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The ONLY type of hotel I’d put in Cuenca

I get it all the time.

People know I’m in the hotel biz…

…and they tell me they have a property and are thinking about putting a hotel in Cuenca.

But truth is, I would NOT put a hotel in Cuenca, except for one type.

You see, Cuenca is already loaded with good hotels, and they’re cheap!

An acceptable option at $10-15 per person per night can be found quite quickly.

The type of hotel I’d put in Cuenca is an apart-hotel.

The difference is the rooms will often be mini-apartments with at least two different ambiances, a living/cooking area and the bedroom.

Unlike normal hotels the rooms have a kitchen or place to cook as most people would get tired of eating in the street for weeks on end.

And they are meant for longer stays.

Usually a few weeks, maybe a few months at a time with of course special weekly and monthly rates.

And they often serve as a “half-way” home for folks who recently arrive in Cuenca and begin the search for their permanent home.

An apart-hotel is a great option for people because agreeing to rent something long-term before they arrive and see it is a big mistake.

Best to look around once here.

And at least initially its nice to take advantage of a few of the services of a hotel like an attentive, knowledgable front desk staff, laundry service and WIFI Internet from day one yet still be able to cook for yourself and enjoy the privacy of your own place as you get your feet wet in a new country.

You could even sell off the individual suites to private owners and continue to manage them and rent them out in a property-manager-type role.

The really neat thing is you could promote it as both a hotel and a condo rental.

There are already a few of these type hotels that exist in Cuenca, but I’ve seen the demand in the area to justify another well-located good one.

More so by far than anywhere else in Ecuador, a lot of expats are moving to Cuenca.

That’s the hospitality niche I’d attack in Cuenca.

Any takers?

You can count me in.

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Posted in Ecuador for Investors, Investor News/Analysis

Sold! Montanita beach house: from $15 to $45k

“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.

He passed.

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.

Done deal.

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.

Stay tuned!

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Posted in Ecuador for Investors, Investor News/Analysis

Who pays what in an Ecuador real estate transaction

 

This week I was involved in an Ecuador real estate transaction.

More on that in my next email.

But it reminded me of something very important to know before you buy property in Ecuador.

To know who typically pays what in a standard Ecuador real property transaction as it may differ from your home country.

Often a foreign buyer will get stuck with paying the whole damn thang because they just didn´t know otherwise.

Typically in Ecuador, unless previously negotiated, the buyer pays all the fees associated with drawing up the new deed and getting it notarized, then registered in the property registrar (escritura y registro en el registro de la propiedad).

The buyer will also pay the tax to the municipal called ALCABALAS.

The seller is expected to pay all past due annual property taxes (PREDIOS) and get the property current.

The seller is also expected to pay the capital gains tax called PLUSVALIA which is calculated based on the official assessed value from when the seller bought the property to when he sells it (not based on actual purchase price).

The seller is also expected to provide proof all the energy and water bills are current.

This is how most local Ecuadorians do it.

Now you know so you don´t get stuck footing the whole bill as the buyer, cause they will lay it to you if they see you don´t know!

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Posted in Ecuador for Investors, Investor News/Analysis

An Insiders take of the restaurant biz in Ecuador

Something about Ecuador ignites the entrepreneur in all of us.

As my Ecuadorian mentor once told me, “people in Ecuador are more entrepreneurial than in a country like the US because they have to be, there are less decent employment options so you got to employ yourself. ”

I´d agree.

And this week, I´m going to interview my good friend Amir, who moved to Ecuador last year from Canada, and has since started a pizzeria in the Quito (Cumbaya) area.

I met him when he was a new arrival “right off the boat”, if you will.

Enter Amir… 

Amir, tell us about your restaurant?

Sure, the name is MegaPizza and we serve top-notch Italian-Canadian cuisine like pizza, putin, salads, subs, wings and more at reasonable Ecuadorian-style prices.  Specifically, we’ve got the best subs and pizza in all of Ecuador (Note from Domenick: I’d agree.).  The restaurant is right between the main park of Cumbaya and the San Francisco University in one of the top restaurant districts of Quito.

So Amir, why’d you choose Ecuador for living and your business?

Well, its warmer than Montreal, residency is pretty easy, taxes and rent are low comparatively and so are most of the costs of living.  In Canada it was too pricey to start my own place.  A restaurant like mine would rent for $4000 or more per month, utility bills would be several hundred dollars a month and employee costs would be several thousand a month.  In Ecuador, rent, utilities and employee costs are dirt cheap and you don’t have to worry so much about peripheal costs like insurance while at the same time I’m still charging about the same as i would in Canada for my product.

Why’d you choose Cumbaya for your pizzeria?

I like the warmer climate when compared to nearby Quito (30 minutes away) and it is an affluent neighborhood and lots of residences ideal for delivery.

What were your biggest challenges when starting and running the business?  

The biggest challenge was finding a good place to rent for the business.  It took several months of checking the Internet ads in Spanish, the newspaper and driving around scouting out areas.  A lot of decent places that were available were offered not by the land owner but by the restaurant owner who wished to sell you their business, furniture and lease, often for upwards of $60k or more.  When I already knew the business and knew what I wanted to do i was not interested in buying someone elses know-how and used equipment and furniture.

Finally, we found a large empty locale and inquired with the caretaker and found out it was available, it had no sign, thats how you can often find the best deals in Ecuador.

Also, obviously communication was an issue cause I don’t speak Spanish well.  I took a one-on-one class in Quito for about two months when I first arrived for $6 an hour and that has helped a lot.

What are the lease terms like for your restaurant in Ecuador?

Well, my lease is for one year only with a security deposit equal to one months rent.  The rent is $1500 a month.  The locale has about 6 parking spaces and 90m2 of dining area plus an outdoor patio with capacity for about 50 people (about 15 tables).

Where’d you find your kitchen equipment and furniture needed for the restaurant at the best value?  

Honestly, searching on the Internet in Spanish helped a lot. I knew what I needed cause I worked for many years as an employee of top restaurants in Montreal.  I found one distributor online in Ecuador where I bought most of my kitchen equipment PROMAINEC.  For instance, we bought all new stuff… a 2 door industrial fridge was $2200, the pizza oven $1700, the dough maker $1200, and the stove-grill-hotplate all in one from the LOZADA store in Quito was $1200.

