Panama City is attracting international property investors in growing numbers these days, lured by the booming economy, reasonable prices and the city’s waterfront beauty. In many ways, it’s also one of the easiest and most secure markets in the region, with an established system based on first-world business practices and common use of the United States dollar.
Yet, Panama City is a complex market and investors need to be careful to make sure they are maximizing their opportunity for a healthy return. Every day we see investors familiar with other markets who make a small mistake or miss a deal, simply because they were unfamiliar with the local nuances.
Here are five tips to help you avoid the pitfalls of your Panama City real estate investment:
1. Don’t rely on listings
In Panama City, many of the best homes for sale never reach the public market. They are sold through the city’s network of private connections. Many are never advertised. Make sure you’re dealing with an established agency that knows the buildings and the insiders.
If you do look at listings be warned — the same property is often listed by several brokers with different photos and even different prices. Make sure the agent you contact has a direct relationship with the owner to avoid dealing with several unnecessary brokers and losing time — or worse, paying an inflated price.
2. Beware Financing Traps
If financing is required to make a purchase, it is available. But it can be a lengthy, time-consuming process. Preferential rates are often given to residents and it’s important to read between the lines of the agreement. One potential pitfall: Most banks charge a stiff cancellation fee if you sell the home before the term of the loan expires.
3. Be Realistic
Negotiating on price is common practice in Panama City, just like most other markets. And reduced prices can be achieved. However, many investors get greedy and try to start with a low-ball offer. This may work as a starting point in other markets, but it can be dangerous in Panama City. Sellers tend to ignore bottom basement offers. They are seen as insulting and there is no room for negotiation. It is much better to start with a realistic first offer.
4. Think Cash
Many sellers don’t want to deal with the hassle of a buyer using financing. Mortgages can take months to close. Sellers looking to sell quickly and efficiently are looking for finance fee options. The best deals can always be found by cash buyers.
5. Hire an Architect
Panama laws governing real estate are different than other markets. In Panama, properties are sold “as is.” There is no warranty period when buying a second hand apartment. As an investor, it is important to hire an independent architect to perform a walk-through at closing to make sure there are no flaws before you complete the deal. As with many aspects of investing in Panama, it is better to spend a little more upfront to make sure there are no landmines in the future.
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