In a world that is becoming increasingly unsure both financially and politically, security, peace of mind, and having the freedom to do as one pleases are becoming utmost priorities for many people. They are waking up and realizing that the type of lifestyle they are looking for is not a given anymore – it is something that they will have to create for themselves. Some look to diversify their money into international investments that are not so vulnerable or volatile as what they may already be investing in. Others look to move abroad, or at least gain residency abroad, to always have a solid plan B if things take a turn for the worse in their home country. But a few have found a way to kill both of those birds with one stone – and the answer lies in Panama.
Panama, with its gorgeous climate and stable economy, has a long history of attracting foreigners. Many show up on a tourist visa, but have a hard time moving past that point to actually obtain residency. Some may have heard of the Executive Decree 343,which permits residents from the United States, Canada, and 45 other countries to apply and receive permanent residency if they meet some very simple criteria. An applicant simply needs to open a business or buy real estate in Panama, and also show an opening balance of $5000 or more in a Panamanian bank account (which can be taken out after residency od granted). Straightforward enough, but many people are not in a position or simply do not want to buy real estate or open a business – perhaps they do not have that much to invest, or maybe they do not want the time and energy commitment. But they do want the option of permanent residency nonetheless.
Enter Teak Hardwoods, managed by expats Mike Cobb and Joel Nagel. Mike is the founder of ECI Development, which has developed successful investments all throughout Latin America over the last two decades. Joel is a very well-respected overseas investment attorney. 14 years ago they looked toward the future and bought a parcel of land in Panama and planted teak tree seedlings.
Teak is a commodity that is being harvested at a rate 8-12 times the rate of replanting. Teak prices have risen dramatically over the last 20 years, and as the harvest continues to exceed the supply, it is expected that the price of teak will continue on an upward trend. Panama was chosen specifically because it provides optimal growing conditions for this tree, combined with political security. From a climate perspective, the Pacific coast of Panama is ideal in that it has an 8 month rainy season and a 4 month dry season, precisely what teak wood requires to achieve maximum quality. Three hundred years of historical records show no sustained droughts for the region of reforestation. Another plus? The teak tree is largely resistant to fire, because unlike some other trees, it sheds its leaves in the dry season as a water loss prevention mechanism.
All well and good, but what does this all mean for people looking for residency or to invest? For $17,000, investors will receive in their name a 1000m2 parcel (about a quarter of an acre) of 14 year old teak trees (the teak has a cycle of 25 years, meaning that the trees can be harvested in 11 more years). You, as an investor, would also receive, because you would technically own real estate in Panama, one adult Friendly Nations Visa. This visa means that you could legally work within Panama, and is a great start for those looking to gain full citizenship down the road. To add more dependents on the visa, including your parents, children, or spouses, the cost is an additional $1900 per person. Investors can expect their visa in 1-6 months. To get the visa, applicants will be required to physically be in Panama for two occasions- one to undergo a very simple (and forgiving) health physical, and the other to pick up the residency cards. To maintain the visa, a visit of at least one day every two years to Panama is required.
For women over the age of 55 and men over the age of 60, there are a few perks that Panama throws in for permanent residents. With this Friendly Nations visa, you can enjoy a generous 50% off entertainment (movies, theaters, concerts, sporting events), 30% off bus, boat, and train fares, 25% off airline tickets, 25% off monthly energy bills, 30-50% off hotel stays, 15% off hospital bills, tax exemption on the importation of household goods up to $10,000, and tax exemptions every two years on the importation or local purchase of a car.
As for the teak trees, they are fully managed by GeoForestal SA, an on-site, Panamanian management team, who in addition to managing plantations, germinates and provides the majority of teak seedlings to the teak industry in Panama. In lieu of monthly maintenance costs, there is a 20% management fee interest in the plantation harvest proceeds, meaning that GeoForestal has every incentive to maximize the teak value at harvest for the property owner. After harvesting, each parcel owner can decide whether he wants to replant or not.
So with all of the options out there for investments, why choose this one?
- Price. $20,000 won’t buy you much in terms of solid real estate anymore, no matter where you look. This is one of the real estate investments with the lowest price you will find – and comes full of 60% mature trees, a bonus visa and all of the legal costs included!
- Diversification. By owning a teak plantation in Panama, teak owners also gain geographic and business type diversification of assets. A teak plantation is a product that is outside of the traditional markets and physically outside of the United States. International diversification is a critical element to any multi-flag asset protection strategy.
- Tax deferral. What you own are long term assets (the trees) that will be taxed at harvest. Literally your assets “grow” tax deferred. Like a growth stock, there are no dividends or cash flow to be taxed.
- Asset Protection. This is a non-liquid asset that is not redeemable prior to maturation of the product, making it an unlikely target for creditors or plaintiff’s attorneys.
No one can tell you which investment is right for you, nor can they tell you whether legal permanent residency in Panama is the right fit for you. But, for anyone looking to live more consciously, taking their future into their own hands, this investment opportunity deserves attention. Do your due diligence, and check it out. 11years down the road, there are a lot of investors out there who will be so thankful that they had the foresight to diversify their portfolio in this way – and who knows? Depending on what happens politically or economically, in just a short couple of years, the opportunity to reside in Panama long-term may be the best option for you and your family. For $20,000 it is not only an investment, but also in a way, an insurance policy there to cover you if (when?) all hell breaks loose in the future.
To request more information about this opportunity, please Contact Us.