How Much to Spend on Retirement Home in Portugal?

[ShokWaveRider]

Portugal is a beautiful country, but it would not be our first choice for retirement. Not for any other reason but the Language is a bear to learn. After spending a lot of my working life going to and from Brazil, I am certain I would never master Portuguese. Now Spain is a different story.

Obrigado.

[NW-Bound]

Quote:

Originally Posted by Nemo2 I've been to Portugal a 'few' times, first visit was 57 years ago....seen numerous places there. Just struck me as 'odd' that the OP selected this 'one country' but doesn't elaborate on 'whys or wheres' and doesn't appear to know what to pay. Variations on a theme: "How long is a piece of string?"

The OP only asks for an opinion on how much he should spend on a home given his financial status, and not on other aspects of buying a home in Portugal. It looks like he has some locations in mind already.

A person often relocates to his roots. Or he has worked there, and has some familiarity with the place. Or a person may fall in love with a locality after reading about it.

About the latter rather risky source of motivation, I wonder how many people successfully follow in Frances Mayes' footsteps after reading her memoir Under the Tuscan Sun (1996). The book was the inspiration for a movie with the same title.

I used to dream of having a home in Provence after reading the many books by the late British author Peter Mayle about his life there. Then, I slowly realized that even as a Francophile, it would not be so easy for me to live there long-term. An exotic place that one falls in love with may lose its appeal once one discovers the hassle of settling there. It is safer for me to make repeated visits than to make a serious commitment.

[Lagniappe]

I have been looking into the Portugal Golden Visa since the lockdown started. I am interested because with a Portuguese residency Visa, I can spend more than 90 days out of 180 in the Schengen Zone. You don't have to buy real estate to get the GV anymore - you can invest in government approved Investment Funds, many of which invest in a portfolio of commercial and residential properties. A startling number of Americans are on various forums either moving or inquiring about moving to Portugal. Many of them read about Portugal in International Living, and are attracted to the lower cost and the hype about lifestyle. But a lot are digital nomads, and there are decent sized communities of techies in Lisbon, Porto, and the Algarve.

The most informative I have found is a facebook rgoup called Americans and Friends in Portugal. They focus on the facts around getting a visa, finding a place to live, and differences between living in Portugal and living in the USA. Everyone, and I mean everyone, who has moved there suggests you rent first, or at least spend a LOT of time on the ground researching. There is such variety in villages/ neighborhoods/ housing that locking yourself into a large purchase is a problem. And outside of the prime areas, homes sit on the market for years, so changing your mind can be a costly and time consuming mistake.

If your question is about how much you can afford to pay for a house, probably about 1 Million. I doubled your spending and used a 3.3% withdrawal rate. What is left, you can spend on whatever you want, including a house. I would question your COL assumptions, depending on where you choose to live. Locals have been priced out of prime neighborhoods in Lisbon by Airbnb and expats, and other prices are increasing as well. I saw a recent Vlog by a family of four who moved to Lisbon last year - they broke down their spending in youtube video each month - it averaged about $4500 per month in a very nice historic district apartment, with no car and no travel outside of Lisbon.

[Nemo2]

Quote:

Originally Posted by NW-Bound The OP only asks for an opinion on how much he should spend on a home given his financial status....

Ah.....so, "Blow that dough"...if you have it, spend it? OK.

[braumeister]

Quote:

Originally Posted by ShokWaveRider Portugal is a beautiful country, but it would not be our first choice for retirement. Not for any other reason but the Language is a bear to learn. After spending a lot of my working life going to and from Brazil, I am certain I would never master Portuguese. Now Spain is a different story.

Funny, I had the opposite impression. Lived and w*rked in Brazil for several years and mastered the language without much trouble.

What I liked was that a Portuguese speaker can easily understand Spanish, while those from the surrounding countries struggle mightily with spoken Portuguese. Written language is OK for reading, but a Brazilian speaker, especially with some regional accents, is nearly incomprehensible to an Argentine. It's kind of like a one-way mirror.

[MichaelB]

Quote:

Originally Posted by braumeister Funny, I had the opposite impression. Lived and w*rked in Brazil for several years and mastered the language without much trouble. What I liked was that a Portuguese speaker can easily understand Spanish, while those from the surrounding countries struggle mightily with spoken Portuguese. Written language is OK for reading, but a Brazilian speaker, especially with some regional accents, is nearly incomprehensible to an Argentine. It's kind of like a one-way mirror.

I’ve long had the feeling that the incomprehension was, at least in part, deliberate, but otherwise agree totally with your view.

As for the OP question, one should spend enough to meet ones objective, but not more than one can afford to lose. There are risks to owning property abroad and retiring abroad, and even in a stable advanced economy unexpected things happen.

