Insider Secrets to Investing in Real Estate in Nicaragua
Insider Secrets to Investing in Real Estate in Nicaragua
The word is out: “Nicaragua is the new Costa Rica” but with prices 45-55% lower than its southern neighbor. Nicaragua is well and truly bouncing back from its troubled and often misunderstood past and beginning to transform into a sought-after investment and tourism destination. Misconceptions still persist, but in many ways that only increases the opportunity that Nicaragua offers.
Nicaragua’s democratically elected government is showing a great capacity to reform in line with its commitment to a free-market economy. The country is booming and tourism is now the number-one industry, increasing by over 19% in 2005 even considering a record-breaking year in 2004. There is a real buzz in the air for this land of opportunity. Whether you are looking for a retirement or vacation destination, a place to start a business or a place to invest for the future, Nicaragua is definitely worth considering.
How much is good real estate information worth?
Market knowledge based on fact and base trends, rather than exaggeration and hype (in both directions) can make the difference between a good investment and a great one. The aim of this article is to capture the essence of the successful real estate investor in Nicaragua. We have consolidated the experience of hundreds of investors and identified seven success strategies for successful real estate investing in Nicaragua.
We hope that this encourages more investors into taking the first step in exploring real estate opportunities outside their home countries with confidence. Although imbued with a Nicaraguan flavor for the purposes of this article, many of the principles and steps highlighted in this article will also hold true in other investment destinations and contexts.
Seven success strategies for real estate investing in Nicaragua
1. Understand the link between tourism and real estate
Tourism brought in almost $200 million in 2005, according to the Nicaraguan government, more than any other single industry in its $5 billion economy. Current projections indicate that by 2007 there will be more than one million visitors to the country. The profile of visitors has shown a marked shift from budget tourists to more affluent and sophisticated travellers and higher-end hotels in tourist areas show consistently high occupancy.
There is strong relationship between leisure and vocational markets and the market for second homes and retirement homes. The areas attracting the most tourism are also generating the greatest levels of real estate activity. For certain real estate products, the link between tourism and real estate is particularly direct and immediate. Pelican Eyes…Piedras y Olas the highest quality hotel in San Juan del Sur, boasting occupancy levels well above industry standards since it opened, offers the possibility for investors to purchase a villa or duplex unit and participate in the revenues generated by the hotel.
2. Know where you are in a property cycle
Nicaragua has seen considerable price rises in the past few years. We have calculated percentage price changes for serviced lots between 2002 and 2005 for seven well known real estate developments on the Pacific that have been active over this period (most developments are more recent) and are still selling property. Over this period prices have risen by an average of 87%. Unimproved colonial homes in Granada have been rising by around 25% per year for the past three years. These price rises indicate that Nicaragua is now on the map as an investment destination, the positive price trend has started, but we are only just seeing the beginnings of a “second wave” of investors: the pre-retirement and retirement market.
Speculators still make up a considerable proportion of investors but an increasing number of pre-retirement / retirement and second home buyers are emerging. Much has been made of the ‘baby boomer’ generation when analyzing future buying trends in many markets worldwide. Baby boomers began turning 50 in 1996 and 78 million of them began to enter their period of highest earnings and greatest discretionary dollars. It is said that over the next 20 years the baby boomer generation will likely constitute the largest potential market ever for real estate products, especially second homes and timeshare/fractional ownership offerings.
The real estate product on offer has also evolved from simple lot sales (sold mainly to speculative buyers) to turnkey products with sophisticated facilities and services for longer term investors and the retirement market. A consistent growth in condominium constructions and sales has been evident for 18 months and is accelerating.
3. Follow trends not events
The bulk of foreign investment into the real estate and tourism sectors in Nicaragua is focused on the south-western part of the country. To take the Pacific coast as an example, in conjunction with Calvet & Associates, we have catalogued over 70 developments on the Pacific marketing to foreign buyers between El Transito and the Costa Rican border. The south-west of the country also includes the colonial town of Granada, Lake Nicaragua and the beautiful Laguna de Apoyo crater lake.
A number of investors are seeking out areas where there is less activity, for example beachfront areas further north. The prices may be lower in the northern part of the coastline – but for a reason – and it is important for investors to take this into account before they make an property purchase. The south western coastline has more dramatic geography, whiter sand beaches, richer biodiversity, better surfing, safer swimming areas and cooling lake and ocean breezes and, yes, also more recently investor momentum. This is not to say that there will be no price appreciation and development on beach areas further to the north but that a significant price differential will likely remain into the future.