The wooden tables and chairs were ordered custom maid by a local carpenter, they came to $36 for each table and $40 for each chair with a seat cushion built in.  Those were the best prices we could find, it was much better than buying ready made tables and chairs from a place like Megamaxi or Mi Comisariato.

What was the total investment to get your restaurant up and running from scratch?  

Including the security deposit for the lease, about $20,000 USD.

Where the permits difficult to attain?  What permits are needed for us newbies to the business in Ecuador?  

Actually, this part was very easy in Ecuador.  It all starts with the SRI (the IRS tax agency in Ecuador).  You need to get a RUC or tax ID number (free).  Once you have that you need to go to the IEPI or Institute that copyrights Intellectual property in Ecuador to register your company name and logo ($115).  Then you have to go the Municipal and apply for your LUAE or license to operate.  After application they will send inspectors to pass your business, first the firemen (bomberos) and then the health department (salud) and Secretary of Tourism.  After passing the inspections you can pay your annual Municipal patent (patente municipal) (varies by business type and location, around $100-250 annually).  A special license to sell liquor does not seem to be necessary in Ecuador from what we have gathered (we’re still confirming this one).

Where do you source your ingredients and food?  Whats cheaper and whats more expensive compared to Canada?

This part was more tricky in Ecuador than in Canada where one phone call can get you everything you need within a few hours.  The big things like flour and cheese we buy in bulk from distributors we found online.  We had to test the quality of several before we found ones we like.  The prices of things like pizza boxes varied greatly so shop around before you commit.  We often would take the phone numbers of the distributors off the labels of the products in the supermarket chains.  We’d stop the trucks delivering supplies and drinks to stores in the street.  The little things like jalapenos can only be found in the top-end supermarkets like Supermaxi, so we buy those there.

Chicken and fresh produce vegetables are much cheaper in Ecuador than in Canada.

Some things are more expensive in Ecuador, like pepperoni which is $5/kg in Canada while $13/kg in Ecuador.  Some things are cheaper like cheese which is $22/kg in Canada while $7/kg in Ecuador.

What are some interesting things you’ve learned about selling food to Ecuadorians?

Ecuadorians don’t drink much coffee compared to North Americans.  They love hot sauce.  And they’re surprised by all the different pasta options we offer like tomato, pesto and alfredo sauces, but in a pizza shop they usually ignore our fringe offerings and go right for the pizza.

How did you find your staff?  

Well, my friend and I started the business, we are the cooks for now, and my friends brother moved to Ecuador as well to help out.  We hired one waitress to attend the clients and answer the phones (since we dont speak much Spanish).  We pay her $400 a month plus tips which is a bit over the minimum wage in Ecuador for a full-time 40 hour a week employee.  We found her quickly by placing a classfied ad in the Quito Sunday newspaper.

What are your profit margins like for the food you sell?  

Well, if you don’t count the fixed costs like rent and so forth , just taking into the account what we pay for the food itself and what we sell it for the profit is about 70%.  That number can get higher if we sell more and are able to buy in bigger bulk.

How much do you sell on a good day?

Our goal based on our price level, roughly $8 a meal, and restaurant capacity is to sell $40 per table for a total of $1000 of sales per day.  That is a good day for us.

Any other tips for a new restaurant owner wannabe in Ecuador?  

Sure, the cost of living and rent in Ecuador is cheap compared to a place like Canada so take your time to find a good location, it could take several months of searching, don’t kid yourself with an average location, you win before you begin.

How can we learn more about your restaurant or give it a shot ourselves?

Check our our Facebook page MegaPizza Cumbaya to see pics of our food, we are right on the corner of Orellana y Chimborazo in Cumbaya or call 02-603-9983 for more on how to arrive, obviously, we speak English, open 7 days a week.  And on Monday nights we have EXPAT NIGHT from 6-10PM where if you show a foreign passport you get a free beer or beverage of your choice with any meal purchase.

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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Posted in Ecuador for Investors, Investor News/Analysis

The dirt on Cotacachi, Ecuador: March 2014 Market Report

This week I had the pleasure to interview Olga Plavidal, one of the most knowledgable people I know on the Cotacachi real estate market.

Cotacachi is a small mountainous community a few hours north of Quito, and 15 minutes from Otavalo, which has experienced quite an influx of North American expats in recent years due to many factors like its healthy lifestyle, low costs and mild, comfortably warm year-round climate.  For me, its one of those few places in the world, and even in Ecuador, where you really don´t need heat or AC in your home and you re still comfortable.  Rare.

So lets turn to the local expert on the ground to get the dirt on whats really going on in early 2014…

Enter Olga.

1.    Why did you choose Cotacachi?  

-       I came to Ecuador 3 years ago, stayed in Quito for a month and was making short trips to various destinations. When I came to Cotacachi for a day trip, my soul whispered me: ‘That’s it, darling, that’s your home…’ Some places looked like from the fairy tales to me!

I’ve been captured by the beauty and the cleanness of the town. Every morning the owners of the stores wash the pavement in front of her/his business with soap (!) They beautify their exteriors with flowers. People are very friendly and they greet you on the streets even if they don’t know you. Gorgeous views of 2 volcanoes of Cotacachi and Imbabura and the stable climate, like May time all year round. Even at the rainy season we have just occasional showers in the afternoon and over the night. Hardly ever until the afternoon.

2. What do some expats complain about in Cotacachi?  Or why some folks decide not to stay in the area?  

-       Some foods are not available that you’ve used to – but use your creative juices and find the alternatives, lots of them! Probably, not too many things to do, as they might think. However, we have lots of activities here now; new businesses are popping up and many volunteer activities as well. But it’s everybody’s choice if they just want to stroll from one restaurant to another and gossip on everything, or to get pro-active in many new opportunities that we have to offer now. Many business opportunities are still not here. You chose this country to live in. Get creative and go for your dream! Turn your hobby into a new venture and create the lifestyle that you desire!

-

3. What are current market prices like in the different areas of the town and for different types of property and the per meter price of vacant land in the area? 

-       Depends on the area. Closer to the center, the higher the price, of course. The typical Ecuadorean house, not the new one, can be around $250-300 per m2, while the new construction in the gated community can run up to $750 per m2. You pay for what you get – quality of construction and finishing materials, security of the gated community, etc.

