Real Wealth vs Phony Wealth in North County

[sdrealtor]

I knew exactly what you were doing. btw, I’m doing just fine with the women in my life.

[earlyretirement]

[quote=Happs]I mentioned this video in another post a few months ago on here about the topic of retiring/moving to Costa Rica. Moving/Retiring to a foreign country is not necessarily a panacea or paradise. Food for thought.

http://www.youtube.com/watch?v=QMKT5pGDvSo%5B/quote%5D

I missed this post first time around. I just watched the video and this guy makes good and valid points about living and retiring abroad.

The things he is totally spot on target is that you can’t go by what the “locals make”. Many people retiring hear that the “median income in X country is X dollars”. They hear that and they think it sounds dirt cheap and they can move here and make it.

The biggest problem is the “median income” in some countries includes tremendous amounts of poverty and the vast majority of Americans can NOT live like the typical local. No way no how. Most Americans are accustomed to a certain quality of life and it would be next to impossible for many of them expecting to get by for what a local can get by for.

Also, other misnomers that people easily mistake is they hear things like “healthcare is guaranteed and free for people in this country”. The reality in many countries is that the free hospitals are horrible and you wouldn’t want to get stuck or depend on them. And most of the middle class on up, have private medical insurance which isn’t cheap. So you have to investigate all the ins and outs of the healthcare system in foreign countries.

The biggest part of that video that I agreed with is the “Mañana Mañana Mañana” mentality that you will see in much of Latin America. Customer service simply doesn’t exist in much of Latin America and other parts of the world. At least not like the USA, where there are consumer protection agencies and tons of competition.

Cable broken? Mañana can mean 2 or 3 weeks. Gas problem in the building? It can literally mean 2 MONTHS to get it fixed. Even in wealthy neighborhoods where the affluent live. Or even having your high speed internet go out for weeks at a time. And no matter how much you argue with the company, sometimes there isn’t anything you can do.

Not everyone can deal with these sort of things. What I’d recommend for anyone thinking about permanently retiring in any certain country is going to live there for several months first and seeing how it is.

I know many people that retired to a place they vacation in year after year but they are only there a few weeks per year and that isn’t enough time to see all of the problems in that destination.

I’m not saying it’s all negatives because it’s not. But you have to be super realistic before you leave the USA to go retire somewhere else.

[svelte]

My wife and I wind down weeknights by watching House Hunters International.

Fairly often, it shows people buying a vacation home in a seaside community somewhere…we always shake our head – they’ve just locked themselves into taking all their vacations at that one location.

Also don’t quite understand how it can be cost effective, unless they plan on living several months out of the year there.

[earlyretirement]

[quote=svelte]My wife and I wind down weeknights by watching House Hunters International.

Fairly often, it shows people buying a vacation home in a seaside community somewhere…we always shake our head – they’ve just locked themselves into taking all their vacations at that one location.

Also don’t quite understand how it can be cost effective, unless they plan on living several months out of the year there.[/quote]

Svelte,

I agree it’s not always wise to buy a place overseas. Take anything you see on those HGTV shows with a grain of salt. Most people don’t realize but they are all fairly “fake”. All of the properties are already purchased before the show airs. The production company can’t take a chance the deal won’t go through so in many of these cases the shows are faked and the properties are long purchased/owned. Plus all the properties they are going around to for comparison are also typically fake and many times the realtor’s house, friend of the realtor, friend of the property owner, etc.

I’m not saying all those HGTV shows are fake but those HGTV House Hunter’s International shows are just about all fake pretending to be buying a place. They are already long since owned in many cases with them moving out furniture out of each room to film it.

Keep in mind that many of these owners that are buying 2nd homes are renting them when they aren’t using them. And that can help maintain it during the year. Even in expensive locations, renting the properties can pay for the entire year’s worth of expenses.

For example, in one of my 2nd homes, I rented it out for up to $8,000 a week during high season. And I got it too. But it came to a point where I couldn’t even enjoy my own property because I couldn’t justify to myself turning vacation rentals down for $5,000 to $8,000 a week. So it’s a catch 22.

Owning a property overseas for many people is NOT about it being cost effective. Many times it simply is NOT. Without renting it out while you aren’t using it, you are stuck maintaining it.

I own several properties overseas but I rent out each and every one of them and it more than pays for themselves plus generates income even after accounting for management fees, utility bills, insurance, local income taxes on the rental income, annual property taxes, plus accounting for paying income tax here in the USA.

It just depends on the locations but many people aren’t buying overseas and thinking about it being cost effective.

Also, many of these people buying are wealthy and it doesn’t matter to them if they are losing money on it. In fact, I sold my beach house after one of the European guests that I had really loved it. He made an offer I couldn’t refuse and last I heard he only uses it a week or so per year and not sure if he is renting it out.

Also, you can also do home exchanges via sites like http://www.homeexchange.com We’ve done some amazing exchanges around the world where we will swap a small apartment for luxurious properties in places like Manhattan, Paris, London, Maui, Monte Carlo, Nice, Zurich and many others.

I realize that is NOT the norm but you can find creative ways to make the most of the property and maximize your ROI.

