for a couple). It must be a pension from a government agency (e.g. social security, disability, armed forces etc.) or from a company. As a qualified pensionado/retiree in Panama, you will be entitled to: 50% off entertainment anywhere in the country (movies, theaters, concerts, sporting events, etc.) 30% off bus, boat, and train fares 25% off airline tickets 50% off hotel stays (Monday through Thursday) 30% off hotels from Friday through Sunday 25% off restaurants 15% off fast food restaurants 15% off hospital bills (if no insurance applies) 10% off prescription medicines 20% off doctors consultations 15% off dental and eye exams 20% off professional and technical services 50% off closing costs for home-loans and more...

The purchase process

There are few restrictions on foreign purchase of property in Panama. One restriction requires public ownership of property within three miles of an international boundary. Another requires that all untitled land be owned first by a citizen of Panama for a minimum of two years before it can be sold on to a foreign buyer. (After the two-year period, the land can be titled and then sold to anyone without restriction.) Much property in Panama is titled, and the country has a sophisticated, computerized land registry through which you can easily trace the ownership of property. Editors note: Nevertheless we recommend that you take out title insurance for any property purchase in Panama. This can be arranged through First American Title Insurance, 13450 W. Sunrise Blvd., Suite 300, Sunrise, FL 33323, U.S.A; tel. toll free: (US and Canada) (877)641-6767 or tel.(954) 839-2900; fax (954)838-9228; e-mail: tmurdock@firstam.com.

Ill tell you what you need to do to get this visa in a moment, but first let me give you a little background.

The legal incentive

The legislation covering this Tourist Pensionado Visa was originally drafted as a way of inviting Canal Zone residents to stay in Panama after the American military bases started closing and ultimately the United States returned the whole area to Panama in 1999. The 1987 legislation created a new type of visa providing these very attractive benefits to pensioners who chose Panama as their retirement haven. This visa is not an ordinary immigration type of visa, but a specially expedited and more economical one. And it is available to nationals of all countries. Law 9 of 1987, which created this visa, waived the $600 payment to the treasury normally required with immigration visas, and created a one-step application process (rather than the normal two steps). Plus, this new program added tax incentives. With a Tourist Pensionado Visa, you are entitled to a one-time exemption of duties for the importation of household goods (up to $10,000) and an exemption every two years of duties for the importation of a car. This latter exemption applies if you bring the car from overseas or if you buy it locally. Moreover (and this is important), the law states that if at a later date the requirements for this visa change, the changes will not affect anyone who has already acquired pensionado status (as long as the pensioner maintains the required minimum level of income). The only drawback is that, because it is not an immigrant visa, although it grants permanent residency, the Pensionado Visa does not allow the possibility of obtaining Panamanian citizenship or a passport. 4

The people to know in Panama

In a new country, one of the greatest challenges is figuring out how to get things done: How to ship a package, where to buy bed linens, how to outfit your kitchen, how best to get from the airport to where youre going. The little things. We strongly recommend, therefore, that you contact our Panamanian office if youre thinking about exploring Panama. They can tell you the easiest ways to get around the countrywhich hotels and restaurants to tryand which arent worth the moneywho the most reliable contractors are (and those youd best avoid)...the best place to go river rafting...how to find a good maid and much more. They also take subscribers on regular tours of their favorite parts of Panama. For more information on these tours, contact our team at: Conferences@InternationalLiving.com. Weve set up our team in Panama to help you do whatever youd like to do. Please take advantage of their expertise. Contact them at tel. (507)212-0344; fax (507)212-3771; e-mail: Conferences@ InternationalLiving.com.

How to apply
Some general rules apply to all visa applications: The application must be made through a Panamanian lawyer. Please treat with caution non-lawyers offering visa services. A good lawyer will assist you with the entire visa application process, advising you on the documentation you need to bring from home, obtaining all the documents that you need in Panama, and providing assistance up to the issuance of the visa. All documents from overseas must be authenticated. This means that the signature of the issuing official must be authenticated by a notary public and the notary publics signature authenticated by the Panamanian Consulate nearest you. If there is no Panamanian Consulate near you, the notarys signature may be authenticated by the apostille. The apostille (the Hague Convention of 1961) is a faster way of authenticating documents and is normally obtained through the Secretary of State in your home statenot in D.C. or through the Foreign Office (in the UK and Canada). All your documents must be newly issued (within two to three months of visa application), and passports must have at least one year to run. If your visa will cover your spouse, you must bring a transcript of your marriage certificate. However, original marriage certificates are not acceptable if more than two months old, and you may not want to part with it anyway. Therefore, you need to request a fresh transcript of your marriage certificate. If your visa will cover your children (under 18), you need to bring fresh birth certificates (not the original ones). Note that most visas, including the Pensionado Visa, do not grant a work permit. The Pensionado Visa is granted indefinitely.

Central Americas best golf courseand $2 movies

by Greg Geurin Ive made two good discoveries recently. First, the new Summit Golf Club and Resort, the closest thing Ive seen in Panama to an American-style golf and country club. In fact, it was originally opened in the 1940s for Americans working in the canal zone. Perched on a hill on the edge of the rainforest but only 15-minutes from the city, this club offers an 18hole Jeffrey Myers course and a beautiful clubhouse with a dining room, a bar, and a swimming pool. Tennis and squash courts are being added, and there are plans for a small luxury hotel on the property. Memberships are as little as $6,500 for a 25-year family membership and monthly dues are $150. You can golf as much as youd like, without paying additional greens fees. WorldGolf.com calls this the best course in Central America (even if they do list it under South American courses). Second, language lessons. Ive just begun taking private lessons. My tutor comes to the office three times a week. We meet for two hours, and the instruction is catered to my needs. The price: $10 per hour. I went to the movies last week for the first time since Ive been living here. First-run movies cost $3.75 ...unless you go on a Wednesday, when its only $2. A large popcorn and a soda is $3. (We get the same movies on the same timetable as in the States...sometimes a few weeks behind. Movies are shown in the original language with Spanish subtitles.)

Important note
The information here applies to nationals of Canada, the United States, and the EU. Nationals of other countries should make specific inquiries as to requirements and costs. As I mentioned, you should engage the services of an attorney in Panama if you are interested in applying for this special visa.

The worlds best offshore bank haven

Panama has the most modern and successful internation-

For more information

You can read International Livings past coverage of Panama at our website. Go to www. InternationalLiving.com. Or go directly to this link: www.InternationalLiving.com/panama. The Panama Owners Manual available from www.ILbookstore.com.

al banking center in Latin America (and the second largest in the world, after Switzerland), with more than 120 banks from 35 countries, including Citibank, HSBC, Dresdner, Bank of Tokyo, Bank of Boston, and International Commercial Bank of China. As one of the worlds top offshore banking centers, Panama has no exchange controls or restrictions on the movement of money in or out of the country. It is also legal and very simple to form truly anonymous corporations. Panama may very well be the best tax haven on Earth, with the most solid banking and corporate book secrecy laws in the world, engraved in the countrys constitution. Non-resident Panamanian corporations and foundations do not pay tax in Panama on any of their incomeinterest income and capital gains income included. Nor do they have any reporting requirements to the Panamanian government. 5

Panama

The view from here

By Mandy Faircloth The Pacific coast of Panama is Nature at her bestlong stretches of white-sand beachclear water for swimming horseback ridinghiking... Tranquil, tropical, and pretty much untouched, the coastline near the Costa Rican border also offers some of the best value for beachfront property in all Panama. You get a lot of beauty for your dollar. The nearby Coiba Islands offer some of the best scuba diving in Panama, and many points along this coast offer spectacular views of other islands. Id been hearing about this part of the country since I moved here and finally decided to go see for myself. I had been invited by International Living reader Gary Elmore to come see his development on this coast, called Istana Properties, and to stay the night in one of the bungalows hes built on this otherwise undeveloped land so I could get a feel for the place. To get to the property, we drove east 25 miles on the Pan-American Highway from David to Horconcitos, and then another 10 miles to Istana, located on the other side of Playa Hermosa. Ill vouch for Garys reports: The views from the property are amazing! He has two square miles on the coast, including beachfront from which you can see Playa Grande as well as Boca Chica, a fishing village of a few hundred people. On a clear day you can see Coiba Island to one side and Isla Parida on the other. Its an hour boat ride to Coiba and Hannibal Bank, known for its sport fishing. The white-sand beaches are private, and the crystal blue waters are calm and peaceful. Looking out from the beach, you see the smaller island named Isla Venado that you can swim to and fish for lobsters. Turning inland, you have a view of the lush, rolling hills by the Esterio River. From certain points on the property past the Esterio, you can even see the volcano, Panamas highest peak. Houses built here will use a central water system, and there are several natural water wells. There will be underground utilities for all of the lots, as well as septic tanks. A satellite will be installed for Internet and cable TV. The existing horse stables are being refurbished, with 16 horse stalls, tack rooms, and equipment sheds. There will be a basketball court close to this area, and a wood-fire stove for BBQs. The area is surrounded by orange, grapefruit, limon, and cashew trees, sugar cane, pineapple, and orchids. Theres a concrete pier and a boat. In addition to the Esterio, there are several little creeks and fresh-water streams and also a fresh-water, man-made lake with a bridge for you to stroll over. It took us an hour-and-fifteen minutes to get to Istana Properties from the city of David. Not all of the roads are paved. The new government has said they intend to pave the road that leads to this part of the coast by the end of 2005, but, as we remind you always, buy what you see. No, theres no paved road. But, boy...the views...

Tapas and teak

By Kathleen Peddicord A new restaurant called Manzanas has just opened in Casco Viejo, Panama. We went there for dinner one night last week with a friend...to discover that they dont serve dinner-only tapas. The owners are Spanish, with a Gaudi flair. Their restaurant is painted sunflower yellow. She wore a plastic dress to match. The decor, the art, the table settings...all were funky and fun. We sat outdoors to enjoy the not-too-hot evening and watch the nightlife on the square. After dinner, we decided to walk a few blocks to a jazz club our friend recommended. And the three of us realized together the significance of this small thing. We were walking. At night. After dark. Unescorted. Several blocks through Casco Viejo. A few years ago, none of us would have done this. A few years, ago, there were streets I wouldnt walk alone at midday. And even today, there are a couple of spots Id avoid at night. But the transformation, generally, is remarkable. You can feel this old barrio picking itself up by its bootstraps. The magnificent Spanish and French colonial buildings are being renovated. The parks are being planted with flowers. The squares are being cleaned daily. Not only had we three gringos walked these streets unchaperoned and unafraid...but families, too...children on bicycles and chasing soccer balls. The locals are enjoying the renaissance of their neighborhood as much as the tourists. Still lots of tempting old buildings in tumble-down states begging for investors with a little vision. The developer we worked with to purchase then restore Casa Ramon has a couple of other similar projects on her books. Shes asking if were interested in another go. Maybe...but we havent quite finished outfitting the one building yet.

Panama

How I came to Panama...and why I havent left

by Clayton Schmitt Editors note: Clayton Schmitt came to Panama for a visitand liked what he found so much that he decided to stay. He has made it his permanent home. Here is his story in his own words. I drove from Costa Rica, where I had been living, to Panama on a bit of a lark...dodging 230 miles of potholes en route to the border. I was curious about this country, I had not been to beforebut I must admit that I expected to dislike it. What a surprise to find, as I crossed from Costa Rica into Panama, that the potholes disappeared. I could drive 60 mph without swerving from one side of the road to the other. Not only that, but I quickly discovered that Panamas hotels are 30% to 50% cheaper than those in Costa Rica, and good restaurants are similarly economical. Not long after that initial trip, I traveled to Panama againthis time armed with a long list of inquiries about the cost and availability of food, clothing, building supplies, hardware, transportation, banking, and medical and dental careabout residency requirements, housing and rentals, personal safety, automobiles, telephone service, electricity, legal services, inflation, and culture. In nearly every category, I found that Panama came out ahead of Costa Rica. In the town of David, for example, I visited the Nissan dealer and found that a four-door Sentra with radio and air conditioning cost $10,545, including the 5% sales tax. When I got back to Costa Rica, I visited the Nissan dealer in downtown San Jose. The same car there cost $23,000, including taxmore than twice as much. So I moved. I settled in the Chiriqui province, a rural area (with lots of cattle) that extends from the Pacific Coast up into the mountains to the Continental Divide, which separates it from the province of Bocas del Toro and the Caribbean Sea. Rice is grown at the lower elevations. At higher altitude, you find large citrus orchards and coffee; and still higher, vegetables are cultivated. I rented a nice house in David, where I lived for a year. This city is safe and modern, and the people are exceptionally friendly. But it is oppressively hot and humid. A short visit is tolerable, but I found living there trying. I discovered a much more comfortable climate in nearby Boquete...and havent left since. Boquete is Spanish for gap, or narrow opening, which aptly describes the place. The city lies in a large scenic basin surrounded by mountains on three sides. Volcan Baru, Panamas highest mountain, sits immediately to the west, the Continental Divide is to the north, more mountains lie to the east, and to the south is the valley carved by the Caldera River on its way to the ocean. Boquete sits high up, at about 4,000 feet. And though it lacks snow, it bears a strong resemblance to the mountain villages youll find in North America or Europe. This town is to Panama what Estes Park is to Colorado or Sun Valley to Idaho. And, like those areas, Boquete is a recreation destination for Panamanians. The home I rent here is at 4,300-feet and sits on a 10,000-square-foot landscaped lot on a paved road. The house is fully modern, with one-and-a-half bathrooms, four bedrooms, a living room, a large kitchen, a utility room, a maids room, and a carport. I pay $275 per month, including water and refuse collection. The altitude here gives me 70degree days and 60-degree nights, all year. With no freezing or hot, humid weather, utility bills are a fraction of what I would have to pay in the States. Is it safe? Invariably, Americans ask me three questions about Panama: Is it safe to live there?... What about Noriega? and... If I buy land, will the government take it away from me? First, yes, its safe hereprobably safer than back in the States. Second, you neednt fear Noriega. Hes in jail. And when he gets out, France wants him. Third, your property is safe. In Costa Rica, squatters can make successful claims to land you own. Panamas laws do not permit such infringements on your property. Life in Boquete is tranquil and low-key. You can buy most things youll need for everyday living, though the selection is somewhat limited. (That provides us with a ready excuse for regular trips to David for shopping and a visit to a restaurant or a movie theater.) The people in Boquete and throughout Chiriqui are friendly, hardworking, and honest. Due to the United States long involvement with the canal, youll find that many people speak English (to varying degrees). We have Englishspeaking doctors, dentists, and lawyers.

Report 2

HOW TO EARN 500% OR MORE

Outside the Stock Market

1 ECUADOR
Rock Bottom Property Prices and the Recent Dollarization Mean This Could Be the Perfect Time to Invest in the Land of Eternal Spring
by Kathleen Peddicord

In early 1999, Ecuadors (former) President Jamil Mahuad called for the dollarization of the countrys currency, the sucre. A desperate measure. But desperate times call for desperate action. The sucre lost 67% of its value against the dollar in 1999 and 17% in the first few weeks of 2000. Whats happened since? Well, the country still has problems, but the worst seems to be behind little Ecuador. In 2000, the sucre was replaced with the U.S. dollar. Local oil companies made solid export profits. The IMF loaned Ecuador $2 billion to bail itself out of trouble. The economy grew by 2%citizens started putting their money back into banksand the stock market sky-rocketed, up 158% for the year. Ecuador was the only country in the world, in fact, whose stock market enjoyed a triple digit gain in 2000. What does this mean for you? For the potential investor, particularly the investor looking for real estate opportunities, dollarization and recent improvements may be a great big buy signal.

But, now, there is a promise of stability and prosperity. Prices have begun to rise.

South Americas oldest democracy

When the Ecuadorian Indians ousted President Mahuad two years ago, it was done without guns and bombs. No one got hurt. There were no shoot-outs in the streets or Molotov cocktails hurled in the air. In fact, not even a shot was fired. You see, these are civilized, peaceful people. The old government just wasnt getting it done. So the people wanted a change. They got one. Ecuadors former President, Gustavo Noboa, had two advantages over past presidents: He was an outsider, without political debts to pay and because of last years coup, local politicians were scared into working together instead of bickering. In November 2002, a new Ecuadorian President was elected Lucio Gutierrez. His promise is to curb corruption and give voice to the poor. Ecuador is, in fact, South Americas oldest democracy. The legal system is impartial, reasonably fair, and, although slow, it does work. Dollarization, although its still early in the game, appears to be working. It certainly has the economy headed in the right direction.

Trouble equals opportunity

This little country has seen its share of trouble: droughta border war with Perunear triple-digit inflation. Then came the rainstwo years of downpour that washed away much of the countrys infrastructureand its crops. Ecuadors economic woes are chronic. The country has struggled through inflation, recession, unemployment, and poverty for the past 70 years. Most recently, it has suffered from a rate of inflation as high as 60% a yearand, in September of 1999, the country defaulted on about half its $13 billion in foreign debt. 9

What dollarization really means

Dollarization has the potential to do great things for this struggling country. What it essentially means is that the sucre is no longer accepted as a means of payment except for coinage. Since September 2000, the U.S. Treasury, not the Ecuadorian government, has had effective control over the

CHAPTER

2
will go up. Indeed, they already are. When inflation goes down, workers can afford to buy more things, such as land and houses. With a stable economy, more people will become interested in buying property and living or retiring in Ecuador. This increases the demand and boosts prices. Low inflation rates make it easier for buyers to get a mortgage, and, in turn, to buy real estate. For example, its easier to get a mortgage in Panama than elsewhere in Latin America. Dollarization also makes it easier for Americans to buy real estate in Ecuador. First, it eliminates the currency risk. And it does away with conversion fees. This not only means it will be easier for you to buy property nowit will be easier for the next guy in line to buy from youafter prices have gone up. This is where the country is headingand why we believe you should consider investing in Ecuador right now.

countrys money supply, interest rates, and other economic policies. Like Panama, which also suffered a complete collapse of economic sovereignty around the turn of the last century, Ecuador has become closely linked with the U.S. If history is any guide, and we think it will be, this could finally mean a real turnaround for Ecuador. The situation in Ecuador is similar to what happened in Panama at the beginning of the last century. Panama is the only other country in Latin America to officially dollarize its currency. The country made this decision almost immediately after breaking away from Colombia in 1903.

Dollarization also makes it easier for Americans to buy real estate in Ecuador. First, it eliminates the currency risk. And it does away with conversion fees.
Dollarization has made Panama one of the most successful countries in Latin America. Its people have one of the highest standards of living in the region. Theyve enjoyed steady economic growth, and they live long, comfortable lives because of access to modern medicine and modern, efficient infrastructure. Inflation averaged 3.5% a year from 1971 to 1997, which was a lower rate than in any other Latin American countryand the United States. A stable currency is a big first step in giving a struggling country a boost. Look what the stable euro has done for the mother countries of Latin America; Spain, and Portugal. Both now have low inflation rates and are experiencing rapid growth.

