Cashing In On a Second Home in Central America: How to Buy, Rent and Profit in the World's Bargain Zone. Tom Hammond Kelly
Central America real estate issues, including The New York Times, the International Herald Tribune, and Business Week. He has invested in real estate in Central America (Panama) and resides in Chicago with his wife, Paulina, and two daughters, Julia and Megan.
Acknowledgements
This book is dedicated to my six siblings — Mike, Bill, Pat, Kate, Maureen and John — for decades of insights, laughs and genuine support. I could not have asked for better young-life housemates and true friends. All of them have made the world a better place.
My genuine thanks to all the Realtors, developers, mortgage lenders and many individuals from tax and accounting, printing, editing and distributing who have aided me for years in my newspaper writing and radio work, and who also provided creative insights and useful information for this book. I have called upon them often and their patience, interest and kindness have been extraordinary. Leading this list are Linda Owens, CJ Yeoman, Heidi Henning, Tami Dever, Erin Stark, Monica Thomas, Laura Shelley, Dennis Dahlin, Joanne Elizabeth Kelly, Rob Keasal, John Tuccillo, Omar Ayales and Kevin Hawkins. I also am grateful to the numerous second home buyers and renters for sharing their stories.
—Tom Kelly
I would like to thank my associates at Stewart Title Latin America for their kind contributions to this book: Lic. Carlos Gonzalez, Lic. Orlando Lopez and Christopher Hill. Thanks also to Mike Skalka, chairman and chief executive of Stewart International; and Rebecca Rice, counsel, and Julie Kleine, vice president, and Mandy Johnson, copy writer, for their continued support and assistance in our efforts.
A special thanks to Margo Taylor, our kids Megan and Ashton; and the rest of my children, Courtney, April and Tanner. I also wish to thank my wonderful mother, Leslie, and my siblings, Gary, Denise and Kevin, and family members, Candy and Ric. They’re great fun and provide tremendous encouragement. I’m thankful to have them all.
—Mitch Creekmore
Thanks to all the volunteer leaders of the National Association of Realtors in Central America, including Jorge Cantero, Deborah Valledor and Carlos Fuentes for bringing things to the next level in the region. Also, special thanks to Lucia Sacasa for the help in Nicaragua; Patrick Crowley for the input on Honduras; Sara Siegel for the assistance with Guatemala; Linda Gray and Mercedes Castro for Costa Rica, and Luis Dominguez for El Salvador. I also wish to thank leaders of the Panama Real Estate Association, Prima Panama, and especially Jose Boyd for showing me Panama. A special thanks to Gail Geerling, Jocelyn Carnegie, Grupo del Sol and Frontier Property Group for their efforts in bringing knowledge of the emerging Nicaragua real estate market to this book.
Finally, thanks to my family, Paulina, Julia and Megan, for their support in my endeavors and their patience while I was away on so many trips.
—Jeff Hornberger
I N T R O D U C T I O N
Why Central America?
Boomers seek adventure … and a place in the sun
Ian Richardson, a southern California mortgage broker, was burned out. It was time for more than a vacation – it was time for a full-scale review of how, and where, he spent his time.
“I stood on a piece of property in Malibu that was absolutely gorgeous,’’ said Richardson, 52, a husband and father of two teenage girls. “I thought that maybe I could slide out of the pressure cooker and work out on the deck of this place with my computer. The trouble was, I would be creating more pressure for myself just trying to pay for the property.’’
Three years ago, the millions that Richardson would have borrowed, sweated and spent on the Malibu piece turned into a $180,000 waterfront lot in Costa Rica. He did not have to pay cash because the seller was willing to carry the mortgage, but Richardson had enough savings in the bank and bought the parcel free and clear. He plans to build a second home in a few months.
“There was no way I was going to put one nickel into Central America real estate,’’ Richardson said. “I also didn’t want to purchase in Mexico because I didn’t really understand the Mexican trust. If I bought in another country, I thought I would fear for my life every day, the agents would try to take me to the cleaners and all the governments would be corrupt with standing armies.’’
One visit not only eliminated his anxiety and questions, it rejuvenated his resolve to spend more time with his family and telecommute as much as possible.
“I wish I had done it five years sooner,’’ Richardson said. “Not only has the property appreciated like crazy, but my family loves being there. Besides, with an Internet connection, I can do a ton of work from just about anywhere.’’
Why Central America? There are so many places to start … yet Ian Richardson provides a prime example. Let’s check his reasons for making a second-home move to Central America. Topping the list are affordability, weather, increased airlift by major carriers and the rapid growth of the Internet, which has made the international market accessible to millions of consumers. More dreamers have become active second-home players because once-difficult-to-gather data is now at their fingertips.
In addition, there is more political and economic stability in the region than in years past; the U.S. dollar goes a long way; improved, inexpensive health care is available; homes and amenities often resemble what boomers retirees find in the States; and most Central American countries are rolling out the red carpet with appealing tax incentives.
While Europe has also been a popular destination for U.S. consumers to purchase second homes (were you part of the group ready to jump on a plane after reading Under the Tuscan Sun?), the dollar has been weak against the euro for several years and air travel tends to be more costly and lengthy to European destinations. Couple that with the number of first-generation Latino residents in the U.S. who have a particular interest in staying connected to their homeland and you have an entirely new category of potential second-home buyers.
But the wildcard in the boomer deck is adventure – it is part of their hardwiring. Not only is this the largest, healthiest and wealthiest group ever to come down the U.S. pipeline, but boomers also seek the thrill of the exotic and are very willing to borrow to obtain that experience.
An overview of a diverse, fascinating region
Central America is as different as the readers of this book. The region is an absolute paradox. It may be all that you imagine, but surprisingly, it is much more than one could ever embrace. It is more than the long and winding territory that connects North and South America. To the typical North American, the area conjures up vivid and varied images. On the geographical side, a mountainous area with volcanoes, colonial cities, jungles and, of course, bananas and coffee. On the political front, turmoil, dictatorships and instability. On the economic front, rich versus poor, agriculture-based economies and sweatshops where United States garments are manufactured and exported.
It is a complex and fascinating place, home to 41 million people with a total gross domestic product of about $88 billion.
How do you begin to categorize such a dramatic and extraordinary place? For starters, this region geographically encompasses seven countries: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.