Wednesday, December 21, 2011

Welcome Freshman Class!

A little over a year ago I started a Gringo Night on Tuesdays at Di Bacco, an Italian restaurant in the historic district. Cynthia and I were riding the bus downtown one day and it was time to eat lunch. I noticed this place out the window that we had never seen before so we decided to get off at the next stop and dine there. Our meal was delicious and reasonably priced, but we couldn't help but notice that the place was practically deserted.

As usual I started chatting up the proprietor, Lauro, and he shared with us that the restaurant had been open for awhile and was struggling to gain a foothold. Out of nowhere I blurted, "What would you think about having a Gringo Night here to attract more expats?." Trust me, it's not like this idea had been percolating around in my overactive brain. I was at least as surprised by the spontaneous suggestion as Lauro was.

He agreed to give it a try. I invited a group of people for a quiet dinner there to hash out the plan. They invited friends who invited friends, and about 40 folks showed up. Yikes! The kitchen was overwhelmed and quite frankly the evening was a disaster, but the experience demonstrated there was a pent up demand for something.

I regrouped with just a couple of buddies over drinks. Since there was another Gringo Night in town on Fridays we decided this one should be on Tuesday. The first night was planned and promoted, and probably close to 100 people showed up. From then on the event has become a permanent part of the social landscape in Cuenca.

Even though I originated this idea I never thought of it as “mine.” Cynthia and I invited people and showed up religiously for awhile to help get things going, but except for our fitness we don’t enjoy doing much of anything on a set schedule (maybe that’s why I’ve never joined a bowling league), so over time our attendance has been erratic.

A visit last week was an eye opener to say the least. The bar area was busy, and the once-empty dining room was packed—so much so that some folks had even migrated upstairs to dine. As I stood looking out at the room I realized that although I recognized a few faces I didn’t really know a single person sitting at the tables. A year ago I knew everyone there because I had invited them. Now I felt like a virtual stranger at an event I had created.

Some of our very best friends are native Cuencanos and gringos who have lived here a long time, but in sheer numbers the vast majority of our acquaintances are folks who moved to Cuenca around the same time we did. We were all rookies anxious to meet people and share experiences getting settled in our new hometown, thus we naturally gravitated towards each other.

And apparently so it goes. I’m guessing most of those folks I didn’t recognize at Di Bacco are newbies similarly forming relationships with other recent arrivals—sharing stories about their misadventures, asking who did you use for this, where can you find that.

This whole expat experience reveals itself gradually over time. It appears I and my “group” have officially become the sophomore class of gringos. We’ve made friends and successfully integrated into the fabric of daily life. Now it’s time to welcome the new freshman class to town. Cynthia and I always look forward to meeting new people and providing assistance and guidance through the adjustment period. We never forget how lost we sometimes felt in the beginning and how much help we needed.

I hope all of you new folks enjoy your life here in Cuenca as much as we do, and that you always appreciate what a wonderful city you have chosen.

Sunday, December 18, 2011

Having a Great Time--Glad You're not Here

An online article about leaving the US before “the collapse” has generated considerable buzz on Ecuador forums, since the writer claims to have lived in our country for two years. The guy is a survivalist who lives in a trailer and drives a pickup so he won’t “stand out.” He hoards food and supplies, and practices suturing wounds on chicken meat.

The gist of his message is that the grass isn’t necessarily greener, which is a perfectly valid personal conclusion, but several of his judgments about Latin American culture, and that of Ecuador in particular, deserve rebuttal.

First we should frame the author’s point of reference. He begins by stating that “one of the most common questions I'm asked today from people who are aware of what's really going on is, ‘Should I leave the USA to get away from the coming police state?’.” It’s safe to surmise this cat hangs with a very different crowd from most of us.

There is no mention of why the author lived in Ecuador or why he left, but the tone of his writing indicates that for whatever reason perhaps things didn’t work out for him here. Often people in this position choose to find fault with their former residence rather than examine their own flawed motives for going there in the first place.

The title of the article promises “words of wisdom,” yet the author exhibits a shallow understanding of and condescending attitude towards the local culture. For example, he cites as an example of the lack of “long-term preparedness thinking” that the “idea of buying large quantities of facial tissue at a Costco or Sam's Club is completely foreign to most South American cultures (more so in rural areas than urban).” Maybe for starters that’s because we don’t have Costco and Sam’s Club.

He ridicules the locals for purchasing one prescription pill at a time, or buying a few screws for a project when it’s obvious they will need more. The minimum wage in Ecuador is $260 per month. In many cases a small quantity is all a person can afford at one time.

Driving through the countryside you see homes everywhere in various stages of completion. Is this due to lack of planning? Absolutely not. A member of the family is most likely employed in the US. Each time extra money is sent home work is done on the new house until funds run out. These homes sit unfinished, sometimes for years, while a husband is far away trying to create a better life for his family.