Your dollars go a long way

For the past eight years, weve been on the ground paying close attention to whats been going on in Ecuador. Weve looked at the best places to buy real estateand weve identified dozens of the best moneymaking opportunities. Ecuador, you see, is a buyers marketwhich is why weve hung out a shingle here, to help readers take advantage of the many opportunities the country offers. For example If you want to build your own house you can get raw beachfront property (remember, though, theres very little infrastructure here) for as little as 15 cents a square foot. On a recent trip here we saw several small 4,000- and 5,000square-foot beachfront lots ranging from $2,500 to $4,000. One very nice lot of almost a full acre was covered in coconut palms and had a large, totally private beach and a primitive house. The asking price was $21,000. It sold for $17,000. If youre looking for better infrastructure, you might want to consider the city of Manta, a major seaport with a population of about 350,000. Its in the middle of the Ecuadorian coast. A new American military base is being built here. The military base brings stabilityand appreciating prices. But prices right now are still very low. For example,

Thats what dollarization can mean for Ecuadorwhat does it mean for you?
In short, it means pricesincluding property prices

For more information:

International Livings Local representative in Ecuador. Our representative here can help you find real estate to rent or buy, put you in touch with a reliable lawyer, tell you about the best places in the country for a relaxing holiday, help you arrange a visa, find a maid, arrange to ship your belongings E-mail your queries to Ecuador@ InternationalLiving.com. The Ecuador Owners Manual, available from www.ILbookstore.com. Firsthand Investigation: If youd like to travel to Ecuador in the company of a group of fellow investors, contact International Living Explorer Tours, tel. (866)381-8446; e-mail: conferences@InternationalLiving.com; website: www.ildiscoverytours.com. FREE E-mail Alerts: For free updates on whats going on in Ecuador, be sure youre receiving International Livings free E-letter. This daily postcard is our way of staying in touch between issues and a very important part of our service to you. Sign up at www.InternationalLiving.com.

10

Ecuador
a one-bedroom studio apartment (next to the best five-star hotel in town) with a large, marble floor, and glassed-in front porch with wrap-around ocean views is on offer now. The asking price is $20,000. In Cuenca a five-bedroom/three-and-a-half-bath, two story house. Well kept gardens front and rear in one of Cuencas best residential areas. Living room, dining room, and large American-style kitchen, study/library. Large family room with bar, sitting area, and pool table. Laundry room, workshop, maids quarters, and balcony with glass bar. Two additional rooms (formerly servants quarters) and dining and barbecue area in backyard. $179,000 negotiable. More information on www.escapeartist.com. Mountain side, half-acre to one-and-a-half acres building lots with compacted house pads an hour-and-a-half ride to Cuenca with fantastic views of the Andes Mountains. Tropical trees and plants are cherimoya, coffee, papaya, guava, mango, bananas, lemons, oranges, passion fruit, avocado, and many more are on or near lots. Starting at $25,000. More information on www.escapeartist.com. A four-bedroom home for $6,800. An American/English expat couple I know has just purchased a new construction home here in Ecuador for $4 per square foot. I know. I, too, did a double-take when I heard that price! The house is very basicEcuadors answer to pre-fab. It has exterior walls, interior walls, a roof, and nice wood floorsall well-made and of good quality materials. The $4 per square foot does not include a concrete sub-floor, (however this would cost an additional $1,000) or plumbing or wiring. The house is 1,200 square feet and has four bedrooms, room for two baths, a kitchen, and a living room. The total cost: $6,800. I wouldnt want this house as a permanent residence, but it would be ideal for a second home at the beach or in the mountains. I dont expect these prices to remain constant, as prices in general here in Ecuador are beginning to move up. Right now, though, this qualifies as a buy of a lifetime. Prices, as you can see, are ridiculously low throughout the country. Yet youll find these bargain properties boast the kinds of finishings you almost never find in North America anymorethick hardwood floors, cabinets and doorselaborate moldingscarved mantles on working fireplacesbeautiful tile work throughout the house. If youd like to come down to have a look yourself, I know of a nicely furnished apartment in a brand-new highrise with wonderful views where you can stay for only $250 per week, including daily maid service and laundry. One thing to remember about the prices Im quoting here. Asking prices for real estate are rising throughout the country. But, importantly, selling prices are not. In other words, the bargains remain unbelievable. You may have to work a little harder to realize them, though. However, if you are interested in buying in Ecuador, I encourage you to act sooner rather than later. There is a growing interest in real estate in this part of the world, and it wont be much longer before sale prices do begin to rise.

Otavalohome to the most successful indigenous group

Just an hour-and-a-half north of Quito on the well-main-

Colonial Quitothe hottest opportunity in Ecuador right now

Colonial Quito, by which we mean Quitos historic center, is unquestionably the best investment you could make in Ecuador today. While living here may not be for everyone, there is no better place to put your money right now with respect to upward potential on properties. There are a few reasons for this: First of all, Colonial Quito became a bit worn around the edges. Crime was a problem, street vendors were annoying, and it was one of the least desirable places to live in the area. Over the last few years, both Cuenca and Guayaquil have restored their historic centers, and have made a remarkable recovery. Foreign tourism picked up, Ecuadorians came back, and property prices steadily rose. This left Quitothe nations capitalas the last man standing with respect to having a nice historic center. But then the city stepped in. The city now has a program to clean up and restore Colonial Quito, and theyve been moving ahead since 2003. The street vendors are gone, buildings are being restored, and the area is now pedestrians only on the weekends. With respect to properties, the city is buying up many old fixer-uppers, and looking for buyers who are willing to restore them. Theyll even give you a price quote, hire you a contractor, supervise the work, and give it to you turnkey. Financing is available for certain properties. These are antique homes that can be fixed up, but never re-createda precious part of Quitos heritage. Living here youll enjoy the conveniences of a big citymore than 300 days of spring-like sunshine a yearall the while surrounded by jagged peaks and beautiful vistas. To give you an idea of the kind of opportunities available right now in Colonial Quito: A 4,320-square-foot threestory home on Calle 24 de Mayo is asking $20,215. (Admittedly it is in need of some work.) Also up for grabs is an old three-story home with three bedrooms, two bathrooms, and a terrace with a spectacular view of the historic center of the city. It has a small store with it that could be rented out for about $100 per month. The asking price is $30,000, and the owner is anxious to sell. It probably needs between $5,000 and $7,000 invested to bring it up to American standards, after which you could either move in, or rent it out for an estimated $500 to $600 per month.

11

CHAPTER

2
probably an Otavalo band you see playing traditional Andean music on the street at summer festivals in Chicago or New York and throughout Europe. Traveling Otavaleos sell sweaters and fine textiles at many flea markets and craft shows around the world. Because of their success, the Otavalo Indians have resisted the pressure on most other indigenous groups to assimilate North American jeans and tennis shoe culturethe women proudly wear their embroidered blouses and gold beaded necklaces, and the men keep their long, braided hair and wear distinctive hats, white trousers, ponchos, and sandals.

tained Pan-American Highway is the town of Otavalothe location of South Americas most thriving indigenous market. The drive winds through the northern Sierras, and along the way youll see some of the most beautiful farms in the country, many tended in the traditional manner with oxenplowed fields. The vistas here are dramatic, with views of exquisite snow-capped mountains. The Otavalo Indians have become the best known and most prosperous indigenous group in South America. Its

How we bought our property in Ecuador

by Lee Harrison and Julie Lowrey We are now the proud owners of a lovely home near the eucalyptus-studded banks of the Tomebamba River in the beautiful city of Cuenca. This has been the experience of a lifetimeboth choosing the city and the house and going through the process of purchase and closing. It was just three hours from the time we walked into the attorneys office to make the initial offer until the sale was closed at the office of the notaria. We had everything in order beforehand, including the title search and our check. Still, it was a quick and painless process. As IL suggested in the Ecuador Owners Manual, our top priority once we had chosen the house we wanted to buy was to obtain the assistance of a respected English-speaking attorney. We worked with Dr. Adriano Vintimilla Ordoez. Dr. Vintimilla is an attorney for the consulate and president of the EcuadorAmerican Chamber of Commerce in Cuenca. As a former bank president and long-time resident of the area, his contacts and influence are extensive. He handled the legal matters quickly and efficiently and negotiated with the sellers on our behalf, with excellent results. His phone number in Cuenca is (539)7-831-600. Before this purchase, my only experience buying real estate had been in the States. I was surprised, therefore, by the informality of the proceedings in Ecuador. We all packed off to the sellers place of work, formed his guest chairs into a circle, and began negotiations in his office! A half-hour later, it was bear-hugs and kisses all around as the deal was struck. Things progressed as described in ILs Owners Manual. We expect to have our copy of the escritura in three weeks. Meantime, were preparing to settle in to our new country. Editors note: You can obtain a copy of the Ecuador Owners Manual from International Living Reader Services, tel. (800)643-2479; e-mail: customerservice @InternationalLiving.com. Kathy Gonzlez and David Morril are a good contact for real estate in Cuenca. Contact them at tel. (593) 27-891-667; cell. (094)500-325; e-mail: Kathy@cuenca realestate.com; website: www.cuencarealestate.com.

Ecuador is, in fact, South Americas oldest democracy. The legal system is impartial, reasonably fair, and, although slow, it does work. Dollarization, although its still early in the game, appears to be working
The majority of the areas population lives in approximately 75 separate communities outside the town of Otavalo, in the province called Imbabura for the mountain that rises next to Lago San Pablo, one of the many mountain lakes in the region. While Otavalo is known for textiles, the nearby villages have their own particular crafts. Cotacachi is a leather center; its main street is lined with shops selling coats, handbags, bootsanything that can be made of leather is on offer here. The artisans of San Antonio de Ibarra specialize in woodcarving, carrying on Ecuadors long tradition of santos, or statues of Catholic saints and angels. The area has great horseback riding, sailing, trekking, and climbing, and several of Ecuadors most popular guest haciendas are found here.

Sample opportunities in Otavalo

For sale in an excellent location in Otavalo is a fourbedroom home with two balconies, three bathrooms, fireplace, study, and an independent apartment upstairs with three bedrooms and one bath. Its brand new (the inside needs to be finished) and the asking price is just $70,000. Write to wfarinango@yahoo.com for more information. Also, theres a somewhat older home on offer with six bedrooms and two baths. The asking price is $65,000. Call (593)9766-3259 or (593)6243-0454 for more information on this one.

Crucita
Crucita is a charming village of 15,000, where people earn a living from fishing and growing rice, tomatoes, corn, and pearl onions. The towns Malecn, or ocean walk, is clean and the road alongside it adjacent to the beach is paved and well-maintained. For tourists, the area is popular 12

Ecuador
for paragliding. We learned of some opportunities at press time from James Cheek, one of our contacts in the area. He has a house near the beach in a small subdivision in Crucita. It contains four bedrooms, three bathrooms, an open kitchen, dinning room, living room, access to the flat roof and a laundry room suitable for a small bed and employee for $65,000. Check out his website: www.miravistaSA.com. Jorge Loor has lots located in a good area of Crucita, with a great view of the Pacific Ocean and the village of Crucita. Its available for just $26,000. He also has a twobedroom, three-bathroom house in Crucita in front of the beach with a private path leading you toward the Ocean. It has 1,560 square feet of construction. The asking price is $115,000. Jorge knows of property outside Crucita as well. For example, near the nearby village of San Clemente, in an area called San Jacinto, where things are still quite primitive, good deals start at $7,000. Jorge has some of these properties and more on his website: www.crucita.com.

IL readers dream home on the lago

The Montgomerys came to Ecuador in 1999 on an International Living tour, looking for new opportunities and an escape from Chicago winters. They fell in love with Laguna San Pablo and the Otavalo area, and later reached an agreement with the owner of Hacienda Cusin, Nicholas Millhouse, to lease a section of the hacienda grounds on which to build. Millhouse is a staunch defender of local culture and aesthetics. He has allowed the construction of only two other houses on this section, ensuring spacious yards, clear views, and a tranquil atmosphere, not only for the owners, but for Cusins staff and the population of nearby San Pablo del Lago as well. Weve heard that another renovated hacienda in the area is offering similar building opportunities. Using local artisans and materials, the Montgomerys designed their modern, 1,000-square-foot home to compliment the haciendas surrounding structures. With two baths, a large guest room, a spacious upstairs office, storage areas, an observation tower, and huge back patio, total construction costs came to $27,000or about $27 a square foot. Construction costs in Ecuadors central valley normally range from $20 to $50 per square foot, depending on the quality of workmanship and materials. The Montgomerys combined high quality with low cost by using Cusins own expert artisans for construction. The house is now known on the hacienda as Casa Esmeraldas. Beautifully decorated by Paula with local artwork, weavings, and furniture pieces, its a shining example of how economy, luxury, and appreciation of local culture can be combined for maximum effect by smart buyers in Ecuador.

Why Im packing up and moving to Ecuador

by Lawrence Williams I returned recently from 10 days in and around Quito, Ecuador. Did I like it? The day after I returned to Sacramento, my wife and I listed the house for sale and, eight days later, had a firm sales contract. We are now sorting furniture and personal items, giving away as much as we can, arranging for eight weeks of one-on-one classes at Simon Bolivar Spanish School in Quito, and working with the Ecuadorian consulate to obtain a six-month visa. We were advised by both Ecuadorians and recent expatriates to apply for residency while in Ecuador. Often, when a consulate grants it in the United States, it is necessary to re-apply in Ecuador. Local officials sometimes choose not to recognize residence permits issued outside the country. During our stay in Quito, we spent several afternoons looking at some inexpensive houses being built by a quasi-government agency. The area manager priced two houses for me. A small one, about 466 square feet, cost $4,653; the largest unit, about 1,443 square feet, cost $12,815. Ecuadorians receive a 20% discount. I traveled to Tumbaco to meet with Acosta Fausto, who is building earth homes all over the country. The walls are hand-compacted, using an earth and straw compound. Looking at the compound, which shows five variations of the structure, I was reminded of some very up-scale areas of Southern California. The walls of the houses are two-feet thick, so a 2,000-square-foot house does not yield 2,000-square-feet of living space. But at a building cost of $150 per square meter, its hard to go wrong with a 300-square-meter house (about 3,228 square feet gross) for $45,000. The architect agreed that he would have to modify his building plans for me if I bought one of his houses. I am 65 and had to duck to get through the doors. The opportunities here are unbelievable. They far outweigh the risks. Anyone with a bit of adventure in his soul should move to Ecuador as soon as possible. It would take volumes to write about all of the possible business, tourist, and personal things you could do. I am 65 years old and may need two or three lifetimes to accomplish all of what I have already planned. I stayed at the Casa Sol, tel. (593)22-30-797. The people there are friendly and helpful, on duty 24 hours a day, and the food is very good. Except for the management, very few members of the staff speak English.

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The low cost of living in Ecuador

by Lee Harrison Weve been reading a lot lately about the cost of living in Ecuador, and I thought Id write to share my personal experience since moving to Cuenca from Manhattan two years ago. In short, our move here has turned out even better than we expected, and were thoroughly enjoying our new life. Overall, Id say were spending about what wed planned prior to the move, with some items costing more than expected, some less. For example: Our property taxes came to $120 for year 2004 (for a 4,000-square-foot home). Electricity and trash collection combined have been $40 per month. Gas, which we use for the clothes dryer, range, and hot water, runs $3 monthly. I paid $9 for two new pairs of good, locally made jeans. Imported Levis, on the other hand, may cost as much as $60 a pair. Full-coverage insurance for our Toyota Land Cruiser runs $650 per year, while the state-of-the-art alarm system was only $85, installed. Insurance for the house and contents runs $680 per year, more than I expected (about twice what I paid in the States for the same dollar-value coverage). Dinner at the Villa Rosa, one of the finest restaurants in Cuenca, is about $35 for two, including cocktails, appetizers, wine, and dessert. Dinner for two at Pedregal Azteca, our best Mexican restaurant, with appetizers, runs about $20, including two beers apiece. Almuerzo, the main meal of the day for many, includes a hearty soup, a main dish including rice and vegetables, dessert, and fresh-squeezed fruit juice. For this weve paid between 85 cents and $1.90 each. (The $1.90 restaurant is located in the courtyard of one of the citys finest historic homes, and is one of the only places in town offering good ol chocolate cake with frosting.) A 24-hour security guard for the neighborhood (our share) runs $25 per month. The workers we employed to remodel the house earned $1 per hour; the master craftsman earned $2.25. Importation of our household goods, including several still-in-the-box appliances, was free of customs duty. The move from New York cost us about $9,000, including packing and unpacking.

Overall, were spending about $1,200 per month, excluding foreign travel. (Our house and car are already paid for.) This number includes, however, eating out three to four times per week, entertaining at home, making charitable donations, going to the movies, etc. You could spend less. As for the real estate market, prices seem to be dropping since weve been here. Here are a few items from this mornings paper, where the least-expensive house listed was $25,000, and the most expensive was $160,000: A 740-square-foot two-story apartment, with two bedrooms and garage. Price: $36,500. Luxury apartments, with two and three bedrooms and adjacent garden. Price: from $38,000. A new house, with garden containing orchids. Price: $40,000. A two-story villa containing two three-bedroom apartments. Price: $46,000. A four-bedroom, three-bath home in a private neighborhood, including laundry room, maids quarters (with bath), terrace, and garage. Price: $86,000. A 4,000-square-foot villa in the historic center of town, with two large apartments and a storefront, with garage, gardens, terraces, and interior patio. Price: $110,000. (We plan to look at this one ourselves.) Keep in mind that these are the asking prices. Given the current economic conditions here (due in part to less money being sent home from Ecuadorian expats living in the States), its possible to do even better.

