Part II of an Interview with International Man

The following is a continuation of yesterday's interview which can be seen directly here: http://www.internationalman.com/imdc-april21-2011.php 

Yesterday, we started our conversation with International Man Jeff Berwick. The story continues...

Xavier Calendar: How did you end up setting up your primary home base in Mexico?

Jeff Berwick: When I originally started traveling on my sailboat, I spent quite some time traveling through Mexico. I spent about six months just getting through the country's west coast because I'd stop at every city and town. I loved it. The Mexican people and the lifestyle down here is just amazing. It's currently about 30 degrees Celsius (85 degrees Fahrenheit), I look out my window and see the bay, palm trees and tropical birds outside of my window.

My maid just came in, a service that's included with the condo fees in the building I live in. Daily maid service doesn't cost much compared with where I came from. She usually brings some mangoes from her tree at home.

Anyway, back to my story. So I spent about six months going from harbor to harbor and after my boat sank in El Salvador, I backpacked the world for about four years. At the end of it all, I was exhausted. I had traveled completely spontaneously, literally just going to airports and saying, "What's your next flight." Or I'd meet someone and they'd say we're going here and I'd just go with them. It was amazing. And to travel that way, that's the way to travel.

I love it when people make plans for vacations a year or two years ahead of time - and it's all screwed up. You can't plan the world. You just have to go with the flow and not try to make it all fit into a schedule. That's just not the way life works.

Eventually, towards the end of my travels, I started looking for a place to live for a while and get back to being healthy - proper food, going to the gym, and so on. If I remember correctly, at the time I was in Cambodia. By then, I had already been to 80 countries and started thinking about which ones I liked best.

Two came to mind: Thailand and Mexico. I had a crazy Thai girlfriend in Thailand for a while and I wanted to get away from her, so I chose Mexico. And specifically Acapulco, because it has all the amenities of a tourist town without really being a tourist town.

Places like Cabo and Cancun were literally built for tourists fifteen years ago. Before that, there was nothing there.

As I said earlier, Acapulco is a 500 year old city, with a lot of culture and mix as well.

Acapulco Bay - Click to Enlarge

For example, my girlfriend here is one quarter Filipino, one quarter African, one quarter Spanish and one quarter Mexican native. And that's fairly normal for this part of Mexico because of that old Spanish trade four hundred years ago.

A lot of Asians came over - there are a lot of Filipinos and a lot of Chinese too. They even celebrate Chinese New Year here. I believe most of the Africans originally came over as slaves, which makes for a lot of very dark skinned African type people. There's even one town nearby that's just French people. I don't know how or why they are here, but it's an interesting place.

For those reasons, I decided to buy a place and live here for a while. That was about three years ago.

XC: Would you recommend your country choice and what kinds of people would that be a good fit for?

JB: Well, definitely I would recommend it for people like me. I love it here. But it's not for everyone.

For example, if you're the kind of person who wants to see perfectly paved sidewalks, perfectly manicured lawns and everything running on time, you won't be happy here because you won't see that. They don't really care about stuff like that here. They care about life and being happy.

They work hard here but it's not as big of an issue as in places like Canada and the US, where work is one of the biggest priorities. It's just a different way of living here. They work to live. Not live to work.

And for those potential expatriates, don't try to force the style of living you're used to on them. It won't work. I see that all the time. Americans or Canadians come here and complain that their taxi driver was supposed to be here at 3pm and it's now 3:10pm… They don't think that way.

The ones that do the best are those that try to assimilate.

XC: How important is it to know the local language before you arrive - where you're now.

JB: It helps but is not necessary. You can always get by almost anywhere in the world without knowing the local language because English is the international language and someone always knows it. However, if you really want to get into doing something like business, that's when you've really got to start picking up the language, otherwise you just end up getting ripped off all the time.

When I first came here to Mexico, I didn't speak any Spanish. Now I speak well enough that I can actually do business and it makes a big difference.

XC: How cheap is the cost of living in where you're now vs. Vancouver? What would a nice dinner with wine cost for you and your girlfriend?

JB: Mexico isn't as cheap as some people think.

You can get by if you just want to eat at little restaurants. In that case, you can definitely eat a good meal with a glass of wine for $5 or $10. However, at a restaurant last evening, I spent over a hundred dollars for my girlfriend and me. That included two glasses of wine, an appetizer and dessert. There are many such restaurants here and you can spend lots of money if you want.

You can live quite cheaply here though. Labour is really inexpensive. For example, I've got a maid who works in my place for an hour or two a day and it costs almost nothing. Things like fruits and food that you buy at the farmers' markets is also quite a bit cheaper.

Electricity is about the same as you would pay in Canada. A car, gas and so on is basically the same.

You can go to the Walmart here and will spend as much as you would at the Walmart in Canada or the US.

For those of you who are looking for a really cheap destination, places like Argentina, Cambodia or Paraguay are better options.

My recent trip to South America took me through Argentina, where we went to so many restaurants and had really world-class meals for like ten or twelve dollars. And it was world-class.

XC: Was it difficult for you to set yourself up in Mexico, specifically buying property?

