Excellent Brazilian Real Estate Investment Available

Brazilian Real Estate Offer – Countryside Estate Property

I am offering for sale the property adjacent to where I live in São Pedro de Alcântara, in the near-countryside just outside of Florianópolis, in south Brazil. Below, you can watch the introductory video explaining the broad details of the property.

Full Playlist of Informative Videos at Youtube

I have created nearly a dozen informative videos in a Youtube playlist covering all aspects of the land itself, as well as information about investing in real estate here, information about the region, the lifestyle and much more. Those interested are encouraged to view all the videos and then to contact me at the contact page here if you have more questions and an interest in a possible purchase.

The Basic Details

The videos go into great detail on all aspects of the property. The quick summary is this,—the land is 40 minutes outside of Florianópolis, in the near countryside, which is spectacular in its beauty, surrounded on all sides by virgin south Atlantic subtropical forest. The property is 2.5 hectares (6.25 acres) in size and the asking price is R$150,000. The property is easily accessible, has easy access to water and electricity and is about half pasture and half forest. There are 1500, 5-year-old pine trees planted, to be harvested for sale in 15 years, when they are giant. Some thinning is needed between now and then which will eventually lead to about 350 adult, full-size trees that, today, would be worth R$150 to R$200 per tree.

A 15% security deposit will be required. We will exchange, sign and notarize a purchase agreement via a courier such as FedEx or DHL (unless you are here, in person, of course), and money will be wired to my account here in Brazil. I can and would like to receive a portion of the payment in the U.S., if possible, though not a requirement.

The rest of the info is in the videos and please contact me if you have more questions.

High Yields from South Brazilian Rural Property

South Brazilian Real Estate: The Largest Returns I’ve Ever Seen in Real Estate

Giant Bee Hive in Native TreeHey, want to feel really, really bad? You know, that rotten feeling you get when you learn that you missed out on a single guaranteed investment that went through the roof? Well, you did. And so did I, in part. There’s still time to make excellent money in south Brazilian rural property, though the craziest yields are off the table, for now.

I’ve lived in Florianópolis in the south Brazilian state of Santa Catarina for eight years now. I’ve studied real estate for this entire time. The first four years I studied values on the island and the second four years I studied values not only off the island, but off the coast, too, in the gorgeous countryside anywhere from a 40-minute drive to a two-hour drive from the best beaches. Over the course of my first five years here, property values on the island skyrocketed, and everyone here was amazed. Values doubled once, and then again almost a second time. For example, a lot selling for R$20,000 in 2003 was selling for R$40,000 in 2005 and then for R$70,000 in 2008. Today, it probably sells for R$120,000. Over the full eight years, that’s a 500% return. Movement in prices on the island are fairly flat right now.

Feeling bad in gut? That wasn’t the part to feel bad about! Check this next part out.

A Story About Typical Land Appreciation in the Near-Coast Interior of Santa Catarina

Veggie GardenOver the past ten to twelve years, while everyone on the island who owned property was doing cartwheels to celebrate their newfound wealth, something even more remarkable was happening 90-minutes away. There are many, many gorgeous cities and countryside towns nearby. This example is of a town named, Anitápolis, in the Sierra region of Santa Catarina, sandwiched between the State park and the Federal Park. The story of Anitápolis is the same as stories of Urubici, Rancho Quemado, São Bonafácio and others. All of these areas were on my radar as I spent several years studying the values of large pieces of rural property, sizes in excess of 50 acres. Here, we use “hectares” as a measurement, which is 10,000 square meters, or 2.5 acres. I will use hectares in this article. 20 hectares is 50 acres.

In Anitápolis, a man named João was showing me property. He wasn’t a realtor, per se, but there are no realtors in that town and he had lived there his whole life and knew everyone and I was introduced to him as someone who knows everyone and everything for sale, and would help me out for a small commission in the end.

João’s Personal Experience

Somewhere between 12 and 15 years ago, João bought a 30 hectare piece of property for R$3000. Back then, you could hardly give away land. The price was practically free. People needed cash. The price was about $25 per acre, seriously. And this isn’t just any land. It had a river running through it and natural water springs, open space with rich topsoil and closed rainforest. The scenery in Anitápolis is breathtaking.