4. Build a good network
Investors commonly complain of an overload of market information and building a good network will allow you to triangulate and contextualize information that you receive. Not surprisingly, given the excitement about the real estate market, there is a great deal of story telling and exaggeration that goes on. Do your due diligence, work with realtors who know the market, learn from professionals and be skeptical about claims that you can flip your property for 100% more “when the International Living investors come into town in a few weeks.”
A solid piece of advice is to buy only what you see. Make up your mind on what you think the inherent value is of the property that you are looking at is. Don’t factor in the “new coastal road” the “new airport” the “new Marriott” into the price. Certainly not if you are investing for the short term. Coldwell Banker Nicaragua has a network of lawyers, project managers, master planners and investment analysts who have a long track record of advising investors on real estate acquisition and development in Central America – these are independent third parties who can provide un-emotive grounded advice.
5. Due diligence everything
More specifically, retain competent legal representation and take out title insurance. Nicaragua has a particularly complex title history and some buyers who have not looked deeply enough into the title history of purchased property are now mired in difficult legal problems. A number of real estate developers try and persuade buyers to use their own legal team for property purchasing. Our advice is to employ independent legal advise at least to review (if not draw up) the purchase contract you are signing and check the title history on the property.
Coldwell Banker Nicaragua recommends investors to take out a title insurance policy. Other realtors do not recommend title insurance as the due diligence that ensues can slow down the purchase process and raise difficult questions. Seeking title insurance will force your lawyer to delve many years back into the property history of the property you are purchasing and follow a set of criteria in their reporting. If you are buying raw land parcels outside of a development your due diligence list needs to be longer and will cover infrastructure issues, environmental issues and development permits.
6. Invest with a confidence, develop with a conscience
This is the strap-line of the Nica Dev campaign run by Donn Wilson a developer, entrepreneur and surfer who has made San Juan del Sur his home. Nica Dev recognizes that real estate investors are entering into another country and have an obligation to respect the land, the people and the environment. When you arrive in Nicaragua the impression that you get is of a warmhearted nation that is welcoming to international visitors. In order for this warm feeling to endure into the future, local Nicaraguan also need to benefit from the real estate and tourism activity that is going on in the country.
Las Fincas, a development aligned with the Nica Dev campaign, is designed with sustainable development principles built in. For example a basic solar power setup is provided for everyone who buys and the project runs a series of active community outreach projects introducing highly effective, yet low-cost and low-tech, solutions for cooking and purifying drinking water. Skills and suppliers for low impact construction with elements such as rain water capture, composting and recycling, hard to find 18 months ago, are now readily available in-country. Coldwell Banker Nicaragua is launching its own campaign to generate funds for the Nica Dev fund as well as other projects that our clients are involved in here in Nicaragua. We will be giving our clients the opportunity to contribute to selected projects at the time of closing.
7. Become and expert in investing in real estate in Nicaragua…before you invest
Coldwell Banker Nicaragua Real Estate has launched a series of concise buyer briefings to help investors interested in the real estate market in Nicaragua in their decision making. The briefings highlight real estate hotspots, analyze market trends and set out good value investment opportunities.
Claudia Gonella is a Director of Coldwell Banker Nicaragua Real Estate, Nicaragua’s premier Real Estate Company and consultant to investors on the real estate market. She has published numerous articles on the Nicaragua real estate market and prepared bespoke market analysis reports for investors. Coldwell Banker Nicaragua is shortly to launch a Central American REIT. Visit us at http://www.cbnicaragua.com for our free investor briefing, property listings and investment opportunities or email info@cbnicaragua.com
Resort Condominiums International
Resort Condominiums International
Arriving at one’s destination to find it not available is probably one of every traveler’s fears. This fear can obviously be eliminated or at least made highly probably with careful and disciplined planning and preparation…so one would think. Traveling in South Africa is, as has been said before, one of the worlds best kept travel secrets. South Africa offers visitors great accommodation options to suit all tastes and also some extremely efficient and well known travel agents and accommodation portals.
The writer would however like to share a frightening experience, after booking with RCI, Resorts Condominiums International, part of the Wyndham Worldwide group I was informed, after having already left home on vacation, that the accommodation in Stellenbosch, South Africa was not available to us. The reason we were told was that the owner had withdrawn their accommodation units from RCI, having given notice some months previously to the RCI agent in Cape Town. The RCI agent had neglected to process the withdrawal on the RCI system and the booking agents had unknowingly allowed our booking to be conformed.