And what about the people still farming the land by hand instead of buying a John Deere tractor? The author correctly points out that one such machine can do the work of 12 men. He fails to appreciate that in a country of high unemployment this strategy puts 11 men out of work.

Our large families come under attack, again for lack of planning. The author forgets that in an agrarian society more children equate to more help growing the crops needed for survival. And while having multiple children is blamed on the “cultural devaluing of the female,” no mention is made that Catholicism, which eschews birth control, is practiced by around 98% of the population.

Ecuador is a beautiful country filled with kind and loving people. We have an abundance of fresh food and water. Perhaps we are not as prepared as the author would like for a “collapse.” Perhaps we don’t need to be.

Is our country perfect? Of course not. There are political, social, and financial problems to solve here just like most every other place. But I’m damned proud to call Ecuador my home, so don’t pick on my fellow citizens to justify your extremist position, mister.

Wednesday, December 14, 2011

To Buy or not to Buy

I was recently in the company of some folks who had attended the latest Ecuador International Living conference. Since we made the decision to move here without the benefit of such gatherings I was curious to learn if they thought the experience was worthwhile.

Each of them in fact did enjoy themselves and felt that they had received a great deal of valuable information about the regions of the country, cultural differences, and many other topics. Regarding the subject of real estate they all shared that the sentiment expressed at the conference was, “Buy now. Prices are going up. You don’t want to miss out.”

During our year and a half here prices have indeed gone up, and one always hates to lose possible investment appreciation. So I’d like to share some thoughts that should perhaps be considered once the decision has been made to relocate to Ecuador.

A disclaimer is in order. Although we have historically been home owners, Cynthia and I rent an apartment here in Cuenca and plan to continue to do so for the foreseeable future. Our desire is to keep maximum working capital available for investment vehicles in Ecuador that don’t involve the roof over our heads. So far this strategy has paid off, as rents are inexpensive and through perseverance and patience we have uncovered some excellent opportunities.

Like the decision of whether to ship one’s belongings or show up with suitcases, buying versus renting is a highly individual decision. Many people are here to retire, period, and are quite happy to have the security of knowing that they own their dwelling and are free to enjoy their lives.

But it is a mistake to assume that the process of purchasing real estate in any foreign country is the same as in the United States. We know too many people who paid cash (there are no mortgages for brand new expats) for their dwellings yet for a myriad of reasons cannot secure deeds for their properties. If this purchase is the intended instrument for obtaining one’s permanent visa, and there are definite time limits for doing so, life can suddenly become chaotic.

After buying their condominium one couple had to ante up $25,000 they weren’t intending to use to purchase a CD (another method for satisfying visa requirements) before the clock ran out. Another ownership couple without a deed confided to us that they are still here on their last tourist visa extension and don’t know at this point what’s going to happen next. They very well may “own” a place here and have to leave the country.

Purchasing during pre-construction is a familiar strategy for getting the best price and realizing maximum potential appreciation. But what if occupancy is delayed for over a year past the promised delivery date, as has happened with another couple we know? Or how about the folks who bought a beautiful place with a lovely view of the nearby Cajas mountains, only to learn that another high rise is going up right beside their building and they will soon be looking at bricks and windows?

Let’s visit this whole notion of the “appreciation” we don’t want to miss out on. I’m sure you’re familiar with the saying that “a rising tide lifts all boats.” You buy a place for $100,000. In two years you can sell it for $120,000. Great—your property has appreciated $20,000. But guess what? Proportionally, so has everyone else’s. This means if you sell for $120,000 you can purchase an identical property now for---$120,000. Your true appreciation, the money you can now put in the bank, is zero.

There are only two ways one can really enjoy the benefits of appreciation: 1) by buying “back of book” (below true market value) and selling for retail, or 2) selling and moving to a place with less appreciation.

Now, many expats in Cuenca have had totally positive home buying experiences. Please don’t take these stories as any indication that real estate purchases in Ecuador are an automatic ticket into the Gates of Hell. The point is that one should proceed cautiously and be aware that possible obstacles exist to which you are not accustomed. Take nothing for granted, perform extra due diligence, and personally stay on top of every detail .

A great choice is to rent before you buy. Whether it’s for 3 months, 6 months, or a year, being “on the ground” for awhile allows you, without missing any significant amount of appreciation, to really get to know the city and make an intelligent decision about where specifically you want to establish your permanent residence. Even more importantly, before making a major financial commitment you get to make sure Cuenca is everything you hoped it would be once the “honeymoon” is over.

“Missing the boat” might not be so bad if you’re not certain of the destination. Remember that 3 hour tour the Minnow took on Gilligan’s Island? Instead of finding yourself marooned on an island of financial uncertainty, be responsible for making sure your expat journey gets off to a great start.