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Ecuador

Update from the Equator

By Sven Lorenz A taxi ride for 50 cents? A night in a four-star hotel for $75? Sushi for $4.50? If all of that sounds too good to be true, rest assured...I personally struck all these bargains last week in Ecuador. Located right on the equator (hence the name), Ecuador is a place of astounding natural beauty. Despite covering a mere .02% of the worlds landmass, its home to 10% of the worlds plant and animal species. I came to Ecuador because of these natural attractions, not in search of an investment opportunity. My thoughts were with the sea lions, the mantas, and the sharks that inhabit the waters around the Galapagos. But moving around this country, I couldnt help but notice things that could prove the seeds of solid investments. To start, Ecuador is incredibly cheap. Granted, the taxi ride in Quito wasnt 50 cents, as I mentioned above. It was $4but that gets you a 25-minute cab ride from the airport to the hotel, including tipfor the same price as I would pay in London merely to board a cab. (That taxi trip for a half-buck did happen. Thats what I paid for the water taxi to take me from the Galapagos capital, Puerto Ayora, to my hotel. Compare that with the price of a water taxi in Venice!) And remember: Ecuador is one place where the U.S. dollar is not losing value right now. After the late-1990s debt default, Ecuador decided to tie its currency to the greenback. The dollar is the official currency...so theres no currency risk. Another plus: South American airlines are now in much better shape than their U.S. counterparts. As a local told me, in South America, most airlines are still state-owned and heavily subsidized. Thats bad for the local taxpayer, but its great for foreign travelers. As an investment destination, South America is currently largely ignored. The continents reputation is still reeling from those debt defaults of the 1990s. But eventually South America will get back on its feet. As we remind you often, boom and bust cycles can be extreme in this part of the world. In South America, people either have no money...or LOTS of money. During a bust, you can pick up assets for pennies on the dollar. When things recover, the market is suddenly awash in liquidity, and prices soar. In economic terms, South America has much to offer. Not only is it rich in resources, but it also has a big and growing base of young people. Consider how bad demographics are influencing growth rates on the European mainland, and you realize just how critical a factor that can be. It wont be long before I head back to South America. I see here opportunity to get into overlooked and forgotten assets at rock-bottom prices. Brazil is home to the second-cheapest stock market of the world, to give you one example. Only Russias is cheaper.

Ecuador in eight days

By Jessica de Haugan If you want to experience Ecuador, take the Ecuador Ethnogastronomic Tour and revel in the discovery of little known villages where ancient truths and secrets are alive and well. Over the course of eight days this expedition introduces travelers to the native people of the Ecuadorian Andes with visits to four indigenous communities. Youll get to share in their unique customs, taste their traditional foods, delve into their knowledge of medicinal plants, and meet the shamans. After you experience the deep rituals and proud traditions of the medicine men and walk through their sacred gardens, you will be changed forever. You will also get to explore the colonial cities of Quito and Cuenca and experience the spectacular natural beauty of the high Andes. There are special departure dates for International Living readers in 2005: June 17 and Sept. 23. Even better, International Living members will receive a free city tour in Guayaquil as a courtesy of Columbus Travel. The price per person for the tour is $1,100. For more information, contact Columbus Travel, tel. (593)2-289-9130 or (593) 9-616-0281; e-mail: jessica@travel2ecuador.com; website: www.travel2ecuador.com.

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2 MEXICO
The Worlds Top Retirement Destination The Best Places to Invest in the Good Life
By Suzan Haskins and Dan Prescher and the Staff of International Living
The border between Mexico and the United States is the busiest in the world. It is estimated that more than one million people cross it legally every day. And more Americans spend part of the year living in Mexico than in any other country in the world. Still, Mexico is a big place, about a quarter of the size of the U.S. And many of the countrys best destinations are still relatively undiscovered by American travelers and expats. In this chapter, well uncover Mexicos secret mountain hideawaysbeautiful beachescharming colonial citiesjungle retreatsand busy cosmopolitan centers. Well tell you about the best places to live, yesand, well tell you where real estate is 1) undervalued and 2) positioned to appreciate in value quickly in the next few years. Well detail a couple of places, for example, that offer undervalued beachfront. Some of these opportunities are on the Baja Peninsula and the Pacific coastothers on the Yucatan Peninsulathe Gulf and Caribbean Coasts. And if youre looking for inexpensive, authentic colonial city living, we can tell you where to look for that, too, in two places that we believe will develop to rival (both in popularity and price) San Miguel de Allende, Guadalajara, and Lake Chapala. And, well give you the inside story on some of the best beachfront investment opportunities on offer anywhere in the world today. First, some background: favorite destinations worldwide for retirement living). Its easy to understand why Mexico receives such high marks. This is a country where you can live very well without spending a lot of money. You can employ your own handyman, gardener, and maid for dollars a dayrent a beautiful three-bedroom house for $500 to $800 a monthpurchase a brand-new colonial-style home for prices not seen in the States since the 1970sbuy national health insurance for less than $300 a yearand buy groceries for less than $300 a month. Mexico is popular and well-known, yesbut it attracts more and more attention as Baby Boomers look for second and retirement homes. One of the first places they look is Mexico. Its only a short flight from home. Invest now and you stand to do well for yourself over the coming years. You know the stories, were sure, of Guadalajara, Lake Chapala, and San Miguel. These places, with their nearperfect climates, low rates of crime, easy ways of living, and affordable prices, have been attracting investors and retirees for more than a decade. International Living started recommending these destinations to readers in the early 1980s. Since then, weve traveled often to these spots, often in the company of small groups of IL subscribersmany of whom have decided to invest. Real estate prices in these cities, while still relatively inexpensive compared with prices in the States, have increased as much as tenfold since we began exploring the area. Guadalajara, Lake Chapala, and San Miguel now have well-established expatriate communities. If youre looking for a warm, friendly community, with fellow expatriates, these places are hard to beat. This is very good news for investors. We believe this kind of opportunity is still to be found in Mexico, in these places and in other destinations where Americans are likely to congregate. 16

Mexico is the worlds most popular retirement or relocation destinationgood news for investors
Mexico ranks high every year in International Livings Global Retirement Index (which rates and ranks our 30

Mexico

The Best Coastal Bargains

Some of the best beach opportunities in Mexico can be found in Baja and on the Pacific and Gulf coasts. Baja Norte is currently experiencing a real estate boom of unimaginable magnitude as Californians especiallyand those who want to remain close to the U.S.are moving across the border in droves. In this part of Mexico, prices are one-third what they are just 20 minutes north in San Diego, California. San Felipe, on the Sea of Cortez side of Baja Norte is also growing, thanks to U.S. expats who are heading south where they enjoy calm, warm waters and the beautiful desert landscape. A new designer golf course is being built here at a project called El Dorado Ranch, and savvy buyers are getting in now. On the mainland Sea of Cortez, developers are busily building condos, homes, and apartments in places that are within a few hours to a days drive of the U.S. From Rocky Point and Puerto Penasco, to farther south at San Carlos and Guaymas, you can still find bargain opportunitiesbut maybe not for long. Farther south along Mexicos Pacific Coast, several areas stand out for the opportunities offered to investors. One such place is Mazatlan. This may be the most under-rated of Mexicos resort towns, but it has a happy and growing expat community and still extraordinarily low pricesboth in the pretty Old Town and in gated communities. Puerto Vallarta, too, is still affordable, despite what you may have heard. You just need to know where to look. Go north to the booming beach towns in Nayaritthe direction development is movingand you will find yourself in what may now be Mexicos fastest growing area for real estate. Another place that has tickled our fancy is Puerto Escondido, in the state of Oaxaca along Mexicos southern coast. Here, you can still buy a beachfront lot for less than $60,000. And the town is lively, fun, and picturepostcard pretty.

Certainly, Baja Nortes growth machine didnt start pumping overnight. According to most reports, it began in earnest in the late 1980s, when U.S. citizens began their own migration south to grab a piece of the laid-back, low-cost Baja lifestyle. And to take advantage of newly liberalized real estate ownership laws. Since then, the 70-mile coastline from Tijuana to Ensenada has sprouted gringo-owned houses, condos, and trailer parks, mostly within walking distance of the beach. Its estimated that about 10,000 Americans own property in the Rosarito area alone.

Mazatlanfamous for fishing and more...

Mazatlan is one of Mexicos oldest and most famous vacation and retirement destinations, built on the reputation of the world-class fishing to be found along the coast, and the 16 miles of beaches running north and south from town. Puerto Vallarta, Acapulco, and other resort areas of Mexico may have stolen a bit of its thunder, but make no mistake... Mazatlan still has what it takes to charm the visitors heart and pique the interest of the potential part- or full-time resident. Its a wonderful blend of resort beach town with a distinctly Mexican flavor...something the mega resorts have largely lost. And reasonably priced real estate is still available. The local expat population is estimated at about 3,000 full-timers and slightly more snow-birders, giving Mazatlan a good expat social structure. In fact, there are enough full-time expat residents to be grouped in two general classes: The Old Towners who frequent the Centro Historico and southern neighborhoods, and the Zoners who live in the newer, often gated communities of the highly developed Gold Zone to the north. The clean and recently restored Centro Historico is a 20-square block area of Spanish colonial and faintly Moorish architecture. The area is centered on the main plaza and the

Rosarito BeachHaven for Californians who can no longer afford California

Just across the border from San Diegoliterally a 20to 30-minute drive, (a faster commute than many who live in San Diego have to suburban areas there) many real estate developments are popping up in Playas Tijuana and Rosarito Beachall the way to Ensenada, in fact. Most of them are on the water or offer ocean views. Prices are 60% to 70% less than a similar home just across the border in the U.S. (Were not sure you can even touch the price of an oceanview home in this part of the U.S. for less than $750,000.) Because of this pricing inequity, two things are happening. Families with young children who cant afford a home in San Diego are buying in Mexico. Retirees are selling their expensive homes in the U.S. and buying less expensive homes in Mexico. They can then live quite comfortably on the profit they make. This is especially a good deal for veterans as they can easily go back north to the base in San Diego for medical care, prescriptions, and to shop at the PX. 17

Protect your investment with title insurance

by Roisin Finlay Nearly all the Mexican residential developments we write about offer title insurance. It is one of the criteria for passing our due diligence process. If, however, youre buying a single propertyone not in a gated communityyou can still protect your investment with title insurance. We recommend that you work with a local attorney you trust to research title for any property youre considering buyingand buy title insurance. Remember, title insurance isnt always common and your realtor may try to talk you out of it. No one is going to require you to buy it. Probably, no one is even going to suggest it. But we do. For a policy on property purchased anywhere in Mexico, Central America, or the Caribbean, contact First American. Speak with Turalu B. Murdock by phone at (877)641-6767 or by e-mail: tmurdock@firstam.com.

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ment is backing development and there are good deals to be had in this gorgeous and pristine part of Mexico. PS: We often host Live and Invest in Mexico conferences in Puerto Vallarta. For these, we partner with the areas best realtors and developers and find the areas best deals to offer conference attendees. You can get up-to-date information about our next conference at www.MexicoInsider.com or by emailing Conferences@InternationalLiving.com.

trendy Plazuela Machado, full of sidewalk cafs and boutiques. At one end of the Machado is the Angela Peralta Theater, a magnificent opera house built in the 1860s and restored to host performances throughout the week. The municipality is giving tax credits to people purchasing in this area, but Mexican property taxes are so low that its not a huge incentive. The local planning board is serious about preservation in the areaso much so that they can be very strict and often whimsical about what theyll allow on the outside, and even on the inside, of remodeled buildings. But this area and the available buildings are worth the red tape. And both north and south of Old Town, youll find plenty of oceanfront and ocean-view properties prices very reasonably. One were especially keen on is called Estrella del Mar, located just south of Mazatlan. Its a beautiful beachfront project offering condos and villas, and it features one of the areas best golf courses. To learn more about it, email us at Mexico@InternationalLiving.com.

Funky, fun, beautiful Puerto Escondido

Puerto Escondido is a little fishing village and a worldclass surf zonea long-standing favorite with surfers worldwide. The downtown area is small, colorful, and crowded, and the primary beach is like a picture postcard, truly gorgeous. This is still a fishing village at heart, and its beaches are among the cleanest and prettiest weve seen on any coast. You can still buy a whole, fresh tuna or dorado from fishermens children on the main street if you get there before 10 a.m. But the little town is growing, and developments both upscale and truly affordable are springing up all over the area.

Puerto Vallarta....the Pacific Coasts most romantic destination

What is it about Puerto Vallarta? Liz Taylor and Richard Burton fell in love here...with each other and with their beautiful tropical hideaway. This is Puerto Vallarta. When Liz and Dick came here it wasnt much more than a sleepy fishing village. A place where misty tropical mountains wrap arms around the crescent moon-shaped Banderas Bay. Today, it is one of the worlds top tourist destinations, with an international airport, pro-tourney golf courses, designer shopping, world-class restaurants, and beautiful people from around the world. Its easy to fall in love with Puerto Vallarta. If you do, youll be happy to know that although most properties here start at $200,000, there are still places where you can indulge your fantasies and live happily and comfortably without breaking the bank. Like a condo in this elite location...right on the beach! At $95,000, its billed as the least expensive beachfront condo in Puerto Vallarta. Its just one bedroom and one bath...but includes security, telephone, parking, gym, on-site restaurants ...and one of the worlds most romantic views. And if you cant yet devote all your time to your new love, you can rent your new condo for a very handsome amount. With this particular unit, you should conservatively expect it to rent for 120 to 140 nights a year in the high season (at $100 to $150 per night) and 55 to 75 nights in the low season (from $60 to $100 a night). So...back to the original question...what is it about Puerto Vallarta that makes people who visit so eager to learn more about how they can live here? What was it that Dick and Liz fell in love with? Lets just say this...Puerto Vallarta has something for everyone, from beach lover to nightclubber, from old to young, from adventuresome to sedate. And for romantics, it cant be beat. By the waywant to be close to Puerto Vallarta but not right in it? Go northto Marina Vallarta, Nuevo Vallarta, and up the coast of the state of Nayarit. The Mexican govern18

A typical doctors visit will cost $20 to $30, and physicians do make house calls.
Two hours down the road is Huatulco, a development planned by Fonatur, the Mexican governments tourism development arm. Because it was preplanned and supported by the government, it is spacious, green, well-maintained, expensive, and seemingly deserted. It just hasnt taken off yet. There is a nice downtown area to Huatulco, and when we visited, we actually found a place to park on the main square at lunch time in the middle of high season something unheard of almost anyplace else weve been. But back to Puerto Escondidoyou can expect us to write more about this special place in the future. Beachfront and ocean-view property here is still among the most affordable in Mexico. (Beachfront lots in a new development just outside town start at less than $60,000 and one row back from the beach at about $35,000.) And this is a place thats truly enjoyable.

Charming, safe, elegant, affordable Mrida

Mrida, 200 miles west of Cancn (but a world apart), is, weve discovered, the colonial city hardly anyone talks aboutalthough thats about to change, we predict. Here, the wide, tree-lined streets are paved with handlaid tiles. On the main square, the oldest cathedral in the Americas stands as a testament to this citys centuries-long attention to elegant detail. Throughout the city, the buildings are freshly painted yellow, green, blue, and red. The colorful fronts hide private open-air courtyards.

Mexico
Mrida is a beautiful, inviting city. It is also an intellectual and cultural center, with five universities and numerous technical schools. The population is well-educated and relatively affluent. You wont want for friends who have something in common with you. The theater, designed by an Italian architect, is as elaborately adorned with plaster baubles as that in any selfrespecting European city, and it hosts a full season of plays and events. There are also art galleries, museums, movie theaters, and weekly outdoor orchestral concerts and dances. The small expatriate community maintains a well-stocked English-language library and hosts monthly get-togethers. The population of Mrida has doubled in the past eight years and is now nearly one millionyet the infrastructure is keeping pace, with new roads and utilities servicing even the outskirts of town. To name just a few, Office Depot, Sams Club, Sears, McDonalds, TGI Fridays, and Blockbuster Video have all set up shop here. In other words, you could live here, even run a business here, comfortably. Plus Merida is a safe cityindeed, perhaps, the safest city in Mexico, with a very low per-capita crime rate. ty prices are still at bargain rates. Expect to pay anywhere from $25,000 to $500,000 for one of these colonial gems. Heres a sample of some we saw on a recent trip: On Calle 66, betweens Calle 63 and 65, a historic home has been recently restored by a local architect. At one time, this home was inside the original walls of Mridas first convent. The original construction dates back to the late 1600s. The home has large, airy rooms and the dining room is open to the terrace, only separated by a large iron gate. The home has been restored with all new wiring, plumbing, recessed lighting, and beautiful ironwork. The house is typical of Mridas colonial style homes in that one bedroom opens into another which opens into another. This house features three bedrooms, one-and-a-half baths and there is an ancient casita in the back, not yet restored. Made of old stone and of ample size, it could be remodeled into a guest casita, studio, etc. And in the large yard there is room for a pool and good-sized garden. The asking price for this historical home is $165,000. Just around the corner from the English library, another colonial home has been completely renovated, making good use of its traditional charms. On the first floor, it offers a living room, dining room, sunroom or den, three bedrooms, a full bath, a new kitchen, a covered patio, a fish pond, and bodega. What a great place to entertain. Upstairs, there is a huge sun terrace and a large open master bedroom. Want to fall asleep gazing at the stars? This is your place. The master bedroom has been plumbed for an additional bathroom and the whole area could be enclosed if you wanted to, although in warm, sunny Mrida, theres no need. The seller is asking $145,000 for this home. We saw two very large homes in El Centro that were really quite spectacular. One, with a HUGE living room and library, two/three bedrooms and two bathrooms on the main floor, along with an updated kitchen, large terrace, garden, and pool is on offer for $317,000. And just around the corner, we toured another elegantly restored mansion. Built on four levels, it goes on and on and on. And it has a pool and beautiful private garden. All told, the home offers four bedrooms, five bathrooms, two kitchens (one up, one down), and is fully air conditioned. (This is unusual, usually only bedrooms have AC.) The asking price for this gem is $399,900 and financing is available. The other thing that makes Mrida special is the haciendas on its outskirts. These old plantation homes, many built in the 17th century, are often in ruins. But visit a few that have been rejuvenated and youll immediately appreciate the possibilities. A few years ago, you could pick one up for as little as $120,000. Today, although prices have risen, you can still find a bargain. We know of onean outstanding original Mexican hacienda on 864 acres and in very good condition with 19

At what cost elegance?

Perhaps the best part is that, in Mrida, you can enjoy all the conveniences of home and all the elegance of a European retreatfor the cost of living in rural Mexico. The Medico de las Americas, for instance, is affiliated with Mercy Hospital in Miami and provides services from neurosurgery to sports medicine. A typical doctors visit will cost $20 to $30, and physicians do make house calls. Indeed, Mrida is one of the best deals for city living in all Mexicoand one of the best bargains anywhere south of Florida. Some expatriates, in fact, are now relocating here from other areas of Mexico where costs are higher. The trade-off is the weather. The climate in the colonial highlands, for instance, is spring-like year-round. In Mrida, it can get hot and very humid. It is often in the 90s in the summer. But the gulf coast is less than a half-hour away should you need a refreshing dip in the ocean.

