by Charles Sizemore | June 17, 2014 3:03 pm
He began to build a condo, but the labor cost was high
His partner stole his money, that left him high and dry
His land is still a mudhole, where you sink up to your knees
And he’s just another gringo in Belize
—Lyrics to Jerry Jeff Walker’s Gringo in Belize.
The “gringo in Latin America” has a certain image: A ne’er-do-well in a panama hat and a guayabera with a terrible command of the local language and money from questionable sources — a walking caricature of a Jimmy Buffett song.
But Latin America — and particularly Belize — has also long been a popular retirement destination for Americans, Canadians and Europeans looking to enjoy great weather and a fantastic lifestyle for considerably less than what they might pay in West Palm Beach, Fla., or Scottsdale, Ariz. Belize also has no taxes on income or property, making it an ideal escape — for those who want to live in or just invest in Belize — in an era of bankrupt government and creeping taxation.
With the baby boomers now starting to retire en masse, the Central American retirement industry is booming — but unfortunately, so is the industry of scamming unwitting gringo retirees out of their nest eggs.
Example of an “Invest in Belize Ad on YouTube titled “Belize Real Estate – buying property in Belize – homes in belize”
The gringo penchant for getting sucked into Latin American land scams goes back centuries. Even the Scots, world-renowned for having a hard nose for business, faced national ruin following the Darien Disaster of the 1690s. The Scots — who really should have known better — tried to build a trading colony on the mosquito-infested Caribbean coast of Panama, and by some estimates as much as half the cash of the Scottish population was invested in the project.
Its miserable failure — and resulting effective bankruptcy of the nation — was a leading factor in Scotland’s decision to merge with England to form the U.K. in 1707.
Googling “Buy Belize scams” brings up 863,000 hits. The more general “Belize scams” brings up 1.5 million hits. And all of this for a country with a population of less than 350,000 souls.
Belize’s con artists must be working overtime to generate that kind of notoriety.
But should you avoid Belize altogether if you dream of retiring in paradise? Not at all. You just need to be smart about how you approach it. Let’s take a big-picture look at the Belize story.
Belize is unique in Latin America in that English, not Spanish, is its official language. Property deeds, contracts and other legal documents are in English, which avoids the cost, hassle and risk associated with operating in a language that is not your own. Until the 1980s, Belize actually was a British colony, and even today Queen Elizabeth II of the U.K. serves as head of state.
An English heritage brings with it one major differentiator from the rest of Latin America that Americans will find reassuring: a common-law legal system with a reputation for fairness. All of Spanish and Portuguese-speaking Latin America use a continental-style civil law system.
This is Belize “on paper.”
In practice, only about 4% of the population speaks English as a first language. Spanish is the most common language, spoken by 46% of the population, followed by the Belizean Creole dialect at 33%. Creole is “Caribbean English” and sounds a little like Jamaican English to the uninitiated. It’s also going to be unintelligible to most Americans or Canadians, at least without a little study.
So, while you will have no problems at all communicating at local banks and government buildings, coordinating the construction of your home or even getting a broken pipe fixed can be a frustrating experience for those who don’t have an ear for languages.
A lot of the “scams” reported are less outright frauds in which a swindler absconds with a briefcase full of your money and more cases of wildly unrealistic expectations mixed with inexperienced and unprofessional developers. Of course, that distinction doesn’t make them any less damaging to the would-be gringo retiree.
So, how can you make your retirement dreams come true without risking getting sucked into a scam or, equally badly, a project that is doomed to fail?
Here are a few basic guidelines if you do plan to invest in Belize, be it real estate or otherwise:
Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he did not hold a position in any of the aforementioned securities. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.
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