| The 10 Commandments for Buying Real Estate |
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| panamarealestate | |
| Written by Matt Landau | |
| Sunday, April 08 2007 | |
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Buying into the hype that is the Panama real estate market can be an easy thing to do. You see it on TV, you read it in the magazines, you feel it in the city. What can also be easy is making costly mistakes, some of which you may not realize until after you've paid and signed the papers. Here, we've outlined ten rules to help you avoid making the typical slip-ups, blunders, and erroneous decisions associated with Panama investment. These are not by any means all of the rules, just ten small ones which may help you avoid disaster in buying real estate in Panama.
1. Thou Shal Use No Unqualified Broker: Make sure the realtor you are dealing with has a license. In some cases, if they're a foreigner—important because it can be difficult for foreigners to get a license—make sure the agency they work for has a license. The last thing you want is to find the perfect piece of land or apartment just to find out that your “agent” and the deal you're about to do, isn't legit. On the other hand, just because your broker has a license doesn't mean they're qualified. It simply means they took the seminar and passed the test. So the real rule here is make sure you're dealing with a reputable real estate agency and not one that screws over buyers and sellers. 2. Thou Shal Compare and Contrast Properties: Because there is no Multiple Listing Service in Panama, you must compare and contrast your potential investments with one another. Comparing location, price, and attributes can be invaluable and are signs of an educated investor. The last thing you want to do is show up to a new development with a hoard of other Hawaiian shirt-wearing gringos in a bus and buy something. Don't let realtors or chatty friends convince you of otherwise: you must take a careful look at at least four options before you jump right in buying real estate in Panama. 3. Thou Shal Evaluate Pre-Construction Condos: Look very closely at the benefits of buying pre-construction versus buying an apartment or house that's already built. With the hype and mania surrounding Panama's real estate boom, its inevitable—and in fact already proven—that scams and disasters will hover over new buildings like ominous storm clouds. As in any gold rush, there will be a lot of greed and a lot of short cuts made by developers, so be weary and well-researched when it comes to snatching up that penthouse on Avenida Balboa or that 3-bd condo in Gorgona. Not unlike a donut shop, walking in and buying what everyone tells you to can be great—but sometimes, the really excellent options are outside the craze. If you don't like donuts, consider a croissant. 4. Remember to Visit Panama Several Times: It can be very easy to read all the articles in the in-flight magazines and overhear your neighbor bragging about the astounding real estate opportunities in Panama, thus landing on the isthmus and buying something in the first week. Do not let realtors or friends convince you here: the smart investor must see everything for him or herself before they buy. You must keep yourself from pulling that proverbial trigger until you've really seen a lot. Make sure you visit Panama a couple of times. Make sure you visit your location of interest different times of the day, different times of the year, and different seasons as well. If you happen to catch an apartment in El Cangrejo on a cool and quiet Sunday morning, you may be surprised the next day when unbearable heat, terrible traffic, and an ugly poop stench materialize. 5. Honor Thy Title Insurance: No matter what professionals here will tell you, title insurance is available and it is recommended. Up until recently, there did not exist title insurance companies in Panama, but today there are several reputable agencies. If you're investing a large sum of money, you want to meet with a specialist and discuss your options. Rates are higher than in the states, but that's because it's such a new industry here—and with time and competition, you'll see lower rates in the near future. 6. Thou Shal Be Careful With ROP Property: Panamanians may say, “oh, you can buy right of possession (ROP), it's no problem” and that may be the case if you're Panamanian or well-versed in Latin American real estate. If you're like most people though, this is your first jaunt into the region and your first investment as well. Land that is ROP can be titled but it takes a lot of time, contacts, and effort. Make sure you are extremely well-read on the subject of title versus right of possession because if you're not, you will get burned. Titled properties can be proven with official government papers showing the registered finca or lot number and the owner. 7. Thou Shal Research Location More Than Anything: The old adage stays true. You must, very early on in your search, identify what region you are interested in. Obviously, some areas are going to be much more expensive than others, and you should take it upon yourself to check them all out. Don't let your real estate agent tell you where to buy—chances are, they'll be pushing you into the investment where they get the biggest or fastest commission check. I find it most useful to take a road trip throughout the country to really find the area that best suits your needs. The great part about Panama real estate is that there are still many many untapped resources—meaning locations that have not been struck by the real estate bullet yet—so doing your research and finding the spot that's right for you is essential. Or, if you want, you can read the first magazine you pick up in the airport and buy wherever they say. It's up to you. 8. Thou Shal Not Rely On Stats or Paper: There are a lot of real estate investment opportunities in Panama that look great on paper. Proximity to city, gorgeous geographics, all qualities sort of similar to these giant Chinese guys coming into the NBA. Immense potential but are they really feasible? It is extremely important, to analyze all of the components of your investment, taking into account history of area, people, topographics, safety, accessibility, and so on. Often times the really successful investors, similar to very good butchers, are the ones who go against the grain so if you find a hotspot that seemingly hasn't yet been realized, do your research and you may have the investment of a lifetime. You may be the pioneer of the region. Otherwise, you may be left with another burn-out 7 foot giant who can't shoot a free throw to save his first-born. 9. Thou Shal Not Trust Flashy Bank Offers? All the banks in Panama claim to be offering tremendous mortgage options to foreigners. Most offer up to about 70% on land or apartment deals. Before you start doing that silly little dance you do when you get excited, go in and talk to a mortgage broker. Chances are, and I'm not trying to be pessimistic or negative here, you may not qualify for that full 70%. Chances are, your credit report or some snag may hold you back, the bank then only offering a measly percentage. All in all, make sure you can actually get the mortgage before you do your happy dance or else you'll be stuck with a thrilling opportunity for buying real estate in Panama and no one to finance it. 10. Thou Shal Build Important Contacts: Panama is a very cool country. It's also very corrupt. This means that in the process of buying or building, you will inevitably run into snags, hitches and holdups that can sometimes be remedied by a good wad of cash. In obtaining permits, licenses, and various permissions, you will need to find yourself someone who knows their way around this country: someone who's familiar with both locals and foreigners in Panama. The same exciting feeling that you get from bribing a cop with a $5 bill can be enjoyed on the grand scale when suddenly, your property gets a permit that none of your neighbors could obtain, simply because of some palm greasing. Point being, get yourself in the know. Start keeping an eye out for powerful people or at least buying beers for anyone with pull in Panama because who knows when you'll need them to help you out. |
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| Last Updated ( Saturday, May 12 2007 ) | |
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