“There it is.” I said as I signed the sales deed this week.
I sold my 4 bedroom, 3 bath beach house near Montanita for $45k.
The same one I bought entering 2012 for $15k.
Once I bought the property I put about $2k into it to clean it out and lightly furnish it with the basics being a stove and a few plates, a mini-fridge and a few beds.
The idea was to rent it as a budget short term rental and keep it as my own weekend getaway when I lived in hot, humid, muggy Guayaquil.
After 3 months or so of owning the property someone who had rented the property offered me $40k to buy it.
I mistakingly turned it down.
Meanwhile, I quickly discovered there was a huge demand in that area of the coast for inexpensive rentals in the $300-450 a month range.
In 2012 I kept it rented about 90% of time.
So much so in late 2012 I decided to build two one-bedroom one-bath beach bungalows on the same property, all with a nice oceanview and a 30 minute walk from the center of Montanita. A pre-fabricated wooden one for a total with furnishings of around $4500, and a brick/bamboo bungalow for around $6500. They both rented well, the brick/bamboo one more so, for around $230 a month each.
Both were done building in about a month.
Then in early 2013 I decided to put the property for sale for $60k because a friend of mine in the area said the area was hot and that I could get $80k.
I did start to notice the influx of foreigners in my tiny little town next to Montanita (Manglaralto) and the building going on all around me.
Plus, the towns streets had just been paved.
I chose not to work with any realtors, just post it online myself.
And after a few months I didn’t get any bites, so I decided to take the property off the market as I didn’t really want to sell it at the time anyway.
But after moving to Quito, as my business grew in 2013, I had less and less time to manage the rental from a distance.
The property deteriorated and became harder to rent.
Often 6-8 months would pass between visits from myself.
Then in December of 2013, i decided to repost the property online for sale, this time for $45k.
And within two days I had several interested folks, one foreigner that lived in aother part of Ecuador called so worried I would sell it he gave me a deposit of $250 just to hold it til the weekend so he could make it over to see the place.
I believe the increased interest this time around had to do with both the lesser price and the time of year, right at the beginning of high season on the coast when most other folks take their properties offline.
But when he actually saw the place he wasn’t impressed.
You see, it is an Ecuadorian-made very simple dwelling, needs work, and certainly not up to most Americans standards.
But I continued to get a lot of interest and several people a week wrote and visited the property with my caretaker.
In the meantime, I got a few low-ball offers but finally in the third month I had the property for sale (March 2014) I got a call from a real estate agent in Montanita saying he had an interested buyer.
He worked as a buyers agent and was charging the buyer 5% commission but not charging me.
The person from the US visited the property several times over the next few days and made the offer for my full asking price. I took it, he deposited $1500 as an earnest deposit.
I then went to the coast after he had already left back to the States to sign the deed to close the sale. His agent took care of the rest and paid the necessary taxes.
The buyer then wired the rest to my account.
The closing took about two weeks.
Besides what i made renting the property, I made roughly $15-16k off the sale.
Not bad, but I could have made more if I wouldn’t have made the following mistakes…
1. Understand properties in Ecuador (a cash economy), especially higher priced ones, usually (but not always) take a long time to sell.
2. I should not have added the bungalows to the property as they didnt do much for the property value.
3. Don’t get emotionally attached to a property, it should always be for sale from the moment you acquire it for the right price.
4. I should have used local real estate agents from the beginning as it pays to have a salesmen showing the house instead of my older caretaker.
5. Don’t try to do too much with a basic coastal-Ecuadorian (boxy) construction, it is what it is, the only way to make it really nice is to level it and start new.
Other interesting things I learned from owning this property…
– A lot of people like sleeping near a tourist hot spot like Montanita but not right in it.
– As mentioned previously, there is A LOT of demand from foreigners for cheaper rentals on the coast as the properties available go from really cheap and generally unacceptable for foreigners to expensive places over $800 a month.
– There is a MUCH higher demand for rentals on the coast of Ecuador in the North American winter months from late December to early April compared to the rent of the year.
– You can charge a lot more than usual during long weekends and holidays in Ecuador if you market to Ecuadorians.
– Ecuadorians look for rentals with caretakers for security, TVs and Air Conditioning while foreign renters prefer privacy (no onsite caretaker) and NEED WIFI Internet while a TV and AC are not so important.
– It would have paid to have a caretaker that speaks English to help the tenants settle in.
– If possible, it pays to market to foreigners already living somewhere in Ecuador, as most foreigners still in their home countries are generally tire kickers.
– The best way to market your property to Ecuadorians is still the areas Sundaypaper.
So, what’s next?
Another property purchase i’m sure, but probably on the coast of Ecuador as I still think the best deals for flipping are there.
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