Exploring Brazil’s Hidden Real Estate Potential

Brazil is recognized for its vibrant culture, Carnival, samba, and delicious churrasco. I can’t deny that Brazil is one of my favourite countries in the world. The warmth of its people is unparalleled, and there’s a wide variety of things to see and do here—including investment opportunities.

Today we’re going beyond the hype of major cities like Rio de Janeiro, São Paulo, and Brasilia. All of them are well-known, but they might also be more expensive and less lucrative than other cities across the country. Brazil is large, and each state offers something unique. 

In this article, you will discover Brazil's hidden real estate opportunities, including some of the investment returns I realized. Perhaps you will find your next investment property here, so read on to get familiar with what this lovely country has to offer.

Cable car in Rio de Janeiro, Brazil

WHY EXPATS SHOULD LOOK INTO 'UNDISCOVERED' DESTINATIONS

Before we dig into the various underrated cities where you may cash in handsomely, it is important to remember some facts about more popular destinations. 

Think of any major city in your home country. If you’re from the US, it could be New York, Los Angeles, or Chicago. If you’re from Canada, consider Toronto, Montreal, or Vancouver. You get the idea: these cities boast expensive real estate which has increased in value significantly over the last few years, but the profit margins are often thin. 

The same logic applies to real estate properties in Brazil's mainstream destinations: Rio de Janeiro and São Paulo. Even though both are tourist-heavy hotspots and, by extension, it is relatively easy to find someone interested in renting your property, sometimes the profit margins are not worth it, and you need to pay higher entry costs.

To be honest, after this realization, I have mostly focused on frontier markets (i.e. countries and cities that are neither fully developed nor underdeveloped). I currently live in Panama, where I own various properties, but I have also acquired real estate in Colombia, Paraguay, and, of course, Brazil. This mindset allows me to tap into compelling investment opportunities at a fraction of the cost of established locations and benefit from potentially higher investment returns. 

However, it’s not all sunshine and rainbows, and you still need to do your due diligence. Before putting down any money, please take into account these important questions: 

• Are roads and transportation improving in the region, boosting accessibility for development and tourism?

• Are there significant investments in reliable power, water, and sanitation?

• Is there convenient airport access (existing or planned), opening the area to international investors and tourists?

Although investing is a numbers game, it is also crucial to check whether the area you are interested in offers all the amenities and conveniences tourists and residents need. For example, proximity to local shops, restaurants, public transportation, and airports are factors that can help you justify higher prices and effectively grant you higher returns. You’ll also want to explore if there are interesting tax breaks and whether the demand is domestic or international.

Sunny day in Lacerda's Elevator in Salvador Bahia, Brazil

WHAT ABOUT THE ROI?

Perhaps you may think that this sounds good, but what about the numbers? What profits am I earning, and how much do I pay for maintenance, management fees, and these types of things? Transparency and honesty are my north stars, and I believe that Brazil is a future-proof destination. Long story short, although my property (a beachfront house with a pool in Fortaleza, Ceará, which I bought in 2022) was on the market for just a few months, I had already earned R$4,362,50 (around $850 USD as of the time of writing) in a single month. 

Assuming I end up earning $1,200 USD net each month, the payback period would be around seven and a half years—as I invested around $110,000 USD into the property. I could sell at a higher price point or keep this asset to create more cash flow. Also, take into account that the demand is likely to increase, so it will be easier for me to charge higher rental prices. 

As you can see, you can benefit from interesting hands-off earnings. Another important factor to consider is Brazil’s expanding middle class. A well-established middle class is synonymous with more consumption, stability, and entrepreneurship. The more disposable income a family has, the easier it is for them to travel for leisure. Pair Brazil’s socioeconomics with international demand, and you have a recipe for substantial returns.   