Somewhere in the range of five to eight years after the purchase, the value of this land had “exploded” to R$30,000, a 1000% yield. João couldn’t resist. He needed the money and he sold for R$30,000. Two years ago, when he was showing me properties, this same piece of land, though not for sale, was easily worth R$300,000. The going price of land, though it’s not an exact science, was about R$10,000 per hectare.

A 10,000% Yield

View of Neighbor's Property in the ValleyEven as an accountant, I can’t believe that I’m doing the math right, and maybe I’m not, but I’m pretty sure that an increase from R$3,000 to R$300,000 is a 10,000% yield over about a 12 year period. Even if the yield percentage is off, what isn’t off is that you take the value of the land and then add two zeros. Think about that for a minute. If you had come here twelve years ago and made good decisions to invest $100,000 USD’s in semi-large rural properties, you’d have land worth $10,000,000 today.

Now, that’s not even true. You’d actually have land worth $20,000,000 USD’s today. Why is that? Because over that time the Brazilian Real has doubled in value against the U.S. Dollar. So crank up that yield to 20,000% when stated in the dollar.

I’ll add quickly that this is not an isolated event. I’ve heard dozens of similar stories and seen many examples with my own eyes.

Ramping Up that Yield Even Higher

Feeling queasy? We’re not done yet! Here’s another thing to consider. The price per hectare of land here is considerably lower for large properties than for smaller properties, often by a factor in the range of 4-7. For example, a 50-hectare property out in this region may cost R$250,000, or R$10,000 per hectare. If there were a one-hectare property across the street, it would cost about R$50,000, or a factor of five times more expensive per hectare. It doesn’t make sense, but it’s true. It’s simply that there are a lot of Brazilians who can scrape together R$50,000 to buy a piece of land and precious few who have over R$100,000. And, remember, you have to pay cash here, or have something of value to trade, such as a car, or a bunch of cows. And I’m not joking about the cows.

The Power of Subdivision

Orchids growing on palm treeEnter the process of subdivision, here called “dismemberment”. I’m not referring to a formal, legal subdivision, I’m simply referring to breaking a big piece of land into small pieces to be sold off individually.

For rurally zoned property, there is always a size limit to how small a piece can be broken off and sold without creating a legal subdivision, known here as a rural condominium. The size limit various from city to city, but the variance is small and is often equal to two-hectares. So, if I have a 30-hectare property, I can break it into 15, 2-hectare pieces and sell them off without much difficulty.

Now, because much of this land is forested, and you can’t clear-cut the forest, some of this property has less utility. So let’s keep this example very simple and very conservative. Let’s say our 30-hectare property above can be broken into six, 5-hectare properties, each with space to build and farm, as well as some forested area. At a very minimum, the value of these pieces rises instantly to R$20,000 per hectare from R$10,000 per hectare, though in reality this is going to be closer to R$30,000 per hectare.

Our Final Yield Calculation

Using a per hectare value of R$20,000, we can once again double our yield. Now, this piece of land that began at R$3,000 (and, actually, less than $1,000 USD’s at the time), is now worth at least R$600,000 today. My calculator tells me this is a 20,000% yield, though I still think I’m doing something wrong. In U.S. dollars, because the Real has double in value against the dollar, this would be a 40,000% yield.

In Closing

This article uses a historical example to demonstrate the extraordinary yields that have been made here over the past decade and a half. It wasn’t so much a “how-to” article, though much can be inferred from what I’ve written, because values out there are still climbing very fast.

I’ll finish by giving you a more contemporary example. After studying rural land values for four years, and aggressively spending two years in search of one to buy for myself, I finally found something with most of what I was looking for, including an honest seller who was desperate to sell. I bought a 44-hectare property in July of 2010. I’m sorry, but I won’t say for how much. What I will say is that today, less than two years later, I’m confident that it’s doubled in value. Adding to this, I know that I can break off one or two pieces that total no more than ten-hectares, and sell them today to recover 100% of what I paid, keeping the best part for myself, 34-hectares in size. Additionally, there is a plantation of eucalyptus trees that in eight years, will be ready for harvest, and will yield, conservatively, 120% of what I paid for everything.

