The US population shift to the Sun Belt: Invest HERE, not there

Dateline: Bucharest, Romania

I had two rather dichotomous conversations over the weekend that ended up at a rather similar conclusion.

One of my calls was to a childhood friend from where I grew up in Ohio. After years of toiling through horrible Cleveland winters, corrupt government, and high taxes, he’s packing up and moving to Florida.

Studies show he’s not alone. Florida is the fastest-growing state in The Land of the Free, with its smaller metropolitan areas dominating six of the top 20 spots in the whole country.

While plenty of young people have discovered that bad weather and poor job prospects can be alleviated by leaving the Rust Belt for the Sun Belt, we all know that retirees have, as well. I guess seeing shuttered steel factories and unionized assembly lines don’t appeal to them.

A Floridian community called The Villages is the fastest growing “metro area” in the United States, having doubled in size in just a few short years as people leave the competitively disadvantaged US northeast for income-tax-free Florida.

Think about it: the wealthiest generation in US history is moving south to escape the harsh winters where they built their wealth. It only makes sense that jobs and wealth will follow suit and the mass exodus from high-tax states continues.

While I’d much rather see these people choosing Panama City, Panama over Panama City, Florida for the cheap cost of living and better tax treatment, the US has a long-standing trend of wealth shifting to the south.

US persons know this. What is interesting is another conversation I had the exact same day, this one with a Ukrainian girl who is helping her company invest here in Romania.

It’s no secret that the conflict with Russia has many Ukrainians concerned about what will happen to the country. The western world is already bracing for a militarized Russia invading territories from Ukraine to Latvia, propaganda I don’t necessarily agree with.

While some eastern Ukrainians in areas like Donetsk are more comfortable with Russian culture and align themselves with Mother Russia, many younger Ukrainians prefer to align themselves with the west and Europe.

Ukraine is one of those countries that has what I call “entrepreneurs of necessity”. As my new friend and I discussed, the job market in Ukraine is rather weak. For everyone talking about hiring cheap office staff in the Philippines, hiring in Ukraine is even cheaper.

Many people earn $100-200 per month, and Ukraine is full of university graduates with skills in programming, sciences, and engineering.

As a result, many people have become freelancers and started their own business selling services to the western world.

But that’s not the point. The point is that the western-facing younger generation is scared about what will happen in the eastern part of the country. And they want out.

Quite a number of them are moving to Lviv, Ukraine’s westernmost major city just fifty miles from the Polish and European Union borders.

As getting visas to Europe or the Americas is difficult with a Ukrainian passport due to fears of corruption there, more and more successful entrepreneurs are moving to Lviv to live a more western life.

Likewise, more companies that hire well-paid employees in the tech field are moving operations to Lviv to take advantage of a young, fresh talent pool.

For these people, Lviv is their safe haven.

Just as US persons are escaping ridiculous income and property taxes in places like New Jersey, New York, and even my native Ohio, people in emerging countries are following my extremely simple five-word formula as well: “go where you’re treated best”.

In countries like China and even here in Romania, the most educated and talented young people move to the capital city in search of the best jobs and lifestyle opportunities.

In a few cases, this trend has been so prevalent as to almost be detrimental to real estate investors. Recent graduates in Beijing are so prevalent (hence the Chinese penchant for seemingly endless education) and wages so low that rental prices can’t really go any higher.

Here in Europe, however, people are seeking out their own safe havens. While most of the kids in my high school class still live near where we grew up, kids in emerging economies are far more often looking for their safe haven as a way to get ahead.

While the best new safe havens are located abroad, outside of the reach of your local government and their economic problems, there are millions of people all around the world seeking the most accessible safe haven for them.

Not every Romanian can get a job elsewhere in Europe, just as Finland can only hire so many reasonably-priced Estonians from across the Gulf.

One thing you can be sure of it that this migration effects investment potential. One of our Nomad Society Members told me about a fabulous success he had buying and selling property in Tallinn, Estonia.

In fact, from 2011 to 2014, property values there rose by nearly 60% as the countries’ entrance to the eurozone helped more people find their own safe haven for career and lifestyle.

Your safe haven may be finding a place to store your money overseas safe from the latest wealth tax. That’s what we talk about here.

When it comes to deploying your capital, it’s important to put yourself in other peoples’ shoes. What are the hopes, dreams, and goals of the people that are the basis of your investment?

I’m not suggesting you buy property in Ukraine. Even with well-furnished brand new construction selling for as little as $700-800 per square meter, the country does have corruption issues.

Capital cities are often a safe bet because, although they can be expensive, the governments located there aren’t planning on going out of business any time soon. This is far less true in Central America where the capital cities are dumps but holds true in much of Europe and Asia.

Living outside of the Americas allows me to pay more attention to trends not involving Americans and Canadians. It’s my belief that far too many people are pumping Chile or Costa Rica merely because 6% of the world’s population likes it there.

There are certainly good reasons to live or invest in the Americas, but when you consider the wealth shift in countries like Ukraine and the reasons behind it, you’ll realize there is far more money to be made there than in the lateral moves of US persons moving to Texas or Florida.