Merida is a safe cityindeed, the safest city in Mexico, with the lowest per-capita crime rate in the country.
Specifically, what would it cost you to buy property in Mrida? A charming two-bedroom, 1,200-square-foot house in the Garcia Generes neighborhood can be purchased for about $70,000. Typically, you can expect this type of property to include a small garden or patio with a fountain, a car port, and air conditioning. Garcia Generes is close to the city center and Parque Las Americas. The heart of Mrida, howeverEl Centro, is where most of the foreigners choose to settle. And why not? This area is rich in culture and history, alive with people, and the proper-

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to Mrida. This is one of the best opportunities for comfortable, affordable city living weve come across in years. No other colonial cityin Mexico or farther southcan rival the price or the location. Editors note: We regularly sponsor conferences, seminars and tours to Mexico. For details on our next event in Mexico, contact Patricia Goltry, tel. (866)381-8446 or by e-mail: conferences@InternationalLiving.com.

many lovely original features. The owners residence (Casa Principal) is in very good condition. Additionally, there are several huge old factory buildings on the property with beautiful stone arches and impressive facades. They need restoration but with a little imagination this could become the place of your dreamsthere is currently more than 10,000 square feet of construction on the property and, obviously, there is lots of room to expand. The main house can have two or three bedrooms, currently consisting of six large rooms and one bath. The adjacent 1903 factory can provide much additional living space of whatever kind you wish. Outbuildings include a second bath plus a thatched Maya-style caretakers cottage, currently unoccupied. The hacienda has many lovely original features, and the surrounding 864 acres is gorgeouscurrently woodlands with abundant wildlife of all kinds. There is no surrounding village to spoil the tranquility. The nearest neighboring haciendas of San Juan, San Bernardo, and Poxil are some of the most famous in the Yucatn. Located less than an hour south of Mrida toward Campeche, this is an extremely desirable property, offered at the very reasonable price of $435,000.

Campeche: Gulf Coast Jewel

Campeche City is the capital of Campeche State. Youll find it in the southwest corner of Mexicos Yucatan Peninsula. Campeches historic downtown center is a World Heritage Sitea richly historical and truly beautiful place. We have heard it said that Campeche is like San Miguel de Allende meets the Gulf of Mexico. We can understand the analogy. Campeche has beautiful old, brightly painted colonial homes and buildings with massive wooden doors and windows, charming flower-filled balconies, and little narrow streets. Unlike San Miguel, most of these streets are paved with flat stone instead of cobblestone. Also different from San Miguel, Campeche is flat. And very, very tidy and clean. And it has a beautiful waterfront area.

Mexicos best-kept secret

This part of Mexicothe Yucatnappears suspiciously barren when you look at it on a map. Youd think there must be little here. The truth is, this area near Mrida is one of Mexicos best-kept secrets. The people are well educated and welcoming. The economy is strongfruit plantations, free-trade zones, tourism, and electricity production (the plants here provide electricity as far afield as Cancun and Belize), provide jobs and income. And Mrida is the seat of the regional government. This city is growing by leaps and bounds, but it is doing so with forethought and grace. You wont see American style, slap-it-up buildings, and so even the newer sections of town maintain a colonial feel. And the local government is actively preserving the interior of the city, painting the fronts of homes (at no charge to the owners) and keeping the many plazas trash-free and inviting. If youre looking for a good place to make an investmentless than a half-hour from a beachbook a flight

Meridaone of the best opportunities for comfortable affordable city living weve come across in years.
Before we go too much farther, lets talk about the Gulf of Mexico. Its not the Caribbean, even though it looks a bit like it. You wont find a lot of high and low tide variance here. You wont find coral reefs (sorry, scuba divers) or gin-clear water. Theres a different feel here, but different in a good way. For example, there is a Cuban backbeat here. Men wear guayaberas (short-sleevemostly but not always whitecotton shirts that button down the front) and the enticing aromas of seafood specialties waft through the air. Sidewalk cafs play beautiful lyrical music. If youre lucky to be there on a night when musicians are playing in

Another way to own Mexican beachfront

by Jennifer Stevens Until recently, the only way to own property on a Mexican beach was to form a Mexican trust, usually valid for 50 years, which was held in a Mexican bank. And for the privilege of owning this trust, you paid $300 to $400 a year in maintenance fees. But not anymore. Today you can form your own Mexican corporation. You need at least two people on the boardyou and a colleaguebut this corporation can be 100 percent foreign owned. It will cost you between $2,000 and $3,000 to set up, but you wont have to contend with the annual fees. (You will, however, need to have a Mexican accountant or retainerwhich will cost $100 to $200 per year.) In addition, your corporation can own more than one piece of land, which is not the case with the trust. There are some other considerationsyou are not supposed to own property used as your primary residence within your Mexican corporation, for example. Be sure to ask your realtor or attorney for their recommendations on the best way to take title to your property.

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the central pavilion, watch out.you may find yourself up way past your bedtime, dancing the night away. Caveat: This is not a Spring Break destination. Its not a party til you drop kind of place. Its a place for grown ups who enjoy good times, good food, great scenery, sultry nights, intelligent conversation, archeology, history, outdoor sports Sounds pretty nice, doesnt it? Were happy to tell you that the real estate prices here are reasonable as well. In town, you can get a massive historic colonial home for anywhere between $65,000 and $200,000. It may require work but will certainly be a showhouse after a spring cleaning and some minor cosmetic adjustments. We were also very impressed with a stretch of residential lots south of the city on the beach between the smaller towns of Chompoton and Sabancuy. About 40 home sites in the second sales phase of the project are soon to come on the market. The lots vary in depth but average 80 feet of beachfront footage and will start at $70,000. It is possible that the developer may offer some financing for both the lots and construction, with several available home models. If you are interested, email us at Mexico@InternationalLiving.com for more information about this project.

Build in Mexico for $50 a Square Foot, Pay Little for Property Taxes
The cost of building anywhere in Mexico is low, mostly because labor is so affordable. Youll pay $50 to $70 a square foot, depending on the finishings you choose. In other words, you could build a 1,500square-foot home with a pool for as little as $75,000. Property taxes are affordable as well. The annual taxes on a $100,000 property are approximately $130. A typical monthly electric bill for a two-bedroom home (running fans rather than air conditioning) is $40 to $50. Youll likely have a gas hot water heater and perhaps a gas oven. Refills on gas canisters run about $55 each, and youll probably refill yours four to six times a year, depending on how much cooking you do.

Lake Bacalar: Yucatns answer to Lake Chapala, minus the crowds and high prices
We thought at first it was the Caribbean on our right as we drove along Mexicos well-kept Highway 307. Here was this expanse of watercrystal clear and shimmering azure then greenturquoise then midnight blue. White sand banks called flocks of birds. Its called Lake Bacalarthe Lake of Seven Colors, and its the Yucatans answer to Mexicos well-gentrified Lake Chapala. Only 23 miles northeast of the bustling town of Chetumal, Lake Bacalar is about 31-miles-long and averages

a mile and a quarter across. The village of Bacalar stands guard over this serpentine body of watera beautiful, impeccably clean little town with proper squares, tree-lined streets, and a well-preserved colonial fortress that once repelled pirate attacks and today houses a regional history museum. Along the banks of the lake at Bacalar are homes, restaurants, small hotels, and a tiny yacht club that take advantage of the glorious views. Here the banks of the lake are steeper than at other spots, and people have built up on the hills overlooking the water and then landscaped the gardens that tumble into the lake below. The occasional dock jets out into the water. What youll notice most is that this place is quiet and peaceful. Weve visited several times and are always struck by the serenity here. Its hard to believe this place is still so undiscovered, because it would make an ideal retirement retreat.

New laws make purchase easier

by Jennifer Stevens Yes, foreigners can legally own property in Mexico! Fairly recent changes in Mexican policy have made the country an even more attractive place to consider for investment and the purchase of property. First, you can sometimes arrange financing when buying real estate; second, title insurance is now widely available. A notario (a super attorney with special qualification) is the only legal entity that can transfer titles. Remember, in the interior of Mexico-in the colonial highlands, for exampleyou get direct deed to your property. You then have the same rights to ownership as a Mexican citizen. To purchase land or a home for personal use in a Mexican restricted zone (for example, within 32 miles of the coast), you must set up a bank trust (fideicomiso) to hold the title for you. A bank trust can be set up for 50 years and is renewable in perpetuity. Another way to hold land in the restricted zone or if you plan to earn an income from your property (if it is to be used as a hotel or restaurant, for example), is to set up a Mexican corporation. (For more details on the particulars related to foreign ownership of land in Mexico, contact the Consulate General of Mexico, 2827 16th St., N.W., Washington, DC 20009; tel. (202)736-1000; fax (202)797-8458. You can also find this information in a detailed report at www.MexicoInsider.com.) We recommend that you use a real estate agent when purchasing property in Mexico, as he will make sure that you are buying clean title. If you dont buy through an agent, we strongly suggest that you enlist the services of a lawyer. (Although this is not required by law, you cannot be sure that you are protected unless you do so.)

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Just north of Bacalar, near a community called Buena Vista, Seaview Properties is representing a project on the lakeshore called La Fe. This wooded residential development boasts more than 72 types of orchids and a variety of bromeliads. And one-acre lot prices are reasonable: $150,000 with 30% down, 5% financing for four years. The lake is clean and clearyou can see the bottom at 100-feet. And its ideal for water sportssailing, boating, fishing, water-skiing, and swimming. And, unlike many lakes in the States and Canadayoull never battle crowds. The weather averages a comfortable 80-degrees year round.

Investment opportunity: The best Caribbean beachfront buy is 140 miles south of Cancunon the Costa Maya
by Kathleen Peddicord

Easy access to Chetumal

Only 23 miles northeast of the bustling town of Chetumal, Lake Bacalar is about 31-miles-long and averages a mile and a quarter across. The village of Bacalar stands guard over this serpentine body of watera beautiful, impeccably clean little town with proper squares, tree-lined streets, and a well-preserved colonial fortress that once repelled pirate attacks and today houses a regional history museum.

Its hard to believe this place is still so undiscovered, because it would make an ideal retirement retreat.
Along the banks of the lake at Bacalar are homes, restaurants, small hotels, and a tiny yacht club that take advantage of the glorious views. Here the banks of the lake are steeper than at other spots, and people have built up on the hills overlooking the water and then landscaped the gardens that tumble into the lake below. The occasional dock jets out into the water.

There is only so much Caribbean coast. And as aging Baby Boomers and others look for what to do with their accumulated wealth and where to spend their would-be retirement years, there is an ever-increasing demand for it. Much of the Caribbean, of course, is already developed and expensive. There is one stretch of Caribbean coastline, though, that is still comparatively affordableThe Costa Maya. This is the stuff your Caribbean daydreams are made of. At least it could be. Right now, these 100-miles of shoreline, starting 150-miles south of Cancun and continuing to where the water separates Mexico from Belize, are, for the most part, rugged territory. The jungle still nearly meets the sea. The towns are small. The roads dirt and rutted. In Xcalak, for example, the southernmost town along this coast, there are a few guesthouses and beach villasand a few private residenceswith solar- or generator-powered electricity, being built primarily by foreigners.

In addition to the white sand, this region boasts a barrier reef set a side as a federal reserve.
The Mexican government has a history of developing little bits of its coast. Now it has set its sights on the Costa Maya. The infrastructure is on its way. Soon these long stretches of white sand wont be so difficult to get to. And when access is easierprices will rise. Right now, prices arent cheap. But theyre a fraction of what youd pay today for a little piece of beachfront in Cancun or Playa del Carmen a little farther north on the same coast. This strip of sand is owned by a handful of people, Mexicans and foreigners. One guy is said to have bought his beachfront for as little as $3.30 per foot. Those days are gone, of course. Prices now are closer to $1,200 to $2,200 per linear foot of beachfront. In Cancn, though, youd pay three times that muchif you could find any beachfront to buy. In addition to the white sand, (much of which is hidden beneath jungle, mangroves, and turtle grass) this region boasts a barrier reef (the worlds second-longest) and a great expanse of land inland, behind the coastal filet set aside as a federal reserve. The cruise lines are on to Costa Maya. In constant search of new places to take their big new ships and their annual throngs of cruise-goers, several lines are already docking at Majahual (just about dead center of the Costa Maya). This is a moment of opportunity for the investor. This land will be worth more in a few years than it is today. 22

Year-round water sports

What youll notice most is that this place is quiet and peaceful. As I stood at a small hotel looking out over the lake, just one lone sailboat glided by. A group of children had wiggled down the hotels pool-ladder into the tepid water below and splashed around contentedly. Otherwise the lake was serene. And my guides told me it was that way all the timeweekends included. Its hard to believe this place is still so undiscovered, because it would make an ideal retirement retreat. Just north of Bacalar, near a community called Buena Vista, Seaview Properties is representing a project on the lakeshore called La Fe. This wooded residential development boasts more than 72 types of orchids and a variety of bromeliads. And lot prices are reasonable: $125,000 with 30% down, 5% financing for four years. The lake is clean and clearyou can see the bottom at 100-feet. And its ideal for water sportssailing, boating, fishing, water-skiing, and swimming. And, unlike many lakes in the States and Canadayoull never battle crowds. The weather averages a comfortable 80-degrees year round.

Mexico
Maybe a lot more. Anyone who bought into the stretch of beach at Cancn in the 1970s was probably happy with the return on his investment. If youre not looking to develop landor to flip it for profitsremember that Costa Maya boasts some of the worlds best snorkeling and divingas well as a small but growing and welcoming community of expatriates. If youre in the market not for an investment but for a beach homewell, this is picture-postcard Caribbean beach. This is one of the most interesting opportunities right now in the Caribbean. In May 2002, Money magazine and CNN ran a story about the eight best places to retire, and San Miguel de Allende made the listthe only non-U.S. city on it. In mid 2003, Bon Appetit devoted an entire issue to Mexico, and San Miguel was high on their list of places to visit. In January of 2004, AARP profiled San Miguel in an article on retiring in Mexico. Suffice to say, this colonial city has been discovered. With its high-towered church and its curving, cobbled streets ...tidy shops selling carefully embroidered linens and handpainted plates...homes that belong in the pages of Architectural Digest...and lush courtyard gardens in bloom year-round, this city is like something out of a childrens fairytale book. So, is it too late to stake your claim? It depends... If youre looking for an 18th-century colonial with five bedrooms, five bathrooms and two enticing central courtyards for less than $100,000...youre out of luck. Its on offer for $625,000.

San Miguel de Allende: One of our favorite placesand location of ILs Mexico Office
By Suzan Haskins

One of the most popular relocation/retirement havens in Mexico is San Miguel de Allende. Here at International Living, weve been writing about it for over a decade. We couldnt resist its charms, and our IL office in Mexico is located there. Way back when, San Miguel was an unsung little retreat, a place artists went to work and live on the cheap and where we sent our savviest readers to buy up colonial mansions for a song. But, as we predicted prices went upas it turns out, about 10% a yearand by about three years ago, we simply stopped recommending readers buy here. Properties had become downright overpriced. In March 2001, the New York Times did a long story on retiring there. And CNBC ran two pieces about San Miguel that same month.

Why San Miguel is suddenly attracting even more attention

The recent media coverage has piqued peoples interest in San Miguel, says a local realtor. Plus, things are really breaking loose here...some major developments that are causing people to take a renewed look at San Miguel. Were starting to see more sales in the off-season, and overall, prices are appreciating faster. Heres what hes referring to: Everyones talking about the new Jack Nicklaus golfcourse on the north side of town. Still in development,

Gulf coast properties just 25 minutes from Merida: as little as $15,000

Mrida is less than a half-hour from the Gulf Coast of Mexicowhere the water is a clear turquoise blue and laps gently at the shore. Progreso is the largest nearby beach town. On the long, white, clean public beach, thatch-roofed palapas punctuate the sand every 25 yards or so, shading benches and picnicking families. Cruise ships stop here occasionally. Blocks of restaurants facing the beach cater to the visitors from Merida who flock here by the thousands in July and August when kids are out of school. Many of the homes here are closed up the rest of the year, but the hotels and restaurants, grocery, and hardware stores are open year-round. One row off the beach, a two-story water-view home with five bedrooms and three baths lists for $75,000. And just five minutes west of Progreso is Chelem, a lower-end beachfront community with homes close together. Most are small, single-story places with one or two bedrooms. But what a bargain. A 49-by-46-foot lot on the beach can sometimes be found for as little as $25,000 (and at this price, be forewarned that it will need some work). Here are some other bargains weve found: Fifteen minutes away from Progreso in the little village of Santa Clara, you can own a beachfront lot of 9,310 square feet. The sand is soft, the ocean is blue and there is plenty of potential on this huge beach of property to build your dream house. The price is an astoundingly low $23,000! Even further down the Gulf coast, near beautiful Celestun, are several lots measuring 50 feet of beachfront by 520 feet deep. There is electricity and water to these lots. This is a great area full of natural beauty and wildlife. These lots are selling quickly at only $42,000 each. (If youd like to buy the entire parcel, you can also do that: 525 feet of beachfront by 522 feet deep for $500,000.) For information about either of these properties, email us at Mexico@InternationalLiving.com. beach getaway!) (PS: For less than $100,000 USD, you could own a nice place in the heart of Mrida AND a weekend

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lots of duffers are waiting to see how Jack lays out the fairways and how far they can drive off the tee at an altitude of 6,000 feet. And whats this about a $48-million movie studio opening up on a vast tract of land just to the north of town? Time will tell. To be brief, though, we can tell you that it has been officially announced that the film production centerwith a film school, family recreation park, and residential, retail and office areasis being planned, with work scheduled to start on a 250-acre site soon. A little farther outwithin sight of that new Jack Nicklaus courseis where Hacienda Los Pirules will be built. A five-star fractional resort built around thermal hot springs, it is destined to rival every other upscale resort in Mexico. Weve seen the stunning vistas from this property and weve invested there ourselves, and cant wait until our first dip in the pool.

Fountains, flowers, and Old World charm

While prices do run the gamutfrom those bargains under $100,000 all the way up to $1-million colonial mansionsa great many stunning properties list for between $150,000 and $300,000. That may not be a steal when you compare it to what you can get these days in Ecuador or Nicaragua (two emerging and largely undiscovered markets), but you can be sure that comparable workmanship, elegance, and views, would cost you much more in the States. San Miguel has other benefitsproximity to the U.S., an excellent climate, an affordable cost of living, an established expatriate community, local golf courses, and the kind of shopping (for everything from food to office supplies) that youre used to back home.

Mexico Insider: detailed information, reliable real estate contacts and more
If you are serious about moving to or investing in Mexico, www.MexicoInsider.com is your best resource for: The best places in Mexico to live or investratings for more than 20 locations How to safely buy property First alerts: unique opportunities Info on visas, title insurance, healthcare, importing your belongings, and MORE

So are property prices going through the roof in San Miguel?

Actually, no. We found some real values in San Miguel, both in town and in the surrounding hills. However, a sense of perspective is required; if youre shopping for real estate in Wichita or Fargo, these prices wont floor you. But if youve been looking almost anywhere else in the United States or Europe, youll appreciate a three-story colonial near the heart of downtown, divided into two complete two-bedroom apartments with kitchens, killer views, and ready to rent out at San Miguels healthy weekly rates ($750 to $800 per week) for only $245,000. (It sold while we were deciding whether or not to buy it ourselves.)