Good luck to you in all you do. Feel free to contact me with any questions you might have at info@brazilforlife.com.

About Joe Naab

Joe Naab is the author of Brazil for Life!, a how-to living guide for those who want to start a new life or have a second home in Brazil. He offers a two-hour private phone consultation for those who want more specialized information to suit their specific needs. He also coaches people through the entire expatriation process and can help those interested to obtain Brazil’s Business Investor Permanent Visa. He can be found at http://brazilforlife.wpengine.com and reached by email at info@brazilforlife.com.

The Cost of Building a Home in Brazil

Brazil Real Estate and Home Building

Concrete foundation with recycled wood structureFor most Americans today, we have long forgotten the era when people bought a residencial lot and then designed and built their own home. Today, homes are what developers of residencial housing tracks build for resale in the ever widening landscape of Suburbia. Not so in Brazil.

In Brazil, the lost art of unique and personalized home design is not only alive and well, it is by far the norm. Of course, this won’t apply as much in densely populated urban areas where there are no available lots to build, but Brazil is giant and there are so many beautiful places to live, some would say the better places, where inexpensive lots are available and the owner is free to build to their own taste with very little restriction or regulation.

The Size of Lots in Brazil

The standard-sized lot in Brazil is 450m2 (square meters). For those thinking in square feet, there are 11sqft in 1m2, so you can think along the lines of 5000sqft. Lots can be as small as 350m2 up to about 1500m2. Getting above this size you move into a range that is certainly available, though not so available in urban and suburban zoning. Also, above this size, the word “lot”, or “lote”, no longer applies, and you enter the size range of “Châcara”, which could be translated into “small estate”.

Recycled Old-Growth WoodThe Price of Lots in Brazil

The price of lots varies tremendously, not only within a city, but from region to region in Brazil. I’m going to use Florianópolis as an example because I’ve been here studying and working in real estate for eight years. There are several factors affecting values other than size and neighborhood, and I won’t cover them here for the sake of brevity. They consist of things such as the type of title, if the lot is in a gated neighborhood (here, called a “condominium”), legal residencial tract, or in neither of these two.

A lot in a nice gated neighborhood will cost from R$250,000 to R$500,000. These are the most expensive lots on the island, and these neighborhoods can be in the hills with panoramic views of the sea, or very near the beach, or both. A lot in a legalized residential tract where all the lots within the tract have public title, roads are paved, sewage system is installed, there are usually sidewalks and easy access to electric, water and phone, – will cost from R$90,000 to R$200,000. (NOTE: our readership is international and exchange rates can be all over the place so I leave it to the reader to convert into their local currency).

Lots that aren’t in gated neighborhoods nor in legalized residencial tracts most often cost the least. Today, about the lowest price that can be paid on the island is R$50,000, and for these lots, which vary a great deal in size, location, quality, etc., you could pay up to R$150,000 and above. The general range is R$50,000 to R$150,000.

Note that eight years ago, when I arrived, the simple lots averaged R$15,000, the residential track lots R$40,000, and the gated neighborhood lots R$80,000. Prices have increased dramatically, though they are flat and stable today.

Concrete foundation with recycled wood structureThe Broad Measure of Construction Cost for Homes in Brazil

It is very, very difficult to get any architect or builder to give you a phase by phase breakdown of the costs associated with building a home. What you’ll get instead is a quote for a price per square meter of the size of the home, and this includes everything—foundation, walls, roof, doors, windows, complete bathroom and kitchen, electrical, hydraulic, deck, and most finishings.

Within this system of pricing, you will often hear of different levels of quality, such as “this price gets you a simple home, this price gets you a typical home, and this price gets you a luxury home.” The difference is often in the finishings, such as the quality of doors, windows, floors, and the kitchen and bathroom installations.

One very important thing to consider is the size of the deck, which here is called “varanda”. Because this is outside had has fewer walls and may not have hydraulic (water) and electric, it is factored in at 50%. The way this is done is taking half the area of the varanda and adding it to the size of the enclosed space of the home. So, for example, a home with 200m2 of inside space and a 50m2 varanda will have a 225m2 (200m2 + 50% of 50m2), for the purpose of giving bids and calculating construction costs.

