Newbie Semi Retired at 32

[Arif]

This site is a jewel! Glad I found it after surfing on LBYM at fool.com.
Anyway my wife and I have been saving half of our gross pay for about 5 years and investing it in real estate. We currently have 31 units and plan to buy 17 more before we quit our jobs this December. To add even more of a twist we plan to move to Panama (where I was born) although I will be flying back to check on the properties and our house. Has anyone on this site ever done something like this? We estimate that our expenses would be about 30k maintaining a house in the states and Panama which should be covered by the real estate. Really interested to hear your responses. Thanks

 

[cute fuzzy bunny]

So whats it like living in Panama?

 

[Arif]

I've been back to VISIT twice in the last two years visiting family. To be honest it is not like living in the states. You have to be more patient when getting something as simple as setting up phone service. Personally the pros far outway the cons but I think everyone would come to their own conclusion.
We have researched the schools for our 3 yo and looking at where we will build our house along with other issues that you consider when moving to another country.

 

[cute fuzzy bunny]

How are they feeling about americans these days?

I hear it was a great place to live and vacation to, but there was allegedly a lot of hard feelings about the canal that boiled up when ownership passed back to panama, and I havent heard much since.

 

[Arif]

I didn't experience any unrest or resentment while I was there. I think they actually miss the americans and the economic impact that they brought with them. I was surprised to see so many Canadians there last December though. Panama also has a visa (Pensianado Visa) for foreigners that have pensions and include discounts on things such as medications, hotels, and depending on when you buy, no taxes on your home for 20 years. That last benefit does come with some catches.
Since I was born there and won't have a qualified pension I plan to renew my Panamanian passport and cedula (ID) when I get back.

 

[cute fuzzy bunny]

Hmmm...interesting stuff. Do you have any other experiences with central/south american country life and how it compares to panama?

(yep, they miss our money when we're gone...bummer...)

 

[Arif]

Not really.
I decided to move to Panama based on my visits there and along with the low cost of living. Although it might not be for everyone you could hire a live in maid for $150 per month. That is just an example of the wages and cost of living there.
My mother is retiring this year also and is moving with us (wife and kid) so the home expenses would be nearly cut in half in an already inexpensive area. I plan to open up a business while there although haven't decided what type yet.

 

[LiveWell]

Hi Arif, thanks for your information on Panama. Your plan sounds pretty good to me but there are a couple of things you may want to consider further down the road. You mention you have rental income and assuming that property is located in the US you'll have to pay US tax on that because it is US source income. Also, assuming you're not a US citizen, when you die that property in the US will be subject to US estate tax. Since you won't be a US citizen or resident you'll be considered a non-resident alien and hence your estate tax exemption will only be $60,000 instead of the $1,500,000 that citizens and residents get (ouch!!). I have no idea why the US is so unfriendly to foreign investors but that's the rules as they stand today.

 

[RockMiner]

I decided to move to Panama based on my visits there and along with the low cost of living.

Arif: I also became interested in Panama at one point, but there seem to be a lot of scary tropical diseases that make living there look like gambling with ones health...not my cup of tea. What is your opinion on these health issues?

 

[SLC Tortfeasor]

Wow Arif, that sounds awesome. I'm jealous. Was it hard to save 50% of your gross salary? I guess the difficulty of doing so depends on what your gross salary is. Would you mind sharing? If it's lower than mine, it will be great motivation for me to be a better saver.

 

[Jay_Gatsby]

Wow Arif, that sounds awesome.  I'm jealous.  Was it hard to save 50% of your gross salary?  I guess the difficulty of doing so depends on what your gross salary is.  Would you mind sharing?  If it's lower than mine, it will be great motivation for me to be a better saver.

It's a lot easier to save 50% of your gross pay if your salary is $100k+ a year and you live in a low COL area. If you have one of those kinds of jobs, hang onto it as long as possible.

 

[Arif]

Fortunately I got my US citizenship 10 years ago so hopefully the estate tax won't be an issue. We are in the process of setting up our LLC and deeding all the rentals into it.
It wasn't hard to save 50%. When we got married we lived off my income (about 45k in 1997) and when my wife started working making the same as me we just maintained our standard of living. We've kept living that way for about 8 years and plowed everything into real estate. Don't think we are rich though. Most of our real estate is in TX and GA with no where near the appreciation of CA and MA.
As far as health concerns go my family lives there and don't have any unique ailments which are unique to Panama. Maybe they are immune to them

 

[pbrane]

Arif:

I've been considering a move overseas for years. Panama is still high on my list.  May I ask where in Panama you're headed? I was thinking of the Bocas area, but don't like the "hype" swirling around the land development and also not sure I could handle the climate year-'round. I'd like to find a place a few miles from a decent beach, up the side of a mountain..like maybe 1000' altitude or more..?

Any suggestions greatly appreciated!
-m

 

[Arif]

Pbrane,
WE are looking for a house on the beach within an hour from the city because that is where our son will be going to kindergarten. A lot of americans live in the mountain areas because of the cooler weather. You can check out the yahoo group at http://groups.yahoo.com/group/viviendo_en_panama/
Just overlook the petty bickering that sometimes pops up on that site.

 

[pbrane]

Thanks, Arif.

Yes, I've been a member of viviendo on and off for a few years. And you're right about the useless bickering, as is common in many groups..

Are you near Coronado somewhere? I don't mean to be "nosey," but I'd like to know about that area and also thought about looking at the "Altos" development.

-m

 

[Arif]

Haven't decided on the exact area although we are interested in building our home. My wife and mom are interested in a new development called Playa Escondido although we have only seen renderings. I am interested in buying maybe 3-4 acres and subdividing the lots and selling them. I want to keep one lot for our home. We plan on renting when we get there while we research our options. While we were driving around the beach areas we found several "se vende" (for sale) signs that our real estate agent didn't show us so we know there are opportunities that you have to go out and find.