As growing numbers of property investors seek out real estate in Central America, we thought it would be a good idea to gather together guidance on investing safely. The past decade has seen most interest in property in Costa Rica, but Nicaragua, Panama and Belize are following close behind.
1. Buy only what you can see and touch
Don’t purchase property in Central America based on what might exist in the future. It’s risky to base your capital appreciation goals on “ifs” such as if a bridge is widened, a new road built or if a big hotel were to come to the area. Although this form of investing in the “path of progress” is tempting, make sure you know what you are getting into and the risks involved – especially in this post-crisis era. The smart money is now trending towards completed property with ready infrastructure and away from pre-construction and speculative plays.
2. Don’t buy sight unseen
You never want to buy real estate sight unseen. It’s vital that you personally check the property options that interest you. It’s a good idea to visit during the off season, which in Central America means the rainy season running from June through November. That way you’ll be able to determine if the location still appeals to you in all seasons and if needed services are available throughout the year. If you want to be extra safe, check again during the peak tourist season which is December to February for tourists from North Americans.
3. Research the market using different viewpoint and sources
Your property research needs to go well beyond what is available through a sales pitch, a real estate brochure or a hot tip from a friend who just got back from a visit. You need perspective and information on many levels, from different sources. Some of the research can be done on the Internet by seeking out independent news sites, online property listing websites and specialist overseas property sites for Central America such as Revreal Real Estate.
4. Begin with your investment goals in mind
There is plenty of real estate on the market in Central America. It makes sense to clarify your investment goals upfront and concentrate on the type of investing that meet these criteria. Are you interested in property investment, speculation or a lifestyle buy? Do you have the patience and nerve to wait for future development? Or do you need current access to utilities, services and want to be part of a community.
5. Take out title insurance
Title insurance is particularly important when you are buying investment property in Central America. Title insurance reassures you that your title has been researched and there are no ownership problems that could hinder your ability to develop or resell the property. Your legal counsel will be required to thoroughly investigate the ownership history of the potential purchase in order to comply with the insurance company’s criteria for issuing their insurance policies.
Above all, take your time. Don’t rush into a purchasing decision. The lure of affordable property in beautiful locations can carry people away on an emotional rollercoaster. Stop. Take a breath. And make sure you are using your head as well as your heart.