Are investment “rules of thumb” different in Panama?
What special considerations does the Panama real estate market necessitate?
I used to think that “what’s good for the gander is good for the goose.” In other words, when I moved to Panama in the early 2000’s from Australia (and after a few
years many years of traveling Latin America,) I figured the general rules dictating property investment were the same no matter where you were.
Now, having spent so many years within the local real estate market, and having advised thousands of clients on the same, I know that Panama has a fair share of rules that foreigners aren’t always privy to.
Here are the most common examples
1. Location, location, location. And then, location.
Imagine you have a house on the beach. It’s a beautiful beach- maybe it could even be featured on a postcard. The house itself is nice enough, featuring all the necessities of a modern day family. Should be a sure-fire investment, right?
Not if the nearest supermarket, health clinic, or police station is over an hour away.
Communities in Panama range widely in their allocation of amenities. Some towns offer many dining and entertainment options, while others contain little more than a chino (convenience store with very basic foods.) There’s a good chance that “dream house” you find listed online lies a formidable distance away from, well, everything.
Needless to say, it will be significantly harder to enjoy or resell your property if this is the case. Take a hard look at the surrounding community before you take any property seriously. It needn’t be on Main Street, but it should at least be an up-and-coming area (or not very far away from one.)
2. Not all communities are created equal.
Let’s say you’ve found what you think is the perfect property, in the perfect location. The next thing you need to ask yourself is: what’s the existing community like?
In Panama, there exist several “expat pockets”- areas that have, for whatever reason, become popular with the expat population. These areas are a lot more likely to win the hearts and down payments of the foreign community.
That’s not to say that foreigners are the only people buying properties in Panama. But they do make up a considerable chunk of the pie. Expats and retirees, particularly those hailing from North America, account for much of Panama’s real estate boom. If you want the largest selection of potential buyers and tenants- you’d be short-sighted to overlook expat preferences.
3. Look for a price with potential.
(Note: If you’re looking to live in your property rather than flip it, you can take this trait with a grain of salt. Low prices are nice, but unless you’re buying with the specific intention of selling I recommend focusing on buying the property that’s right for you by the time you move into it.)
You needn’t be an economist to understand that you want to sell something for more than you bought it for. Ideally, much, much more. Finding a property that’s attractively priced- but still has the other qualities mentioned in this list- is key.
It’s easier said than done, of course, and this is one of the trickiest parts of buying property anywhere. A good rule of thumb is to avoid purchasing something that’s at or close to the price peak of the market. If that condo is already one of the most expensive in the area, you’re going to have a lot more trouble turning a profit.
One popular strategy for outsmarting the price wars is to find something to purchase at a pre-sale special. Be wary, however; you need a trusteddeveloper of the building to buy with confidence. There are many a horror story of people buying pre-construction – and the developer not finishing the project. Check out their other projects and do your homework on the developer’s past- and current popularity.
4. All the amenities of the Jones.’
There once was a time when lavish amenities like swimming pools, play rooms, saunas and fitness centers, were not at the top of everyone’s “must-have” lists. But in Panama, that time is coming to a close.
Panama’s newer buildings come equipped with enough amenities to quality as luxury resort, with some like Casa Bonita in the ultra-luxury category. Buyers in Panama (at least the ones you’re likely to be aiming for) have come to expect these amenities. And why shouldn’t they? If the tower up the street has an indulgent poolside lounge area, theirs should too.
5. Property management team.
This one is too often overlooked by investors. A reliable property management team is priceless, particularly for those who wish to rent out their properties to tenants.
Imagine you have a beachfront condo you rent out to tourists by the week. Without a property management team, you’re the one that’s going to be responsible for meeting the tenants, issuing cards and keys, collecting payment, and being there whenever a light bulb or appliance gives out.
With a property management team on your side, all you have to do is advertise the room, select your tenants, and sit back and wait for the checks to arrive.
6. Built by a reputable developer
The real estate boom of the past decade has spurred an arm’s race of condo towers of every shape and size. Unfortunately, much of the quickness in construction was made possible by cutting corners in quality- something you do NOT want to worry about when living on the 39th floor.
When looking at any property in Panama, be sure to research the developer who built it. Google their name, see what unbiased reviews have to say. Look at their past projects- is that building from 5 years ago already crumbling, or is it standing tall and proud? What’s the public opinion on the developer- is it a name that people are proud to represent?
You can compare the importance of the building developer to the importance of having a car under a good name. Only quadruple.
I’ve helped many investors make a substantial return on their investment in Panama. I recommend you follow in their footsteps: do your research, look ahead, and work with a real estate professional with a proven track record.