Buying Real Estate In Brazil-Part 4

By Robin Sparks

Brazil is a vast country and real-estate bargains can be found anywhere, from the beaches worth fifteen Florida's in the Northeast to the high-rise condominiums of São Paulo. I chose Teresópolis because I had friends there and had come upon a bargain in a town of spectacular climate and views, situated close to the world-class city of Rio de Janeiro. I had cash in-hand by virtue of having just sold an over-appraised 1060 sq. ft. home in Austin, Taxes. 

Santa Edwiges was listed at R$75,000 and had been on the market for about a year. We closed at my offer of R$74,000. The real estate broker took 10% from the seller but provided me excellent service. It took 7 weeks from contract to closing. I had to pay a transfer tax of 2% and a recording fee of 1%. (The county valued the property at R$100,000, but we settled at an appraised value of around R$85,000.) 

I figure that I paid, in all, some $32,000, what it would have cost me in Austin just to build the stone and concrete wall around a place like Santa Edwiges. (NOTE: While I was there, the dollar climbed in value from $1 = R$2.32 to R$2.42. Now, just one month later, it's at R$2.72. On October 11, 2001 the dollar stood at R$2.80. Now in mid-2002, the dollar stands at $3.85. If we'd closed the same deal today, instead, I would have saved about $12,000!)

My property taxes will be about 0.5% per year, compared to the 3% we pay here in Austin. Of course, there's that 2% I'll pay on Santa Edwiges whenever I sell. This real-estate transfer tax is probably one of the reasons 17 families still own all of Brazil. How can they afford to sell the Amazon rainforest? Better to rent it out to sharecroppers and sell off the monkeys, parrots and hardwood trees. Once it's a desert, they can give it away, avoiding all tax. Is there no end to government control of people's lives and environment through idiotic tax policy?

Home Construction

I am in the process of planning improvements to Santa Edwiges. First I wish to install solar water heating for the houses, then solar heating for the pool, then solar space heating by Trombé wall for the main house. In the process, I will be building a tower to facilitate the view from my property across the valley and to accommodate elevated cisterns for hot and cold water. Once I have the tower, I will mount an antenna for short-wave radio, TV-satellite dish and WiFi networking to link all the neighbors' computers to a fiber-optic line that runs through Teré's main street below. If you wish to contribute as a pioneer in telecommunications, Brazil is the place to be! Even the favelas are now online! See http://www.vivafavela.com.br

Brazilian construction materials and techniques are way different from those we Americans know and love. Generally speaking, a Brazilian (like most Latins) considers a wood-framed house a flimsy, temporary thing for poor people in a favela -- just a step above a cardboard box. Real people who love their families will want to leave their great-great-... great-grandchildren an enduring house made of stone, concrete, brick, mortar & stucco, with a roof of terra-cotta tile. 

Foundations in Brazil have to be stronger to support the extreme weight. Electrical installations are completely different: In Brazil there is no such thing as a ground wire or GFCI, often no 12-ga. or heavier wire, and the cables, as well as water-supply pipes, are laid in channels chiseled right into the brick wall. Normally, hot water is not available at any sink, kitchen or bathroom, though hot water for the shower is almost universally provided by a pressure-controlled electrically heated showerhead connected with exposed wires. You will almost never find a bathtub in a home or pousada, unless someone has modernized by installing a "hidromassagem." The normal Brazilian home has no window screens, no central heat, no air conditioning, and no insulation.

But you sure can fall in love with the various hardwoods used for posts, beams, floors and fine furniture! I gained a lot of experience working with the cheap and common hardwood, known as "massaranduba," that is used for massive exterior and interior beams and posts. It is extremely strong, highly resistant to rot and termites and much heavier than water. It cannot be nailed without pre-drilling a hole almost the diameter of the nail. A fast spade bit will burn and a twist drill must be repeatedly backed off to clear it. The wood is subject to severe checking when dry. Massaranduba is sold by the cubic meter in Teré, where a fully milled board or post costs between R$1000 and R$2000 per cubic meter, equivalent to around $1 per board-foot, about the same price we Americans in Taxes might pay for a Southern Pine 1 x 12. Another much lighter hardwood, used for fine furniture, has a lacewood pattern and costs about twice as much. A custom-crafted 2x7x8 ft. entertainment-center/wardrobe of this material will cost you R$1500, delivered and installed. 

Home Furnishings

Brazilians have simpler tastes and fewer choices in domestic appliances than we Americans do. Their kitchen is an American kitchen of the 50's, with a 4-burner (propane) stove with oven, a simple fridge/freezer, and a granite counter with single sink and cold water for washing dishes. There is nothing else -- no microwave, rice cooker, bread maker, blender, coffeemaker, toaster, etc. There may be a low-capacity cold-water washing machine in a separate room or outdoors. There might even be a simple dryer consisting of a zippered plastic cube-shaped garment bag where you hang clothes to be dried by a kind of hair-dryer that blows hot air over them. But every home will have an outside barbecue grill and a terra-cotta water filter for your drinking water.

The middle-class living room will have a 27-inch satellite-TV that pulls in some 7 free government stations, including the Cow Channel that streams pastoral scenes of happy cows from Minas Gerais to outer space and back again, 24/7. For a little less than we pay here, you can get a private satellite system like our Dish Network and Direct-TV, with programming you can actually stand to watch, like Discovery, History, National Geographic, CNN, BBC and DW. The home will probably not have a computer and seldom an Internet connection, since you normally pay by the minute even for local calls. 

Until the recent privatization of telecommunications, a Brazilian had to wait two years and pay up to $2000 to get a phone line installed. Now that the Spaniards, Italians and cell phones have moved in, you will get a land line for a little less than we Americans pay and wait just a little longer for installation. Cell phones are cheap and everywhere; you can always rent one and buy the minutes, as you need them. You can also head for the local Internet Café, buy coffee or a beer, and sit down to email or web surf for as low as $0.60/hr in downtown Salvador, BA (it costs $5/hr in Teré).

Housewarming, Cinch de Mayo, Lula & Neighbors

After I bought my property, I held a housewarming party and invited all my friends and neighbors and anyone involved with its acquisition. This is only customary, and the date for the party turned out to coincide with the Cinco de Mayo (Mexican Independence Day) that we also celebrate in Austin, Taxes. I billed my party as being held in honor of Lula, the socialist-laborite contender in the 2002 Brazilian presidential elections. This I did to tweak my left-leaning friends, pointing out to them that Lula had saved me over $1000 in the purchase of Santa Edwiges, by virtue of the dollar's having risen during my stay from R$2.32 to R$2.42, largely on account of international bankers' fears that Lula actually had a chance of winning! (LATE BREAKING NEWS: he won in a landslide, and the Real slid to R$3.65 = $1)

My friends took care of inviting most of the guests and we went out and prepared by buying 18 12-packs of beer in cans and a couple hundred Reals worth of meat for the churrasco. Various friends and relatives helped in shopping and clean up, and in daylong grilling of the meat, which is the macho specialty of the Brazilian male. We even had salad and specially prepared potatoes for the few vegetarians. My bill came to about R$400 for fun provided some 50 guests, most of whom spent several hours "batendo papo", swimming and playing soccer. Kids, as usual, were numerous and participated in everything. Half of Brazil seems to be under the age of 18, but the average Brazilian woman is now limiting herself to 2.1 kids while trending on down to the 1.2 kids of the more liberated Italian woman. It thus appears likely that Brazil -- a country of 170 million or so persons and more or less on a par with the USSA, Canada and China in land area -- will remain "under populated" by world standards.