The land is the same – the closer to the center – the higher the price. $40-50 per m2 closer to the center and smaller lots, and can be $15-17 per m2 just outside the town for the bigger acreage. Again, it all depends on the location, neighborhood, views, size, and many other aspects to consider.
4. How has the market performed over the last year?  over the last 3 yrs?  over the last 5 yrs? 

-       It’s steady growth of about 15% a year, the more people get to learn about Ecuador, the more they come here. The property prices have tripled here in the last 3-5 years. They will be still growing, but there’s still a great chance to get them cheaper than in the US or Canada. Also, please consider that you don’t have to pay cooling or heating humongous prices, property taxes for most of the properties are under $100 a year (!). Also, what you pay for food, services and some other things are incomparably cheaper that in the US and Canada. You have to weigh all this on your scale and don’t just look at the property prices, but rather the whole picture of your monthly spending here. You know it yourself that you can live here comfortably under $1,000 a month, even renting a modest property, or under $500 if you own it.

5. Do you see any notable tendencies in the local real estate market?  

-       I sure do. More people are looking now into income producing properties, businesses to support them in case there will be some political changes, affecting their lifestyles. They are looking mostly for B&B’s, restaurants, farms and agricultural land. However, there are still quite a few folks who’ve built their nest-egg, sold their property back at home and want a nice comfortable home to live here peacefully.

6. Where in the city is best for an expat to invest and where are some areas to avoid?

-       To avoid is definitely the areas out of the city, where the Indigenous communities are occupying. If you decide to live in one of those communities, you should be really adaptable to their lifestyle and culture. Otherwise, the whole city of Cotacachi is not so big, let me know your desires and I’ll do my best to assist you in finding the best place for you!

7. For someone looking to invest in a rental property, what would you advise them and what type if property should they buy and where to keep it rented?

-       Most of the folks are looking to rent in the center of Cotacachi, a few minutes walk to the center. It’s easier to rent it out. Inexpensive, maybe Ecuadorean style home with all the basic furniture. Many renters want it for a short period of time, up to a month or a bit more, so that accommodate them, as it’s cheaper then hotel and gives them more privacy.

8.  What are the prices of nearby farm land and what types of crops are most common in the region?

-       The most common crops here are corn and beans, avocado trees are abundant as well, lemons and oranges grow well here, tree tomatoes (it’s a local fruit), potatoes, tomatoes, cucumbers, lettuce, cabbage – so many things, this soil is so rich, I think that whatever you stick in it, will start popping up J

Prices can be very different, depending on the location and the size of the land. $1-10 per m2.

9.  What other opportunities do you see for investors in your area?  In other words, what would you do with $100-200k in your area right now?

-       I’d buy some good rental property that will bring some good ROI. Also, land for development or a good inexpensive land for agriculture. No matter what the future holds for us, people will always need the place to live and the food to eat.

10.  For renters, what are the average rental prices looking like?  What are the normal rental terms?  

-       Depends on where and what you rent. Gated communities can be $600-1,000 a month, all furnished and really nice. But you can find a small local Ecuadoreans apartments for $100 unfurnished, or a bit more furnished. All depends on your choice of lifestyle and budget. My friend rents now a 1 bedroom furnished apartment with a good size kitchen, full bathroom for $200 a month. Please, don’t ask me for rentals, I usually don’t do them.

11. What’s one thing most people don’t know about Cotacachi?

Gee, Dom! That’s a big one! Please don’t limit me on that one! Let me list some of them, at least:

-       You’ll pay for anywhere going in taxi in Cotacachi just $1, don’t even ask the driver ‘how much’, it’s just a buck, wherever you go. Can be $1.25 or even $1.50 if this is 5-10 minutes to the properties that are a bit out of town, Like Yana Pamba, El Batan, Jahua Pacha.

-       You can have a really nice lunch in a local restaurant, if you ask for ‘almuerza’, not going for ‘a la carte’, which is from the menu. Just from $1.75 in many little  local places, at the food court/bus terminal as well, to a fancy ‘La Tourista’ on Bolivar street for $3.50 – awesome! Just don’t forget the magic word ‘almuerza’, write it down now, or they will bring you ‘Menu del Dia’ and will charge you twice for a little bitty added to it.

-       Do you know that you can drink the water from the tap? Yes, it’s safe! It comes from the Cotacachi volcano and goes through the purifying facility here in Cota, and straight to our homes.

Thank you, Dom for interviewing me, hope that will help some nice folks to get some better ideas about living here.

Welcome to Ecuador! And, please check my website for the best properties in Imbabura area: http://chantal-realty-ecuador.com

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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Posted in Ecuador for Investors, Investor News/Analysis

Where to bank (safely) in Ecuador

 

Do you want the long or the short answer?

The short answer is … no where.

Keep your money in your home country except for what you need.  Remember, this is a country where from one day to the next a bank could close shop, put a lock on the door and say “adios” with your money.

Kind of funny hearing this from a supposed “Ecuador expert”.

But it is what it is.

It happens.

In fact, to two differnet banking institutions in the last year (2013-2014).

However, I know if you are going to live or invest here it sure is convenient to have a local bank account.

One you can withdraw from anytime without fees or hefty exchange fees.

So in this case I offer you the long answer

There are only two banks in Ecuador where I suggest you have your money.

1. Banco Pichincha.  Its the biggest bank in Ecuador (the yellow one) and has branches everywhere you want to be.  It’s where all the locals have their money in Ecuador.  Its the institution everyone uses to do business.  If this bank closed up there would be major riots in the street, in other words, the government would not let it happen.

One thing I’ve learned when living abroad, if all the locals are jumping off a bridge, damn it, you better follow suit!  There is a reason for everything all though we may not see it at first and think, “huh, that’s stupid, I’m so much smarter than they are. (not true!)”

2. Banco del Pacifico.  This bank is the other decent option, albeit with far fewer branches, this is also one of the safest places to stash your cash in Ecuador because it is owned and managed by the government.

It’s like making friends with the bully in grade school so they don’t pick on you.

Heck, I know I did it, this is the same difference when the government seems to be the one going around ordering banks and credit unions (cooperas) in Ecuador to close these days.

Extra tip:  Be sure to keep no more than $25000 in any one bank account in Ecuador, that is the amount your money is insured to and in the event of a bank closing you’d be one of the first people to get your money refunded.

