The Saga of Buying an Apartment in Rio de Janeiro

On my last trip to Rio, I had the pleasure of accompanying the complex, yet fascinating process of buying an apartment in that wonderful city. Like anything in Brazil, this is not for the weak of heart, but things happen eventually after many complications and some faith.

I wanted to share some of the important things I learned in just a few weeks and around 15 apartments visited, each of which entailed a new discovery, a new piece of the puzzle.

This your complete guide to buying an apartment in Rio.

Where to Find Apartments?

Most apartments are listed on a website called zapimoveis.com.br (it’s the same one you would use to look for rentals, which is an important point, if you are buying as an investor and want to understand returns). In addition, each real estate company has its own website and listings, but very rarely those aren’t available on Zap. There are other small sites, but the most important one is www.nestoria.com.br that aggregates the information from all these websites. Which leads me to pitfall number 1: multiple listings (to be discussed in the next section). 

Another option is to walk down the streets you like and ask the doormen (porteiros) if there are any apartments for sale in the building. They normally know anything that’s going on and may even have the keys to show you the place. This way, you might be able to negotiate the price directly with the owner and avoid the middle men of the agency.

Pay Attention to Multiple Listings:

The same apartment easily be listed with 3-4 different real estate agencies, each with a different price, which may depend on the fee each agency  negotiated with the owner, and some kind of sales strategy they may have. For example, we found that JTavares, which seems to be marketing itself as a higher-end agency, normally has the same apartments as other agencies, listed at R$100k more.

Moreover, the information on apartment’s size and home owner association (Condomínio) fees may be different at each listing. Knowing this, you should do the following:

• Look up the apartment in Nestoria (or google) with search term like: “apartamento a venda rua <streetname> , <neighborhood name>. Then try to identify all the similar listings by browsing the pictures . See what is the lowest price listed and have this in mind as the lowest initial price. You can still go see it with an agency that lists it for a higher price, but make sure to tell them that you know it’s listed lower with a competitor
• Verify with the realtor the following info: the correct apartment size (it should be in the official documents), Condomínio fees, availability of parking spot and exact terms of using it – more on parking spots later).

The Realtors:

After seeing several apartments, you will soon start to realize that there is a great degree of variance in skills and attitude from one realtor to another. It seems that it’s not very difficult to get a real estate license and the agents themselves don’t make too much money therefore, don’t expect much out of them. One of them very accurately termed his colleagues as “abridores de portas” – “door openers.” Most of them don’t know much about the apartment or owner and just simply read from the paper in front of them, the same information you would get from the online listing. Every question receives the standard answer: “I will need to check.” They also send you the listings that they are trying to turn over, instead of the ones that match your profile, often ignoring all the things you told them you’re not interested in and basically waste a lot of your time on dead ends. They will tell you, however, when you meet them that they are “trying to understand your profile and needs.” Don’t be fooled.

The other interesting finding was that if you decide to make an offer, they pass it to “their manager”, who is the person in charge of negotiating with the owner. From what we have seen, these people aren’t necessary more knowledgable or skilled. They have just been there long enough to earn the status to be able to sit in air-conditioned office and not run around under the sun opening doors. Whenever the realtor doesn’t know something or doesn’t want to answer, they will invoke this imaginary “manager”, who they must first consult.

The best way to deal with realtors is to

a) search yourself for apartments that interest you and send them to the realtor to schedule a viewing,

b) be really strict and persistent on your criteria and ask lots of questions about the apartment before seeing it to make sure that they aren’t trying to sell you a lemon.

c) make sure that your realtor is actually registered and not someone who just decided to show up. They all have a registration number called CRECI – which you can look up on this website.

Once Inside the Apartment

Most apartments in Rio’s south zone are old and not very well maintained. There are new buildings but the prices of apartments in them will tend to be much higher so unless you have an unlimited budget, you’re left with the old apartments market. The actual conditions of the apartment may vary a lot and not necessarily have anything to do with the price of the apartment, therefore the best way is to just see the apartments and do your own math about what they may be worth to you. Apartments are sold as-is and owners are not responsible for taking care of any damages before handing you the keys.

The two common types required renovations are electrical – changing the wiring and increasing capacity and hydraulic – changing the pipes in the bathrooms / kitchen because they might be all rusty, full of leaks, and  water pressure may be insufficient. Sometimes realtors will tell you everything has been renovated but a quick walkthrough, a look at the electrical box, at the state of the shower and toilets, check of the ceilings and walls for stains can tell you the real story. It seems that wiring is not too expensive to do but hydraulic, depending on number of bathrooms and configurations may add up costs, because it requires breaking walls and redoing the tiling.