Home Construction Costs in Reais per Square Meter

The following prices are for the combined costs of a labor and materials. The going rate of good labor today is R$300 to R$350 per square meter, so you can figure the difference in cost is due to materials. This cost number, in portuguese, is called the “cubi” (KOO-bee), the construction cost per square meter.

  • R$800/m2 – Simple home, still quite nice, modest finishings, no complex design elements.
  • R$1100/m2 – Very nice quality home, good architect, reputable builder, quality, but not extravagant finishings.
  • R$1400/m2 – This would be a luxury home (marble floors, luxurious detail) and the price could be much higher, too.

Home Construction Costs in U.S. Dollars per Square Foot

To help you do this yourself in the future, simply divide the price above twice as explained here. The first division is the exchange rate of the USD versus the Real. This will get you USD’s per square meter. For example, today the exchange rate is 1.90. Then, you divide this outcome by 11, which is how many square feet there are in a square meter. This gets you the cost in USD’s per square foot.

  • $38/SqFt – Simple home.
  • $53/SqFt – Very nice quality home.
  • $67/SqFt – Luxury home.

Adding it All Up

I’ll leave it to the reader to calculate the myriad of cost combinations of lots, home sizes, and quality levels. There is no upper limit to what you can spend, so I’ll give you an example of a lower limit.

You buy a lot here in the reasonably priced beach neighborhood of Rio Vermelho 1-2km from the beach for R$50,000. You build a 70m2 two-bedroom home with a 20m2 varanda. Your building size for the “cubi” calculation is 80m2. Your cost to build will be R$64,000, so you’ll invest R$114,000 total. With today’s exchange rate of 1.90, this would be $60,000 USD’s.

I hope that helps you to gain a better understanding of the costs of building your own home here in Brazil.

About Joe Naab

Joe Naab is the author of Brazil for Life!, a how-to living guide for those who want to start a new life or have a second home in Brazil. He is presently working on a near-coastal, countryside real estate subdivision project outside the city of Florianópolis, Santa Catarina. He can be found at http://brazilforlife.wpengine.com and reached by email at info@brazilforlife.com. His Youtube channel is called BrazilforLifeTV.

How to Value Brazilian Farmland

Brazilian Real Estate: Features to Evaluate in Brazilian Farmland

I’ve already written about the incredible investment yields over this past decades from investments in south Brazilian farmland real estate. I haven’t yet written about how beautiful it is out there and what a great place it makes to live and to build a new life. I’ll save that for later. What I’d like to cover in this article is the most important features that one must consider when valuing Brazilian farmland. It is critical to consider each of these points before making an offer on any property.

The Irrelevant Question: How Much per Hectare?

Now that I’m known as the “farmland expert”, the most common question I get is, “how much does farmland cost per hectare out there?” I get this from foreigners who live here and from Brazilians, too. This is because most of them know that this is how people talk and price things out there. However, once you have studied to the depth that I have, you realize that there’s no answer to this question. Each piece of land is very different from the other and there are about a dozen considerations that can have massive effects on the price per hectare of land. I’ll cover each of them briefly here, and I speak about them in the included video.

NOTE: A hectare is 10,000 square meters. A hectare is also 2.5 acres. The size of properties I am speaking of are from 3 hectares to 80 hectares, what are called “sítios”. Sítio best translates to either “family farm”, or “countryside estate”.

Size Matters

All things held equal, meaning if you had two properties next to each other with the same feature sets, except that you changed only one variable, the size, the price per hectare changes dramatically. The smaller the property, the higher the price per hectare. The difference can be dramatic. One reason for this is that Brazilians may have R$50,000 to R$150,000 to spend and they want at least two hectares and hopefully a little more. So, the competition in the price range is very high. You have to pay cash. You can’t finance. When I say “you”, I mean everyone, Brazilians included. Because of this, a 2-4 hectare property might be priced today at R$80,000 to R$150,000, depending on features described below. Call it R$30,000 per hectare (This is about $7,000 USD per acre).

