This is the first on a series of post about the step one goes through to buy real estate in Ecuador.
Part of the magic of buying real estate in Ecuador is you have a near infinite range of possibilities. You can choose to live in cities, towns, mountains, jungle, forest, plains, or beaches. The question is, what do you want? Spend some time thinking about it, get specific, and write it down. You’ll reference this wish-list many times during your home buying process.
When buying real estate in Ecuador, don’t forget about the foreigner tax. It is not a government tax, but something you will have to pay, none the less. What I am referring to is the difference between the price a local Ecuadorian will pay for a property and what a foreigner will pay. If you are not paying attention, that difference can be as much as 300%. Even if you are paying attention, it will still be somewhere between 25% and 50%. Just chalk it up to the price of doing business in Ecuador.
There are expatriate communities all over the world. These are cities or towns where groups of expats all decide to live. A shared culture often bring people together and an expat community offers good comradery and a sense of understanding. On the other hand, it makes it easier to keep oneself apart from the local community and all that it has to offer. When choosing a place to live abroad, one of the important choices to make is whether or not to live in an expat community. There is no right or wrong way, but the choice you make will certainly impact the type of experience you have.
Where do you want to live? For many, that is a simple question to answer. I want to live in this neighborhood or that neighborhood, in this school district, or that community. For some of us, all we know is where we don’t want to live – where we currently are. For those people the question gets a little trickier because there are so many choices. That question gets even harder when where you know you don’t want to live is in the country you are living in. With the whole world as a possibility, how do you possibly choose somewhere? You could probably eliminate the countries which are highly unstable such as Iraq, Somalia and Syria, but that still leaves you with most of the world. You could look at the various rankings of best places to live in the world, or cheapest places to life. That is not a bad option, but what you consider important may not be the same as the people who did the ranking. What is needed is a handy, easy to use tool that allows you to create your own top ten list based on what matters to you. Stay tuned, because that is exactly what this site will provide. In fact, it is being developed as we speak!
Most people do not understand real estate. Most real estate agents do not understand real estate for that matter. Many years ago I was a real estate agent in San Diego and can attest to that fact personally. I understood how to sell houses, how to negotiate, how to put a contact together. I knew whether the market was going up or down and I could even sense when things were picking up or slowing down. What I lacked, though, was perspective. I was so focused on my neighborhood or town that I missed what was really going on. I missed the large scale and long term trends that really dictate how the market is going. A global view is required for a person to even begin to call themselves a real estate expert and I have yet to meet a residential real estate sales agent who has a global view.
In case you don’t know, and there is no reason why you should, Rafael Correa is the current leftist president of Ecuador. He was elected in 2007 and has certainly made a mark – good or bad depending on which side you are on. In 2008 he lead Ecuador to default on its foreign debt. Later he terminated 13 different bilateral investment treaties creating some uncertainty in the foreign investment community. At the same time GDP is up along with real estate prices and Ecuador seems to have favorably weathered the financial crisis that rocked many other countries. Whether you love him or hate him, you had probably better get used to him because it is likely he will be re-elected in 2013.
A quick search of web sites for people moving abroad will bring up a host of sites geared toward people who are retiring overseas. While retirees are a significant group, the majority of people planning on moving overseas are not retirees. In fact, it is estimated that about 3/4 of the people who are planning on moving abroad are under 55 years old.
For a more detailed look at the numbers check out:
Any informed decision requires a look at the big picture. How an economy is fairing has a lot of impact on what home prices are doing. In the case of Ecuador the economic picture looks good. Unemployment remains low compared with most countries in the region, GDP is increasing at a steady 3%-4%, and the national debt remains manageable. The countries main exports – oil, bananas, flowers and cocoa, and various other fruits and vegetables – remain in demand. Nothing is ever certain, but the economic future of Ecuador looks solid.
Thinking about getting a loan to finance part of a property purchase in Ecuador? You may want to reconsider that. It is very difficult for someone who is not a Ecuadorean national to get a real estate loan. Even if you are Ecuadorean you will be paying 13% – 17% interest.
The upside is that for little more than you would be paying for a down payment on a home in the United States or Europe, you can buy the entire home in Ecuador. All things are relative.
I just had a conversation with an old time real estate agent who used to sell property in the United States during the 1970′s and 1980′s – the pre-internet age. The was no multiple listing service or any type of property data base to go to for knowing what was on the market and how much similar properties had sold for. Networking and relationships were king. Those agents who knew who to talk to and where to look found the best deals. Things have changed a great deal in the United States and Europe, however buying real estate in Latin America still harkens back to those older days. Knowing someone who knows the market can make all the difference in finding the right property at the right price.