The best places in Mexico to buy real estate (and enjoy life)
Farther away from San Miguels high-rent central area are quiet neighborhoods with real bargains for people looking to live here. We saw several large homes with big yards in the tidy Los Frailes subdivision next to the municipal golf course for $125,000 and up. (Our Mexico office directors, Dan and Suzan, bought a home in Los Frailes in June 2004 for $152,000.)

Every month, information is updated and youll find an in-depth report on a different Mexico location: what its like to live there/real estate market overview, etc. As you know, our local office managers, Suzan Haskins and Dan Prescher, are constantly traveling in Mexico to investigate different locations and find out what its like to live there, how much the daily living costs are, etc. Whenever we visit a place we inevitably spend time with local realtors, touring properties, and getting a feel for the local market. If we feel these realtors are honest, reliable, and knowledgeable, we recommend them to our readers. To subscribe to Mexico Insider, go to www.mexico insider.com/subscribe_info.html. And if you have any additional questions about who, what, and where in Mexico,

Languid, lazy days in the Yucatn village of San Crisanto

by Foster Graham We found our paradise a few years ago in a remote area of the Yucatn. The beach houseactually two separate casitas joined by the largest palapa in the villageis on the last sandy lane that marks the eastern border of the village of San Crisanto. Nowthis is not everyones idea of paradise. We live in an isolated village. Theres no phone service. Stormy nights bring seaweed mornings, and you must rake a spot for an umbrella and blanket. And unless you master the language (we havent), a Spanish dictionary is a necessity, because no one here speaks English. We have no hot water, but weve learned how to improvise or just make do. Although were the only Norte Americano residents here, Gina and I have been sincerely welcomed to sleepy San Crisanto from the beginning. And the residents we have come to know are most gracious.

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be sure to contact Suzan Haskins and Dan Prescher at Mexico@InternationalLiving.com. Viva Mexico!

Real estate contacts

Mexico Insider (www.MexicoInsider.com) was developed for people who are seriously interested in living or investing in Mexico. Weve traveled all over Mexico looking for great opportunities and good resources. We do as much due diligence as possible before we recommend realtors, developers, etc. At the website, you can find our constantly updated list of resources. (Click on Recommended Realtors) Here are a few of them: Ajijic / Lake Chapala RE/MAX Fenix, (Barbara Mercik and Marvin Golden), tel. (office) (52)376-766-4332; (Marvin cell) (376)7693904; (Barbara cell) (376)769-3920, e-mail: Ajijic@ MexicoInsider.com. Costa Maya / Lake Bacalar Seaview Properties (Laura Zapata and Jim Boyter), 5th Ave. and Calle 8, Playa del Carmen, Quintana Roo, tel. (52)984-879-3107; e-mail: CostaMaya@Mexico Insider.com; e-mail (Laura) Seaview@Mexico Insider.com. Playa del Carmen One Stop Real Estate Office (Shawn Bandick), tel. (52)984-803-3739 or 3740; e-mail: Playa@Mexico Insider.com. Puerto Vallarta Tropicasa Realty (Wayne Franklin), tel. (52)322-2226505; cell. (52)322-92-3279; e-mail: PV@Mexico Insider.com San Miguel de Allende RE/MAX Colonial (Lane Simmons), tel. (office) (52)415-152-7363; cell. (52)415-153-5165; e-mail: SMA@MexicoInsider.com.

Hacienda Los Pirulesthe fractional concept comes to San Miguel (where were investing ourselves)
By Dan Prescher When we first heard about the Hacienda Los Pirules project, all we could think was What the heck is a fractional? After doing the research and visiting the project and its developer, we ended up buying one. Fractionals are often confused with timeshares because they appear to work the same way. You share ownership with a certain number of other people in a particular building or development. Thats where the similarity ends, however. With fractionals, you actually own an undivided interest in the property itself. When you buy a fractional share in the villas at Hacienda Los Pirules (just outside San Miguel de Allende), for example, you actually buy an undivided one-twelfth share of real property, the villa itself. You are still subject to right-of-use considerations, but with a timeshare, thats all you haveright of use. Another difference is that fractionals are generally much more upscale. Thats certainly the case at Hacienda Los Pirules, where the villas will share the 50-acre grounds with a five-star hotel and a spa complex that takes advantage of the natural spring water pumped out of the ground there at 110 F. Fractionals are also often included in reciprocal arrangements with other high-end service providers... like personal airplane services, expedition outfitters, and other fractional developments. That means that you could exchange your fractional usage for credit toward, say, renting your own jet, going on an African safari, or staying at a luxury resort in Switzerland or the Caribbean instead of San Miguel. Its certainly a concept that works for us, especially since we love San Miguel. Hacienda Los Pirules sits on a plateau outside of town with a magnificent view of the Sierra Madres. Its close enough to town to be convenient and far enough out to be quiet and exclusive. At the time of this writing, the project is just starting to move from the design to the construction phase. We fully anticipate that, some time in 2007, well be sitting in the Roman baths, getting a massage, enjoying world-class cuisine in the restaurant or spending time with the family in our million-dollar vacation home that we bought for a fraction of that price. For more information on Hacienda Los Pirules, email us: mexico@internationalliving.com.

Our local office

The most important resource you have in Mexico is International Livings Mexico Office to assist you in answering any questions you may have or to connect you with the resources you need: International Living Mexico Office (Dan Prescher and Suzan Haskins, Directors), e-mail: Mexico@ InternationalLiving.com; website: www.Mexico Insider.com. Our local office managers, Suzan Haskins and Dan Prescher, recently updated Mexico: The Owners Manual. Its the resource guide you need if you are considering a move to Mexico. It is available from International Living Reader Services, tel. (1)800-6432479; e-mail: customerservice@International Living.com.

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3 NICARAGUA
The Best Pacific Coast Beach Buy in the World
by Kathleen Peddicord
Land prices are ridiculously inexpensive. Nicaragua seems to be the logical next choice for adventurous travelers in Central America. Costa Rica is a lot more expensive than it used to beGuatemala is still suffering from the effects of a 36-year-old civil wareven Panama, a relatively wealthier nation, is much more developed and expensive than Nicaragua. Conde Naste Traveler, February 2002. Right now, you can get in on what we believe will prove to be the smartest Pacific coast real estate investment of the decade. Because most Americans still believe Nicaragua is a country in trouble, real estate here is undervalued. How cheap is it? In Nicaragua, youll pay about one-fifth what youd pay for a similar property in Californiaone-third what youd pay in Costa Rica, just across the border. Theres no denying the beauty of this country, especially its Pacific coast. Nicaraguas Pacific coastline is dramatic and unspoiled, like the best of the California coast 100 years agorose-pink sandwaves breaking against the rocks and cliffshorses galloping on the beach

Investing with few restrictions

In the last decade, Nicaragua has privatized nearly all its old state-owned monopolies, save for the public utilities, and has thus dramatically reduced the amount of government red tape investors have to contend with when they do business here. In addition, it has opened up all sorts of new markets. A foreign investment law ensures you can repatriate 100% of your profits and, after three years, the initial investment as well. (Even if you dont register your investment, banks will freely repatriate profits.) Youll find no legal grounds for discrimination against you when you invest. The law allows for 100% foreign ownership in every economic sector. And there are no restrictive visa or work-permit requirements to inhibit investment.

Run your tourist business tax-free for up to 10 years

Nicaraguas Law 306 (enacted in September 1999) is the most attractiveand most aggressivetourismincentive law in Latin America. If youve ever thought about opening your own B&B, running your own tour business, or having a little arts and crafts shopNicaragua is the place to do it. This law is sweeping in scope and offers hard-tobeat benefits for investors who take advantage of the program. If your business qualifies, you pay no income taxes for up to 10 years, pay no real estate taxes for up to 10 years, and bring in (or buy locally) all the supplies you need, from furniture and boats to linens and cash registerstax-free. Not only that, but INTUR, Nicaraguas Institute of Tourism, has done an outstanding job of cutting through the 26

Why investment makes so much sense

Nicaragua has one of the fastest real-GDP growth rates in Central America. The country has complied (unlike many other nations) with prescribed IMF demands for cutting its deficit, implementing structural reforms, and maintaining overall monetary stability. Nicaragua is set to benefit from rapid and sustained economic growth in the years to come, growth it has encouraged with the passage of several laws specifically designed to attract and protect foreign investors. The inflow of foreign direct investment increased by 60.7% in the last four years. In 2004 it was recorded at $260 million. And Nicaragua is the fastest growing tourism destination in Central America.

Nicaragua
usual red tape and outlining very clearly what you need to do, so the application and approval process is straightforward and fast as long as the proper documentation and procedures are followed. In addition, the law allows the agency just 60 days to approve your application so you wont find yourself in limbo for months or even years on end. Whats more, depending on the type of project, an investment of only $30,000 can qualify you for benefits. More information can be found on the following website: www.managua.usembassy.gov/wwwhe59.html or contact Raul Calvet of Calvet & Associates, tel. (505)270-1320; e-mail: info@rcalvey.com. Especially when, for less than one-fifth that amount, you could buy a half-acre of dramatic coastline in Nicaragua (remember, its the same, dramatic Pacific coast)and build a spectacular home complete with handmade tiles and mahogany finishings, perched on a secluded shore that looks like Californias did 100 years ago? And Nicaragua is not simply a bargain compared with overpriced California. Its much less expensive than any beachfront property youll find anywhere in the United States. Americans are buying second homes in record numbers (the National Association of Realtors reported that second home sales were up 30% last year), driving up the costs of vacation homes everywhere in the country. A recent USA Today article stated that one in every seven people in the U.S. now lives in a county bordering the coast. The simple fact is that almost every bit of U.S. coast is becoming overcrowded and overpriced. Consider these items from the same USA Today story In Naples, Florida, recently, during a six-hour sale of condo units averaging $1 million each, 99 people plunked down $25,000 apiece for apartments that werent even built yet. In Folly Beach, South Carolina, quarter-of-an-acre lots that sold for $50,000 10 years ago now fetch as much as $500,000. One contractor in North Carolina reports that hes building $200,000 homes along that states Outer Banks faster than ever before.

A straightforward law
Nicaragua is slowly being discovered. And an improved tourism infrastructure can only speed the process. Law 306 is a well-crafted document that gives you an incentiveand makes it easy for youto help jump-start the industryand make a profit while youre at it. Several tourist activities fall under the laws umbrella, and with an investment in any one of them you benefit through tremendous tax savings.

Property overlooking the glorious Pacific: $40,000or less

Before I explain exactly whereand howyou, too, can take advantage of this opportunitylet me back up a bit. I want to tell you this story from the beginning, so youll understand why this opportunity makes so much sense. The first time I stood looking out over the Pacific Ocean on Nicaraguas western coast, wild horses galloped down the beach. The sun was shining overhead, glinting off the water as the waves rolled onto the beach. The air was hotbut a constant breeze made it comfortable. It was like a scene out of a filma place its hard to believe still exists in our world of tract homes and shore-side resorts where you battle boom boxes and boardwalks for an eight-foot-square of sand. Whats really amazing, though, isnt that a place like this has remained untouched for so longits that right now todayyou can own a piece of it for as little as $40,000. Whats more, youre only a two-hour flight from Miami. To give you a point of reference, not too long ago, I was in California to visit a friend and drove along the Pacific Coast Highway. The shoreline in California is hard to resist, with its inlets and coves, dramatic, rocky drop-offs, and long stretches of sand and surf. But for a one-bedroom, one-bath, cracker-box-sized home in Malibu, youll pay $250,000. For a larger placefour bedrooms with a gourmet kitchen and an artists studioyoull fork over at least $1.5 million. Farther north, on South Highway 1, in Mendocino, I saw a Victorian ocean-front house, perched on a bluff with views to the west of the Pacifics rugged coastline and east to grazing pasture lands. This three-bedroom house, with a deck, was listed at $1.25 million. More than a million dollars for a house is a lot of money, no matter where youre buying. Why do people do it? 27

How does Nicaraguan beachfront compare with that in other Central American countries? Again, it costs a fraction as much. Consider Costa Rica. In the early 1980s, it was the place to go for affordable beachfront. Today, in the beachfront community of Tamarindo, a quarter-acre beachfront lot sells for $150,000. That same lot in Nicaragua not 100 miles away on the same stretch of coastcosts about $50,000. In Belize, its the same story. Ten years ago, you could have bought a beachfront lot on one of the islands off the coast here for $35,000. Now youll pay $280,000 for a modest home on that same lot. In Nicaragua, by the way, youll pay no property taxes. Nicaragua makes smart investment sense. Just as the cost of beachfront property has appreciated in neighboring countries, so, too, will it appreciate in Nicaragua, as this emerging country continues along the road to development.

The good news:

You still have time, though, to get in ahead of the crowd. The countrys current prosperity is being fueled mostly by non-American investment. Most Americans still dont recognize the opportunity here. They still dont understand that this is now a safe, stable country.

CHAPTER

Granada: Nicaraguas grandest city

by Kathleen Peddicord Why Granada? I had been traveling in Nicaragua for a week, scouting out a site for our new International Living office. We had that morning decided that Granada would be the place. Thus the question, posed by the gentleman having lunch with us, an American named Curt who moved to Managua from Pittsburgh four years ago. Weve chosen Granada as the location for our new office, I explained, because Granada is the most agreeable city in this country. A city with history and charm and a large central plaza surrounded by old Spanish colonial buildings. A city with little streets for meandering, neighborhoods for exploring, and style. The people dress better here than in Managua or elsewhere. The buildings are painted bright blues and greens and reds. The women walk proudly to and from the market balancing baskets on their heads, smiling, and holding hands with each other. The children ride bicycles in the main square.

A place to settle in
Granada is a place where you can settle in...on one of the long, breezy porches running along the main square. Settle into a white wicker rocking chair and soak up the scenery. Its 6 a.m. as I write this. Im sitting on one of those long porches in one of those rocking chairs. Beside me are two gentlemen doing the same thing. Theyre Americans. Texans from their accents. And theyre talking about the e-mail messages they received last night. Talking businessas they rock slowly and watch the square wake up. Already young women in pretty skirts are crossing the square on their way to work. There are two women sweeping up the litter from last night. (The square was filled with people, even young children, until at least midnight when I finally went to bed.) They sweep up every morning, I understand. The streets are being cleaned, too, and the tiled porch where Im sitting is being swept and mopped. As we drove in last night, I saw that some of these grand old buildings are covered with scaffolding. Theyre being renovated and painted. This sleepy, once-grand city is regenerating itself. I hope it doesnt move too quickly. Right now, Granada is still a good place for escape. This time of year, theres barely a tourist in sight. The only ones Ive seen are the gentlemen rocking beside me (whove now been joined by two others). Yesterday was market day. As we drove into town, we passed the makeshift wooden stalls and vendors offering everything from watermelon to papaya...from ladies lingerie to childrens toys. One gentleman next to me is boasting to his buddies about the leather belt he bought for $4 and the red polo shirt he got for $12.

Word on the street is that Granada is on its way...a major international destination in the making
Ive heard this before. Mostly from real estate agents in beach towns where they were trying hard to sell beachfront property. Here, the claim is more credible. First, because its not coming from the guys hustling property (at least not only from them). You hear this from everyone you speak with...the native Granadinos, the tourists from Costa Rica and Guatemala, and the expatriates whove already made Nicaragua home. These people have all been watching the transformation for the past few years. They say the changes are noticeable month by month. Granada is unique in this country. The only city of any size where you could live and be comfortable. Managua is bigger, of course, and offers more amenities and infrastructure. But its not a place most people would want to live. Its dirty and crowded and otherwise nondescript. The residents of Granada look down their noses at Managua. Their city offers good restaurants, good hotels, a movie theater, four Internet cafs, and decent shopping (theres a big computer supply store, for example). Managua has these things, in greater abundance (and many Granadinos make monthly trips to the capital to stock up on things they cant buy locally). But what Granada has that Managua doesnt is something thats hard to pin down and impossible to manufacture. Granada has character.

Friendly, safe, and an artists community in the making

Granada feels like a small town. It feels friendly. And safe. And, yes, like its on its way to becoming a point of distinction on the world map. Some say itll be Nicaraguas answer to San Miguel de Allende, the artists community in Mexico. Wandering the neighborhoods, passing the houses with their balconies and ornate ironwork, you begin to believe these prophecies. Theres already an art school and a small art gallery. Last night at our hotel I met an American

28

Nicaragua

from Los Angeles. Hes an artist thinking hed like to spend time here in Granada painting the old buildings and the park. Hes traveling with a friend, another artist, an American living now in Costa Rica where he has started an artists colony. Maybe, they explain, theyll try the same thing in Granada... Of course, theres a long road from here to there. This is, right now, a Third World city. In some areas, sewage still runs through the gutters. Nicaraguans (and Granadinos) have gotten a taste of what capitalism can mean. And they seem to like the flavor. Prices have taken a huge jump and they will continue to appreciate. Bargains are few and far between but can still be found occasionally with some serious searching. Were invested ourselves, as you know. About eight years ago, we purchased, with friends and colleagues, a tract of land along the southern Pacific coast and weve opened an office here in Granada. Were committed to Nicaragua. We think with good reason.

How to buy property in Nicaragua

Buying property here may be a bit different than what youre used to. First of all, if youre interested in a property, you could go directly to the source: the local farmer or fisherman who is selling it. However, if you dont speak Spanish and you dont have time to really familiarize yourself with the market, working with a real estate agent is safer and more efficient.

Four things to do before you buy

Buying property in Nicaragua is safe when you go through the proper channels. However, you have to be sure that the person selling you the property is indeed the owner. Gail, at the IL office in Granada, can refer you to a respected local attorney and real estate agent. 1. Hire a respected local attorney Your first order of business is to engage a locally respected attorney to assist you in the property-buying process. Property titles all over the country are in dispute. But an experienced attorney can trace the title to the property that interests you and assure you that it is not contested. If youre interested in a property for which the title is not clear, we advise you to move on. 2. Research the title Pay extra attention to land that is for sale and is part of the Autonomous Regions of RAAN and RAAS (Regiones Autonomistas Atlantico Norte and Regiones Autonomistas Atlantico Sur). The Autonomy Law requires the government to consult indigenous people regarding resources in these areas. If youre interested in buying in one of these regions, hire an attorney who understands this law to help with title clearance. 3. Understand the contracts Beware of signing contracts that you dont understandin Spanish or English. Regardless of your Spanishspeaking abilities, make sure to have the contract fully translated into English before signing. 4. Make sure the attorney is working in your interest In Nicaragua, rules regarding conflict of interest are non-existent, thus your attorney might be working for you and the seller. Sometimes an attorney may not disclose this informationeven if asked.

