Real Estate Buying Process in Punta del Este, Uruguay
I am no stranger to purchasing real estate in South America. In fact, I own one of the largest property management companies in South America and I purchased more residential real estate in Buenos Aires, Argentina the past several years than any single individual in the world. I took several years to research the market in Buenos Aires before I started purchasing and it paid off tremendously for both myself and all my clients that I purchased real estate for.
I performed the same due diligence before making my first purchase in Punta del Este, Uruguay. I first flew to Punta del Este in 2004 to look at both apartments and homes that were for sale. I was amazed with how beautiful the city was. The city was incredibly clean and the properties were beautiful. The lawns were perfectly manicured. I was pleasantly surprised to see such wonderful properties. If Buenos Aires is the Paris of South America, Punta is its Saint Tropez. It is one of the world's most exclusive resort towns.
I came away from my first tour of Punta del Este impressed. I looked at many properties in various neighborhoods. I visited both in the high season (end of December to end of February) and in the low season. I was surprised to see just how empty the city was during the off season. The rental rates are insanely high during the peak season. In fact, many owners are able to NET about 5% - 6% on their total investment just renting out their properties during that peak season 2 months per year.
I was always amazed how tremendously expensive it was to vacation here, even by American/European standards. That doesn't seem to bother the exclusive holidaymakers that come here during the high season. In fact, everyone that I knew seemed almost to be proud to be paying so much to vacation here. I talked to friends that would starve and "eat rice" for an entire year just to be able to splurge and vacation here in the summer months.
I remember thinking what a shame such a beautiful city didn't get more tourism year-round and I proclaimed Punta del Este "the most underutilized city in South America". I kept returning to this beautiful city and each time I noticed more and more growth. In fact, my first trip in 2004 I almost made an offer on a plot of land in the neighborhood of La Barra and I was amazed that not too long after that it has all been developed and the prices have skyrocketed in value. I knew my initial instinct to purchase was correct.
Typically, wealthy Argentines own the majority of the real estate in Punta del Este. Something I noticed was the demographics of the tourism was changing. There were less and less Argentines coming and more and more foreigners. In fact, over 50 visiting cruise ships (including the 3,000-berth Queen Mary II) will have visited Punta del Este in 2006.
I noticed that more and more foreigners were purchasing real estate here, which I consider a very positive sign. Americans, British, Brazillians, Chileans, Europeans and Mexicans are all increasing their real estate portfolios here. I watched this growth and decided to finally purchase.
The buying process in Uruguay is much more friendly and easier for foreigners than nearby Argentina. Uruguay has always been called the "Switzerland of South America" when looking at their banking system. Uruguay welcomes outside investors and doesn't place barriers like other countries in South America.
As a foreigner (non resident) you can purchase property free and clear under your own name and hold title under your name or you can establish a corporation and purchase under a corporation. Most foreigners simply purchase under their name. There is nothing special you need to apply for. No Uruguay tax ID number is needed. You simply purchase with your Passport from the country you are from.
First you would look at properties with your realtor. All good property is listed with a realtor. Typically the realtor's fee is 3% of the purchase price. Once you find your dream property you would make an offer on the property. This is called the "Boleto" which acts as a purchase agreement. Your realtor would prepare the pre-purchase agreement (boleto) for you. This "boleto" is a private contract between the buyer and the seller of the property. The boleto would have all of the important information regarding the transaction including the purchase price, the buyer's name, the seller's name, passport #'s, real estate agents included in the operation and what in the house is included for the purchase price.
Typically you would leave a down payment with the realtor of 10% of the purchase price to show that you are serious about the offer. Once the offer has been accepted by the seller, you will need to have an "Escribano" (Notary Public) involved with the transaction. All real estate transactions must have an Escribano (Notary Public) that is involved with the real estate transaction. It is essential that you have an ethical and competent Escribano as he/she has a tremendous amount of responsibility with the transaction.
Once the boleto is signed by both parties, the seller must turn over several key documentation including the title deed to the property, receipts of past tax payments, blue prints/floor plans of the property, land surveys and all key documentation that relates to the property and taxes paid on the property. The Escribano must carefully review all the paperwork and documentation going back at least 30 years. The Escribano verifies there are no liens, encumbrances or mortgages on the property that you are purchasing.
Several days before signing the title deed transfer and closing on the new property, the Escribano coordinates with all parties involved (buyer, seller, realtors) a mutually convenient date/time to close on the property. The Escribano gets all of the paperwork and documents certified by the Real Estate Property Registration office. Immediately, there is a protective 30 day period in which the property that you are purchasing is protected from any legal proceedings. The Escribano is the one that actually writes the title deed transfer documents and register this copy with the Registrar's office.
Again, you are placing a tremendous amount of trust with the Escribano so it's important that you use someone very competent. You are handing over any down payments to the Escribano and he/she is in charge of the funds NOT your realtor once the offer is accepted. The Escribano also is in charge of paying all taxes due. There is a real estate tax when purchasing real estate in Uruguay. It's 2% of the value recorded with the Registrar's office. Typically it is always lower than the actual purchase price of the property you are purchasing. You as the buyer pay 2% of the historical value of the property and the seller also pays 2% as well. Typically the Escribano's fee is also about 2% of the actual purchase price paid on the property.
After the closing, the deed is officially registered at the local Registrar's office. Shortly afterwards, you will get the original and registered copy of the title deed, blue prints, land surveys, tax receipts for going back the past 30 years.
As mentioned, the process to purchase real estate in Uruguay is much easier and straight forward in Uruguay than other parts of the world. At the closing you pay all legal fees, taxes and realtor's fees.
I predict that real estate in Punta del Este will continue to rise in value. I also predict that tourism will eventually become more year-round. Granted, not as busy as January/February but I do see tourism increasing in the off-peak months. Consider that Buenos Aires which is a major hub for people going to Punta del Este is experiencing tremendous growth in tourism. Many of the tourists coming to Buenos Aires are looking for other great cities to go to once they made the long journey down to South America. Punta del Este is a short 50 minute trip by plane and it's extremely easy to get to and there are several flights per day. I truly believe Punta del Este will be one of the cities that experiences tremendous growth in tourism over the next decade.
I was a pioneer in the luxury rental market in Buenos Aires, Argentina (owner and founder of www.apartmentsba.com. ) I hope I can accomplish the same thing for Punta del Este, Uruguay.
mike@puntarealestate.com
Michael Koh
President/Founder, Punta Real Estate.com
|
Home