[Nemo2]

Quote:

Originally Posted by MichaelB There are risks to owning property abroad and retiring abroad, and even in a stable advanced economy unexpected things happen.

May be inapplicable to the OP, (and likely 'date sensitive' and/or volatile), but on one trip to Portugal, circa 1987, I got talking to an 'older', (well, older than me at the time), resident Brit couple who told about a number of their friends/acquaintances who had purchased there and a few years later expressed a desire to return to England.

Problem was, housing costs in England had increased at a faster rate, so their hoped for swap outs weren't viable for them.

[Poopycat]

I’ve thought about the Golden Visa program too. Sounds like one of the more realistic ways to obtain residency in Europe. Others have already provided links to GV info.

I don’t remember off hand how much you have to spend on property to qualify. I think there’s one option where you can spend A minimum 350K euros and another where you can spend a minimum of 500K euros. But I think the 350K is if it’s an older building that will require renovation, which could be challenging. Renovations are hard here in the US, I can’t imagine doing one in a foreign country where there are language and cultural barriers, and no US quick service orientation. So I’d spend the 500K.

Also, as someone mentioned, there are ways of obtaining a GV without investing in one residence. You can invest or start your on business.

[NW-Bound]

Quote:

Originally Posted by Lagniappe ... Locals have been priced out of prime neighborhoods in Lisbon by Airbnb and expats, and other prices are increasing as well. I saw a recent Vlog by a family of four who moved to Lisbon last year - they broke down their spending in youtube video each month - it averaged about $4500 per month in a very nice historic district apartment, with no car and no travel outside of Lisbon.

Out of curiosity, I looked on the Web for real estate prices. Houses are outrageously expensive in Lisbon, but the hubbub is not my style anyway.

Then, I looked at homes along the famed Douro River. Hey, look at this! For a mere €200,000, you get a home of 2,600 sq.ft. on a hillside overlooking the Douro River and the nearby town. It comes with 5 acres of vineyard, and read this:

"warehouse with cellar and all machinery for the production of the wine itself, having a wine press, stainless steel vats, press, wooden barrel, machine for bottling wine and the like".

And the above price is negotiable.

When can I catch a flight to Portugal to check out this place? I can see myself using a few thousand square feet of land to set up a PV solar array much larger than what I have now on my suburban lot. I am sure I will need AC for the summer. Then, I can settle down to learn how to grow grape and make my own wine.

PS. To make friends, I will let neighbors plug into my solar array to get some free juice, which will be more than I can use. They are gonna love me. I did not see any PV array along the Douro River in my visit. Hmmm... Maybe they do not allow it. Darn!

[Eric S]

Quote:

Originally Posted by copyright1997reloaded i'm curious about the consensus on this also. I've been struggling with how much house/condo/townhouse I should buy if/when I ever move. For example, assuming the current residence is worth $350K, but that I could swing something much higher (e.g. $1 M+) w/o impacting the safety of retirement, is it crazy to up the housing investment so much? I'd assume the answer is that it depends - what that spend gets someone is all based on location, and that sometimes you just have to pay to play?

I read Andrew Tobias' money management books and articles as a kid. He made a point which really hit home for me: the key to happiness is living well beneath your means and enjoying infrequent highly-targeted splurges.

I've found that to be true. And you're not me, but I'd still urge you to spend way less than you need to, and keep your powder dry. A home's a home. Whether grand or cozy, you'll soon become largely blind to it. So neither play nor pay. Opt for coziness and periodically fly to Naples for dinner. It can even be smaller infrequent splurges that are simply things you wouldn't ordinarily permit yourself. Or else enjoy the luxury of being of service to someone in genuine need (I'm amazed that my consumerist/shopping itch gets well-scratched even when I help out a stranger).

Just my two cents fwiw...

[Eric S]

Quote:

Originally Posted by NW-Bound Do you really want to settle down in one spot, if you can spend time and money to travel, see, and experience more places and things?

European budget airlines have crazy low prices. I can go all over Europe and North Africa for <$100 if I'm willing to tolerate the ridiculous restrictions (travel light, fer sure). Naples for lunch and back! And I can really explore Africa, the Middle East, and even out to South Asia for <$500. None of that is possible from back home in the states. I'll have WAY more diverse cultural experiences over there than I could here.

[brett]

We only travel with international size carry on-8g. Seven days or two months.

Lots and lots of travel on low cost airlines in Europe and in SE Asia. Pretty incredible when you can catch a flight from Cyprus or Crete to London or Paris for $100. Direct...sometimes less if you are will8ng to have a stopover.

[Eric S]

Quote:

Originally Posted by brett We only travel with international size carry on-8g.