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Posted in Ecuador for Investors, Investor News/Analysis

The unknown under-belly of Montanita: Manglaralto, the top rental opp on the coast?

manglaralto beach
Manglaralto Beach, Ecuador

Everyone loves Montanita.

But nobody actually wants to live there.  Unless you’re a 20 year old hippy.

It’s a neat mix of a traditional bohemian-Ecuadorian surf village turned mega-tourist attraction.

And its a great place to meet people, eat, drink or party.

But to live, for most, it’s just too noisy, too scandalous, too touristy.

There’s restaurants, heaps of hotels for every budget, travel agencies, surf shops, discos, bars… in a word, it’s fun.

And since 2009, when the local Ecuadorians started to discover the town, it’s absolutely exploded.

All year every weekend the place is packed, and during the high seasons (Jan-Apr and Jul-Aug) its got loads of travelers midweek too.

But what a lot of people don’t realize is there is a sleepy little town right next to Montanita that actually shares the same beach head.

And yes, it means you can walk between the two in a little under a half hour.

Yet most people just skip it.

They don’t even realize its there.

Its 4 km away from the center of Montanita, in fact, it is a 5 minute drive or 30 minute walk along the nice, wide, sandy beach.

Welcome to the town of Manglaralto, the town next to and just south of Montanita.

Manglaralto is still as local as it gets, like Montanita was maybe 10 years ago.

Theres one guy that sells chicken (for cooking), another street shop tucked away that sells the beef, another little nook sells the vegetables, and there’s one guy that come out in the mornings and sells the fresh fish.

You learn as you go.

It’s real quiet, the streets actually look quite empty or dead most days and there’s only 3 or 4 streets that run parellel to the ocean, a little park with a church and a landromat, a hardware store and 2 or 3 small hotels, thats it.

But it does sport the only hospital along this stretch of the coast, and its free to all (public).

Also, a little less than a year ago in early 2013 the streets of this tiny town were paved, which is HUGE.

But the reason I mention this town is the opportunity.

I discovered this town by accident 2 years ago when I bought a little dinker house there.

Not many foreigners live here full time yet, but there are certainly more than when I first bought 2 years ago.

And I can tell you first hand that the demand for rentals in the area is HUGE, being a quiet place to sleep near the action but not right in it as most prefer, and its the ONLY town that shares a beach with Montanita (one of the biggest tourist destinations on the coast of Ecuador).

So like most, eat or party in Montanita, then catch the $1.50 5-minute cab ride to sleep in peaceful Manglaralto.

Specifically over the last year or two, developers have started to move in to the southern end of town starting a few small subdivisions, but deals can still be found like the $15,000 4 bedroom house I found and bought 2 years ago.

Small 250 m2 lots in and near town can be found in the $10,000 range.

Oceanview lots go for anywhere from $30-60 per m2.  A lot a block or two back from the beach with no view can go for half that.

But you have to look, cause prices are all across the board.

It’s still one of those neat opportunity areas where prices have already risen a bit but you can still find a deal.

But mostly know that Manglaralto is not only a cool, peaceful place to live, but also one of the best places (at least top 5) to put a rental property on the coast of Ecuador.

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Sold! How I sold my beach lot in Ecuador. Part 10 Property search series

 
I know what you’re thinking.

Where’s part 1-9 of this series?

Well, they were released about this time last year and tell the story from step one of how I found an undervalued beachfront lot near Salinas, Ecuador, legalized and resold it.

Well, about a year later, it’s now sold.

First, the specifics… 

In October of 2012 I bought a 500m2 lot right on the beach in a small fishing village 30 minutes south of Salinas near the town of Chanduy for $4000.   The lot was cheap for a number of reasons, the lot was located in a rather impoverished, completely undiscovered area of the coast, the papers of the lot were out of date and needed to be legalized (or attained for the first time), and the previous owner didn’t know much about marketing and sales.  The lot took about one month to legalize and cost around $500.  (No lawyer fees except for the notary.)

Then, in November of 2013, after negotiating I came to an agreement to sell the lot and sold it for $8000, a price where I still made money and the buyer still got a great deal (even for Ecuador) on a front-line beachfront lot.

How I sold it?

Due to time constraints and other priorities, I didn’t spend much time or money marketing it, all I did was post it on my own blog ecuadorealestate.org as well as on viviun.com .  Nothing else!  I didn’t list it in Spanish, or in the local paper (like I planned), or with any real estate agents.  Then I left it be.  And after a lot longer than I thought I had a buyer, a year later.

What I learned from the experience?

- That contrary to popular belief in Ecuador it is possible to take publicly owned “communal” land and privatize it and legally deed and register it in the notary, municipal and property registrar just like any other privately-owned property if you get some knowledge on your side.  But it can be a process and is a bit risky cause you never know.

- That if you buy property in an undiscovered, out-of-the-way location it is NOT a short-term play and will take you a lot longer to turn than you thought, even if the property is nice and right on the ocean (ideal).

- That the quality of the beach and proximity to a legit city with shopping and other services is important.

- That it will be a harder sell if NO other foreigners are in the area.

- That simply being beachfront is not quite enough to ask what other beachfront lots in more discovered, developed places on the coast are asking ($80-$100 per m2) .  If I would have got that I would have sold for around $40-50,000!  I started by asking $20k then I lowered to $16k but I didn’t start seeing any real interest until I lowered the asking price after several months to $12k.  Albeit I didn’t do a whole lot of marketing.

- That stating publicly on my blog how much I paid for the lot doesn’t help to sell it for a profit (duh).

- That using an agent probably would have been a good idea, it’s just that I had a bad experience with an agent previously.

- That there are a lot of areas on the Ecuador coast that are actually pretty stagnant while other areas are moving quickly.  Best find the areas moving quickly (which Ill cover on future newsletters).  For instance, this lot had a ‘for sale’ sign when I bought it that had been there 6 years!

- Not to waste time with all the (dozens) of tire-kickers online, the person who is actually going to buy your lot is probably someone already in Ecuador beit foreiger or local.
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The forgotten beach party town in Ecuador

Even if you don’t like to party, party towns are good places to base yourself as you explore the nearby areas of the Ecuador coast.

There’s more places to eat.

A larger variety of places to stay at a much lower average cost.

It’s easier to meet more people.

