Category Archives: Real Estate

Why Do People Choose Panama to Live And Invest?

Posted by on July 26, 2010 Comments Off

Panama is located at the south of the Central American isthmus tucked under Costa Rica.  Approximately 25,000 US expats call Panama their home.  That’s a little less than Costa Rica but for decades Panama has flown beneath the radar of US investors and retirees and was only known for its canal.  That’s changed significantly since 2002 when the boom in Panama real estate began to take hold.

The market cooled considerably during the recent financial crisis, especially for Panama apartments in the capital city, given the over-supply and retreat of the speculator buying (mainly) off-plan for quick flip profits.  But as we enter the second half of 2010, market signals that indicate that Panama is emerging from the downturn faster that its regional neighbors and is probably the most popular destination in Central America right now for international real estate investors.  According to the Latin Business Chronicle Panama is the number one ‘growth champion’ in the region when looking at 2010–2015 GDP growth forecasts.

Every where you look infrastructure upgrades are taking place.  The international airport at Tocuman is being expanded and soon the David airport in the west of the country will be equipped to receive international flights.  The roads connecting the Pacific coast and Caribbean coasts between Panama City and Colon and also between David and Bocas del Toro have been improved considerably.   Panama City’s $189-million Cinta Costera project involving a new city park running oceanside along Balboa avenue has recently been completed and the Panama City bay is undergoing a significant clean up operation.  Those are just a few examples, and we haven’t even mentioned the massive Panama Canal expansion project.

Panama City is the most modern and cosmopolitan city in Central America and the regions most important financial hub with the one of the world’s largest banking sectors.  But the capital also manages to retain some old world charm, especially in the Casa Viejo colonial area.

Real estate in Panama, although not as low in prices as (say) Nicaragua is still well below Costa Rican prices for most categories and comes below Belize for some property types.  Check out the Peninsula de Azuero for ground floor real estate opportunities for example.

Affordable real estate when combined with a low cost of living, a retirement program packed with benefits, a dollarized economy and cheap good quality health ends up pressing all the right buttons for investors and retirees alike.  It also doesn’t hurt that Panama’s current President, Ricardo Martinelli, is also winning praise in many business and investment circles.

Investment Property Headaches

Posted by on July 7, 2010 Comments Off

The potential income from real estate investments can be very enticing.  It’s a simple concept.  Buy a house, get a mortgage, find a tenant and let the rent pay into the equity for the house.  That might sound simple enough, but often times it’s not.  And the reason it gets so complicated is the same reason anything in life gets complicated, it’s the people.

The most challenging component to investing in real estate is not getting the loan, finding the house or doing renovations.  It’s finding good tenants and managing the property.  It can be a real headache for investors.  That is why they quite often find qualified and experienced property managers to run their investment properties.  Doing it yourself can become a nightmare.

That is the thing that most investors underestimate is the managing the tenants.  If something breaks on the house itself, it’s often the landlords responsibility to fix it.  But that usually isn’t the biggest headache.

The biggest headache is tenants who consistently don’t pay their rent on time and tenants who wreck the property.  In many cases, it’s both.

I’ve had friends who have had nightmare tenants.  Not only did they constantly not pay their rent, they also wrecked the house and it was difficult for him to get them evicted.  The eviction process in many states is a complicated and difficult process.  It takes paperwork and the right documentation to be able to legally evict a tenant.

That’s not the worst part sometimes.  Sometimes the tenants leave all of their stuff behind when they leave.  That means you are left with all their junk and you have to clean up their mess.

And sometimes, you don’t know what your tenants have been doing and that can be catastrophic.  Sometimes they are drug addicts.  That means you will find all kinds of surprises when you go in to clean things up.

With all the headaches involved in investment real estate, investors might be better off investing in stocks, bonds or growth funds as an alternative.  You might still have some headaches, but it doesn’t compare to the nightmare stories that I’ve heard about investing in real estate.

Safe ways to use leverage to build equity on your home

Posted by on June 3, 2010 Comments Off

I’m sure you’ve heard of this thing, it takes moneymaking. But what if you don’t have one? Well you have to start somewhere. Unfortunately we are not all born with silver spoons.

On the best ways to build leverage, is by buying a multiple family home. With a multiple family home, you can quickly build equity. If this is your first home, you can take advantage of the fact that you can even get a residential loan, meaning that your loan down payment will be much lower than the typical 20% down payment commercial property.

Because of the recent housing bubble burst, and multiple foreclosures this is one of the greatest times to buy a new home. If you buy smart, you can amass large amount of equity in a very short on time. By purchasing a multiple unit home, you can take advantage of economies of scale. You can save money by doing things such as splitting the cost of Internet, cable TV and other amenities. We’ll also have the benefits of having other residents pay money toward your mortgage and property taxes.

If you’re really aggressive, you can go about even having roommates in your place. If you purchase a three unit family home, you can live in one unit and rent out the other two. If you choose to rent the bedroom so I replaced as well you can really push up your leverage.  Plan ahead and now you can have multiple income streams.   Once you are the owner of the new property, you will now have the benefit of 3 to 4 people paying down your mortgage in addition to your own income.

This is about as close as it comes to living for free by building home equity.  Keep in mind however that you will have to do certain things once you become a homeowner. You will now be responsible for things such as maintenance and repairs which need to be factored in when you determine your monthly budget.