Based on my own early returns, I’m expecting up to 10-12% net returns in the coming years. These are net figures after paying rental management fees, HOA fees, and furnishings. As of the time of writing (April 2024), a beachside villa may cost around $89,000 USD. You can also opt for property management services that would handle virtually everything you would otherwise need to do on your own, such as marketing and advertising, maintenance and cleaning, reservations, rent collections, and even check-in and check-out. 

My dear friend John is a bargain hunter, international real estate investor, and top-notch professional. He’s helped me profit massively from these opportunities in beautiful Brazil, so if you’re interested, email us at expat@beachfrontoffers.com to learn more. 

Fortaleza Beachfront in Ceara, Brazil

SOME CITIES TO INVEST IN WITH SURPRISING POTENTIAL

These days, a lot is going on in Brazil’s major cities, but this doesn’t mean that other lesser-known places may not offer amenities that renters could be looking for. Indeed, investing in a less-saturated destination may yield higher returns for those thinking outside the box. 

If this sounds like you, you just can’t miss these up-and-coming destinations that promise high returns:

TRANCOSO, BAHIA

Trancoso offers historic charm and lush rainforests, making it a perfect choice for travellers looking for immersion in nature, sophistication, and a touch of exclusivity. Here, you can find eco-resorts, boutique hotels, and properties that contribute to the preservation of Trancoso’s heritage and artistic scene.

PIPA, RIO GRANDE DO NORTE

Pipa boasts dramatic cliffs, lively nightlife, and a diverse crowd, which makes it a destination with broad appeal. You can expect upscale condos with breathtaking views, which both tourists and digital nomads highly appreciate, as well as mixed-use properties serving long-term residents with shops and amenities.

ITACARÉ, BAHIA

Surfers and nature enthusiasts flock to Itacaré for its rich biodiversity and active tourism opportunities. Niche resorts with access to rainforest trails and surf breaks, properties bundled with activities like surf camps or guided nature tours, and developments that champion outdoor living with open-air spaces and adventure gear stores would thrive in this market.

MARAGOGI, ALAGOAS

Known as the "Brazilian Caribbean," this location boasts stunning reefs and diverse marine life, making it a diving and snorkelling paradise. Resorts with world-class water-sport facilities, dive-focused accommodations with equipment rentals, and properties capitalizing on marine life, such as glass-bottom bungalows, will flourish. Think waterfront, with a constant focus on underwater wonders.

Florianopolis is the capital of the State of Santa Catarina, Brazil

MY TWO PREFERRED CITIES

When investing in overseas real estate, I prefer not to follow the crowd too much. Brazil’s real estate in major cities might offer many opportunities for profit, but not as much as other options in the country. Saturated markets are hard to navigate, forcing you to compete with thousands of people interested in either renting out their property or purchasing the house that you want for yourself.

On the other hand, looking for somewhere that’s only inexpensive is not a good move either–emphasis on the word “only.” You always want good value for money, and somewhere that’s just inexpensive will probably not hit the mark. At the end of the day, you want to have tenants who will be more than happy to stay in your house. So the question is, where would expats and locals like to enjoy their vacation peacefully in Brazil? I found two interesting yet underrated choices that you may want to consider:

FLORIANOPOLIS

Florianopolis, the capital of Santa Catarina, is the second most entrepreneurial city in Brazil after São Paulo and a cherished tourist destination, making it an interesting choice for real estate investors. The region has four distinct seasons that differentiate it from other ever-warm regions in Brazil. In short, Florianopolis is far from being a mere beach town where tourists can swim, surf, and spend time outside. Investors may also be interested in targeting tech professionals needing housing next to start-up hubs.

I spent six amazing months in this city with my wife and kids, especially because my second child was born in Brazil, adding another passport to the family. We made many memories, hunted for houses to buy in this city, refined projects like the Expat International School, and much more.

Even if your primary focus is investment, Florianopolis' natural beauty impacts resale value. You may want to focus on properties near beach access with stunning views or those within walking distance to the city's vibrant shops and restaurants. The quality of life draws long-term renters and offers an enticing future home if you ever choose to relocate full- or part-time.