And you have access to services that you wouldn’t have in more remote locations, like laundry, internet, organized activities, etc.

Everyday I ask other foreigners where they plan to travel on the coast of Ecuador.

And they always tell me the same damn thing, “Salinas, Montanita, Manta, Canoa”.

Yet theres one popular party town on the coast that is completely overlooked by foreigners.

Atacames.

For me, Atacames arguably has the nicest beach of all the locations mentioned above.

It certainly has one of the widest beaches of the country, and one of the few white sand beaches lined with coconut palms in Ecuador.

Beaches with good surf are nearby.

And beaches that are coves with flat water great for swimming are just a short Tuk Tuk ride away (in neighboring Sua).

Plus, when the other beaches mentioned above are likely overcast, you can usually count on Atacames to have sun.

Nightlife. Check, Ecuadorians know how to party, trust me on that one.

Accommodations. Cheap and plentiful with budget places starting around $10 per person and the nicer places around $20 per person.

Food. You bet. Each region of the Ecuadorian coast has their own unique blend of seafood gastronomy. But the north coast has the best cuisine out there! Try the seafood in coconut curry (encocados) or the seafood in nut based curry (cazuela) and you won’t be dissappointed!

Foreigners. Almost none to date yet the area has been popular with Ecuadorian tourists for weekend getaways (particularly from Quito) for decades.

Airport/Hospitals. Yes and yes. Atacames is one of the few beaches within just 20 minutes or so from an airport reachable by commercial flights (Esmeraldas). Plus, being just 15 minutes or so from Esmeraldas there are plentiful private health clinics and free public hospitals available.

Safety. This has been the knock on Atacames as most folks think its too close to Colombia for comfort, but actually its still several hours from the border (like a place called Quito), and with the added police force I believe safety has improved greatly over recent years.

The locals. Different from the rest of the Ecuador coast, the locals are mulatos by ancestry. And by far the friendliest and best looking people on the Ecuador coast.

Real Estate. Cheap! The best deal I see this week in the area is a finished and FURNISHED 20 room, 20 bathroom hotel one block from the beach right in the center of town built just 8 years ago complete with reception, oceanview terrace, and cistern asking $170,000 negotiable.

But the owner sounded like he’d go down even lower, I’d try for around $150,000. Its possible, and it would be a steal.

Im a hotelier myself, and I can tell you, to furnish a 20 room place (well) you’re looking at easily $45,000. And depending on the state of the building (which looks good in the photos) at this price it could pay for itself in 2 years if you market it right.

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Property holding costs in Ecuador: Not what you’d expect

I get it all the time…

“Well nowadays I can also buy a $40,000 property in Waco, Texas, what’the big deal about Ecuador?”

OK, well, one thing is the holding costs.

Lets take a look at my 4 bedroom, 3 bath house on the coast near Montanita. I currently rent it out.

I pay…

$0 for insurance (with so much concrete construction home insurance is not common).
$0 for condo or association fees (not in gated community)
$102 a year in property taxes
$7 electric bill last month (with one single person living on the property full time.)
$4 water bill last month
$2.50 gas (bought one tank of gas, this is also subsidized by the government)

Now lets compare this to a 2 bedroom condo in my home state of Montana, USA currently valued around $180,000…

$1200 annual property taxes
$583 every 3 months association fees.
electricity $80 a month (varies)
water $125 every 3 months
$180 annual insurance
gas $250 (varies)

How about a 2 bedroom house in Montana valued around $350-400k…

$3400 annual property taxes
$1200 annual homeowners insurance
$0 association fees (not in gated community)
electricity/gas $300 a month in winter
$25/month garbage collection

Now, lets throw in the extra cost of my Ecuador ‘property management’ because I do not live nearby (I live in Quito) and I rent it out short term as a vacation rental.

$20 a month to caretaker who visits property twice a week and lets me know if there are any problems, waters grass once a week and takes out the garbage.
$5 each time the caretaker has to go and turn in key or recover key from an entering or exiting guest.
$10 for each cleaning between guests.

The caretaker also is in charge for paying the energy bills, and does NOT live on the property. All guests prepay online, I do all the marketing myself.

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Cocoa farms in Ecuador: An inside look into the Biz

Forget about exporting handicrafts a minute.

Ecuador has some VERY rich people, but they export different things, for instance, the product I’m going to mention today is one of Ecuador’s chief exports… cacao (or cocoa, the seed chocolate is made from).

As the breeze off the plantation whisked past my forehead I sat in a hammock across from a friend of mine who is the plantation owner of a 100 hectare cacao producing farm near the border town of Huaquillas in the South of Ecuador.

I was picking his brain. The business really interests me… here’s what I learned:

Cacao needs a tropical climate and a lot of moisture in order to grow effectively.

Rarely will you find folks with farms in full production willing to sell, because it’s a cash machine. But sometimes we can get lucky.

Cacao requires two full years after planting the seeds to begin to deliver fruit, but once it begins to deliver fruit, it will continue to for a long time as long as you take care of the trees.

When looking at listings for already-producing cacao farms for sale you’ll notice a big difference in prices… right now in the south of Ecuador cacao farms in full production are costing around $20,000 per hectare if they have CCN51 type cacao, and around $9,000 per hectare if they have the local, national type cacao.

Why the difference? The purple colored CCN51 produces a little over twice the fruit as the green colored national type cacao, and both fetch the same prices at market. So if you think you found a bargain, be sure to ask which type cacao is being produced!

For every 3 hectares of cacao farm in full production you’ll need one employee, to whom you’ll have to pay about $300 a month or $3,600 a year. Those same 3 hectares in full production will produce around $15,000 a year in sales, which is a low-ball figure, according to the plantation owner, who was my friend and wasn’t trying to sell me anything.

He said after water, fertilizer and irrigation costs as well as subtracting the above cost for the employee, each 3 hectares will leave around $9,000 in annual profit.

Once in production, you will harvest different sections every 15 days, giving you a constant stream of income, for the rest of your foreseeable life! People love Chocolate. I believe my mom’s actually addicted.

One big benefit to working with Cacao instead of Banana is that if you don’t sell the Cacao for whatever reason, you can store it, dry it, and it becomes even more desirable to the exporters, whereas banana, if you don’t sell it immediately, you lose the whole crop.