But I DEFINITELY agree with you that you really have to think twice before you buy a property overseas and also know ALL the laws and also what the taxes are like in each country. Many times abroad, no one tells you what the tax consequences are, or they flat out lie to you about it.

I’ve seen Americans buy a property because it was “cheap”. But then they never pay their property tax or municipal taxes for years and years and have problems when they sell.

In many countries, you do NOT get any bill in the mail. It’s your responsibility to hire an accountant to file the taxes. No one ever mentioned this to you but you find out when you sell.

Also, in some countries you have to get a permit to sell the property which isn’t always so easy. So it really makes sense to think all of these things through before buying abroad.

[temeculaguy]

It turns out Brian is right, we are still the coolest. Maybe I should go live somehwere else.

http://www.cnbc.com/id/44407241/

[flyer]

From the viewpoint of a native San Diegan, based on the people we know, I believe there is a great deal of “real” wealth in San Diego, and I also believe there are an equal or greater number of people here who simply try to give the “appearance of wealth”–but that is probably true in any given city. Whatever the case, if you are living the life you want to live–that’s what really matters.

For us, our spiritual core is the basis from which everything else in our lives evolve. It’s great having the means to do or have just about anything we want in life, but we’d find little meaning in any of it without our spiritual center. I know that is not true for everyone, and I make absolutely no judgement calls in that regard, but it has made a true difference in our lives, so I just thought I’d share that perspective on this topic.

[The-Shoveler]

I used to think being from L.A. was cool, but then I met someone from Shanghai and she was way cooler than I was.
But to tell the truth I still can’t get used to SD news.
Seems no one can hype a story like the local L.A. news can.

[earlyretirement]

No doubt there is a lot of wealth but I agree there is probably an equal amount of fake wealth as well in North County.

Even in affluent neighborhoods. I was surprised to read in the annual report of the HOA where I live, which they recently released, that they just wrote off $676,075 in uncollected assessments resulting from 3 years of foreclosures and bankruptcies. “Amounts left owing due to foreclosures have been pursued and about 60 personal debt judgements have been secured. Collection on these debts continues”.

These are mostly $1 million on up houses in this development where I live. So I’m sure that the neighbors assumed that these 60 people that have debt judgements against them were truly wealthy but I guess that wasn’t the case.

Often times it’s really impossible to know if someone is truly wealthy or faking it. Just look at shows like Real Housewives of Orange County or Real Housewives of Beverly Hills where these people are blowing insane amounts of money on expensive watches, expensive cars, live in nice places. Only to see that several are faking it and spending money they don’t have. Losing their houses in foreclosures, and one so called Venture Capitalist just committed suicide due to financial woes.

This is a guy who spent $60,000 on his 4 year old daughter’s birthday last year! I think California is full of these “keeping up with the Jones” types. Very sad.

[Anonymous]

If you can successfully fake it your entire life, is that any different than actually having it?

I know some people that I suspect are faking it, but it never seems to catch up to them.

So, either they are not faking it, or perhaps they are so good at faking it that it doesn’t matter that they are faking it.

[earlyretirement]

[quote=pri_dk]If you can successfully fake it your entire life, is that any different than actually having it?

I know some people that I suspect are faking it, but it never seems to catch up to them.

So, either they are not faking it, or perhaps they are so good at faking it that it doesn’t matter that they are faking it.[/quote]

I don’t think it really matters what your friends/neighbors have or don’t have. As long as it’s not affecting you then it doesn’t matter at all.

I don’t base my friendships with people based on their net worth. So it doesn’t really matter to me. But I do have some people that I know that this kind of thing is really important for them to know.

However, the people that are typically faking it usually has it catch up with them at some point. I once had a neighbor that I assumed was doing very well….he lived right across the street from me, drove a Mercedes, kids were in expensive private schools and one day I found out he and his family moved away in the middle of the night. It seems he was in the middle of a foreclosure and rather than stick around to face the music and shame…he just moved…. He didn’t even say bye to anyone.

Of course this was back in 2003 when foreclosures and short sales wasn’t totally normal like they are now… Now you have people almost bragging in newspaper articles about not paying rent for 30 months like something they are proud of….

[briansd1]

[quote=temeculaguy]It turns out Brian is right, we are still the coolest. Maybe I should go live somehwere else.

http://www.cnbc.com/id/44407241/
[/quote]

We are the coolest still. Our brand image is very strong abroad. American should travel more and be ambassadors to our culture.

BTW, TG, I lived abroad as a child and attended international school with local and other expat kids.

As adult, I lived abroad and paid bills. I know it’s not all roses. But the nightclubs and cafes abroad are generally so much better than here.

For my working retirement, I will just have a 1-bed apartment in a foreign capital. I’m not dreaming of a house with ocean view or anything exotic. In fact, I have no interest in resorts at all.

[briansd1]

Wealth is relative.

I believe that there is less wealth that we like to believe.

A lot of wealth is dependent on the social institutions we have created (social security, medicare, pensions, credit system, etc..). Access to credit is so important to American society. Without credit most Americans would not make it. A cut off of credit can cause many of those who are wealthy to go bankrupt.

So to me, real wealth is the wherewithal to live very well, without credit.

[Author]

Posts