Investment Mistakes to Avoid in Nicaragua

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AVOID REAL ESTATE TRAPS

Maybe one of these fine days we will finally get the world to not remember Nicaragua as the “second poorest country in the western hemisphere” but come to know it as a beautiful country with vibrant wealth opportunities. A secluded beach might be a nice idea for  real estate purchase, but the reality is that most people are interested in property that is easily accessible by road, has access to all the various amenities and has Internet access. One of the major objectives for those investing in Nicaragua is to turn a profit. A smart way to do so is to rent out vacation homes to travelers visiting the beaches and inner cities of Nicaragua.

Nicaragua is an incredible vacation destination, and it can also be a great investment as well as a wonderful place to call home.

In recent years, the government has implemented and followed through with a number of plans for infrastructure. With wind turbines surfacing around the country, new national and international airports operating in remote regions, fresh water or seaports beginning to sprout, this small country, strategically positioned in the world, has potential for enormous growth.

With  recent statistics showing drastic growth just in the last 5 years, Nicaragua has already seen major improvement in a variety of industries. Tourism, manufacturing and agricultural specialty products are on the rise. This has allowed the working class Nicaraguans to receive better work benefits provided by a stronger national economy. When comparing Nicaragua to world statistics the in June of 2012, The World Bank hailed Nicaragua for the great work and example it has given the world during times of hardship.

If you do an internet search of investment opportunities you will find dozens of real estate companies and big ticket retirement communities selling you overpriced properties. YES real estate is a great option for someone looking to invest in this country but it is not the ONLY option. Think twice before making big ticket real estate purchases. In the not too distant future you will see a situation develop in some new real estate communities that the condo/house you bought several years ago has NOT increased in value. It will be a similar situation to the one happening now in  neighboring Costa Rica.

Mike Periu, a Miami-based financial expert  recently published a report on the five most expensive places to live in Latin America. Costa Rica occupied fourth place, which followed Uruguay, Brazil and Venezuela. It is reported that San Jose is the most expensive city in Central America, and that Managua is the cheapest; this would imply that tourists get more bang for their buck in Nicaragua, a country where tourism is just a fraction of what its southern neighbor currently enjoys. Oh, and to add on that…. Real estate in San Jose is the most expensive in Latin America.

In our opinion part of this “issue” is due to the fact that so many foreign investors chose to purchase big ticket condos and homes and in order to make a profit had to escalate the cost of renting these properties to cover their investment. Our recommendation: Find a vacant and buildable lot in Nicaragua. Owners of small parcels of land  all over the country are selling their properties at bargain basement prices. In the long run you will save money and have a better return on your investment. If you do decide to build a property you may want to consider a house big enough for rooms you could rent out as a guest house. Tourists are looking for places to stay and many prefer quaint off the beaten path properties for lodging

TOURISM  IS GROWING

If you have a background or experience in the tourist sector then you may want to consider investing in the biggest sector of the Nicaraguan economy right now. Tourism is at an all time high and everywhere you turn you see signs that the foreigners are pouring in. Places like Granada are burgeoning with visitors and hotels and eateries are usually packed to the gills.  Our advice however is if you don’t have a lot of cash to invest in this very promising commercial market, you may find it a not so good option at this time. Areas such as Leon and Esteli are starting to sprout lots of eateries and bars and you may want to take a look at these areas for possible doorways into the tourist dollar market. Don’t believe everything the real estate agents tell you because they won’t fill you in regarding Investment mistakes to avoid in Nicaragua.

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