The reasons for moving a portion of one’s savings into a hard asset in a stable jurisdiction are probably clearer today than they have ever been before.
Real estate in Chile is a good candidate for this strategy. Property rights in Chile are actually stronger than they are in the US, government debt is low, and the country has some of the largest mineral reserves on the planet. Still, the property market in Chile is fairly undeveloped in many ways. There are a few things you’ll definitely want to know before you get serious about purchasing real estate.
1: Identifying the market price can be a time-consuming process
If you’re investing in a home, office, or condo in Santiago or in one of the country’s larger cities, this isn’t something you need to worry about so much. However, if you’re considering a rural property in one of the country’s 15 regions, you’re probably going to need to spend a lot more time and energy on this than you might have originally imagined. With no multiple listings service or central database that covers available properties in Chile’s rural regions, asking prices are often times based more on opinion and intuition than on hard data.
The best places to look for deals are in areas where there hasn’t been a lot of activity recently… though this means getting information on recent, comparable sales ranges from difficult to impossible. If you’re conducting your property search independently, be prepared to spend several weeks (if not months) researching the local market to get a good grasp of a fair price.
2: How to negotiate the terms of sale
Arranging a transaction for smaller properties in Chile is relatively straightforward, with verbal agreements and a handshake usually being respected until contracts are prepared (at least in my personal experiences).
Unfortunately, when it comes to larger properties, the exact opposite is true. Chilean businessmen are notoriously stubborn and sly, meaning the larger landholders aren’t nearly as easy to deal with. Price increases at the last minute and long wait times for a response to an offer are commonplace when trying to purchase larger properties.
The takeaways are to never get your heart set on one specific property, and always be ready to walk away from a deal if the seller starts changing conditions or becomes unreasonable.
3: How to complete the transaction
The rule of law is clear and well respected in Chile; however, that won’t mean much if you don’t follow the proper procedures for closing on and recording (or inscribing) a property sale.
There have been reports of an unscrupulous foreign property developer who has convinced unwitting investors to “buy” a property in Chile by signing an English-language deed at their office and never having it stamped at a notary. The signing of deeds for the sale of real estate in Chile must take place at a notary. If you’re not already familiar with the steps involved in a legal real estate transaction in Chile, you can find an explanation here.
Other developers in Chile have allegedly pushed foreign buyers into depositing funds as a down payment for a property deal when the full price was well beyond their reach. The developers are said to have pitched the property as a “guaranteed” win and completely ignored the risks involved with signing a promissory note in a situation like this.
As with real estate anywhere in the world, though, it’s always important to educate yourself on the laws of the country and find trustworthy legal assistance. If you’re not fluent in Spanish, consider hiring a translator to help you review documents and whenever possible, double or triple check things with an independent party who doesn’t have a stake in the sale.
Editor’s note: Be sure to get the free IM Communiqué to keep up with the latest on the best options in Chile and other attractive international diversification opportunities.
Darren Kaiser is an American expatriate and current resident of Chile. He is a small-business owner, journalist, and investor. You can find more at his website, http://www.darrenkaiser.com.