Panama Real Estate Slump - 4 Ways to Profit
(thepanamareport.com) For the most part, everyone seems to be roughly on the same page that Panama's supply of units will exceed their demand in 2009 resulting in a significant drop of, what was up until now, a booming real estate market. In a recent article, I discussed how Panama's real estate "bubble" bursting - because that's what bubbles do, they burst - might actually be a good thing for the Republic: a way of tempering an inevitable storm. This article will explore what, if any, profit can be made in Panama's predictable downturn, or at the very least what deals there are to be had.
While flipping through the channels the other afternoon, I came across a bit on ABC news about the hurting car industry in the United States and how certain dealerships are offering outlandish discounts to spur sales. "Buy a Ram Truck at this dealership in the Valley," the news anchor said, "and get a PT Cruiser or Dodge Calliber for just ninety nine cents!" I looked down at the $2 empty bottle of organic orange juice I had just drank and cursed myself until the sun had long set over the hills.
The piece was concluded by an expert nerd wearing slim glasses who sat in front of a large mural of downtown Chicago. "This is the best time to buy a car in the past 25 years," he said; an example that reminded me that in Panama, cold markets can offer great opportunities. Here are four ideas of how to profit in Panama's approaching real estate rupture.
1. Put the spotlight on distressed developers: With the amount of predicted buyers unable to complete payments, combined with a large glut of apartments never even sold, developers in Panama will be willing to entertain a bevy of offers: nothing is too outrageous in my book. This may mean, in many cases, being able to buy at the same prices offered years ago (which were pretty good deals) simply because developers are trying to cut their losses and escape alive. Knowing contracts well here can also give you the upper hand, specifically when it comes to suggestion number two.
2. Make offers to owners of vacant (completed) apartments: Against what any agent says, I can personally take you on a tour of plenty of Panama residential complexes that have no one living in them, period. Most of these owners had hoped to flip their units, but upon realizing they couldn't, became stuck with vacant real estate. Once you've determined your standards, press agents to look hard for units that fit your bill and when you find something that's appropriate, lowball the hell out of the offer. Remember, in a market where desperate sellers are trying to unload distressed real estate, beggars can't afford to be choosers.
3. Please shower before entering the rental pool: In advance, I will say that renting your unit out on a regular basis will not be nearly as easy as the agent who sold you the unit suggested. However, by brushing up on your marketing skills, little-old-you can take advantage of the growing rental industry in the city, beach, and mountains. Seeing as though tourism is up significantly and hotel occupancy is unusually high, apartment rentals could be your path to profit...as long as you set yourself apart from the gaggle of gringo geese trying to do the same thing. Post classified ads on websites like Craigslist , use ad enhancer services such as VFlyer , register as an owner at vacation rental sites like VRBO , and if you're really feeling proactive, build a website for your unit and make an account to advertise through Google Adwords where you pay per click. These three marketing techniques will put you ahead of the game and keep your unit rented more often than not.
4. Seize great deals: Not unlike the $0.99 car offer, the future will force Panama's real estate players to get a little creative with their offers. Low interest rate financing, cheap prices, and extra parking spaces to boot: there will be a great array of perks and benefits donning Panama's real estate magazines over the next few years. Just recently, projects like Valle Escondido in Boquete (David) and Rio Oria Estates in Peadsi (Los Santos) have begun offering "sell your existing home first" financing plans in which buyers are permitted to pay off the bulk of the cost over a span of years; an offer that both shows faith in their product and patience for those who want to buy in Panama, but need to regain financial stability first.
The trick in profiting from Panama's downswing will be to keep quality in mind above everything else. Good real estate, whether you're in a recession, a boom, or the middle of a Eskimo hut, is always good real estate: it does not change with the tide. Keep your eye on the prize instead of buying something else you didn't originally want because it "seemed like a good deal."
Being a buyer in a time like this gives you the power to dictate the deal: agents will be inclined to cut commissions, sellers will have no choice but to lower costs, and contractors are subject to reduce fees for construction work. Pre-qualifying for a loan is a great solution to clearing up any kind of ambivalence with regards to payment and if paying up front in full is an option, as with any distressed real estate deals, your opportunities in Panama's real estate market could be huge.
If any readers have advice on how to profit in Panama's imminent real estate downswing, feel free to comment below.
