If there’s one thing that conservative Democrats can rejoice about, given the less-than-stellar reviews of their point person who now occupies 1600 Pennsylvania Ave. rent-free, it’s the shout-out heard around the world, President Barack Obama’s opening with Cuba that occurred earlier this year.
The residual effect of this better-than-late coup d’etat, in terms of international diplomacy, is that the opening with Cuba will somewhat allow Americans in a roundabout way to buy investment real estate without the red tape that existed before — when that other young President with the initials JFK monogrammed on his luggage occupied the White House.
This diplomatic opening has just about made it possible to buy a single-family residence or a similar type of investment property, such as a duplex, small apartment complex or perhaps a similar income producing property without the normal red tape — communist or non-communist state.
Make no mistake, this is a momentous occasion for small investors and resort developers. The good news, however (depending upon your perspective), is that you won’t have to renounce your American citizenship, move to Cuba and shack up with a Cuban national to buy an investment home.
Greenbacks in a red country
According to Yad Aguilar, CEO of Canada-based Point 2 Cuba, a company that provides Cuban real estate expertise to international investors and developers:
“Many people have been planning ahead for this day. I can tell you that a number of major American hotel companies have already spotted sites in which they’re interested. I’ve already heard of a 750-slip marina under discussion. And for American travelers, the prices will be incredible … beautiful penthouse condos will be going for as little as $200,000.”
Although Aguilar might be a bit more optimistic than what jaded investors are willing to fully embrace, here are the facts: Cuba is 220 miles south of Miami and is considered one of the hottest real estate buys in the world right now.
However, most Americans and foreigners are shut out of this potentially lucrative product due to existing archaic laws still on the books. Namely, the Trading with the Enemy Act, passed by the U.S. Congress in 1961. However, that’s not the case for Cuban nationals.
Why? Because Fidel’s little brother, Raul Castro, has been in control of Cuba since 2006, and to his business acumen, has become an ardent pro-business advocate in a communist country.
More specifically, Raul Castro is allowing Cuban residents to buy and sell their own homes. This is the new normal. So instead of a communist revolution, a real estate revolution is occurring, which has never happened in such volume since Fidel took over the island country 54 years ago.
At that time, Fidel seized nearly all foreign-owned real estate in Cuba without so much as a peso for the real estate.
The real estate revolution and the new normal: Cuban style
Is this a new day in Cuban-American relations? Irrespective of the politicos, the feeling since Obama’s announcement is bullish among investors. Here’s what those in the know are saying about the new normal.
“Where Cuban tourism and residential development is concerned, the sky’s the limit,” Aguilar said. “The opportunities are certainly there. And American investors, resort developers and high-end residential developers are just waiting for the opportunity to rush in and fill the vacuum that’s been created over the past 54 years.”
“For the resort and residential sectors, we think Cuba will become a land of opportunity,” Aguilar added.
To further support this optimism, Cuban-American real estate broker Pablo Tacon opened a new office in Havana earlier this year called Cuba Tacon Inmobiliaria.
But it’s a bit more complicated than that.
How complicated? There are two different ways in which Cuba’s real estate market functions: one for the locals and the other for outsiders.
Tacon tells The World Property Journal, “One market is called Permuta, which is for Cuban nationals only as the buyers and the sellers amongst themselves with the Permutaeros as agents; the other is for foreign investors only with particular designated properties and intermediaries.”
Translation: If you have a stomach for international intrigue versus buying cookie cutter bullshit condos in Phoenix and would like a little excitement in your life, then the Cuban housing market just might be for you.
And especially so, if you dig anything written by Ernest Hemingway and prefer tequila shots over piña coladas.
To be clear, because this is not for the faint of heart, Cuba’s way of transacting real estate today is archaic, opaque and fragmented. Yet, given the country’s natural beauty, its proximity to Florida and the thawing political detente, vis-à-vis American Cuban relations, what’s not to like about Cuba?
In practical terms, and even with the unlikely accession of Republican Marco Rubio to the White House, can one really expect relations with Cuba to be nothing short of sunny days going forward? Likely not.
The takeaway: expect Cuba to deliver kick-ass investment returns to property speculators worldwide over the immediate to near term.
Marry a Cuban, buy a home?
According to World Property Journal, there is a back-door way of buying homes in Cuba, albeit it’s rather unorthodox.
According to the World Property Journal, “Another example of how some non-American, non-Cuban investors are skirting Cuban property purchase laws involves the investor marrying a Cuban woman and both beginning to live permanently in Cuba.
“The property could be bought in the woman’s name. She would hold the title for life. And if the two divorce, the property remains in the woman’s name. True love would have to blossom and [endure] in this situation.”
Also according to World Property Journal, there are ways of entering the Cuban market in a less salacious manner, all the while maintaining your Christian values.
So if you happen to be a frustrated, cash-loaded American who desires to enter the Cuban real estate arena, you might be technically hamstrung based on the aforementioned Trading with the Enemy Act, passed during Kennedy’s first year in office.
Here’s the skinny: there’s plenty of opportunity for under-the-table action involving Americans and foreigners.
For example, and according to World Property Journal, an American investor could consider funneling funds to a Cuban resident friend in Cuba to purchase properties and hold the title under the friend’s name.
Under this situational scenario, Raul Castro’s government — sometime in the near future, of course, would allow non-Cuban Americans to legally buy real estate in Cuba with no restrictions attached.
The risk is that such a move by Raul Castro might be many years away, which would leave the property in the Cuban friend’s name for an indeterminate period.
So, if you’re not risk averse and all the latter sounds too much like a Tom Clancy novel, wherein you think you’re headed for an ulcer, then go ahead and live your Norman Rockwell life in your safe little world.
Buy a nice modest rental in a nondescript master planned community — completely ignore the contents of this article — and log into Zillow to see what harmless and unobtrusive tract home deal awaits you.
D. Sidney Potter is a contributing writer for several online periodicals.