Some apartments may be completely destroyed and the realtors will tell you can renovate everything quickly for like R$30k, which is  of course a lie. Renovation can take months and it’s not cheap.

Cost of renovation will depend on apartment conditions and your personal tastes, but if it requires more than the basics, the total bill can easily add up to more than R$100k for a 2-bedroom, 80 sqm apartment. This is an important factor to consider when evaluating the sales price.

A charming apartment at a first glance, with a nice balcony and view

and beautifully restored antique floors…

But then!! The horror is witnessed in the bathroom that looks like it was bombed!

Look for Sources of Noise

Noise can come from different sources and realtors will always have an optimistic explanation why the apartment is such a great deal. One apartment we saw, was on the 6th floor of a building adjacent to a school. We could hear the noise of the kids playing in every single room, even when all windows and doors were shut. The realtor was trying to convince us that it’s not a big deal if we just installed sound-proof windows and kept them shut during the day. Another apartment, had its ground floor windows facing a very busy street, which according to the realtor, was not a problem as long as we spent time in the interior-facing bedrooms.

Elevators in some buildings can be really loud and if one’s apartment is located near such elevator, be prepared to constantly hearing the relevant sounds at all times of day and night, especially if it’s a building with many apartments.

Some apartments may be close to a favela, which in itself is not a big deal, if it’s pacified. The problem is that almost every favela will have Baile-Funks, which are big block parties. EVERY SINGLE WEEKEND, until the early morning hours. Unless you’re a big party goer, this becomes a huge nuisance and will certainly affect the resale value.

A charming apartment at a first glance, with a nice balcony and view

..until you take a closer look and discover the monsters lurking downstairs!!

Understand How Much You Really Care About Having a View

A typical “selling-point” we have seen in some of the listings is that the apartment is very silent and facing the “fundo” / back of the building. This can be a great benefit but more often than not, we saw apartments that have a view of the wall of the building nearby, or even worse, the view of the windows and the insides of the apartment in the next apartment block. Others have views of the internal ventilation area of the building, which aside from being depressing is a another noise hazard, because you will hear the echo of all the conversations of all the other neighbors whose apartments are facing this area.

We saw one apartment that was well located and “in a really great building”, that had a gym, pool, exercise areas, playground, restaurant, hair salon, etc etc. It only had a small problem: a little favela of 10 or so houses that formed near it. Well, when you opened the apartment window, you would be looking at the toilet area and other houses of this favela, that was located about 20 meters away. It could be a great opportunity to make friends but forget about any kind of privacy. The realtor suggested that if we put curtains, we will be able to “hide” the part of the favela from the view.

To help mitigate: from the pictures in the apartment listing, sometimes it’s already possible to identify such apartments and verify with the realtor.

Apartment 1: view of the Sugar Loaf

Apartment 2: view of next-door favela (illustrated)

 

Empty versus Occupied Apartments

Normally, it’s much better to see an empty apartment because you can better evaluate its conditions and identify potential problems. However, it’s not always possible and we found occupied apartments kind of a pain. First, because people had A LOT of stuff, and it was hard to understand the size and potential of the apartment. And second, because they seemed paranoid about us stealing something so they would follow us everywhere and won’t stop talking about their lives instead of properly showing the apartment.  

The silver-lining in having the owner around is that by asking the right questions, you can get some information about their chances of being a crook and also understand their current financial situation and flexibility to negotiate. They might also be able to clarify information about the apartment, which the realtor may not know.

Pay Attention to Illegal Constructions

Some owners may decide to close of part of a the building’s courtyard that is adjacent to their apartment, thereby extending the livable space. This is normally marketed by the realtors as a great opportunity/benefit. This however, may turn into a problem because you may be forced to “legalize” the extension and won’t be able to close the transaction on time or have to deal with extra costs and bureaucracy in te future.  So pay attention to those charming courtyards and balconies.

Parking Spots are a Commodity

Having a parking spot is kind of a big deal because many of the older buildings come without garages and street parking is scarce. Even if you don’t drive, it can be advantageous to have a spot because you can always rent it out for a few hundred reais. However, it’s important to understand the terms and conditions. Generally, if the apartment has one, it will be in the official documents (“escritura”) and specifically assigned to the apartment. Sometimes, there is an unassigned but guaranteed spot in the building’s garage. A third situation we saw was a waiting list for which one could sign up and EVENTUALLY get a spot. This option is clearly worth a lot less.

• It’s important to understand the exact terms of the parking spot and not just trust the realtor’s word of the apartment having a spot.
• Realtors try to make out of a parking spot a bigger deal that it really is in order to keep the high price of the apartment. So do your one math of how much extra it’s worth paying for an apartment if one could rent a spot for R$200-300 a month.