What made this incompetence worse was that we had in fact phoned the owner of the unit, two days prior to departure from home and she had confirmed via e-mail that the booking was in order and they were “looking forward to our arrival”. If one generously accepts that mistakes can happen, one would also believe that a large well know holiday organisation would take every step to make an alternative arrangement by organizing alternative accommodation for us, irrespective of any cost or inconvenience, merely as a token to show their customer commitment.
RCI managed to find accommodation for us in a different town. Now for personal reasons this was not acceptable to us, was rejected and RCI were requested to seek accommodation in Stellenbosch as a replacement, they refused and hid behind a reference to “terms and condition”, refunded the booking costs and walked away form the situation. In my mind, contracts do not protect an organization from incompetence, RCI were incompetent in every sense of the word and compounded this by not “biting the bullet” and assisting us with replacement accommodation.
The matter continues and will do so until my family and I are comfortable that we have either received due consideration for our traumatic experience, the spoiling of a holiday look forward to with much excitement or alternatively, that we ensure other RCI members and potential members are fully aware of the risks and lack if service commitment that seems glaringly evident.
The tourism potential in South Africa is an asset to us all, largely untapped but it has the potential to create jobs and bring much needed foreign investment to South Africa…we simply do not need stories like this eroding this potential and Companies like RCI need to be taken to task.
Alan Hawkins – CEO
Staysa.co.za
Alan Hawkins is the CEO of StaySA. StaySA is a leading South African Accommodation portal. Visit StaySA next time you are looking for a kind of Accommodation in South African
Questions to Ask Before Signing the Lease on That Rental House
Questions to Ask Before Signing the Lease on That Rental House
You’ve been looking around for a certain house in a certain area. Location, square footage, number of bedrooms, number of bathrooms, and the type of yard all meet your specific needs. Finally, you believe you’ve found the perfect match. There are a few things to check out before making the big commitment of signing on the dotted line.
1) What is the length of the lease? Is this a place you plan to live in for a long time or just as temporary living quarters? Different options usually include a month-to-month arrangement, a six month lease agreement or a one year lease. Quite often the shorter amounts of time are offered at a higher monthly rate, but it might be worth the extra money for more flexibility if there is a possibility of needing to move again soon.
2) What amount of security deposit is required and what are the stipulations for getting it back? This deposit usually covers breakage or damages that are not considered normal wear and tear. Be sure to carefully inspect the property and record any existing flaws, such as dented cabinets, a stain on the carpet, a broken curtain rod, etc. Any damage that is found should be documented in writing so that you won’t be charged for it when you move out.
3) Do you have pets? You will need to find out if they are allowed and if so, what types. Some rental houses allow dogs, for example, but they must be under a certain weight. There is often a separate security deposit that will be required that is often termed a pet deposit.
4) Is there a clause in the agreement to release you from the timeframe agreed upon in case of an emergency, such as unexpected job relocation? It is helpful to know this in advance so that you can plan appropriately. Some landlords will let you sublet the space. Some will make you pay for the entire length of the lease, whether you move or not. Some will allow you to pay a “break the lease” penalty fee. Check the language in your agreement carefully.
5) Make sure the monthly rental amount and the date that it is due is spelled out in black and white in your contract. There should also be language which reflects whether there is any grace period for late payments and what the cost of late charges will be, should they ever occur.
6) If you are dealing with an individual landlord owner rather than a property management company, you may want to check the county records to assure that this is indeed the property owner whom you are turning large sums of money over to. There have been cases where prospective tenants have been victimized by giving cash to a person who didn’t have the right to be leasing out the property at all.
When all of your questions have been answered satisfactorily, then go ahead and sign on the dotted line and start packing!
In Baton Rouge, real estate agency helps you to familiarize yourself with the buying or selling process and get organized while buying any property. To know more, visit http://www.realestatelouisiana.com
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Can You Still Make Money Investing in Real Estate with Fixers?
Can You Still Make Money Investing in Real Estate with Fixers?
Real estate investors have made money by buying fixers, fixing them up, and then selling them for years. It’s not a new real estate investing method. But what if you live in an area where homes sit on the market and sell at less than full price? Can you still make money investing in real estate by fixing houses under such market conditions? The simple answer is yes, if you do your research, find the right seller, and follow proven strategies.
Real Estate Market
It’s been a sellers’ market in America for a number of years, with more buyers than houses, which meant that sellers weren’t as motivated as they were back in the 80s, when interest rates were sky high, inflation was running rampant, and mortgage lenders were more cautious. Today’s market is shifting towards a buyer’s market and real estate investors find home sellers more willing to bargain, because like in every age, people get into trouble for various reasons.
