Comments (25)

2008 Presidential candidate Ralph Nader urges you to visit constitutionpledge.com to make a pledge for the Constitution. In part 3 of my interview with Ralph Nader, we talk about Naomi Wolfe, The “End of America” and the National Initiative for Democracy (NI4D) Part 1- The Progressive Dilemma http Part 2 – God is not a Real Estate Agent www.youtube.com Part 3 The End of America www.youtube.com In part 2 of my interview with Ralph Nader, we chat about War and Faith Always tons of independent candidate love spreading around at www.operationitch.com NADER- SPOIL WHAT EXACTLY shirts available here – http
Video Rating: 4 / 5

Comments (0)

Spicing up your Residency Permit in Central America – Investing in Teak and Tropical Timber

Demand for Residency Permits in Central America

Spending longer time in Central America will at one point require a residency permit as tourist visas require to be renewed after 90 days. The following points summarize the main reasons to obtain residency in Central America:

1) Retirement – Relocating to an exotic country in Central America is a dream followed by many retiring baby boomers from the US and Europe.

2) Starting a new business – Central America is home of several developing countries and offers many exciting business opportunities for entrepreneurs. Work permits as employees are hardly available and in most cases are reserved for high-skilled workers from multinational companies. Thus in practice an investor visa or a pension income is required to start legal activities

3) Tax optimization – countries in Latin America tax income mostly on domestic sources only, thus income earned from sources outside the country remain tax free

4) Obtain a second passport – the residency permit is a first step to obtain a second passport

In the US alone, 76 million children were born between 1945 – 1964. This large population group is called the Baby Boomers. Today they control over 80% of all personal financial assets (Source: Wikipedia). This generation of baby boomers is reaching retirement age and many of them will evaluate international living options such as relocating to Central America due to lower costs of living and the warm tropical climate.

In Latin America itself, some countries await economic and political difficulties. Thus many citizens of such countries try to secure a safe place abroad for their families to prepare for any eventual emergencies. Especially citizens of Venezuela have recently been seen looking to obtain residency permits in Panama while historically many Colombians brought considerable financial assets to Panama. Due to political stability and a history of being a safe haven, Costa Rica and Panama qualify very well as a place to relocate in case the situation at home becomes too difficult.

Teak and Tropical Tree Plantations

Tropical tree species such as teak are limited to grow in climate zones near the equator. Therefore only a few select countries in the world can supply teak wood demanded by the world market. Some countries are difficult to do business with being a foreigner but countries such as Costa Rica or Panama offer an investor friendly environment and succeeded in attracting considerable foreign direct investment. Tropical timber plantations in teak and other tropical trees are supported by their governments through tax incentives and require lower minimum investments to obtain a legal residency permit as small investor.

Tropical forestry plantations allow the growth of sustainable planted trees under government control which reduces the pressure to extract wood from unsustainable (and in most countries illegal) logging activities in primary rain forest. Plantation wood also can be easier certified by e.g. the Forest Stewardship Council (FSC) allowing more transparency for the consumers to understand the production methods of such woods. Tropical tree plantations thus indirectly aid to protect the environment, flora and fauna of the remaining natural forests.

In case of Panama, the country suffered heavily from deforestation during the last centuries removing primary rain forest nearly completely from the landscape in certain regions. This explains the country’s need to promote reforestation and facilitate forestry plantations where the wood can be derived from sustainable forest sources under strict governmental control. Bigger forestry plantations also often contain spaces, which cannot be used to grow commercial plantation wood due to the soil quality or humidity of the area. Therefore, such areas offer an ideal use as so-called eco-pockets by letting the area re-grow into natural forest and offer space for indigenous animals. Plantation owners might even extend the size of those areas over time as a show-case to demonstrate that ecology can go hand in hand with economics, thus offering investors additional arguments to invest and providing peace of mind to aid the environment as otherwise the area might be used for pasture land.

Tropical timber investments are mostly long-term in nature (teak investments take e.g. 20 – 25 years till final harvest) and can be financially highly attractive. Volume growth is driven naturally through the growth of biomass, thus the investment grows in value over time. Concrete forestry investment opportunities show a range of returns between 8% – 18% estimated Internal Rate of Return (IRR) according to Investing Alternatively. Forestry investments are known to have the capability to beat the stockmarket in the long-term and also show low correlations to other asset classes which make them an ideal investment complement from a portfolio point of view (Source: Forest Investment Associates, NCREIF vs. Financial Assets, Forest Research Group 2007).

The View of Retirees towards Teak and Tropical Timber Investments

Foreigners retiring in Central America normally can look back to successful professional careers, thus having less a need to create wealth for themselves but are interested to pass wealth over to their children and grandchildren.