What is "8g"?

[NW-Bound]

Quote:

Originally Posted by Eric S European budget airlines have crazy low prices. I can go all over Europe and North Africa for <$100 if I'm willing to tolerate the ridiculous restrictions (travel light, fer sure). Naples for lunch and back! And I can really explore Africa, the Middle East, and even out to South Asia for <$500. None of that is possible from back home in the states. I'll have WAY more diverse cultural experiences over there than I could here.

OK, that makes sense.

Ten years ago, I read about Malta's program for retirement visa. I don't remember the details, only that I would qualify easily. And English being an official language there would make life easier.

One problem I read about is that European countries often have red tape and bureaucracies that can drive foreigners nuts. Things that US citizens take for granted may require jumping through hoops to get, such as a banking account, a driver license, etc... Hopefully, countries that have a retirement visa program will make it easier for people who are accepted.

I later abandoned the idea, because I found that I had my roots here, even though I am not native to the States. I would not find myself at home somewhere else, and would forever feel like I were a perpetual traveler, which I am not cut out to be.

Of course, everyone is different. YMMV.

[NW-Bound]

Speaking of buying a home in Europe and the different ways of doing things there compared to in the US, I recalled reading a fun book about an experience similar to Frances Mayes' book Under the Tuscan Sun.

Quote:

Originally Posted by NW-Bound The Reluctant Tuscan - How I Discovered My Inner Italian (2006) by Phil Doran The author was a producer of several popular TV sitcoms in the 80s. His wife was a sculptor and had been living in Tuscany for a while to work, when she called him one day and said she bought an old farmhouse for them to rebuild. He flew there, and found that the home had no heat, no electricity, no bathroom. In fact, he discovered later when applying for a building permit that the town could not provide one because it never had an address. A reviewer says this book is a cross between Frances Mayes' (Under the Tuscan Sun) and Dave Barry's works. Indeed, the author's recollection of his run-in with town and bank officials was hilarious, as well as his encounter with the idiosyncrasy of the Italian customs. Learning that the author's wife was an accomplished sculptor, I searched the Web to learn more, and found that she died recently of cancer at the age of early 60s. It's sad.

[Sunset]

OP could always buy a $1 house in an Italian town, many are still giving them away.

[NW-Bound]

Portugal may have similar "free" homes, which may cost a million bucks to restore. The problem is that the OP wants to use the home as a base from which to travel, and these "free" homes are nowhere near access to an international airport.

Here's a run-down home I found in my Portugal trip last year. We happened to pull over for a rest, and found this abandoned villa. Seeing that the gate was open, I decided to drive in for a look. The driveway led to an abandoned resort and park which ran along the Douro River. Just from the look of it, the place had a splendid past.

I researched it later, and on the Web, someone said that it used to host grand parties that even the King of Portugal attended.

[bmcgonig]

Have you looked into health insurance there? I know they have free/cheap public care but not easy to get straight away. Many/Most expats there use private health insurance there, which isnt cheap. I got a quick quote for a 65 yr old at about 9k/yr. Don't know what happens to the cost when you advance in age.

[Lagniappe]

Private health insurance is actually quite affordable. Policies in my age group (56-60) run about 1500 per year for high end coverage.

Quote:

Originally Posted by bmcgonig Have you looked into health insurance there? I know they have free/cheap public care but not easy to get straight away. Many/Most expats there use private health insurance there, which isnt cheap. I got a quick quote for a 65 yr old at about 9k/yr. Don't know what happens to the cost when you advance in age.

[Markola]

Quote:

Originally Posted by NW-Bound Out of curiosity, I looked on the Web for real estate prices. Houses are outrageously expensive in Lisbon, but the hubbub is not my style anyway. Then, I looked at homes along the famed Douro River. Hey, look at this! For a mere €200,000, you get a home of 2,600 sq.ft. on a hillside overlooking the Douro River and the nearby town. It comes with 5 acres of vineyard, and read this: "warehouse with cellar and all machinery for the production of the wine itself, having a wine press, stainless steel vats, press, wooden barrel, machine for bottling wine and the like". And the above price is negotiable. When can I catch a flight to Portugal to check out this place? I can see myself using a few thousand square feet of land to set up a PV solar array much larger than what I have now on my suburban lot. I am sure I will need AC for the summer. Then, I can settle down to learn how to grow grape and make my own wine. PS. To make friends, I will let neighbors plug into my solar array to get some free juice, which will be more than I can use. They are gonna love me. I did not see any PV array along the Douro River in my visit. Hmmm... Maybe they do not allow it. Darn!

There’s a nice wine documentary on Netflix or Prime called “A Year In Port,” which can give you a feel for the Douro and the wine industry there.