The best deal in the world on Pacific beachfront property

About six years ago, we made one of the biggest decisions in our history. I hope it will be a life-changing lifestyle improvement for you, too. We found what we believe is one of the choicest properties in all Nicaragua, where we hope to build a new, private enclave of International Living friends, family, and associates. Im talking about beautiful beachfront propertywith cliffs and covespink sand and the most amazing sunsets in the world. As I write to you, some of those who have already decided to participate in the project are building dream homes here with swimming pools for practically nada. Well, its not free. But it is cheap enough that we couldnt resist. 29

Thats why we (a small group of principles and friends of International Living) pooled our resources to purchase, together, 1,700-acres of the most gorgeous land weve even seenvery private with a grand view of the Pacific to the front, and majestic mountain views to the back. Our idea is to develop this as a carefully controlled oceanfront paradisea place where you can swim, surf, snorkel, fish, ride horses, sailor just go walking on seemingly endless, open pristine beachesin safety and privacyin the company of International Living friends and fellow readers. Rancho Santana (St. Anns Ranch) is a stunning 1,700acre reserve with two miles of coastline and three distinct beachesPlaya Rosada (Rose Beach), Playa Dorada

CHAPTER

4
Playa Rosada, the initial phase of the International Living Properties S.A. (ILP) project, is a protected property nestled within Rancho Santana. With pink sand atypical for the region, Playa Rosada is also the setting for the Casa Club, which includes a pool, outdoor showers, bathrooms, and picnic area. At the northern boundary of the reserve is another 670 feet of beach called Playa Dorada, where Phase II of the project is now well under way. The Oxford Club (a sister organization) recently celebrated the official opening of their completely furnished clubhouse/meeting quarters, which is also open to the public as a restaurant and hotel. There is a new poolside bar and grill, and a terrace overlooking the ocean out front. The wide, straight stretch of land at Playa Dorada is wonderful for recreation, allowing for 10mile walks along the beach to the north. The third beach, known as Playa Escondida, is to the east of the property. You can take the new road to the 8,660 plus feet of beautiful soft sand where theres rarely a footprint. Playa Escondida is completely sold out but the development above it, Alta Vista has two lots left with stunning views all the way to Costa Rica. Rancho Santana is set on rolling hillside rising away from the water, allowing dramatic Pacific Ocean views no matter where you stand. The lots on either side of the beaches are cliffside and no less spectacular, where you can enjoy magnificent coastal views, brilliant orange-pink sunsets, and vivid starlit skies at night. The newest phase of development is Bella Vista, which sits on the hillside just over a half-mile from the beach, with sweeping views of the coastline. Pre-infrastructure pricing on these one-acre lots starts at $40,000.

(Golden Beach), and Playa Escondida (Hidden Beach). Its on the Pacific coast of Nicaragua, just 50 miles from the Costa Rican border. The property was left untouched by Hurricane Mitch, since, unlike the Atlantic/Caribbean sides of Central America, the Southern Pacific side is tranquil and does not see hurricanes.

Better than California

By Lief Simon The shoreline in California is hard to resist, with its inlets and coves, dramatic, rocky drop-offs, and long stretches of sand and surf. But the median price for a single-family home in Malibu is $1.8 million. For a larger place-three bedrooms with a gourmet kitchenon the beach you can expect to pay almost $3 million. Thats a lot of money, no matter where you are. Yet for a fraction of that amountless than $100,000 you can buy a third-acre of beachfront farther south in Nicaragua with the same dramatic Pacific coast, glorious sandy beaches and warm, soothing wind. This week Ive seen another report in the travel press about Nicaragua as a top destination (this time, for adventure travel). Conde Nast Traveler featured an article in March about Central Americas Action Mecca and talked about the secluded beaches on Nicaraguas Pacific coast and the activities (more than I realized, I admit) that are now available there. My own observations from a trip in February is that the tourism market in Nicaragua is shifting from backpackers looking for $8-a-night hospedajes to middle-class tourists looking for quality places to stay. I visited a hotel in San Juan del Sur that is charging what I think are crazy rates-about $150 a nightand they arent even on the ocean. Its a quality hotel with high-end service. Still, I pay only $100 a night at the Intercontinental in Managua. I am convinced that this countrys Pacific coast will become an attractive weekend and second home market for wealthy Nicaraguans and expats living in Managua, less than an hour away. The location is convenient. The area also will attract retirees who want to wake up to the sound of the surf each morning...but still be within easy driving distance of the conveniences of a big city. This market continues to move forwardfast. Its well past the early stages of its up cycle...and the current deals wont last much longer. By the way, the March 2005 issue of Conde Nast Traveler also featured an article on California complete with glossy photos of sandy coast. If youre skimming through the issue, dont make the easy mistake of confusing the two articles...

Your own Pacific oceanfront home for about $140,000

Today, you can own a lot with a breathtaking oceanview at Playa Dorada for as little as $49,500. You can build a dream oceanfront house with three-bedrooms, two-and-ahalf bathrooms, and long, breezy decks with panoramic viewsfor about $105,000! So, for $139,500, youll have something even the Californians will envy.

Our place in the sunfriends of International Living only

Weve wanted to do this for many yearscreate the perfect retreata private overseas haven where we could gather in the company of friends and likeminded colleagues. Now, after 20 years of looking, studying, and analyzing this goal has become a reality: Ownership in some of the most naturally beautiful and desirable property in the worldwith a plan of development that actually makes it better. In addition to a spectacular ocean-facing lot that is being set aside for use by all ownersand the new clubhouse/meeting quarters built in partnership with The Oxford Club, state-of-the-art tennis courts and stables have just been 30

Nicaragua
completed. Every detail has been carefully thought out to enhance and preserve the natural beauty of the place, while still creating the infrastructure that allows you to enjoy it. Whats more, were going to great lengths to make sure that the culture and ambiance of the country are enriched, rather than eroded, by our presence. The by-laws of the Land Owner Association for Rancho Santana guarantee that the area will be developed in a proper manner consistent with our own tastes for privacy. This is a carefully designed environment for us and our friends only. It will provide for us an exclusive, private retreat with first class amenitiesall in a desirable, yet incredibly inexpensive location. For more information, take a look at the projects website: www.ranchosantana.com. To capitalize on this exclusive International Living private retreat, contact Gail Geerling, e-mail Nicaragua@ InternationalLiving.com.

Nicaraguas best coffee beans

by Gail Geerling This is not Starbucks country. No Mocha Frappaccino herejust good strong brew. Cultivated on the sides of mountains or the slopes of volcanoes, the best coffee is always shade-grown. And, they say, the cooler the climate at night, the better the bean. In the north of Nicaragua, in places like Matagalpa and Jinotega, coffee growers take advantage of the higher elevations and generous rainfall to produce some of the worlds finest coffee beans, grown at elevations of more than 4,265 feet. Despite the high quality, in recent years some plantations have had to close, and hundreds of manzanas (one manzana equals about 1.7 acres) of coffee bushes have just been left to sit because of low market prices. Competition from countries like Thailand has made it tough to keep a plantation alive in Central Americas poorest country. Things are looking up this year, though, as coffee connoisseurs around the world realize that Nicaragua grows the best. (Of course, Im completely unbiased!) For those of us lucky enough to live here, experiencing the taste and aroma of a smooth rich cup of Nicaraguan estate-grown coffee is a real pleasure. Even children drink coffee here. Its not unusual to see a 10-year-old kid with a steaming cup in his hand, and at many service providers there is a big pot surrounded by tiny espresso cups and saucers. Youd think with all this caffeine Nicaraguans would be rushing to get things donebut somehow it doesnt seem to affect them. My favorite is Caf Excelso, grown in Jinotega at a hacienda called Los Papales at an elevation of nearly 5,000 feet. This coffee comes in a brown paper bag, like the lunch sacks we used to carry to school, with a green labeleither whole bean or ground. (No choice of regular or decaffeinated heredecaf is for wimps and gringos.) This stuff is pure heaven: rich Arabica beans dried in the sun according to a more than 80-year-old tradition and roasted to perfection. Youll hear it described in terms like acid balanced, nutty aroma and full-bodied evoking images of the finest wines. And growers here take coffee as seriously as any Sonoma Valley vintner. The best, Im told, is Origin Coffee, referring to the type of coffee grown in environmental conditions unique in the world. Excelso has this designation, which makes it popular as an export brand. Caf Excelso is a small, family-run operation. The couple who own it, Franklin and Maria Antonieta, live just outside Managua, and they process and sell Caf Excelso right from home. Their sales concept is caf fresco molido a la vista, or, freshly ground as you watch. You cant buy Caf Excelso just anywhere, but if you cant make it out to visit them, its usually available at the Hyper La Colonia on Carretera Masaya, just on the outskirts of Managua. So come visit Nicaragua, and taste the flavor of an over 80-year tradition. I promise you wont miss your Starbucks!

For more information:

Our office in Nicaragua: Gail Geerling and her staff on the ground in Granada, can assist with any queries you may have on living, investing, or visiting Nicaragua. Contact them by e-mail: Nicaragua@International Living.com. The Nicaragua Owners Manual: To get a good look at this promising country without actually going there yourself, take a look at the Nicaragua Owners Manual, a comprehensive report available from our online bookstore at: www.ILbookstore.com. Our International Living Exploratory Tours: We regularly take tours to this beautiful country. For more information on our next tour to Nicaragua, contact Kelly Carbaugh; tel. (410)783-8446; e-mail: Conferences@ InternationalLiving.com.

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CHAPTER

How To Discover The Fortune In International Real Estate

Dear Reader, Stock market investors have seen little returns for the risks that they are taking now. The broad market still hasnt returned to the heights reached before the March 2000 collapse. P/Es are still at levels that put investors at risk. That means theres greater chance to end up losing money in stocks than making a bundle. Whats a smart investor to do today? There are safe alternatives to the stock market...investments that can deliver real profits of 84% in a year, 300% in nine months and as much as 900% in six years...and with a minimum amount of risk. Let me explain... Im talking about property. Real estate. But, before you decide you know how real estate works and how to make money from it already, let me make this critical pointone that may come as a surprise to you: The best deals and the biggest opportunities in real estate markets today are NOT to be found in the U.S. Thats right. Take the example of the U.S. coastlines... Almost ALL the exclusive resorts in the U.S. are already priced far beyond the means of most people. Even if youre already very wealthy, the costs of a beachside home can be a threat to your wealth. Yet, you can actually own even more stunningly beautiful beachfront...at a fraction of those prices...simply by taking advantage of special situations that make some of the most desirable property in the world downright cheap! International advantages are overwhelming But affordability is not the only benefit of global property investments. Here are just a few advantages: [1] Global real estate investments can appreciate faster than U.S. real estate. Because of the low price there is a higher ceiling for appreciation. Thats driven by the fact that with todays technology many people can work from anywhere on the planet. [2] Global real estate offers you a safe alternative if things go badly in the U.S. Many Americans fear for their constitutional rights. It seems as though they are fading quickly in this age of Homeland Security. And although, many governments around the world arent much better, many are much less intrusive. [3] Global real estate is an easy way to move some of your assets offshore. There are few restrictions placed on Americans by the government regarding the purchase of property overseas. And once you own property abroad its extremely difficult for the government, creditors, or anyone else to get at it. [4] Your real estate investment can double as a personal retreat, part-time residence or vacation getaway. Making Global Real Estate Investing Easy Allow me to introduce myself. Im Lief Simon, a real estate investorbut not a normal one. Its more than that. Im an Opportunity Scout. A group of wealthy and adventurous savvy businessmen and investors pay me good money to fly around the world and uncover the absolutely best property investment deals on earth. These guys dont trust Wall Streetor follow crowds. And why should they? We are looking for something bettersafermore interestingand more profitable. We like investments that are realtangiblenot paper promises based on questionable accounting and hype. I scout the world for the best real estate deals...desirable property that will appreciate quickly. And is deeply undervalued. I compare price and value globally. I look for the greatest potentialand when I find spectacular value, I send out a memo to my small group of wealthy investors. And the deals I find are so outrageously profitableI make sure that I invest right alongside them. Id like to invite you to join us. Youll be able to get in on exactly the same deals that we do...at the same potential for profit. Youll read my reports at the same time and on the same basis as the rest of us. I want to make this as easy as humanly possible for you. And Im looking for people who are serious about this opportunity to join us. With the power of the group...well be able to create deals that would be unavailable to any of us as individuals. And you can reap the rewards right along with us. The Global Real Estate Investors Club is not for everyone...in fact, its not for most people. Only the most astute and adventuresome investors will ever be interested in this opportunity. Were looking for only a few like-minded investors. If you would like to be part of this private group, please visit www.globalrealestateinvestor.com for more details on membership. Best Regards,

Lief Simon Editor, Global Real Estate Investor

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Report 3

BETTER THAN BURIED TREASURE

International Business Opportunities That Could make You Rich

WAYS TO PROFIT FROM YOUR TRAVELS

by Gary Scott
It was strange to be sitting in the back seat of a Rolls Royce, papers laid out in front of me on a folding picnic table, writing an article. But as I gazed at the 11 hand-stitched Scandinavian hides that made the seat covers, and as I ran my hands over the rare, polished, Italian burl that adorned the car, I felt inspired. And knowing that my Rolls, having travelled 100,000 miles, would run many more years and grow in value as well, inspired me even more. Best of all, I bought that Rolls for less than the price of a new Chevrolet. That inspiration took place nearly twenty years ago when in my global travels I discovered a distortion (and a weak British pound) that allowed me to buy a shiny Rolls Royceand import it duty-free back into the United Statesfor a mere $14,000. I gained much more than a luxury car from that loophole. I gained the understanding that distortions could turn my international journeys from expenses into money-makers. Though that Rolls has long since been sold (at a profit I might add) and that particular loophole has changed, you can still find similar distortions that will not only pay for your travels, but could become a profitable business. Over the past 20 years, I have gained enormous tax and business benefits from my travels...and I want to show you how to do the same thing. countrys tax policy, unchanged in 20 years (and unlikely to change soon). This policy gives U.S. business people who conduct business abroad a better deal than their poor brothers who operate only in the U.S. The tax law essentially leaves nonU.S. companies totally free of U.S. taxes (even if owned by U.S. citizens). To qualify, your business must 1.) not do business in the U.S. and 2.) earn 70% or more of your income from non-passive sources (passive sources include rent, royalties, dividends, etc.). This loophole is technical and loaded with pitfalls, so dont run off and start an offshore company half cocked. Youll want a good international attorney. But this is a solid loophole forced upon Congress by the fact that U.S. businesses must be allowed to compete in global markets to maintain a balance of trade. Anyone with a desire to build a reasonable business overseas can take advantage of this fact. A second tax benefit, even if you dont have an overseas company, is that if you take your trips with the intent of making a profit through business, the cost of the trip, flight, hotels, etc., can be tax deductible. This tax benefit is for almost anyone willing to look for business opportunities when they travel abroad.

Two distortions that remain

Two things help make your penchant to travel worldwide profitable: taxes and currency fluctuations. First, lets look at the tax benefits of global business activities. A front-page article in the USA Today points out how two U.S. Presidential candidates have very similar economic policies. The article stated that the reason behind this is that U.S. economic policy is now controlled by the realities of the global economy. These economic realities dictate what U.S. administrations do and also dictate a part of the 34

Turn your passion into profit

What type of business should you start? I recommend you make it something you really enjoy. Most of us travel for pleasure, so begin your business by turning your passion into profit. You do not have to make a big deal out of your business to gain tax benefits. The activity can (and should) be fun, but if you desire, the offshore business can be kept quite small. For example, my mother, a grandma in her 70s, is not a business person in any sense of the word. Her passion is making and collecting dolls.

Better than buried tre a s u re

Because she knows the art of making dolls well, she is able to have a very small international business. She knows that the best doll eyes in the world are manufactured by a small company deep in the countryside of England. She turned several of her U.K. visits (to see me when I lived in the U.K.) into profitable trips by buying these exquisite dollseyes there and selling them to her doll-making friends back home. She published a Romantik Hotel and Restaurant Guide, which lists romantic hideaways all around the world. I learned about this business while staying at the Hotel Hermitage, a quaint, charming inn developed from a 17thcentury plantation on the tropical island of Nevis. We had a lovely balcony overlooking the mountains and blue sea, with monkeys swinging from the trees. She also hosts weddings there...we enjoyed watching a plantation wedding, complete with the brides horseback arrival.

The $14,000 Rolls Royce

This example also highlights the second way to make money with your travels: currency fluctuations. As currencies rise and fall versus the U.S. dollar, they create distortions. When I lived in England, the pound was very weak (as low as one pound per dollar). This made my Moms doll eyes cheaper in U.S. dollar terms. The pound per dollar parity also meant when I bought my Rolls for 14,000 poundsI paid only $14,000 bucks! Often a crashing currency also comes attached with an economic crisis. This creates an even better opportunity. In the case of my Rolls, I took advantage of an English economic crunch (which drove the price of luxury cars down and forced many diehard owners to sell), a weak pound, and a U.S. customs loophole. Three distortion opportunities like this are the best. So talk to a tax attorney experienced in international structures, keep an eye on currency fluctuations, and look for distortions relating to fun things you want to be involved in.

Free hotels, rooms, and meals

This hotel stay reminds me of one more benefit that can come from your global business. When Merri and I enjoyed the Hermitage (the rooms normally cost from $190 to $690 per night), our stay was free. We have received free hotel rooms, flights, tours, meals, and cruises. Real estate developers have even offered to give us free beachfront lots. So you can gain free fringe benefits when you spot distortions because having a global business view makes you an important person, able to help other peoples businesses as well as your own. This mentality puts you one step ahead of the lot. I could go on and on, because this subject is my passion, but the main point is to grasp the underlying principles: do what you love as you travel the world. Keep your eyes open for business distortions, especially those created by currency fluctuations or a by a local economic crisis.