It’s actually a much more hands off business than most assume. Most plantation owners have a “Jefe” or farm manager who runs the farm for them, the owner I spoke to rarely visits his farm (maybe once every week or 2).

And as for selling your production, it’s easy, most just sell it directly to an intermediary in their town, who then turns around and sells it to an exporter in one of the ports in Ecuador (like Guayaquil), who then sell it to an importer in the destination country, who then sell it to a distributor who then sells it to the final production plants.

Why don’t the producers try to skip the supply chain and export themselves for higher profits?

Volume.

The importers require a certain, large amount of the product delivered to them regularly, and most farmers can’t guarantee such a large amount with frequency… so that’s why they use an exporter who gathers the product from various farmers and intermediaries to ensure they always have product on a steady basis for the importers.

You can find cacao farms along the coast and lowland areas of Ecuador, as well as in the eastern Amazon third of the country. To make good money, consider farms only of at least 20 producing hectares or more.

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The Galapagos: off-limits to retirees, or is there a loophole?

There’s only one place in Ecuador with Caribbean-like, snow-white sand beaches and emerald green water…it’s a little bit of the South Pacific, and a little bit of Ecuador….

… and it’s the only place in Ecuador that attracts the high-rollers…

…you know, the ones that spend $10,000 for a week-long cruise.

And you’ve never heard it mentioned as a possible retirement destination, until now…

The Galapagos Islands.

Problem is that the whole area is considered a National Park, making immigration and foreign investment laws tight.

Foreigners (not even Ecuadorians who aren´t from the Galapagos) can not buy property in their own name, or spend more than 3 months a year in the Galapagos.

But I think I found a loop hole.

And I’ll share it with you.

Recently, I discovered this loop-hole right from the source, talking to the current manager of the Property Registry Office while I was in the Galapagos.

With at least one local from the Galapagos as a minority partner, foreigners can start a business in the Galapagos.

The local partner can own a small, almost symbolic percentage of the shares, they don’t have to be the majority owner (I asked).

And then you can buy a property in the Galapagos under the name of the Galapagos-founded company.

Foreign companies can NOT buy property in the Galapagos in this manner.

And then the easiest way to become a legal resident is to get a work permit, as investor and retiree visas are not given.

One way to do so would be for your Galapagos company to hire you. Yes, in essence, you’d be hiring yourself.

But that’s the only way I’ve found for foreigners to live and invest in the Galapagos.

Buying in the Galapagos can be a complicated, risky venture. But it just may be worth the risk.

Of course, this theory still has to be proven, I’ll let you know how it goes.

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Pay off your next flight to Ecuador with micro-importing

I know you’ve probably heard how Ecuador is cheap, cheap, cheap.

Actually, for many things, it’s not.

In fact, many things in Ecuador are way more expensive than in North America.

It’s due to the ever tighter restrictions on importing many consumer goods.

And with the current administration, its only getting worse.

But of course this leaves the door open to business opportunity. Opportunity that even the casual traveler can cash in on.

For instance, an iPad Mini 16GB was for sale on special in Best Buy (USA) over the Black Friday weekend for $200. It normally sells around $250-300.

In Ecuador, the same 16GB iPad Mini was for sale in the mall I visited for $807.

On Mercadolibre, the eBay of Ecuador, new, sealed iPad Minis are going for around $400-450.

Thats just one example.

Other products that are historically more expensive in Ecuador are usually electronics, name brand clothes, shoes and perfumes.

Other random things like certain brands of spices and pepper sauces, perfumes, body creams, liquors, sugar cubes (I know its ramdom but they’re really hard to find here), large size clothing and shoes are simply not found in Ecuador.

So if you have a business that deals with people constantly coming and going from Ecuador (like in the travel industry), or if you yourself are constantly going back and forth, its quite easy to tap into this and become the go-to guy in your area of Ecuador bringing down things for people and charging to do it.

Why don’t resident expats in Ecuador just order online and have stuff mailed to them?

They do, but there’s a risk in that like what happened to me recently when I had a package mailed to me and it got stuck in customs and generated a steep tax that I had to pay and it was way more than the goods were even worth. It was just random stuff like a few books and clothes. I decided not to pay the tax and I never got the package.

Other items like cell phones have strict import restrictions and may not be released from customs, period. Never know.

Other times, it just doesnt make sense to pay $40-50 to get something like a pepper sauce you like mailed down when you could pay someone else $10-20 to bring it down for you.

Welcome to the concept of micro-importing. And its a real opportunity for some in Ecuador.

Micro-importing is under-the-radar-style importing where travelers take advantage of un-used space in their bags to bring down items that are for personal use only that folks living in Ecuador don’t have easy access to.

At the very least, its something that could help pay off your next airfare to Ecuador.

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High-season’s coming: Leaving money on the table on the coast of Ecuador

As we enter November here in Ecuador.

And all the leaves on the trees are exactly the same color as they were the rest of the year…

As the owner of vacation rentals on the coast of Ecuador I’m being constantly reminded of one fact as the email requests start to flood in.

That the demand for home rentals on the coast of Ecuador really spikes upward from late December to early April when all the folks from the northern hemisphere try to escape the winter.

The difference in demand is huge and shouldn’t be overlooked if you own a rental on the coast of Ecuador.

You really can charge double, maybe even triple the rent that you could during the rest of the year.

And you’ll get it! Just be patient.

Especially if you market to both Ecuadorians (who also want to be on the coast more in those months due to the nicer weather) and English-speakers (escaping the winter up north).

A lot of renters will want to enter starting in November and drag into the high season paying the same low-season prices, or pay you months in advance for the whole high season at a discounted rate.

Don’t let them, or you will be leaving serious mu-la on the table.

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2013 Ecuador property transaction records: Cuenca, Vilcabamba, Loja and the Ecuador Highlands

The responses are in…

We asked how much you actually paid for property in the highlands area of Ecuador.

And you answered.

These aren’t asking prices, but actual recent values people opened their wallet and spent.

In a country like Ecuador with no MLS standardized system, nor publicly recorded comps (or comparable sales records) and with historically low and unrealistic municipal appraisals knowing how much people are actually paying can be very useful.

And thanks to all those who responded to this inquiry… below are the responses!
Loja area

1. 24 hectares (60 acres mas o menos) en La Paz, a small rural town about half way between Cuenca & Loja. We were able to get it for 60k. It has a pristine biew of the valley, two narrow waterways that supply the water for the towns in the valley, Wild Blueberry treeas all over it & maybe 350ft of roadfront property on the main highway.