There are many great details yet to follow but I will save them for part II which will cover the charming legal and bureaucratic aspects and the price negotiations process. Thanks for reading so far!

 

Apples from the Desert

Living the high-paced stressful modern day capitalism, we often forget those “small” things in life that are the actual source of happiness and stability – old friendships, human kindness, family ties.
This is one of the reasons why I like going back to my country, where real people with real problems and real loves remind me who I really am, where I come from, and what really matters.

After 5 years of promises, I decided to make the two hour trip (long distance in Israel terms) to visit my longtime (12+ years) school friend, Blondy, in the desert city, Be’er Sheva. My previous encounters with Be’er Sheva were limited to 30 minutes stops on the way to Eilat, Israel’s most southern point and main tourist destination. I was therefore curious to get to know the place better and see how my friends’ life looks like.

start point

On the way

My destination: Be’er Sheva

Blondy and hubby made me feel at home, and we caught up on life and work. Blondy and hubby are a typical Israeli young couple. Recent college graduates. She works as an administrative manager at a nursing home and he is a management trainee at one of the main national banks. Both are doing great. It was interesting to discuss Israeli working culture and see how work problems and management of people are still universal. However, the best thing by far about The Blondies was their cat, Khatulish, a modern cat, who follows all the global trends. He even plays games through his personal pet app on the tablet. I believe that Khatulish is more technologically advanced than me in that. Blondy was commenting about the difficulty that some of her older colleagues are having in learning how to use the PC. I think she should consider using Khatulish as a technical trainer.

Khatulish analysis the situation

Khatulish charges in…

Oh no.. the fish are not real. Must try again!

Given that most people think the entire country is one big desert, one most clarify that the main difference between Be’er Sheva and any other middle class city in Israel is that it has some bedwin presence and if you drive a few kilometers away, you pass all the apartment buildings and shopping malls, and arrived to vast unused sandy plains, dotted with trees and some military bases.

Beer Sheva is also a university town, housing the Ben Gurion University. It is named after Israel’s first prime minister David Ben Gurion who was a big patriot with crazy white hair and a believer in bringing bloom to the wilderness and to his death lived in a cabin in the Negev desert (currently a museum at Kibuttz Sde Boker). As a university town, BS has a vibrance and friendliness about it. There are many bars and restaurants with cool atmosphere, good prices and friendly service. I went to of those bars, called HaSifriya ( The Library), where the waiters all wore nerdy glasses and suspenders and looked liked New York hipsters from Williamsburg. We ate burgers (Blondy and hubby), and typical israeli food (me) to the sounds of Lady Gaga concert playing on the plasma TV, while chatting with our friendly hipster bartender. Yet another example of global trends with local flavor. I like seeing so many of those around the world.

Hipster Bartender

Hummus, Falafel and Kava. What else does one need in life?

The coolest thing I discovered about Beer Sheva was that it used to be a Turkish stop point during the Ottoman rule. Someone got the right mind just a few years ago and they are now restoring the old town, and creating an interesting leisure area of galleries, cafes and nice restaurants, all done in the beautiful ancient style full of arcs and internal courtyards with quaint gardens. I can’t believe someone has not thought about this earlier but also cannot wait to see the area in a few years. In the meantime, the houses already restored look gorgeous. Wish I had money to invest… I love seeing growth opportunities that also bring beauty to this world.

Cool commercial for instant coffee. It says: “He doesn’t have a pretentious foreign name. He is simply delicious”

On my back on the train, aside from the normal update of local politics, I got an interesting advice on real estate from a phone conversation I overheard.

“Trust me, Tel Aviv is the best place for real estate investment. You buy a 1 bedroom apartment for 1.1 million shekels (~$300k) and can rent it out for 5k shekels a month. You will make money every month. Israel is the only place where people still care about buying housing. The rest of the world simply rents. Worst case, you can live there afterwards as it will be in great location”‘.

Sounds like the guy spent too much time in Manhattan, or Rio, or Moscow, or London, etc.,…

Real Estate in Rio

This weekend I headed with some friends to a suburb of Rio called Jacarepagua, this is the neighborhood after Barra de Tijuca and a few years ago was mostly leveled but now is one big real estate development. This is also where the olympic games in 2016 are going to take place. Some of you may have heard of the crazy real estate boom around here. Most of Zona Sul which is the best part of Rio, close to the beach is all built up and old, and so the city is expanding westward in a crazy pace. Everyone wants a big shiny new apartment close to the beach and the construction companies are giving them just that.

There are also a lot of investment and speculation going on as house prices rise like 20-40% a year on new construction and financing cash is readily available. Everyone can say a ‘bubble’ at this point but it does seem like there is a shortage of housing that is being bridged.

