New Panama Investment Technique Making Impact


New Panama Investment Technique Making Impact

(9 votes)

Written by Matt Landau

Wednesday, October 24 2007

OK, we're not going to tell you where you can make the most money in Panama City, but we are going to reveal a clever investment strategy being used to make lots of money by today's sharp capital investors.

You'll read lots of articles on this website and others doubting the real estate boom in Panama City. And while The Panama Report doesn't exactly endorse buying pre-construction real estate, we do believe there are good deals out there to be had in the Panama City condo market. By looking at 5 evils of pre-construction, we're able to highlight the lesser-known (yet still extremely lucrative) investment technique of buying, then flipping or renting out resales.

The process of buying resales (previously owned apartments/homes) is a promising practice in Panama because you avoid many of the hitches otherwise associated with pre-construction mayhem. Just from a glance, you'll see a boatload of buildings and units inside, maybe 5-20 years old just begging for a facelift. In buying resales and sprucing them up, you open yourself to a number of options and steer clear of various tribulations:

1. The ambiguity of delivery: Today's pre-construction projects in Panama City are glittery and polished, but will all of them actually come to fruition? There have been a small handful of projects that have failed and a larger handful of ones that appear to be on the same track. By investing in resale apartments, you don't have to deal with the question of whether or not your unit will ever be realized, because it's right there in front of you, ready to move into tomorrow.

2. The ill-defined construction materials: We've seen it time and time again: developers not delivering the quality of materials they first promised. So many times, buyers prepare to move into their new unit only to find poor quality craftsmanship and sub-par materials used in construction. In buying resale real estate, you are able to identify and evaluate the materials because they're in front of you.

3. The wait: A common complaint of today's Panama City pre-construction buyers is the prolonged periods of time they have to wait until their building is finished. Days can turn into months which (in some cases) can turn into years: buying resales avoid this haziness altogether and allow the buyer, as many desire, to move in (or rent out) soon thereafter. Renting these resales is also a great strategy as it provides the investor with a steady source of income to combat mortgage payments.

4. The difficulty of getting a mortgage: Speaking of which. A number of people of late are having a really hard time getting a mortgage on Panama City pre-construction real estate, and I don't blame the banks. It seems like they too have realized this irrational boom and started to cover their bases in tightening options. They don't however have many issues in providing mortgages for condos or homes that already exist. This is because they can use the existing piece of said real estate essentially as collateral (should you not be able to keep up with payments).

5. The high costs: It's no secret: prices for pre-construction in Panama City are through the roof. And they're increasing at terrifying rates. So we're suggesting you look at resales, where you can get "more bang for your buck." The price/m2 sticker of most resales in Panama City will surprise you and renovation costs are far lower than in the States. Investing in units dating back 5-20 years will save you a bundle and with a little touching up, you'll have a unique product to live in or flip for a profit.

So if you love Panama City for what it is-meaning the restaurants, the bars, people, infrastructure, beauty...etc-and you don't want to get slugged in a pre-construction sting, try the resale or previously-owned option. We've seen it work many times, especially with people who are able to purchase currently-occupied units and simply continue to rent them to residents. It's a tactic many glitzy-eyed investors overlook but one that certainly deserves some keen attention. Cruising the internet just for a few minutes, we came across a number of great deals: resales larger 150m2 in good neighborhoods, for under $200,000.

Comments (2)

Ari: great piece

Very informative and gives investors like me some new things to think about.

November 05, 2007

derek marlowe: ...

4. The difficulty of getting a mortgage: Speaking of which. A number of people of late are having a really hard time getting a mortgage on Panama City pre-construction real estate, and I don't blame the banks.

Why would anyone need a mortgage on a pre-sale? The mortgage is put in place upon delivery of the unit, not upon going to contract.

December 21, 2007

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