Brazil may not be considered a likely location to invest in property for many when you consider its economic and political situation along with the threat of Zika and dengue viruses. But as this week’s Money section highlights, there are gains to be made for the astute investor looking to invest in the next country set to host the Olympic Games. For those that do make the leap, here is a step-by-step guide to how to buy in Brazil’s property market as a foreign investor:
1. To begin the purchase process all you need is a valid passport, as well as a Brazilian CPF (Cadastro de Pessoas Físicas) unique tax file number for individuals, which anyone, including non-residents, can apply for. The process is straightforward and your local lawyer or property agent should help you with this.
2. Once you have your CPF, the contract of sale can be drawn up. This is a legal document between the buyer and the seller. The contract gives safety and peace of mind to both sides. It will stipulate the payment terms, the property price, the municipal taxes and general terms, which both the buyer and seller need to adhere to.
3. Once a price has been negotiated, buyers will sign a Purchase and Sale Agreement, putting down a small deposit, while the necessary certificates and documents related to the property are compiled by the seller. This first contract can be either a private contract between the parties, or it can be registered with the public notary, at cost to the buyer.
4. Assuming all documentation related to the seller and his property are in order, the amount owing on the property is paid and at the same time, a title deed is drawn up by a public notary.
5. This deed is then registered with the Rio de Janeiro Property Registry.
6. All incoming transfers are registered through the Central Bank and exchanged into Brazilian Reals. When transferring money to Brazil for your property, there is a procedure to follow. Any foreign buyer would need to justify why they want to send money to Brazil. This can be done by presenting your contract of sale to the Brazilian Central Bank, once they have cleared this document you would then be able to transfer monies to complete your purchase. Ensure you send the money from the bank account of the person mentioned in the contract of sale document as this can slow the process down. First, the Central Bank will refuse the payment, second, it can take months for the bank to return the monies to the sender and third, it's highly likely you will incur unnecessary bank charges and currency fluctuations along the way.
7. Finding a good property agent can be a challenge without guidance, most local agents in Brazil, will only speak Portuguese or basic English. Therefore, it's important to seek an international agent (who speaks your language) that can explain the buying procedure to you and advise you where and where not to buy. Look for an agent who has had lots of experience with the property market in Brazil and ensure they have been to visit Brazil, as some agents try to sell you property in a country they've never visited themselves. Check out a few websites and do as much research as you can online – if you have any friends or acquaintances who have lived in or are in Rio, don't be shy to ask, as they can probably point you in the right direction.
8. Take measures to ensure you get good advice on where to buy (within six blocks of the beach is a good indicator), and ask questions regarding what will be a good longer term investment in terms of if you wish to sell or rent the property in the future. Although your perspective as a foreigner may mean you will be able to see potential in some types of properties the locals may not appreciate, it is always good to keep in mind what Brazilians find appealing as a property because they may be your end users down the track as tenants or buyers.
9. Look for properties that you would like to live or stay in – there can be a great deal of noisy, poorly lit, poorly ventilated properties around which may be difficult to find buyers or tenants for later on. Also look for diamonds in the rough – properties in good locations, which are in a state of disrepair, but have potential for renovation. This can be the path to very good returns if you have the time and patience for a project.
pf@thenational.ae
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