Question 1: Why should I invest in Brazilian properties now? Is there room for further growth?
Brazil has been one of the fastest-growing property markets in the world and we expect this trend to continue for at least the next five years and beyond.
The government is actively encouraging its people to buy their own homes with generous social housing programmes. One particular project – Minha Casa Minha Vida in Natal – also happens to provide investors with an easy route into the Brazil market that will give more than a 100% return on investment inside a year.
Question 2: Can a foreign national legally buy real estate in Brazil?
Yes, there are no restrictions on foreign investment in Brazilian property. Foreigners also have the same property rights as Brazilians, which means investors will get free & clear title to any property they choose to invest in.
There are literally millions of foreign nationals who own property in Brazil and all you need to join them is a Cadastro de Pessoas Fisicas (CPF) number. This is a tax registration number which you can apply for via the Brazilian embassy in your home country or in Brazil. As soon as you have received the CPF you can be legally identified as the owner of a property.
Question 3: Can I get finance to invest in Brazil Property?
At present, foreigners are unable to get finance to invest in property in Brazil. The opportunity right now is for cash investors and with property prices low the market is still accessible without the aid of finance.
Alternatively it is possible to raise finance in your country of origin or invest via a self- invested personal pension.
Question 4: How do I profit from an investment in Brazilian property
- Social Housing Projects
Brazil is probably one of the best markets in the world you can invest in for high capital returns. Those investing in Minha Casa Minha Vida projects can enjoy a guaranteed 15% return in the first 12 months of investment. With the scheme underwritten by the Brazilian government the developers are in a position to guarantee a handsome return on your investment e.g. an investment of £46,000 could generate a profit of £6,900 or if you were to increase this investment to £115,000 – the profit would increase to £17,250 inside a year.
- Invest in Holiday Properties
Brazil is one of the world’s best holiday locations and with the price of property in popular holiday resorts still less than £70,000 and yields of 5% and more, the opportunity is there for the taking. Keep in mind that although many developments come with guaranteed rental, the returns are unlikely to be as high as with Brazil social housing.
- City Centre Apartment Developments
This is the classic pure property investment strategy where you can invest in a property costing less than £55,000 and enjoy rental yields of 8-12% depending on which city you invest in. The rental market in Brazil’s cities is still young and suitable properties are in short supply. This makes it easier to generate positive cash flow from the start of your investment.
- Hotel Rooms
Hotel rooms are a low-risk kind of property investment that allows you to buy into an existing hotel and gain a steady profit from income generated by the room. With occupancy rates high in most cities in Brazil this is a particularly attractive option particularly when it is backed by a major hotel brand and the investment is full managed for you.
Question 5: Can there be multiple buyers for each home?
If you are thinking of investing in Brazilian real estate with your business partners you will not encounter any problems unless there are more than 10 of you. Up to 10 individual names can appear on a title deed, which means that Brazil is open to fractional ownership.
Question 6: What taxes will I need to pay when investing in Brazilian property?
Brazil has a very liberal tax regime and the costs of property ownership are a fraction of what they are in Europe or the United States. Notary fees are charged at approximately 2% of the property value, Deed registration 0.75% and legal fees up to 2%. Property tax in Brazil is currently just 0.6%.
Capital Gains Tax in Brazil is 15% of any declared gains, subject to double taxation treaties in place between Brazil and the investor’s country of origin. It is best to seek advice from a taxation expert before purchasing if you are unsure about any other issue relating to tax.
Average property taxes for a home in Brazil are likely to cost between £100 – £200 annually, depending on the value of the property. It is also good idea to get cover for your investment and this too is relatively inexpensive. Residential insurance to cover everything from fire to theft, will be between £30 to £70 annually, however prices can vary and it is best to check before you invest.
Question 7: Which locations in Brazil give you the best return on investment?
The major cities of Sao Paolo and Rio are ideal locations to take advantage of an emerging rental market fuelled by strong demand for property in the best areas. Fortaleza and Natal are extremely popular with foreign investors and locals alike who are attracted by the excellent quality of life.
Question 8: How long do you suggest an investor holds on to the property to achieve maximum capital gains?
We suggest holding on to the property for a minimum of five to seven years for maximum appreciation potential. It may be worth hanging on to some investments for longer than this, such as in the case of hotel rooms which sometimes offer a guaranteed buy-back at the end of a 10-year period.
Question 9: What is the outlook for the rental market in Brazil?
Rents are expected to remain constant and/or continue to increase as the costs of buying property continues to rise. New construction is currently not enough to satisfy demand for property and is unlikely to be for some years yet.
There is a huge shortage of rental properties in cities such as Rio and Natal and landlords are attempting to double rents, particularly in Rio. When it comes to renewal of contracts landlords often cash in.
Question 10: Can I invest in Brazilian properties without visiting the country personally?
In certain cases investors may not have the time to travel to Brazil to view properties. There is no reason why anyone can’t invest in property without visiting the country, however it is advisable unless you can trust an agent to complete the process on your behalf and take care of all the necessary paperwork.
Assuming your agent has expertise in Brazil property, this can be an ideal solution that will allow you to benefit from the lucrative opportunities in the country without needing to take time out of a busy schedule.