A teak or tropical tree investment can be attractive to transfer long-term wealth by optimizing tax and return aspects. As the wood will be harvested in the future it can e.g. be used for foreseeable expenses in the future which will require larger amounts of capital such as e.g. building a house or finance the education of the grand-children. Thus the retiree can leave a legacy behind in form of planted trees which are steadily growing in volume and thus in value. This makes more sense than depositing money in the bank where current interest rates are low and might not even be enough to offset inflation. Also an investment in teak or other tropical trees can ideally complement stock market and real estate investments as the fundamental value drivers are different and thus aid to diversify the investor’s portfolio.

Residency Permit through a Teak Investment

Facilitating forestry projects is part of the strategic plan of the government in countries such as Costa Rica and Panama. Thus forestry residency visa’s are one of the cheapest options to become legal resident. For other countries where investment requirements are low (e.g. Ecuador USD 25,000 or Nicaragua USD 30,000 but subject to change) an investment in a tropical tree plantation can be a great way to obtain a residency permit without the necessity to start business activities in unknown territory. Most common form of a tropical timber investment is teak as there exists a well established market for teak wood and the prices are quite attractive compared to other tropical timbers.

When looking at the minimal investment requirements to obtain a residency visa in Central America, it is evident that tropical timber investments can be a great way to obtain legal residency as a foreigner:

Costa Rica: USD 100,000 investment in an approved reforestation project (otherwise USD 150,000 minimal bank deposit required)

Panama: USD 80,000 to obtain control over 5 hectares of reforested lands in an Autoridad Nacional del Ambiente (ANAM) approved reforestation project (otherwise minimal USD 150,000 investment required to start a business).

Conclusion

Combining a residency visa with a teak investment can be an attractive alternative to other residency visa programs,. A teak investment in a plantation aids to satisfy demand for tropical timber without touching primary rain forest, offers attractive long term returns and can be an ideal instrument to transfer wealth to the next generation. Compared to other residency visa programs in Central America, the government supported forestry investor visas appear as one of the cheapest option to obtain legal residency.

Find More Investment Articles

Comments (0)

Maximize Your Credit Card Services with Small Business Loans

Since June 15, 2009, the United States Small Business Administration has been processing deferred payment small business loans of as much as ,000 to be given out to 10,000 small businesses. This is covered by the SBA’s America’s Recovery Capital (ARC) Loan Program.

To qualify, companies should be private enterprises that are for-profit. They should have up to five hundred employees only and should be at least two years old. Furthermore, they should be able to prove financial need with a twenty percent decrease in sales, revenue or working capital. On the other hand, they should be able to prove that one of their two years in business has been profitable, and that with the infusion of cash they will be able to meet their existing and future debt obligations. This means positive cash flow projections. The ARC small business loans are intended to be used to pay outstanding debt such as payables to vendors.

For this batch of small business loans, there are no fees or costs involved, except if the borrower defaults on the loan later. In that case the SBA-approved lender can charge costs for securing and liquidating collateral.

The ARC small business loans also do not charge interest. Actually, the SBA pays the interest for the borrowers. Disbursement of the loan can take as much as six months but payment of the principal is also deferred for the next 12 months. After that, the borrower has five years to repay the loan principal.

Each small business can only avail of one ARC loan. SBA-approved lenders will offer the loans until September 30, 2010 or until available funds run out, whichever comes first.

There are, however, an estimated 30 million small businesses in the United States and only 10,000 of them can avail of the government’s small business loans. What if you do not happen to be among the 10,000 lucky recipients? How will your small business survive?

There are even doubts being raised on whether as much as 10,000 businesses can indeed avail of the ARC loans. There are fears that there may not be enough lenders willing or able to participate in the program. Lenders will have to advance the full amount of the loan, will not receive payment on principal for a full year, and will not be able to charge any fees, thereby absorbing all administrative costs. This may be too steep for many lenders. They may not be able to afford to participate at all.

This is where you as a small business owner can and should maximize your credit card services. We are not talking about your personal credit card services here. Instead, we are referring to the merchant services that enable your small business to receive credit card  and debit card payments. Surely, any business these days avails of these types of credit card services. After all, more people pay by credit card or debit card rather than cash.

Most credit card services offer small business cash advances that can be as substantial as small business loans. These small business loans do not require any collateral because they are secured by your company’s future credit card receivables. This is even more convenient for your business because repayment is also built into those receivables. Credit card services automatically deduct a percentage from your income to go toward loan repayment. For as long as you have incoming sales, you can support your loan. Interest rates are often quite affordable considering how the loan can help your business.

Small businesses should therefore look into maximizing these credit card services for small business loans. The survival of your business could hinge on this.