3 real estate business models that do NOT work in Ecuador

This week I´m checking in from my hometown of Cleveland, Ohio on a quick trip back from Ecuador.

And everyone I run into seems to be in real estate.

But it´s a completely different animal than what I´m used to in Ecuador…

…here are three common business models I´m seeing here that would NOT work in Ecuador.

1. Purchase low-income rental properties.  In Cleveland, that means the properties in the inner-city where my family lives selling for around $20-40,000.  In Ecuador, I would not touch this business model with a 10-foot pole.  Low-income rents in Ecuador are really low (like $100-300 a month) and the rental laws just don´t protect homeowners with long, complicated eviction processes for this to be worth the hassle to me.

2. Live-in flip.  Where you buy a fixer-upper property and live in it until you are able to resell it.  Well, when you buy a beat-up property in Ecuador chances are it won´t be livable (if you have an average North American living standard).  I know, I´ve done this one and it was ROUGH.

3. Sell on contract.  This is when you tie up a property in a contract for a period of time usually 15-30 days and then resell the contract (or right to buy the property) for a profit of usually a few thousand dollars to another investor.  This COULD work in Ecuador and something I may try in the near future, but this is usually done in RED-HOT markets like we are seeing in the western USA now.  In Ecuador, properties usually take much longer than a month to sell due to the primarily cash-only market.

So what would I do to make money in Ecuador property? Stay tuned to this newsletter and you´ll find out!

Hasta pronto, if you liked this you’d love my Insider’s newsletter on living and investing in Ecuador,

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How I got approved for a home loan in Ecuador being a foreigner

If you’ve ever been to Ecuador, you know, as a new arrival often on a tourist visa it is almost impossible to so much as get a bank account open in Ecuador, let alone get approved for a home loan.

Once you have your residency visa and cedula (ID card) it is easy to open bank accounts, but getting approved for a mortgage still is difficult.

But there is a way.

I just got approved. And I as well am a new arrival expat (4 years ago) in Ecuador from the USA with no credit history in Ecuador.

Here’s what I would do to get approved as a foreigner…

1. Forget the big banks in Ecuador and focus on the credit unions or COOPERAS like JEP or Mutualista Pichincha. Open an account there and better yet leave a substantial CD of $20-30,000. 3-6 month term is fine. Both of the institutions listed above are insured on deposits up to $32k, I wouldn’t deposit much more than that.

2. Open an account as well and have any steady income you receive deposited directly there for a few months (preferibly at least 6).

3. Make friends with the banker at your nearest branch, maybe buy a few bank products from them, and maybe help them sign up a few other people, try to show them (albeit maybe not true) you are a “high-roller” type with cash and connections to boot although new to Ecuador.

4. On one of your bank visits while chatting up your new banker friend mention to her a great property deal you saw and that you were wondering on the possibility of a home loan. Chances are if you’ve built up rapport and shown that you have a little bit of money (by investing in a CD in their bank) or a steady income through monthly deposits they’ll ignore the regular requirements like showing tax statements of proof of Ecuador income or mandatory time in country and approve you for the loan. Your banker friend will often help push the application through her boss.

This is the exact albeit unsophisticated process I used to get approved for an up-to $70,000 home loan in Ecuador in 2017 with one of the above-mentioned institutions.

The next immediate step after you’ve been approved is they will send an appraiser to check out the property you are interested in, and from that will be able to loan up to 70% of the purchase price usually over a 10-15 year term. Oh yea, but did I mention mortgages aren’t cheap in Ecuador at 10.5% annual interest.

The challenge for me now is to find a property that can generate a POSITIVE CASH FLOW that puts money in my pocket each month above and beyond what I have to pay to the bank each month even at that expensive interest rate. Possible? You bet! Stay tuned.

Shopping time!

Hasta pronto, if you liked this you’d love my Insider’s newsletter on living and investing in Ecuador,

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13 things that annoy the h-ll out of me living in Ecuador

“Oh man,” I thought as my heart sunk into my chest while driving in Ecuador. As I peered through my rear-view mirror I saw a cop car on my behind with the lights blaring.

“What did I do now?” I thought. Is it simply “driving while foreign?”

Yes, cops have been known to swindle foreigners out of a few easy bucks for no driving infraction whatsoever, they know we can be an easy target (an Ecuadorian if pulled over for doing nothing would be like F-off!).

But then, the cop car sped around me, he wasn’t after me at all.

Relieved, I didn’t know this was a normal occurrence in Ecuador until I lived here a bit, which brings me to my first annoyance in Ecuador, cops that ride around with their sirens on, for no reason, the norm in Ecuador.

Here’s a few more things that annoy me enough to make this list…

2. When people in Ecuador don’t accept my dollar bill that has a microscopic rip in it.

3. When banks don’t accept my check (or one another person gave me) because the signature was missing a dot of the “i”, or a tiny missing loop… yes they actually check signature form here!

4. When lane-sharing motorcycles pass me to the left when I’m about to turn left.

5. How a “hot” shower to an Ecuadorian often translates really to a mildly room-temperature one.

6. Conversely, how in many places the water pressure will be so low you have stick your bare-a$$ to the shower wall in order to get the one little dribble falling from the shower head.

7. How buses gladly sell you a ticket and let you up on even a long distance ride when there are no more seats, and you find yourself holding onto the rails in the walkway for dear life while your neighbors comfortably sitting down reach over and pick pocket you.

8. Also, how city buses don’t bother fully stopping to let you off, I often have to “time my jump” so not to land face first in an open, unmarked sewer hole.

9. When neighbors leave for the weekend and leave their dogs out to roam the streets and fend for themselves often ravaging in your garbage which is only slightly worse them leaving them locked on their roof to bark all night hungry.

10. How when parked at a red light and upon the change to green you often literally don’t have time to lift your foot up and press the gas pedal before someone behind you is honking at you to go.

11. The horrifically gory, mindless, Chinese action movies Ecuadorians ALWAYS have blaring in the long distance buses.

12. The absolutely horrendous local Andean music the city buses often have blaring at all times of the day.

13. Ecuadorian men who dress like women, YIKES, Thai men they are certainly not!

But despite these annoyances and a few others which you usually can get used to. I love Ecuador and would prefer living here 100 out of 100 times over living in the USA!

Hasta pronto, if you liked this you’d love my Insider’s newsletter on living and investing in Ecuador,

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