Brazilian Buyers Still Like Miami
Post on August 3, 2016, 3:49 pm by the-victoria-law-group 0 Comments
Wealthy Brazilians with cash to put into second homes have always loved Miami. But since the political crisis erupted two years ago, they’ve loved it even more.
“There is no doubt in my mind that the motive to buy real estate in the U.S. has changed for Brazilians over the last two years,” says Fernando Bergallo, owner of FB Capital, a foreign exchange brokerage in São Paulo. “The guy who bought in Sunny Isles in 2011 did it because the price was right. Now with the price is higher and our currency weaker, and they are still buying. Because they are buying for other reasons besides income. They are still thinking about investing first, but are also thinking of getting out of Brazil in a close second.”
Brazil is in the throes of a once-in-a-lifetime political crisis. Its president, Dilma Rousseff, is likely to be sacked after facing a Senate hearing later this month. She is being accused of breaching budget laws, a crime of fiscal responsibility under the constitution. On Tuesday, Reuters reported that a 440 page Senate report accused the suspended president of “altering official budget figures” and “using funds from state-run banks to cover up the real state of Brazil’s faltering economy” ahead of her re-election bid in 2014.
Her impeachment will place her vice president and interim leader Michel Temer at the helm of a ship that’s run aground. The mood has been dismal since January. And investors with money to burn have been taking it out of Brazil. Much of it landing in Miami.
Bergallo said he has 400 clients this year looking to invest in everything from gasoline stations to apartments, primarily in Florida. Brazilians who invest at least $500,000 qualify for an EB-5 visa, giving them conditional permanent residency for two years. The qualifying value goes to $800,000 next year.
Marcio Kogut, 43, has been buying up Miami housing since 2013. Over the last two years, the political crisis gave him a bigger incentive to buy, he says. He has invested well over $2 million in the U.S., and has assets tied up in a Delaware offshore firm called Agency Kogut LLC and a family investment fund registered in Florida called MMK International Investment Fund. Back home in São Paulo, he runs Kogut eBusiness and a start up fund called 20Startups.com. His plan is to link Brazilian start-ups to the California venture capital scene. The goal is as much pure investment driven as it is a “plan B” should Brazil somehow track in the direction of Venezuela.
“I was in New York a month ago scouting things out, but it is too much like São Paulo,” says the father of two. “Miami is more business and pleasure. I can see me dividing my time between the two countries someday.”
For now, that’s in the future. In the meantime, he spent $490,000 on an apartment in the Design District of Miami in 2013; $650,000 for an apartment in the Brickell area near downtown in 2014 and $1.3 million for a luxury apartment in Sunny Isles.
“People do it as a way to earn dollar income,” he says. He’s not making a killing. After condo fees he’s bringing in just $100 a month from the 2013 property. The other two towers are still in development and won’t be move-in ready until later next year. He might flip them.
Brazil’s wealthy in Miami are different than those from Cuba, Argentina and Venezuela. All three are living in self-imposed exile. Brazilians, even those that are no fans of the ruling Workers’ Party, are more pragmatic. They are a hybrid: one part rent seeking investor, one part political refugee. There’s always been an inferior complex among middle and upper income Brazilians and having a Miami property to show off is as much smart money as it is transcending Brazilian roots, like a bumper sticker that says: my second home is in the States.
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