Vilcabamba area

1.  Malacatos, near Vilcabamba that I bought in May,2011 for $6.83 m2 that is 11,000m2.

2. bought a house in Vilcabamba for 165K in March 2013, land 3,500 sq m. construction 140 sq m, 3 bedrooms, 2 bathrooms , 2 years old, American standards. Sloping land, landscaped, excellent view.

Cuenca area 

1. Cuenca, South side on Rio Tomebamba. 2 floor penthouse condo with 2000 sf. Bought in Jan 2010 for $70K. Found it in the local paper. Condo is 7 yrs old.
2. Cuenca, 10 min (by taxi) from Plaza de Armas.  $67,000.  apartment, 2 bed/2 bath with (solar) heated water, washer/dryer hookups. one of the bedrooms is en-suite. apartment complex was built in 2011.  apt. is 80 square meters, on the 2nd floor of a 4 story apt. complex.

3. on the Tomebamba River in Cuenca El Centro. $175000.  Penthouse condo – brand new.  150 sq meters – includes 30 meters sq of terrace.  October 1 2013

4. Lot 45 minutes from Cuenca, near Paute $40K gental hill side over looking Paute river.  4295 sq mtr, about 1 acre,  January of this year.  has power and water to it

5. 7 hectare (about 17 acres) finca near Guachapala (it’s halfway between Paute and Guachapala) earlier this spring (2013). It has a 3BR/1bath house (in pretty good shape), lovely rock outcroppings, small pine forest, 800 producing fruit trees of several varieties, large spring-fed pond stocked with tilapia, and the access is excellent. The asking price was $165k and they got it for $150k.

6. Cuenca – edificio fronting Rio Yanuncay $89,500.  Apartment, built in 2010 , 116m2 + parking space & small storage area Bought Jan, 2011.  3 br, 2.5 ba.

7. Chordeleg – rural  $160,000.  Orchard, garden, House, empleada      Constructed 20 years +/-  Land = 5945m2 Main house = 180m2 2nd “house” 65m2 Bought May  2009
8. Cuenca.  first floor three bedroom two and a half bath condo for 100,000.00 USD at the corner of Premier de Mayo and Avineda des Americas in Cuenca. The purchase was made last October and the unit is rented out at $875.00 per month

9. Cuenca. 3 blocks from Tomebamba river away from El Centro at Solano and Crespo $174000.  115 sq meter condo built in 2009 Bought October 2013.

 

Quito area and valleys

1. Centro area, one of the few condos facing Calle La Ronda near the Sur Arco.The purchase price was $38,000. The age of the complex is about 42 years old. The 3 bdrm unit itself is approximately 90sq. metros. The purchase date was in July of 2012.
.2 La Carolina/Quicentro area, across from the Mega Maxi on 6 de Decembre. This 12 floor penthouse suite (1 bdrm) is in a brand new complex. The purchase price was $85,000 and is about 50 sq. metros. The purchase date was May, 2013.
3. Quito, La Carolina $104 000 dollar US condominium under construction, delivery on April 2014.  flat of 60 square meter + parking Bought April 2013

4. Checa: For $ 180.000, in Nov. 2011, I bought a 2 bedrm house, in a triplex, with a third of a wall attached. Gardens to be enamorred by, but at that stage, no Internet nor the promised swimming pool etc… Today, with some of the amenities better established, the same house sells for $230.000. The development will soon include a medical center, the covered and the open swimming pool, a mini-market, and high speed Internet,  well as several other conveniences. By then, it will probably be worth closer to $250.000.
5. Cumbayá in Urbanización Meneses-Pallares near Colegio Menor. The property has 1,360 mts2 of land and the house has 760 mts2 of construction. It has some 17 years of being built. I sold it for $500K.
Ambato, Banos areas

1. AMBATO
-the actual purchase price – 125,000
-the type of property and age – RESIDENTIAL HOME /1994
-meters squared of land and construction – 300 / 344
-approx date of transaction 2006

2. BANOS   three bedroom house in  Banos ( near ambato) for $42,000.  it sits on a large lot but had no wall around it.  the house is brandnew but was not well made. white washed walls,no kitchen cupboards

Otavalo, Ibarra, Cotacachi, Atuntaqui areas (north of Quito)

1. Atuntaqui $31,000 . lot.  5,000m2.  6/2013 with irrigation water [4 blocks closer,  property starts at 25 per meter to 50]

2. North and west of Cotacachi.  $18,000.  Raw land some primary forest 1 hectarias flat, 9 hectarias steep from river to Peaks of mountain, accross river from dirt, drivable road. No buildings, electric, or phone.  We do have our own springs and reliable good quality water.  slightly less than 10 hectarias.  march of 2011

Amazon region
1. Between Tena and Archidona, Napo Province. $17,000 for 2.3 hectares of rural land, adjacent to a river (fertile). Cafe and cacao trees on 1 hectare, no construction.  Bought February 2013.

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RE: How much did they pay for coastal Ecuador real estate?

 

You can ask whatever you want for a property in Ecuador.  Doesn’t mean you’ll get it.

In fact, some are quite ambitious when they price properties in Ecuador.

But in a country like Ecuador with no MLS standardized system, no publicly recorded comps (or comparable sales records) and with historically low and unrealistic municipal appraisals seeing how much people ACTUALLY HAVE PAID recently for property in Ecuador can be very useful.

Today you’ll get to see just that.

Or actual property transaction records for real estate in Ecuador.

This is how much someone actually opened their wallet and paid.  (Not the asking prices!)