I visited a particular apartment complex, called the Peninsula, and was incredibly impressed. Ex-pats that don’t care about living in the center of Rio, this is your paradise. I think it had something like 15 apartment buildings, half of them with exclusively duplex apartments. The complex encompasses a natural reserve (45 thousand!! square meters) for hiking and biking, swimming pools, tennis courts, playgrounds, gardens, restaurant, event halls, etc, etc. I think the prices for 3 BD apartments go for something like 1 million reais ($600k..). Not too shabby… (and this is something like 2 hours commute from the city center, with average traffic). The apartment complex also had its own visitor center, with model apartments, viewing halls, coffee shop and whatnot. Utterly impressive.

After this short glance into modern civilization, we drove back via Barra, where we encountered the real “povo”, the people, of Brazil, spending their Sunday drinking beer, eating heavy feijoada, and listening to Samba / Forro music. We stopped over at a Mexican restaurant (which was of course completely empty) since I was having strong longing for variety. I gulped down my frozen Margarita and ate all of my nachos, while wearing a sombrero and listening to Samba music. Cultural syncretism at its best. I also ate what they called Tapas, which was mini tortillas (pronounced TORTILAS by our waiter) with tomato sauce and sour cream. I ordered it just for the sour cream which is impossible to find around here. Of course it tasted nothing like sour cream and so I put some tabasco sauce on it to make myself feel better  (the margarita effect was helpful for this as well).

I also discovered a new business idea – a Barberia -> a place where for R$20 men can enjoy a haircut accompanied by beer. Brilliant! Maybe  I can open the women equivalent one – haircut with Caipirinhas (price tag of $R100 at least). I have seen nail salons with drinks before, but never hair. This can be much more lucrative  since hair takes so much longer to do..

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Entrepreneurship in Action

Failing to find something adequate, this little girl decided to take her destiny into her own hands and finally find herself an apartment.

A perfect deal in Copacabana turned into a nightmare when I found out that the ancient lawyer that the owner hired to rent out the place requires local guarantor and won’t accept any other means of guarantee (even several months of rent in advance). My relocation assistant went crazy trying to devise and involve me in crazy schemes to solve this situation. I was nearing a nervous breakdown and decided this is way not my Karma.

So today, I started calling real estate agents on my own and talking to them with my broken Portuguese. Although I didn’t find anything, I was proud of the fact that I managed to communicate with them and make myself understood.. baby steps.

Then I decided to step-up my efforts. I started walking around the street next to my house and talking to doormen, to see if they have any apartments available. Apparently here, there is the underground doormen -real estate mafia. They have all the information and they compete with the agents. One of them, at first attempt told me – no, we have nothing. Then I went away and came back, and he said – yes, we might have something. Let me speak with the owner. We exchanged phone numbers. Then another doorman, told me that he knows some other buildings that might have something and he will ask around. The mademoiselle in distress strategy worked like a charm.. I am new here… I just moved. I am trying to find an apartment and I like this area so so much, but it’s impossible to find anything.. can you please please help me??? I also explained to one of them that Israel is not a Catholic country and that Jews existed before Christians and that Jesus was a Jew. He was really impressed. Hopefully, this will give him some religious inspiration to help me!!

I am learning so much about human relationships in this country.  When society lacks procedures or known rules for almost anything, relationships are the only thing that one can rely on to get ANYTHING done. For example, one’s bank is not judged by its quality or availability of services or rates of commission, but rather the bank manager that you have to deal with. If the manager is a good one, you are in the game. If he or she is not so good, GOOD LUCK, my friend!

When market prices are not transparent

After seeing more than 25 apartments, the only conclusion I can make about Rio real estate is that there is no pattern whatsoever about it. For the same price, one can find 1BD, 2BD, modern, old, in a nice neighborhood, in a bad neighborhood, ocean view, facing a wall, etc etc etc. This is crazy because one can’t ever know if  he or she is getting a good or bad deal. It seems like a lot of the good supply depends on connections and/or pure luck. But one can easily encounter numerous wall-facing apartments with falling apart everything for exorbitant prices and shameless owners refusing to re-model anything.

Eh, the decision on my plate – for more or less the same price:

1. 1BD in an apartment building (daily cleaning), decent condition (super ugly furniture), good view, nice balcony, good location but in Botafogo, includes some utilities. Shorest commute to work.

2. 2BD in normal building, semi-furnished, very cute. Good view. no utilities included. No A/C.  slightly worse location in Botafogo.

3. 2BD in Copacabana, huge apartment, amazing location, close to all my friends. Has A/C, semi furnished but will have to upgrade. no utilities. lots of character. kind of an old apartment with mostly shitty furniture but very nice building.

How does one make a decision under such a complicated criteria?!!

arggggggggggggggg