Sub-dividing apartments in Ecuador for a big-time income flow

“It´s really more apartment then people need on a short stay,” I commented to the building administrator where I owned a condo in Guayaquil.

“I see you´ve got lots of clients, why don´t you subdivide it into two units, wall off the living room and add a bathroom in there so each unit has it´s own separate entrances?”  He replied.

He continued, “As long as the exterior of the unit to the common hallway stays the same I have no problems.”

He was right.

That would be a great idea.  The thought of creating two hotel rooms with private baths out of my current suite in Guayaquil which included currently a living room, kitchen, and separate bedroom with bath.

The kitchen could be shared and be a common area where we have the washing and drying machines.

Then I could wall off the living room, add a bathroom in there and and then I´d have two separate units with their own entrances.

From my time as a hotelier I´ve learned for short stays all people really need is about 15m2 of space plus a 3m2 bathroom.  From my 42m2 unit I could do that, twice.

I figured from my construction experience in Ecuador I could probably add a bathroom for around $3-5k.  The walls would be reinforced gyprocks sound-proofed.

The increased revenue would  be substantial as I could turn a suite in a luxury building which I was renting for around $40-50 a night into two separate hotel-like units and rent easily in the $35-50/night each range.

That´s on the low end $2100 of rental income a month.

This could serve as someone´s pension! Long term passive income, baby.

Yet, the costs would stay relatively the same as I don´t need to hire staff like a hotel would, I can use the 24hr front desk staff the building already has to do the basics of calling taxis for clients and giving keys. Plus,I could take advantage of the buildings amenities like the elevator, jacuzzi, gym and pool without having to up-keep it myself.

For cleaning between guests I´d hire a local like I already do and pay per clean on contract.

Other costs:

Condo fee (water included): $125/month
Electric: around $90/month (in Guayaquil people use a lot of AC)
Cable TV Internet: $45/month
TOTAL fixed costs: $260/month

Problem is when having the conversation I already was under contract to sell my suite.

And I did.

But now I have another opportunity, a bigger one, in same area for another larger penthouse suite I could make multiple units out of, way more than two, in the same luxury building… but I would like an investor.

Hasta pronto, if you liked this sign up for my Ecuador Insider’s newsletter so you can check out my latest posts(not available online) on living and investing in Ecuador:

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The biggest hidden danger when buying in an Ecuador coastal development

Many developments on the coast of Ecuador have an elephant in the room.

Can´t see it and they don´t mention it when trying to sell you their property.

It´s up to you to thoroughly research this before buying… as most developments DO have a big problem!

The WATER situation.

You see, on the Ecuador coast many developments get developed in areas with already precarious water situations, and the local governments don´t demand (like they do in places like the US) that the development invest to increase the capacity of the installations of the general area for the ballooning amount of people the area will hold once the development is finished.

So they don´t invest, and the situation gets even worse once populated and once you´ve already bought in!

I can live without electricity a few days(I´ve done it).  But try living without water for a day or two, it really sucks.  Yes, you can have cisterns as most do in Ecuador, but those only last a few days max, then you are dependent on the whims of expensive tanker trucks to come give you water on their schedule.

And yes, the price of water raises in times of need.

But there are some areas of the coast that really don´t have city water problems, and a few developments that have really planned ahead.  But most haven´t.

I´d talk to folks already living there before buying and don´t buy anything you can´t see or whose value is based on promises (aka pre-construction) in Ecuador.  (That´s just how I feel.)

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Property flipping in the USA vs Ecuador

I´m concluding my trip back to my hometown of Cleveland, Ohio now and I´ve got to say, property flipping here is tempting.

Here, like in other hard-hit rust-belt cities of America you can find decent houses in the $10-20k range.

So, naturally, I´ve been shopping around.

I found one BIG house in a decent area on the west side of Cleveland asking $12,800. Next door a house just sold for $78k.

So what happened? The house has a fire-damaged roof and the whole thing and framing needs to be replaced.

The problem and the BIGGEST difference I see in flipping property here vs the coast of Ecuador?

USA property has been passed over, multiple times before most common-folk even see it.

Passed over by people who know more or have bigger funds then you.

In Ecuador, particularly the coast, you still can find hidden treasures no one else knows about!

For example, here in Cleveland, the broker in charge of the sale also flips property, and he passed on this one.

Also, the realtor who showed me the property was a young, nice guy who confided he also flips property (and has also passed on this one).

So I passed. There´s just too much I don´t know about the market and the prices to fix the place up. I don´t have experience in the USA (yet). Plus, I would not be around for the rehab which I´ve learned in Ecuador is a big no-no.

I´ll stick to Ecuador real estate for now.

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