Now, take this to an extreme and say there is an adjacent 50 hectare property with a very similar feature set. At R$30,000 per hectare the market price would be R$1,500,000. However, the actual price would be much closer to R$500,000, about 1/3 the cost per hectare, simply because it’s larger and the market of buyers shrinks dramatically. One strategy here for those who have the money is to simply buy a big piece of land and then legally dismember it into smaller sítios, and then sell these sítios at two to four times the price per hectare that you paid.

Water Features

The most common water features are either a river or a water spring, called a “nascente”, that originates within the property. A real water spring flows water 24/7 all year. There are some that flow only after heavy rains and dry up. Within these two features you have “flavors” of the feature. For example, is it a big river, smaller river, or creek? Does it have a small or large waterfall inside the property? For the water spring, how much water does it produce? Will your home be above or below the place where you’ll capture the water (i.e. will you need to pump uphill or not).

There is almost always well water. Well water can be shallow, from 8 to 30 meters below the surface, or it can be mineral water, from 80 to 250 meters below the surface. Well water doesn’t have much effect on the price. Rivers tend to raise the price the most, though I personally value the water springs more. You can’t drink river water. It won’t be horribly polluted, but it will still contain the urine and feces of cows from upstream farms and runoff from pesticides used upstream.

There is not specific value to assign to a water feature. It’s subjective and depends on the quality of the feature.

Pasture versus Forest

South Brazil was once entirely forested. It is now 95% deforested, though the region that I’m talking about is about 40% deforested and the forest has actually been returning. Ironically, those who broke the law in the past and clear cut their properties, now hold the most valuable property in the area. Open pasture has a much higher value than forested property. Ideally, you want a mix. You can build on pasture and you can farm on pasture. You can plant eucalyptus as an investment on pasture. It is now very difficult and risky to cut forest. It’s still done. There are discrete ways to do it and not-so-discrete ways to do it.

Open pasture, especially if it is flat, or near flat, is valued at four to five times per hectare than forested space. This isn’t a rule. Few people talk about this or are even conscious of it. However, after four years of studying values, this is the factor I use, loosely, when valuing farmland.

Distance from the City Center

Many of the buyers of land today are Brazilians who have apartments in the city and want a second home in the countryside to spend every weekend and all holidays. They live in the city because that’s where they work and where their children go to school. Often, their out-of-city home is thought of as their real home. This is where they build a large house with a pool and a small soccer field, for example.

When valuing land as an investment asset, you must consider how far of a drive it is from the city center. As a second home, city dwellers don’t want it to be more than 90 minutes from their home in the city. You must also factor weekend traffic into the drive time. You might get there in 90 minutes during the week, but on Friday afternoon and getting back on Sunday evening, it could take three hours, and that’s too far.

Another factor to consider is that it might take two hours to get their today, but half of that distance is on dirt roads that will be paved in the future. This land will be of much lower value today. However, when these roads are paved it might only take an hour to get there and suddenly this becomes to hot new spot to own a place.

It probably goes without saying, but land prices are much, much higher the closer they are to the city. To give you a “ball park” idea, properties 30 minutes from Florianópolis might sell for R$40,000 per hectare, and large ones are non-existent or will now cost millions of reais, because they are candidates for gated neighborhoods. There are places 1.5 to 2 hours away where land is still around R$5000 per hectare for properties in the 50+ hectare size. Again, all of this is subject to the feature set.

Other Features that Influence the Price

A few other features that influence land values are as follows:

  • Is there internet access and, if so, how fast?
  • Is there land line service? Will there ever be?
  • Does the property front the main road (raises value), or is it far off the main road?
  • Are the hills on the property extremely steep (lowers value) or soft?
  • Is there any infrastructure already, such as in-property road, electric, fenced area for cattle, a house, etc.?
  • Is the seller an honest, trustworthy and well-respected person? This effects value.

In Closing

Brazilian farmland, today, is the best Brazilian real estate for investment considerations. It is has great potential for a future home, for off-grid living, for “getting away from it all”, etc. Be prepared to spend a lot of time getting to know candidate properties, including the sellers. It can take several hours to visit one property and to walk it, and you still won’t see more than 50% of it. Time spent in focused study will pay dividends.