1,900% pillow profits

Dont make this harder than it is. There are opportunities all over the world waiting to be used. Art lovers might get into the business of buying art at auctions in one country and selling elsewhere. Love to fish or golf? Organize tours to your favorite fishing or golfing spots. Recently on my latest trip to Ecuador, my wife Merri stumbled across these amazing, huge herbal pillows, filled with Eucalyptus, rosemary, pine, lemon, orange, rose, and chamomile. Having an interest in aromatherapy, I know that very small herb-filled pillows sell in U.S. health stores for as much as $39.95. These full-sized pillows in Ecuador sell for just two dollars! This is a distortion I know I could (if I didnt already have more than enough business there) capitalize on. If you love photography, why not create a book or calendar? The 12 best golf course in the world (of course youd have to spend time at St. Andrews) or the best dozen fishing spots (youd have to fish for salmon in Scotland), or the most famous paintings, or the top 12 wine cellars, the list goes on and on. Do you prefer to write? How about creating a travel newsletter or writing a book about a subject you love? One of my readers, a private pilot, wrote quite a good book on the best restaurants near small airports. (Unique restaurant guides10 best places in the world to get french fries...the most romantic hotels, etc.) In fact, German business woman Ann LaViolette created an entire global business based on the idea of romantic hotels. 35

The Big Mac index

The Economists Big Mac Index (www.economist.com) is a good way to figure out where the dollar is strongest and weakest (in other words, where you have the most buying power) at any give moment. The average Cost of a Big Mac in the States is $2.71 Cheapest Big Macs $1.26 China $1.33 Malaysi $1.42 Philippines $1.49 Russia $1.52 Thailand $1.54 Hong Kong Most expensive Big Macs $5.46 Switzerland $4.97 Denmark $4.46 Sweden $3.75 Euro area (average) $3.61 Britain

Contacts
Leslie Share, Packman Neuwahl & Rosenberg, 1500 San Remo Ave. Suite 125, Coral Gables, 33146; tel. (305)665-3311, fax 665-1244, e-mail: las@pnrlaw.com. Leslie is a tax attorney I have worked with for nearly 20 years. He specializes in the use of overseas structures. Romantik Hotels & Restaurants, Postfach 11 44 D63786 Karlstein, Germany; tel. (49)6188-95020, fax 6007, e-mail: info@romantik.de, website: www.

romantikhotels.com. The Romantik catalog lists hundreds of hotels and restaurants in dozens of countries. They list only establishments of distinctive historical character small enough to ensure that the guests always receive individual attention. The Hermitage, St. John Figtree Parish, Nevis, West

Indies, tel. (809)469-3477, fax 469-2481. This rustic inn with breezy gardens and terraces features a library, a pool, tennis courts, stables, and quiet rooms in quaint island cottages with canopy beds, private porches, lovely antiques and astonishing views of the Caribbean blue sea. Incredible cuisine is served on the terrace.

Taking care of businessEcuador style

By Dan Prescher and Suzan Haskins
After nearly six months living in Ecuador, we have come to the conclusion that many of the foreigners moving here arent retiring as much as theyre re-trying. Weve met many expats in Ecuador who have happily left behind former lives and careers. Some have indeed retiredthey dont need to work another day in their lives. Some have years to go before theyre old enough for U.S.style retirement, but they live very comfortably here on what they already have, thanks to Ecuadors remarkably affordable cost of living. But most of these folks arent coming to Ecuador simply for a different view from their rocking chairs or extended vacations in one of the worlds natural wonderlands. These adventurous souls want more. They want challengesunique, exciting business challengesand theyre finding them. term for quail, and their tiny, half-dollar-sized eggs are touted from Japan to North Africa as a delicacy, a health tonic, the worlds most complete brain food, and an aphrodisiac. Walter has a fully functioning export operation going, complete with printed cartons and a list of buyers. He lacks only the capital to meet his production goals, and he is actively seeking investors.

Saints preserve us
Matt Guillory came to Ecuador after trying Spain, Venezuela, and Colombia. He was looking for the right combination of old-world Latin social and artistic values and 21st-century conveniences. Entranced with the classic religious and civic architecture of Quitos Old Town, he decided to stay a while and check out real estate investment possibilities, but he wondered what to do to keep busy in the meantime. He found the answer while attending Gary Scotts (longtime friend of International Living) International Business Made EZ seminar in Quito last January. One of Garys ideas was to combine something you love with the possibilities of the Internet. Matt took the idea and ran with it. A long-time aficionado of Catholic religious art, Matt established relationships with local antique dealers and master artisans at the heart of Ecuadors centuries-old religious sculpture tradition. The result is a new website where Matt offers some of the worlds finest original and reproduction religious statuary.

Logging on the coast

Five hours from Quito, along Ecuadors lush Pacific coast, vast stands of chanul wood thrive in the tropical heat. Beautifully grained and iron hard, chanul is the wood of choice for high-end flooring, interior finishing, even classical guitar finger boards in Ecuador. This unique wood is littleknown outside the country, but commands high prices locally, making it a target for pirate logging operations, which often illegally clear-cut large tracts. Robert Montgomery asked himself if chanul plus new Ecuadorian environmental regulations against clear cutting equaled a business opportunity, and got YES for an answer. Hes formed a company with another local businessman for short-term eco-logging of chanul and other Ecuadorian hardwoods that is expected to supply the local market, preserve remaining stands, and earn a nice return all at the same time.

The cure for what ails you

Ecuadors eastern rainforests are cornucopias of unique plants and animals, many if not most of which remain unclassified. This rich treasure trove of biodiversity yields new and exciting natural remedies almost daily. Gary Scott and his wife Merri are themselves involved with the production and marketing of one natural substance called BIRM, or Bio Immune Response Modulator. The exact effects and activity of BIRM are explained on Garys website, but if the reality even approaches the hype, Ecuadors jungles have produced yet another remarkable modern miracle. For those with the interest and the patience, Ecuadors teaming natural pharmacy still offers opportunitiesindeed, it has barely been tapped. 36

Laying nest eggs

On a recent trip to Ecuadors Manabi Province to look at real estate, we were asked by a friend if we wanted to take a side trip to see some codorniz. We had no idea what codorniz was, but we were intrigued enough to follow him to a property owned by Walter Briones, where he had set up a series of chicken wire coups. Inside, small brown-and-black birds were busily doing what birds dolaying eggs. But these were no ordinary eggs. Codorniz is the local

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Growth industry
If it grows, it grows somewhere in Ecuador. With rich volcanic soil, 365 days a year of equatorial sun, and nearly every type of terrain except arctic tundra, Ecuador is a natural greenhouse for plants of all kinds. Not only is Ecuador one of the worlds largest rose growers and exporters, but fruits and vegetables do so well here that there are more varieties we dont recognize than those we do. Werner Forster is using Ecuadors natural abundance to his business advantage. He exports a growing list of organic vegetables to the United States, for use by natural food stores on the West Coast. He, too, is looking for interested investors. Thanks to Ecuadors natural fertility, there are lots of new crops to try and markets to tap.

Looking for business partners?

Is Walter Briones the right Ecuadorian partner for you? For more information on his business, e-mail: brescor@hotmail.com. If Matt cant find the saint you want in an original, he'll have it made for you. Or send him a picture and he'll copy it in whatever size you like. For mor details, e-mail: www.thecatholicequator.com. Gary and Merri Scott have done so many things over the years that its hard to say exactly what their business is, but part of it right now is BIRM, or Bio Immune Response Modulator. For the whole story, check out Garys website: www. garyascott.com.

Whats your idea?

The list of potential business opportunities in Ecuador goes onsoft adventure tourism, extreme sports, textile manufacturing and export, hospitality, real estate develop-

ment, infrastructure provisioning for upcoming private telecommunications concessions, and much more.

Ecuador business opportunities by the bucketfull

By Dan Prescher and Suzan Haskins
Majestic mountain hideaways, beach houses next to the crashing surf, high plains, haciendas, upscale condos overlooking the heart of the cityname your favorite living situation, and Ecuador has it, often at prices unseen in the United States since the 1960s. But if your investment objectives go beyond real estate, Ecuador has just as much to offer. As we saw on our last Discover Ecuador tour in July, some of these unique investment opportunities are looking better than ever, given current conditions in the U.S. stock market. But before we talk about these opportunities, lets take a look at the factors, past and present, that make Ecuador a good business bet for the next three to five years.

A rocky past
In 1999, Ecuador underwent its worst economic crisis in history. Oil prices dropped. El Nio caused massive flooding and crop loss. Asian and Brazilian economies bottomed out, hurting trade. Banks failed and assets were frozen. Political deadlock made effective government reforms impossible. These crisis conditions made Ecuador the land of opportunity for people looking for extremely cheap real estate: Cash-hungry Ecuadorians were parting with their property at unheard-of prices. In the year 2000, back against the wall, Ecuador implemented an economic program aimed at regaining stability. The U.S. dollar replaced the sucre, the national currency, and significant reforms were approved by congress on March 1, 2000.

A 15% discount on the Ecuador Owners Manual

Parts of this special highlight report on doing business in Ecuador are condensed from International Livings specially compiled edition of Ecuador: The Owners Manual. The manual is 120+ pages of detailed information, including the muchexpanded version of this report, as well as extensive lists of in-country and U.S. contacts for doing business in Ecuador. Plus, there is detailed information about why and how to relocate to Ecuador, and much more. Usually Ecuador: The Owners Manual costs US$69. But, as an International Living subscriber, we are offering you the chance to avail of this special discountthe report is yours for just $58.50. Thats a saving of 15%. To place your order and to get your 15% discount, tel. toll free in the U.S. 1-800-643-2479 and ask for Dept. I120CAEE.

The road to recovery

Ecuador has begun to get back on its feet in a big way. The 2001 balance of trade was +US$1.2 billion, up from + $.9 billion in 1999. The new oil pipeline from Ecuadors eastern oil fields to the coast will be completed in 2003, doubling oil exports to about 800,000 barrels a day. Inflation has plummeted and is expected to be in the single digits 37

next year or the year after. The positive economic news has put the brakes on the pennies-on-the-dollar real estate market, but the upside is that, despite higher entry levels, property prices should continue to appreciate. Indeed, prices and costs for almost everything should continue to increase for the next three to five years. How has this general price increase affected business in Ecuador? Heres a telling statistic. Labor costs have skyrocketedfrom 65 cents an hour to 85 cents an hour! Thats not a misprint. The government has gone out of its way to encourage new business investments from offshore. Equal treatment is given to local and foreign investors, so youll receive the same rights of entry into markets as locals. Practically all sectors are open to investors. Profits and capital can be repatriated without restriction, and business in general should continue to benefit from the increasing stability and visibility provided by dollarization. All this boils down to a great environment for your business in Ecuador.

others have come back to the natural beauty and ecological appeal of tagua. We visited a factory in Manta that produces buttons for many of these houses, using the latest laser technology to engrave the designersnames and logos directly on the buttons. The chances are good that the buttons on your new Gap or Banana Republic shirt are made of this remarkable stuff. What do current tagua manufacturers need? New markets and American-style marketing know-how. One of our tour participants stood in the factory show room holding a small tagua sculpture and wondered what a tagua chess set would sell for in the Hammacher Schlemmer or American Airlines in-flight catalogs. Fortunes arise from acting on just such daydreams.

Shrimp tales
As it happened, one of the local guides we introduced to the readers on our Discovery Tour used to work in the Ecuadorian shrimp industry and told us that the margins were incredible. To prove it, Diego called an acquaintance near Manta who wanted to leave the shrimp operation he was working for and start his own. That very afternoon he showed up at our hotel, and we spent a very interesting afternoon discussing the potential for investment in shrimp farms.

Choices, choices, choices

The question is, what and where are the specific business opportunities? We uncovered more than we could imagine on our last Discover Ecuador tour. We started out with roses as we drove through the majestic Cayambe Valley north of Quito. Ecuador is one of the worlds largest exporters of roses thanks to a perfect equatorial climate that allows a year-round growing season, and Cayambe is home to companies that produce hundreds of millions of roses annually. A walk through a greenhouse the size of a city block, bursting at the seams with perfectly formed roses of every color and variety, can make you think youre strolling through heaven. As we learned by talking to the managers of these operations, there is practically no room in the market for start-up companies. Where then is the opportunity? Competition and the sheer number of companies mean that almost everyone is seeking an advantage by expanding production. At the same time, many lack sufficient capital. The front door to the management office is open to investors who can provide the wherewithal to add more greenhouses and support infrastructure.

It seems that the longer were here, the more interesting ideas pop up, and some of them make us scratch our heads and wonder, Why didnt we think of that?
The problem is land: Even at the relatively cheap prices of Ecuador, startups are often undercapitalized. Shrimp pools are large, and the more you have, the more you can produce, making it difficult for local entrepreneurs to round up the necessary seed money to compete with the large, established operations. But once in production, these shrimps provide a giant margin. Our visitor estimated that initial capital could be recouped in three harvests from a large operation...and there can be up to four harvests a year!

Thinking outside the box

These are only a few of the opportunities we have come across as we have traveled around this diverse little country. It seems that the longer were here, the more interesting ideas pop up, and some of them make us scratch our heads and wonder, Why didnt we think of that? Coffins, for example. Were not being facetious or macabre. Ecuador is full of master woodworkers, and we know of a local entrepreneur exploring the possibility of having high-quality wooden coffins constructed here for export to the United States, where they would be bought and distributed by a national funeral home supply company. His research indicates that the margins would be significant. 38

Money for buttons

When we flew to Ecuadors warm, lush Pacific coast, we found another growth opportunitytagua. This amazing product is often called vegetable ivory, since it can be finished to resemble real ivory in hardness, beauty, and durability. Cottage industries have grown up around sculpting these dried, cured nuts of the tagua palm into an amazing assortment of figurines, but the money currently is in a most unlikely placebuttons! Tagua used to be the material of choice for buttons of all kinds until it was replaced by plastic. Now, however, designer houses like Joe Boxer, Polo/Ralph Lauren, and

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Now thats thinking outside the box. Along the same lines, weve heard of a dealer of fine Russian art that is having reproductions of elaborate period frames made here in Ecuador for his paintings. These frames add significantly to the appeal of the paintings, as well as to the sale price.

Join the folks who are doing it

Robert Montgomery has been interested in the eco-logging possibilities in Ecuador since he arrived in 1999. He now has a company that cuts chonta, chanul, and other exotic hardwoods from secured stands near Ecuadors lush Pacific coast in such a way that their continued health and growth is assured. Roberts company is seeking partners, and he can provide a complete business plan to serious investors. For more information, e-mail: rcmpalm3@hotmail.com . Walter Briones is a supplier of codorniz eggs to the local Ecuadorian market. Codorniz is the local term for quail, and their tiny, half-dollarsized eggs are touted from Japan to North Africa as a delicacy, a health tonic, the worlds most complete brain food, and an aphrodisiac. Walter has a fully functioning production facility complete with printed cartons, delivery vendors, and an extensive list of local buyers. He wants to go global, and hes looking for investors to help him increase production to meet demand. For more information, e-mail: brescor@hotmail.com . Matt Guillory came to Ecuador looking for the right combination of Old World Latin social and artistic values and 21st-century conveniences. A long-time aficionado of Catholic religious art, Matt established relationships with local antique dealers and master artisans at the heart of Ecuadors centuriesold religious sculpture tradition. The result was a website offering original and reproduction religious statuary. Matt has now expanded into the reproduction of fine silver and gold pieces. For more information, e-mail: guillory@latinmail.com; website: www.thecatholicequator.com. Gary and Merri Scott are involved with the production and marketing of a natural substance called BIRM, or bio immune response modulator. The exact effects and activity of BIRM are explained on Garys website, but if the reality even approaches the testimonies of some of those who have tried it, Ecuadors jungles have produced yet another remarkable modern miracle. For the whole story, visit Garys website plan: www.garyascott.com. Andrs Cordova is one of our very valuable legal contacts in Ecuador, but he also has an interest in tagua as one of his countrys unique and most promising products. Anyone interested in the possibilities of Ecuadorian tagua would find Andrs a wealth of ideas and contacts. For more information, e-mail: afcordova@accessinter.net.

Another brilliant idea

Another brilliant idea weve heard is the wedding gown business. The cost of labor and the skill level in Ecuador makes constructing beautiful bridal gowns here and exporting them to high-dollar shops in the United States a real opportunity. Remember how much you paid for your daughters gown at that fancy shop downtown? Imagine the profit for the manufacturer if it had been made with the same detail and craftsmanship, but with 85-cents-an-hour labor! Or imagine a onestop wedding shop featuring everything from gowns to tuxedos to flowers to silver cake service sets to hand-carved wooden wedding party gifts. All produced in Ecuador, all beautifully crafted, and all supplied for a fraction of U.S. costs.

Bigger businesses for bigger profits

As intriguing as these ideas may be, you may already have a thriving business in the United States and want to expand your market. The U.S. Commercial Service tracks trade with U.S. trading partners and keeps tabs on the growth areas where money is to be made importing U.S. goods. Here are some of the top areas of greatest opportunity in Ecuador right now: TelecommunicationsEcuadorians love to communicate and the countrys potential $2 billion telecommunications market for all services opened to free competition in January 2002. The best prospects include concessions for fixed and mobile wireless access, PCS, WLL, and LMDS concessions. Automotive parts and accessoriesAn Ecuadorians love of soccer is second only to his love for his car...its treated like a family heirloom and when it needs parts, it gets them. U.S. automotive parts imports are expected to reach at least $41 million. FranchisingWe keep looking for a Kinkos down here, and well buy dinner for the guy who opens one. The total franchise market size is estimated at $110 million, with an estimated growth rate of 15% to 20% over each of the next two years. Best prospects include quick printing, office services, language and computer learning, dry cleaning, sports and fitness centers, entertainment, optical centers and pharmacies, delivery and packing, security systems and services...and Dominos is handsdown the favorite pizza in Quito. Consumer Food ProductsA can of Campbells tomato soup costs $1 in Quito, and they cant keep it on the shelves. Same for beer, snack foods, meats, wines, and dairy productsEcuadorians will pay more for U.S. products. Dollarization and tariff reductions are accelerating the increase in consumer food importation. 39

Living the dream in the South of France how to own your own country B&B
by Val McQueen
Something in the human condition seems to dictate that, on hitting the age of 40 or so, thoughts run to the idea of getting out of the rat race and maybe, say, starting up a B&B in the south of France. Of course, there are plenty of other places in the world that enjoy a healthy tourist industry and make ideal settings for B&B's and small hotels, but none seems to hold the allure of the French Midi. Perhaps its the clear, cloudless Midi sky, the strong sunshine and sharp shadows, the fields of poppies and lavender and the never-ending supply of tourists. The history-laden Languedoc, where I live, draws around a half-million tourists a year, all of them seeking a place to crash after a day of tramping around looking at one historic site after another, climbing rocks or mountains, or spending a taxing day lying on a Mediterranean beach soaking up the rays. Although the concept is encircled in daunting red tape here in France, you can avoid the worst of it. If managed right, running a successful B&B can afford you a decent income, congeniality, and freedom. (No ones stopping you closing up for three or four months a year if you feel like it, for example.) You can give your place any personality you wish. You can make your own rules about whether, and when, you will serve food. You can decide what sort of guests you will accept (you can say no pets...or cats, but not dogs, and so on), what your room rates will be, what kind of atmosphere will permeate your chambres dhotes, what months you will open... The primary reason people take up the idea of running a B&B in this part of the world is that they want to live in the south of France, yet they need to continue to generate an income. As finding a job in France as a foreigner is all but impossible, starting your own small business is the obvious response. And a well-run, friendly B&B with a good website will find customers, at least throughout the season, in Frances most popular tourist areas. The history- and drama-soaked Languedoc is one of the most important tourist regions in France...but it is poorly supplied with hotels. There are no industries here other than wine, which is largely a subsistence industry, and tourism, and the tourist season lasts only four months a year. In other words, no hotel chain sees any benefit in building in this area. There are 23,000-plus B&Bs in France, most of them owned by expatriates, so plenty of people are living the dream already. I talked to the proprietors of two B&Bs tucked away 40 in a popular corner of the Languedoc. First, Britons Nicky and Neil Sinclair, who own The Stone House in Caux. This is their second year in business. I spoke with Nicky.

