Cashing In On a Second Home in Central America: How to Buy, Rent and Profit in the World's Bargain Zone. Tom Hammond Kelly
as the Bay Islands of Honduras, Guanacaste (Costa Rica) and Antigua, Guatemala, are booming with tourism. The economies are irreversibly tied to the U.S. dollar. The region is changing dramatically with new construction and modern conveniences—no longer the stereotypical “banana republics.” Most importantly, every government in the region recognizes the magnitude of the international second-home market and the multiplier effect it has on jobs, economic development, and international relations. By buying a second home in the region, investors become important contributors to the economic development of a rapidly emerging region.
The goal of this book is to provide an educational adventure to a vastly undiscovered region. It will not require riding on old U.S. school buses with musical hits from the 1970s blasting in the background as you drive along bumpy roads with hairpin curves. You won’t have to change currencies or wait hours to cross borders in front of guards with machine guns. But have a seat and imagine yourself in a thatched hut palapa with a cool drink, fresh food and sunshine along a deserted beach. Or, imagine yourself hiking through a misty rainforest with a view of a volcano in the distance while counting exotic birds. All of this unfolds a few hours’ flight from the predictability of life at home. Stay with this book and discover why buying a second home in Central America may change your life, economically, mentally and spiritually. Where is the most activity? Sure … there’s plenty of information about Panama and Costa Rica but we’ll provide you some intriguing content on the new-look Nicaragua, the cayes of Belize, the colonial magnet of Guatemala, the islands of Honduras and a few unknown beaches of El Salvador approximately 20 minutes from one of the most efficient airports on any continent. What are the most important rules of buying real estate in the region? Be open, flexible, cautious, a bit adventurous and most importantly, diviértete! (have fun!).
In Part I, we explore the countries and explain where and how second-home buyers—real people—have purchased property in Central America. There are simply too many cool hideaways and gorgeous towns to chronicle, yet let’s investigate some of the most intriguing locations of a terrific region. Some of the stops already have been discovered, yet others are just appearing on the radar screen. First up, that booming country of Panama.
PART ONE: EXPLORING THE POSSIBILITIES OF A DYNAMIC AREA
C H A P T E R O N E
The Lure of Panama
U.S. efficiency … with a Latin soul
If you have traveled abroad, you know the routine … Get off the plane, hot and restless, dump your bags in the room and then check with a local—perhaps a cab driver or a hotel clerk—about his favorite place to grab a bite to eat. You discover this wonderful, cool refuge tucked away in a back alley and immediately request … bottled water! The initial inquiry in any far-off place is for that prized, sealed-top liquid that not only satisfies a thirst but provides a sense of security and reliability at the same time. In most places in Panama, your waiter or host will enthusiastically interject that you absolutely can drink the water that flows from the Chagres River, a key tributary of the Panama Canal watershed. A popular old saying is often repeated: “Once you drink water from the Chagres, you will return to Panama.”
For many second-home seekers who have toured this intriguing country, a new saying has surfaced: “Once you see the variety of affordable real estate, you will run back to Panama.’’
The Panamanians are a proud people, and the fact that the water is drinkable is a fitting metaphor for their country. This small, Central American nation feels comfortable to foreigners, especially North Americans, who seem more preoccupied with the quality of drinking water than visitors from other parts of the world. In fact, Panama is perhaps the only Latin American country where you can indeed drink the water and not worry about a negative outcome. The nearly 100-year presence of the United States in the “canal country” has produced many dividends, including an excellent water purification system that is the envy of neighboring countries.
As a second-home market, Panama is appealing for individuals looking for a hybrid of U.S. efficiency and a Latin soul, combined in an intriguing mix that offers both comfort and adventure. From the moment you step off the plane at the modern, bustling Tocumen International Airport, located approximately 30 minutes from Panama City, you know that you’ve arrived in a region that is unique in Latin America. A divided four-lane highway whisks you into the suburban sprawl of Panama City, complete with freeway exits, strip malls, high-rise buildings housing a variety of corporate regional headquarters and expansive manicured homes and gated communities that resemble Miami more than any other city in Central America. Panama City’s dramatic skyline appears along the coastline, with construction cranes everywhere. The familiar feel of the U.S. permeates the infrastructure, yet with a distinctive Latin American flair that is carried by the culture and its people. For example, you will pay your taxi driver in U.S. dollars—and your change will be delivered in U.S. paper dollars by an instructive driver eager to point out how closely the local coins, called balboas, resemble U.S. currency and carry the same value (but won’t work in soda machines back home).
The buzz about Panama—an inexpensive, fascinating second-home market—has turned to boom. North Americans are visiting in droves and buying property. The buying interest has expanded outside of Panama City, to what is called the “interior” that includes mountain highlands, colonial towns, beachfront developments, islands, gated communities, and suburban-style developments. There are now developments, properties and estates to match any taste or budget, from an affordable view condo ($100,000 in 2007) in downtown Panama City to multimillion-dollar homes on the beach.
All properties have one common denominator: they can be purchased at a fraction of the cost you would expect to pay in the U.S. The cost often is the prime reason for rationalizing a Panama purchase, however, the ultimate decision to buy is bolstered by the stable government, a dollar-based economy, impressive government incentives, friendly Panamanians who are accepting of Americans, the low cost of living, a lack of natural disasters such as hurricanes and a country that truly offers (along with Costa Rica) the most “U.S. style living” in Central America.
Paul McBride, chairman of the real estate committee for the American Chamber of Commerce in Panama (www.panamcham.com), was educated at the University of CaliforniaBerkeley and then spent 12 years in Alaska. He first visited Panama more than a decade ago and immediately fell in love with the country because it reminded him of a “tropical Alaska” with beautiful coastal mountains, fertile waters teeming with fish, abundant wildlife and lush rain forests … and better weather.
“Having witnessed Alaska blossom during my stay there, I immediately saw that Panama had the same, if not more, potential,’’ McBride said. “More than anything, it was the business opportunities that intrigued me most about the country.’’
McBride is now director of Prima Panama, a research and marketing company that helps investors and consumers better understand the nuances of buying and living in the country. The company completed an extensive survey of its members to determine their motivations, attitudes and preferences detailing the process of considering Panama as a place to buy or invest. He is also part-owner of a tour company, Panama Travel Experts (www.panamatravelexperts.com).