Chacras and Real Estate
Chacras are small parcels of farmland, starting at about 5 hectares. A hectare, to be precise, is 2.47105 acres. They’re not big enough to farm.
I was interested in buying one because a) they’re affordable and b) they are a reasonable way to get some money out of the U.S. and into something real in Uruguay. Farmland in Uruguay has a lot of appeal.
I read an article by Lee Harrison a few months ago about buying chacras in Uruguay starting at $45,000. The cheapest one I saw was priced at $50,000. It had cows on it because the current owner had adjacent land and used both parcels for his cows.
Initially, I was thinking that I would buy the cheapest chacra I saw, just to get some money outside the U.S. After learning from my friends that real estate isn’t moving very fast in Uruguay, I had a change of heart.
If I bought a chacra I didn’t really like and wanted to upgrade to a more attractive property in the future, it could take a long time to cash out the first property. I’m talking 5 years or more. My current thinking is that I’ll save up some more money and buy what I really want.
I have a new strategy for growing my wealth in the U.S. which I haven’t talked about yet. I’ll tell you about that when I have proven that this strategy works. I know that it is risky to keep all my assets in the U.S. longer, but I just don’t have enough to buy what I want in Uruguay yet.
The real estate agent who showed me the chacras is Noel de los Santos. His website is www.camposdeleste.com. He was very helpful and knowledgeable.
He shared some chacra investment strategies with me:
- I could buy the cheapest chacra (5 hectares for $50,000) and make improvements to resell for a profit. Improvements are things like making a nice little pond, cutting down the brush, planting nice trees if there aren’t any, and repairing or replacing fences.
- I could buy the cheapest chacra and just hang onto it while others make improvements to the surrounding chacras. Having nicer chacras near mine would raise the value of my chacra, although not as much as if I improved my chacra.
The property taxes are paid quarterly. He guessed they would be about $300/quarter on a 5-hectare chacra. I didn’t realize the taxes would be this much. It would be hard to do something with such a small parcel that would generate income to cover this expense. I thought hanging on to a piece of land would be almost free.
If I bought a chacra that I really liked, I could build a house on it in the future and live there. This is an appealing idea and another reason why I should wait to buy one that I really like.
I asked about the closing costs. The commission for the broker would be 3.6% and the fee for the notary would also be 3.6%, bringing the total to 7.2%. The notary (escribano) checks the chain of title back for 30 years. There is no title insurance.
It is not customary to get homeowners insurance if you own a home in Uruguay. I’m okay with that if the construction of the home is brick and/or concrete. However, it seems pretty risky if the home is constructed of wood. I don’t even know if insurance here would cover theft. Theft seems to be non-existent in Punta del Este and La Paloma. I like that a lot!
My friends have been monitoring some small houses in La Paloma. The houses have been on the market for years. This reinforces my decision to not rush into buying a chacra just because it’s the one I can afford. Since people pay cash for real estate in Uruguay, there doesn’t tend to be any urgency about selling anything. No one is desperate to get out from under payments.
Understanding the Cuts of Beef in Uruguay
There’s no such thing as a Filet Mignon or a New York Strip steak here in Uruguay (and not in Argentina, either). The butchers here cut their beef in completely different ways than our butchers in the U.S. Hence, they use completely different names for the cuts. That can make it very difficult to figure out what to order at a parilla or steakhouse.
From talking to Uruguayans and Argentinians, I have learned that the cuts that us North Americans will probably like the most (because they are similar to what we are used to) are the following: vacío, entrecote, picaña and lomo. Lomo is the most expensive cut.
I have had lomo and loved it. It was covered with mushroom gravy. I also had entrecote and liked that a lot. When I did a little research, I found that entrecote is actually not an Uruguayan cut. It is Argentinian, but they offer it sometimes here in Uruguay.
The real estate agent who showed me the chacras said I should get asado de tira. I tried it that night after looking at the chacras and I really didn’t enjoy it at all. It didn’t have any flavor and it was very thin and chewy.
Yours in prosperity,
Sophia Hilton (A savvy woman)