FORTALEZA

Fortaleza is one of the main tourist hotspots in Brazil, and to be honest, I was taken aback by how well-developed the area is. I imagined Fortaleza to be a backwater area that didn’t have proper roads and plumbing and, at best, intermittent power outages. I couldn’t have been more wrong. Fortaleza is a beautiful city that gives you a true Brazilian cultural experience without making you feel like an outsider. The area has a vibrant nightlife with plenty of nightclubs, peaceful neighbourhoods, and a wide range of entertainment options to soak in Brazilian culture.

While luxury condos along the coast are a sure bet, don't overlook mid-range housing developments further inland. Fortaleza attracts workers across different industries who need practical, well-designed apartments near transit lines and business districts. 

This provides reliable, less tourism-dependent rental income. Another property type worth considering is commercial real estate near the port. Warehouses, logistics centres, and even small storefronts catering to import-and-export businesses would see high demand. The potential of this city is so great that I decided to buy our family’s beach house there.

With construction already completed, these houses in Fortaleza are ready to be titled, furnished, and entered into a rental program so you can start earning rental income in just a few months

BRAZIL’S APPEAL DOESN’T STOP THERE

If you want to go the extra mile and solidify your international strategy as an expat, Brazil is, once again, a land of opportunity. Having had my second son here, he automatically became a Brazilian citizen and gave us fast-track access to residency in the country. However, I am aware that some of you may already have children and want to opt for different routes to residency. The good news is that you can invest in real estate in exchange for a residency permit called VIPER visa. Here’s what you need to know:

VIPER VISA

First, the program is open to all, meaning that any foreign national can participate, as there are no country-specific restrictions. Also, the investment minimum is affordable, especially when compared to other residency programs around the world, like those of Malta, Greece and even my current home country, Panama.

To get a permanent visa through the real estate route, you must acquire real estate in an urban area. The price must be at least R$1,000,000 (around $204,000 USD). However, if the investment is located in the Northern or Northeast Region, the minimum investment drops 30%, and you’ll only need to invest R$700,000 (around $143,000 USD). The property can be under construction or already built.

Finally, the simplified investment process goes like this:

• Purchase qualifying property in Brazil;

• Register your investment with the Brazilian Central Bank;

• Move to Brazil and register to receive your Foreigner's ID (RNE);

• Maintain your investment to apply for permanent residency.

Originally priced at $117,000 USD each, these premium houses in Fortaleza are now available exclusively for Brazil Beachfront subscribers at a special rate of $97,000 USD. Email expat@beachfrontoffers.com with "Deal" in the subject line, and our sales team will contact you directly

CONCLUSION

Brazil is definitely a country that should be on every savvy international real estate investor’s radar. Apart from the classic beachfront properties that tourists often opt for, you can tap into other profitable and less tourism-dependent opportunities. 

For example, Florianopolis would be an excellent place to target young tech professionals, while Fortaleza would be an interesting choice for commercial real estate dedicated to the logistics sector. 

Also, keep in mind that qualifying investments will grant you fast-track access to residency, which is something that will always come in handy in your international strategy. I strongly recommend that you have a diversified residency and passport portfolio, if possible.  

All in all, Brazil is one of my favourite countries in the world. It is a breathtaking place with lots to see and do, a lower cost of living, and a growing, dynamic economy. If you grab this opportunity now, you’re in for the possibility of future high returns and can obtain a great residency while you’re at it. Whether you want to make Brazil your permanent home or just purchase a rental property, this country welcomes you with open arms. Stay up to date with news and exclusive real estate deals in Brazil at https://brazilbeachfront.com/newsletter. 

If you have read this far, you are definitely an action-minded individual, so this is the right time to secure your exclusive report on getting a second passport or a second residency by going to https://expatmoney.com/plan-b-residencies-special-report.