The Stone House

IL: We hear horrifying stories about French bureaucracy and miles of red tape for starting a business here. How did you get the courage to get started? Nicky Sinclair: Well, we unwittingly by-passed it all by making an innocent mistake. We didnt know that in France you dont need to retain your own notaire to act for you in a property purchase...that the notaire acts for the transaction itself, not for either party. So, accustomed to the English Common Law adversarial system, we retained a UK solicitor (attorney) who not only gave us excellent advice, but happened to be married to a French advocat (attorney). They advised us to set up a SARLa French limited company, which we did. And we thus bypassed having to do all the tramping around ourselves as the advocats firm acted for our company. IL: What motivated you to embark on this project in the first place? Had it always been a dream youd had? NS: Not at all! Neil and I had a catalyst in our lives and we decided to make a change. We had to find a way of making money without having to go out and find jobs. I speak poor French and poor Spanish, but the Spanish dont have a B&B culture, so we chose France. IL: So you had no experience in the hospitality industry? NS: Well, we did have the advantage that Id worked in the hotel industry for 22 years, so knew plenty about efficiently turning over 100 covers a day. So the mechanics werent that difficult. And also, in the hospitality industry, you learn that the customer wants to see a smiling face and doesnt want to hear about problems. IL: Why the Languedoc in particular? NS: Neil wanted to be near the sea and Provence was way too expensive. So we hit on a little bit of France that wasnt completely overrun with expensive properties. IL: And how long did you have to look at properties before you found a place that you knew would work for you? NS: We were incredibly lucky. We bought within 10 days. The house was already in a state of good repair and dcor, so we didnt have to do any giant renovation work. Basically, all we had to do was put bathrooms in each of the four bedrooms. And were just adding a fifth bed and bath on the ground floor. Neil was in the construction industry before, so weve only had the cost of the materials.

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IL: It strikes me that one of the most attractive things about running a B&B is you basically get to set your own terms of doing business. Would you agree? NS: Thats true. Its a flexible concept. You run your B&B exactly how you want it. For example, we dont take pets. Some do, though. IL: No pets! In France, the family dog goes everywhere with the family. Doesnt this rule restrict the number of French guests you get? NS: As it happens, not at all. We have several people in the village who live in these old village houses and dont have space to put up visiting members of their own family, so they book them in with us. So the relatives stay with us, but their dogs go and stay in the family home with the hosts. IL: With the large family furniture in the living room, the French windows, the sunny garden beyond, The Stone House has a very relaxed, comfortable feel. I can only imagine how much hard work went into giving it this informal ambience. How did you tackle furnishing it and so on? NS: Well, we wanted it to feel as though our guests are staying in someones home. Im a bit of a hunter gatherer and sought what I could get, where I could get it. We brought a lot of our furniture down from England, driving the truck ourselves because we didnt want to spend money on a moving company, and before we left England, we bought some other things with this house in mind. What we didnt have when we got here, like wardrobes, we went out and bought in flatpacks and Neil put them together. For anything else, I went scouring the trocantes. (Trocante, for those not in on this wondrous French invention, means swap or trade. Those with something to sell take it to the troc and the troc displays it, sells it, takes a commission, gives the seller his money and even delivers large items. Those wanting to buy can spend at least an hour in a good troc, just looking. Being in a really good troc is like being in a big magic attic.) IL: How long did it take you to get your place ready to receive your first guests? NS: Six months. IL: Some B&Bs serve evening meals. But I see that you dont serve foodexcept breakfast, of course. NS: I started off thinking I might do meals, but I changed my mind. IL: During the high season, how many hours a day do you work? NS: Well, because I dont serve evening meals, which is very time consuming, we work around a standard eighthour dayaround 7:30 a.m. to 4 p.m. I really dont mind it, although its hard physical labor. Especially during the height of summerrunning up and down those stairs in 95 degrees. Also, on really hot days, guests sometimes dont want to go out, which means theyre hanging around the house wanting to talk all day. I dont mind, but it puts the work behind. IL: A lot of B&Bs only stay open six months a year, but you stay open year-round. NS: Yes, but it drops off in September, so the pace isnt nearly as hectic. IL: If you had to advise someone on the very first step to take once theyd actually decided to embark on buying and running a B&B in France, what would it be? NS: Very first step? Hire a good accountant. French tax laws are very complicatedas are tax laws everywhere. But if youre going into business in a foreign country, you want a good accountant on your side. An accountant knows how to shelter your income. No matter what your French accountant costsand the more he costs, probably the more astute and knowledgeable he ishe will save you money. IL: Almost last, but not least, how do you go about your marketing? NS: The Internet. British and northern Europeans all check the Internet when deciding on vacations. IL: Youve been in business for over a year now. Do you think youve found your second vocation? NS: Well, lets say I think weve found our niche for the moment. IL: If you had to put a price on it, how much do you think your businessmeaning the house and all the improve-

Whats the difference?

The definitions of B&Bs, gites, and hotels are very precise under French law, and they are all subject to different legal guidelines. B&B (or bed and breakfast) is the same as chambre dhote (literally, a bedroom in the house). The two terms are used interchangeably. Of the three categories, B&Bs have the most flexibility, and of the three categories, offer the most opportunities for reflexions of their owners personalities. By law, a B&B cannot have more than five bedrooms for letting. Any more and it becomes a hotel. A B&B can serve food to persons staying in the house, but not to people wandering in off the street. When it serves dinner, all the guests must be seated at one big table. No separate tables are allowed, as that would make it a restaurant. The food served must be regional cooking and what the family would have been eating had they been eating alone. (As if, but never mind.) The government would, in an ideal world, like everyone to speak French at the dinner table. Next most flexible are gites. These are fully-equipped houses or apartments rented out by the week for selfcatering holidays. They are often second-homes bought as holiday homes by expatriates and rented out, through an agent, while their owners arent using them. Some are also owned by northern French. There are a host of regulations covering gites, right down to the minimum width of the shower trays (80 centimeters), but as this article is about B&Bs, we wont expand on them here. Hotelsmore than five bedroomshave a whole host of attendant and rigorous regulations, among them kitchen regulations and fire regulations.

41

ments youve done and goodwill youve built up would be worth in todays market? NS: I dont know. We havent thought about it. I suppose anythings worth what another person is prepared to pay for it.

Help, please
Through the Federation de Gites de France, French government assistance is available to people who want to give owning and running a chambre dhote a go. There are people trained to advise the hopeful on the nature of the business, its structures and limitations, tax situations, and warnings on the amount of sheer hard work involved. In some cases, government grants are available. Not unreasonably, these come with strings, one of which is an ability to speak, if not fluently, then very good French, as most tourists within France are French. Second, the recipients have to commit to keeping their B&B running for 10 years. If they fail to do so, the money has to be returned and this will be taken out of the proceeds of the sale of the house, at source, and returned to the French government. Third, the amounts vary according to the number of rooms being let (one to five) and to the region chosen. The government wants to help the economies of some of the poorer regions by encouraging tourism, and these regions get slightly higher grants. Bearing in mind the previous two sentences, the average grant is $8,600, the full sum returnable if you pack your tent and leave before the mandatory 10 years is up. Although the work is clearly taxing and takes tremendous commitment, Christiaen Gaille of the Federation de Gites de France tells me that the rate of attrition is quite low. I dont have the figures, but most people who start B&Bs know what theyre getting into. It has long been a dream of most of them and theyve researched it thoroughly. Some give up, but not many. Is it worthwhile joining Gites de France? After all, it does make bookings for you. Bill points out that this organisation was put in place long before the advent of the Internet, and its regulations are targetted at giving French tourists what they want. French tourists, by and large, seek economy and basic accommodation. Theyre not interested in the bells and whistles, and certainly dont want to pay for them. Expatriate B&Bs mostly target people from overseas, who will pay a small premium for pleasant and comfortable surroundings. They need to be a little fancier or more interesting, and they need a good website. Gites de France will give you sound advice, but there is no compelling reason to join the organization.

No. 7 Avenue de Pezenas

William Price and Ben Dutton, also British, run a very different style of B&B in St. Thibery, also in lHerault in the Languedoc. Whereas Nicky and Neil have developed a relaxed, country house feel to The Stone House, Bill and Ben have gone for swank. Here is how the owners of No 7 Avenue de Pezenas see the taxing life of the B&B properietor: IL: What got you interested in the idea of running a B&B in the first place? Did you have any previous experience in the hospitality industry? William Price: No, but we had plenty of experience running a business. In London, we owned a chain of interior dcor shops, so we already had a pretty disciplined business outlook and we knew something about hard work. IL: Why a B&B and why in the south of France, or, given Englands climate, is that a silly question? WP: Actually, we never made a conscious decision to look for a B&B. Instead of being the accidental tourists, were the accidental hosts. We happened to be on vacation in the south of France and, as you do, we started looking around at properties. We ran across this very old maison de maitre in St Thibery. A three-story house with two wings. It was pretty dilapidatedhadnt been lived in for yearsbut it was absolutely vast. And somehow, the thought of opening an upmarket B&B caught hold in our minds. IL: So how long did it take you to make up your minds? WP: We came across the house, decided to open a B&B, and made an offer all within 10 days. IL: You say the house was pretty dilapidated. How dilapidated? WP: It was like something out of The Addams Family at first. The house had been empty for so long, it had scorpions in all the bathroomsand at night, we actually had bats flying up and down the corridors. IL: It must have cost you a fortune to renovate it then. Was it worth the expenditure? WP: Fortunately, were both handy. We can do everything but plastering, so we did all the electrical rewiring and all the plumbing ourselves. And the dcor, too. IL: Ive seen the Gaudi bathroom in the studio... WP: Yes, we designed and installed that ourselves. Everyone always wants to see it. IL: So how long after buying the house did you open for business? WP: We spent the entire first year renovating, doing all the labor, which is even more onerous than it sounds, because of the way French taxes work. After a year, we had the place looking presentable and all the rubble cleared away, and we were able to open one bedroom. After that, we opened each bedroom as it was finished, then the studio and the apartment, which we rent out as gites, one week 42

at a time. Bill Dutton: Obviously, this meant we were paying out a tremendous outlay for materials and doing our own labor, but we had to sustain ourselves as well, without earning a penny for over a year. IL: Once youd got the place habitable, how did you go about furnishing it? WP: Our choice of furniture was dictated by the character of each room. Theres the Green Room, the Blue Room, both opening onto a large sunny terrace, and the Copper Room, all furnished differently.

Better than buried tre a s u re

BD: Most of the stuff in the Green Room is trocante because we were looking for an older style. And also dictating our choice was the amount of money we had available at any one time. WP: And then there are the things you dont think of until youve lived through the experience. For example, a simple thing, if you want to serve your guests with ordinary tea or coffee cups, you have to bring them with you. Theyre hard to find in France. The French take their coffee out of little tiny cups or bowls. IL: I know that B&B owners get to decide for themselves the rules of engagement, so to speak. Do you agree? WP: Oh yes. We dont do children and we dont do dogs! BD: We have two cats who take exception to dogs in the house. IL: Ben, youre a former chef. Do you serve evening meals for guests who request them in a day in advance? BD: Yes, if a guest requests dinner in, then we ask the other guests in the house if theyd like to join us. As you may know, in a B&B, you cannot have separate tables in a dining room, because that would make it into a restaurant. Everyone has to be served at one big family table, so guests quite enjoy it. IL: Do you feel that providing evening meals adds more hours to your workload? BD: With the planning and prepation, cooking, cleaning up afterwards so the place is ready for breakfast the next morningwe are working 18 hours a day during the high season. IL: I cant believe the pace... WP: Sundays in the hot or warm months are spent on the beach with the mobile turned off! IL: Bill, you mentioned a while back about the French tax system and why it made your first year, when you werent earning any money, harder.

Brass tacks
Either set up a private limited company or make the Trsor Publique your first port of call. Find out what taxes you will need to pay, and pay them. This is one area in which you should not delay. Once youre registered as a business, you will be entitled to wholesale discounts off a variety of things. Get a good accountant. Not only will he advise you on taxes, but he will figure out whether it is worth your registering for VAT. Keep good records. Some people try to do a lot of their trading in cash, but this can end in tears. The French government, if it becomes suspicious, has the power to assume a certain income and tax you on it whether you achieved it or not. So keep it above board, for your own peace of mind. If you offer to do evening meals, the hours you work will be expanded alarmingly with marketing, preparing, cooking, and cleaning, added to the normal housekeeping routine. When setting your charges, dont forget that rooms in a B&B are quoted by room, not by person. A fair average seems to be in the region of $40 per night per room. Breakfast charges vary between $4 and $7. Be prepared for hard work, smiling when you dont feel like it, getting the occasional guest whos a terminal bore, gritting your teeth when guests flights have been delayed and they turn up on your doorstep at 2 a.m., being informed about places of interest for them to visit, having medical emergency numbers handy, and all the other small inconveniences that having people in your home involves. And dont forget, the rate of attrition among B&B owners is very low. Most people have been committed to this dream for years before they realize it. So, unlike many new businesses, most B&Bs are successful. Other popular areas for expats to own B&Bs are the Dordogne, Provence, Brittany, and Normandy, all of which draw tens of thousands of Anglophone tourists each year.

French tax authorities will be down on you like a ton of bricks if you fail to register as a tax-paying entity. And in France, you pay taxes in advance, before you are allowed to set up a business.
WP: First port of call for anyone embarking on a business in France is the Trsor Publique, or tax office. This is something you absolutely must not put off doing, because the French tax authorities will be down on you like a ton of bricks if you fail to register as a tax-paying entity. And in France, you pay taxes in advance, before you are allowed to set up a business. And one must deal with all the different tax officeswhich residents of the U.S. and the U.K. just arent accustomed to. Theres health, social security, pensions, the two taxes on your place of residence, and so on, all administered by different authorities. BD: Seriously, there is also a tax to pay off the national debt which, again, is administered and paid separately and to which foreigners earning money in France must also contribute. WP: This means, of course, that in addition to the outlay for the property, and the outlay for renovations, you must have enough money to pay likely taxesbefore youre even within sight of earning any money. IL: So no one should contemplate opening a B&B if theyre looking for an easy life? BD: If you want an easy life, go in for heart surgery! IL: I know you get a lot of repeat business and referrals, 43

but how do you actually go about marketing your B&B? WP: We get most of our business through the Internet. IL: If you had to give someone contemplating starting a B&B in France one piece of advice, what would it be? WP: Hire an accountant. You cant trawl through all the paperwork yourselves, especially all the French legalese. You just cant. No matter what it costs, a good accountant who knows his way through the thicket of French tax laws will save you money and keep you straight with the government. And if you have to renovate your place, the first thing you should ask your accountant is whether it is worth registering for VAT. This is too complicated to explain now, but there are trade-offs and, depending on the individual circumstances, it is either very worth while to register for VAT, or not worth it at all. But you should ask the accountant about your own case before you embark on your renovations. IL: Is your B&B fully renovated and furnished now? BD: Not quite. We put in a courtyard last summer, and were still putting the finishing touches on it. IL: Youve owned the house for three years now, youve spent a year renovating, youve got three bedrooms you rent

as B&Bs and you also have a studio and an apartment you rent by the week as gites. Can you put a price on how much your property is worth on todays market? WP: Guestimate$485,000. IL: Your place is beautiful and I know how much repeat business you get, even in the dead of winter. Looking around, do you think youve found your vocation? WP: Nothings forever.

Rolodex
Bill Price and Ben Dutton, e-mail: BillnBen@ tiscali.fr; email: www.stthibery.com; website: www.stthibery.com. Nicky and Neil Sinclair, e-mail: thestonehouse_ caux@hotmail.com; website: www.thestonehousecaux.com. Federation de Gites de France, Paris HQ, France; tel. (33)1-49-70-75. Federation de Gites de France, LHerault, Languedoc, France; tel. (33)4-67-67-6262.

Setting up shop in Brazilthe pros, cons, wheres, hows, and whys

by Sol Biderman
Sol Biderman, an expat who has lived in Brazil since 1958, talks about the advantages and the challenges of starting a business in Brazil. Q:What are the advantages of setting up a business in Brazil? A: Brazil is more open to foreigners setting up business than many countries, especially if the business employs Brazilians at a good wage ($350 to $1,333 a month). One of the most successful employment agencies in this country Catho of So Paulowas founded by an American. Other Americans have set up the largest fruit export firm in northeastern Brazil, fast-food chains, hotel franchises, and liquor distribution companies. Q: How would a foreigner go about setting up a small business in Brazil? What type of legal documents does a foreigner need to get started? A: If a foreigner wants to represent an American company in Brazil, help can be obtained from the U.S. Trade Center in So Paulo or the American Chamber of Commerce in So Paulo. Otherwise, you should engage an attorney to help you navigate the red tape. Two to consider are Fernando Furriela, e-mail: ffurriel@srflaw.com.br; and Olivia Arantes, e-mail: olivia.arantes@southpartner.com. Fernando and Olivia are two of the few Brazilian attorneys who specialize in obtaining the appropriate documents and facilitating the process. In the long run, you save a lot of money and time paying an 44 attorney to manage this process for you. Q: Which industries are tough to break into and which ones are hot? A:Youll have trouble making a business selling imported products. Salaries are 200% to 400% lower than in the U.S., so products priced in dollars, pounds, or euros sit on the shelf. On the other hand, Brazil has 180-million inhabitants and at least half the population is of student age. Setting up educational institutions or related facilities, therefore, can be a promising area. Exporting generic pharmaceutical products may be a good nicheif the new legislation in the U.S. is followed closely. Over-the-counter and prescription drugs are usually three to four times cheaper than in the States. Companies in Brazil are currently exporting many products to Mexico, which are then shipped to the United States. Saturated industries in the upper-middle-class regions of the country include art galleries,boutiques, and tourist agencies. Q: Should I invest my nest egg in setting up a company in this country? A: No. In the past nine years the currency has been more stable than in the previous 45. Even so, in 1994, the domestic currency, the real, was 86 cents to the dollar, while today, $1 buys 2.4 reals on average. If your business does not maintain your lifestyle hopes, keep a reserve in dollars or in U.S. real estate, so you can return home.