JB: It's all fairly simple. Most countries in the world don't make it too difficult. They want to accept your money by letting you buy their real estate.

Of course, there are some places that get xenophobic - Thailand, for example. They don't really allow foreigners to buy property. But there are always ways around it. As you know with anything that has to do with governments, the free market always finds another way. People who want to do things will always be able to do things.

Here in Mexico, they do have something sort of similar. They don't allow foreigners to officially buy property within something like 50km / 31 miles off a shoreline, but you can get around that with something called a "fideicommiso" or a "bank trust."

I have a condo here right on the beach, which didn't cost very much. The property taxes for this condo come to $150 dollars per year, which is much less than people in the US or Canada would pay.

The government realized that they had literally hundreds of thousands of foreigners buying property in Mexico and wanted to cash in on more than the small amount of property taxes. They needed to keep the taxes low enough for the locals to afford, so they just started requiring the foreigners who wanted to buy within 50km / 31 miles of the ocean - which is most - to get a bank trust. These trusts cost about $500 a year and can be done really simply. It's just another way for the government to make some money.

For example, my company actually renovates and sells condos. It's called acacondos.com. Our company helps you buy property without even coming down. [Editor's Note: International Man recommends you always do proper due diligence before investing in properties outside your own country, including a proper visit]. We set it all up for you, including the bank trust.

You can find services like that in almost every country that you go to nowadays. Places that don't offer such services present great opportunities for entrepreneurs. You can set up a business catering to Westerners that want the benefits of the area but still be able to conduct business as they are used to.

I started this particular business just for the fun of it. I was sitting here, looking at these condos on the beach that were available for under US $60,000 - I figured I could renovate them and sell them for a lot more. Then, since most owners wouldn't live here all year round, I would rent them out for the owners as needed in a "boutique hotel concept." All the condos are in the same building and I renovate them to all look similar.

It's great for someone who wants to just go somewhere and start their own business. A lot of people talk about starting up a Bed & Breakfast, and while that's also not a bad idea, you generally need a lot of upfront capital.

With my business, I had to basically put no money down. I found some condos that were for sale. I offered them for sale myself on the internet - because the sellers didn't even know how to do that in English. They might have them in Spanish sometimes, but never in English. Very quickly I sold a few and I said to the new owners, "I can renovate them for you." And they were happy to have me do it.

So I made some money, first on the sale and then on the renovations, without using any of my own capital. After the renovations, I offered to find renters for the times when the owners wouldn't be there, which is great for them. It's another source of cash for me.

That's how it started and now, with zero dollars down, I have a company that renovates and sells condos. Every time I sell a condo, I add another room in the "hotel."

You can do these things in many parts of the world - not so in Canada and the US. There you have to get your real estate license to sell the property. That takes a few months. And if you set up a hotel, you need all sorts of licenses.

I've done all this without even setting up a company. I use Paypal and no one here cares. No big government getting in the way.

In fact, that's one of the big reasons why things are getting so bad now in the US - the government has so many rules and regulations that to start a company and to keep it going is a huge endeavor. Oftentimes, it's not even worth the effort. That's why you're seeing a lot of major problems in the US now.

In many areas of the world, they don't have such rules.

For example, I just got back from my first trip to Paraguay and I couldn't believe how amazing the lifestyle is down there. It's one of my top 10 favorite countries now.

The finance minister is on record as saying, "We've been trying to put in an income tax now since 2003, and we haven't been able to because there is a lot of resistance." This is the way that life is in other parts of the world. They don't even have income tax in Paraguay. It is really an amazing place. It's probably going to do well over the next few years.

The opportunities nowadays are not in the places they used to be. They used to be in the US, Canada, England and those sorts of places. The opportunities are now in the rest of the world. Latin America and Asia, in particular, have a lot of potential.

Xavier again. For the sake of space, we'll wrap it up here for today. The final installment will arrive tomorrow, including an interesting way to watch your TV from home on your computer from anywhere in the world with the Internet, as well as a few other words of wisdom.

<...continued in the 3rd and final part tomorrow>

Comments

[Pete]

I am interested in buying land in Uruguay or Argentina do you help facilitate that process like you do in Mexico? I know you guys have a realationship with Doug Casey and he has that place in Argentina but I am more interested in raw land acreage. I remember you guys talking about going down there to scout it out did you and if so what was the outcome?
Thanks

[Jeff Berwick]

Hi Pete,

Yes, I did go down and scout it out... I am not 100% sure yet but I may write-up Uruguay in the May issue of TDV... if not in the May issue then almost for sure in the June or July issues.

[Ken]

Hi Jeff,

I'm going to be at your investment conference in Indian Wells next weekend, but am very interested in talking with you about your condo/hotel concepts in Mexico and elsewhere. I am a licensed RE agent in CA and have experience with helping others buy and rent or buy and flip. I'd be interested to see if I can work with you. I'm hoping to cash out some land that I own in CA, and some other assets, but am not flush with capital now unfortunately, but I'd like to get out of the US as soon as I can. Can you email me to discuss?

Thanks for the insight into the real world!

Ken