You must know what houses sell for, under what terms the property sells, the conditions of houses sold, and how long the average home sits on the market. Once you know your market, you will know how much to offer a motivated seller.
Find the Right Home Seller
You might think you’re looking for a bargain house, but what you’re really looking for is a motivated seller. Look for sellers that have found themselves in financial distress, for whatever reason, and who need to sell quickly. Sellers with difficult situations have motivation, and will be willing to work with you to overcome the difficulties they face. Those are the houses that will make you money, regardless of the overall market in that area.
If you look at houses on MLS, tell your agent to request that the seller be present. This way, you have the opportunity to talk to the home seller and see what problems prompted the home sale. You can also run ads that say “We Buy Houses.”
Fix the House Right
To give yourself the edge when you go to sell your home, don’t just paint everything white and have boring beige carpeting installed. Today’s home buyers look for a home that makes them feel “at home.” Learn how to profile your home buyer and make decorating choices to target that buyer. You don’t need to spend extra money fixing up the house; just make wise design choices.
Sell Your House
Since most home buyers look for houses with real estate agents, don’t waste your valuable time trying to sell on your own unless you have sold many houses and know exactly how to manage all the disclosures and paperwork. Find an agent who is willing to show the house, not just place a lock box and forget it. Every time the house is shown, it needs to be staged with lights on.
You can still make money investing in real estate in today’s market. Do your homework, learn as much as you can and follow proven strategies.
Copyright © 2006 Jeanette J. Fisher
Jeanette Fisher teaches interior design secrets for fixing houses. For more Real Estate Investing Information for beginners, visit DoghousetoDollhouse.com — the Internet’s largest library of real estate investing tips and articles for beginners. Free ebook and teleseminars: http://doghousetodollhouse.com/real_estate.htm
Contemporary Real Estate Marketing Tips For Agents
Contemporary Real Estate Marketing Tips For Agents
With technology today quickly advancing, many markets, many people’s lives are getting affected. Change in societies is rapidly occurring. These changes are visible to the naked eye as well. These changes actually affect even the real estate industry. Because of the advancing technology and the rapidly changing society, real estate marketing experts are left with nothing to do but to adapt to these changes.
Because we are at a world where technology gets more and more advanced, societies are being reshaped, we should follow through. Real estate marketing is becoming more and more different than it was before. We have started to make use of the internet to put up our own real estate marketing sites. We have also started using blogs to market the properties we have. In line with this, here are some tips to follow set in the contemporary world setting to help you, fellow marketers, to succeed in the rapidly developing business.
The first tip is of course, to create your own real estate marketing blog. Blogs are becoming a hit to potential clients these days. Those who would rather check on the properties available from the comforts of their home in from of their computers could highly benefit from them. They don’t really have to scour the area for available properties they could buy. These blogs aren’t only to advertise homes up for sale. They also have helpful articles to aid anyone who’s looking to buy properties.
The second tip is to be more and more present, visible online. Couple the blog with your own website. A website is always extensive. It would have information on you as a real estate marketing expert. It would contain information, too, on your business. Your contact details would also be visible to many potential clients on the site.
Because more and more people are getting into the online world for virtually anything, including online shopping, blogging and managing real estate marketing websites is the way to go. At least then, on the internet, you can find potential clients. All they have to do is browse your site and comment on your blog posts.
Second, improve the way you market directly. Direct marketing homes have been experiencing changes as well. These days, it’s very important to be different from other real estate marketing business because, let’s face it it’s a competitive market. Try to change your direct marketing tactics. In your post cards, you could be more personal on them. Include your philosophies where real estate marketing is concerned. More people would like it if you didn’t follow the herd that use worn-out phrases.
Add public relations to your business. A little PR could really help your marketing business. An article on you and your business on local papers would help boost your credibility. The free seminars you give on anything about home buying would also get you recognized. These are little things in real estate marketing that makes use of public relations but they’re a great way to get yourself and your business recognized. There are different ways to use PR in the real estate marketing business. You just have to be creative.
Lastly, be more talkative. Talkability is a word you don’t find in the dictionary. But when you go to the business section, it’s a word that’s been used frequently. It’s fairly simple, if you want people to get interested enough to buy the properties you sell, talk to them, persuade them to buy the homes you sell.
These are some tips in line with the changing society we have today. Hopefully these have been helpful to real estate marketers who have been in the industry for years and who are new to the business.
Adnan Naeem