And thanks to all those who responded to last weeks question…

-On Ecuador coast, No area specified
100,000 (500m2)  Purchased JUN 2013
ocean front  new gated community   lot on front row  ($200/m2 of land)

Puerto Lopez

1. Ocean view on a hill, road dirt access
$6000 USD (320m2) Purchased May 2013  ($19/m2 of land)

2. 26sq.m suite in the Piedra del Mar hotel in Puerto Lopez we bought last May. We have about $33,000 in it now including appliances and furnishings.  ($1269/m2 of construction)

Canoa

1. $19,000 (June 2012)
Lot in urbanization, roads, electricity water pipes installed
400m2   ($47.50/m2 of land)

2. 5 kilometers west of Canoa and  kilometers north on a dirt road …..location:  17 Hectares @ $1800. per Hectare
Purchased in June 2013

3. Briceno, between San Vicente and Canoa on the coast
$30,000 usd
vacant beach front lot on Pacific ocean
360m2  ($83 per m2)
Purchased 05/2013

4. House with oceanview, 2 bedr 1 bath on 1000m2, poor condition
$22k, FEB 2013.   ($22/m2 if taking into account only the land)
Salinas 

1. We purchased an apartment in Chipipe 4 years ago for 230k. 4 bedroom direct beachfront + Maid Quarters, fully furnished + 1 covered parking space.
2. Salinas. 1 block from beach in San Lorenzo. 2 bedroom, 2 bath condo with 900 sf. Bought in Feb 2011 for $49K. Condo is 10 yrs old. ($583/m2 of construction)

3. Salinas. New construction. 3 blocks from beach in Chipipe. 2BR, 2BA, 1000 sf with pool and rooftop spa and BBQ. Bought in Mar 2012 for $70K. Brand new. ($753/m2 of construction)

4. On the Malecon of Salinas, 4 buildings up from the Hotel Barcelo. A 15 unit condo, and we are on the top floor of an 8 story, 6 year old building. Our unit is just under 89 square meters, is 3 bedroom, 3 1/2 bath with an ocean view. With it came a 2200 square foot finished terraza, with a rest room, and wet bar that is ours, and not part of the common area. We paid $95K. It was purchased April of this year. ($1067/m2 of construction)

5. I bought a house & 2 lots in La Malina (Salinas),$49,000 house is 120 mtrs, 2 bedroom, 2 bath, 2nd lot has 18X36 ft pool.

6. Salinas 45K 8 blocks from beach. 4bd 3ba

7. April 15,2013 we bought a 2000 sq ft, 4 bed room, 4 full baths, 19th floor, 5 year old  condo on the Salinas Malecon for $220,000. We are right on the Pacific with  fabulous panoramic views of the Pacific from every room. The building has a swimming pool, kiddie pool, hot tub,2 designated parking spaces, sauna, gym and full 24hr security.  ($1182/m2 of construction)
8. Salinas Malecon Beach View Condo Salinas
$105,000 Purchased Dec. 2011  170 Sq M interior 50 Sq M exterior terrace
Penthouse Suite – Full Floor 8 floor building 2 units per floor except penthouse level
2 parking spaces in garage
3 bedroom 3 bath total with a separate lock-off suite with 1 bedroom 1 bath and living, dining, kitchenette
Condo required total gut and remodel.  1975 construction ($618/m2 of construction)

9. Chipipe Beach View Condo Salinas
$123,000 Purchased Sept 2013 163 Sq. M includes ‘interior’ terrace with sliding doors
3 bedroom 2 bath w. separate maids qtrs.  1974 Construction
7th floor of 11 story building.  2 units per floor.  Condo requires total gut and remodel  ($755/m2 of construction)

Jama
1. Jama Campay which is a residential resort complex (in process) located north of Jama, south of Pedernales. The preconstruction price of my home in May 2012, with 3 BR, 3 BA, one row back from oceanfront, including appliances, basic furniture and a jacuzzi off the MB was under $140,000.  Prices have increased a little since then.  It is now scheduled to be finished in the first quarter of 2014, which is behind the original completion date (oh surprise.) The condo is approx. 1600 sq. ft. ($940/m2 of construction)

2. -the approx. location  JAMA CAMPAY
-the actual purchase price  $89,500
-the type of property and age NEW CONDO
-meters squared of land and construction 2 BED 2 BATH OCEAN VIEW
-approx date of transaction   COMPLETION END OF THIS YEAR

3. Coco Beach Village – just outside of Jama, Manabi
$200,000 for beachfront lot with shell of house – put $100,000 into it this year (3 bedroom, 3 bath)
1,000 sm of lot and 2,350 sf of house (ground floor) w/roof terrace   ($200/m2 of land) ($459/m2 of construction)
Purchased May 2012 – Moved here August 2012

4. Jama / El Matal
$123,000.  Oceanfront lot
Land only – approx 1900 square meters
Nov. 2008  ($177/m2 of land)
all infrastructure in place, ready to build, gated community with club house, pool.

Santa Maranita 

1. $217,000
4 bedroom infinity pool yard done in paveing stone gated outdoor kitchen. Built about 5 years ago.
approximately 660 sq meters double lot . House is roughly 1800 sq feet on two levels.

Esmeraldas 

1. Colope Esmeralda ,  actual purchase price:$ 30,000.00   type of property : 4ac. / 1 1/2 ac. flat land . Approx date of purchase: Aug. 2013  Any other pertinent facts regarding purchase: Top of hill with ocean view .

2. playa provincia esmeraldas
usd 45,000.  casa 20 years old, 3 floors 4 rooms 2 bathrooms
129 sqm land  180 sqm building
summer 2012

Bahia de Caraquez

$175,000
New Ocean Front Condominium, custom built, 4th floor of 8 story bldg. with balcony, 3 bedrooms, 3 baths.  The living room, dining room and 2 of the bedrooms all have fantastic ocean views.  Inside parking garage and bodega.  197 sq. meters, around 2,000 sq. ft.  (2011).  Pre construction pricing.  ($888/m2 of construction)
Tonsupa

1. in Tonsupa, in September, 2011. I found everything that I had ever hoped for and more, at Playa Almendro Resort. It was new construction, 95% completed, and I was able to choose everything inside the doors, including custom wood cabinets and bathroom vanities.  There is 6 pools, with a 7th under construction, 2 spas,a commercial laundry, mercado, 2 tennis courts, 2 volley ball courts.  My condo is 94 square meters, and the cost was basically $1,000/square meter.  We have agreed to lease our condo on an annual basis for $900/month.

2. Lot near beach but not right on it.  $ 35.00 a square meter….total for 1200 square meters is $ 42.000

San Clemente

1. San Clemente  $75,000
“Townhouse” / condo (Vistazul) Built 2008
130 m2 on two floors, 60 m2 roof terrace, May 2011
(6) – 3 floor buildings (5 to 7 units per building), 1 hectare gated community, 100+ meters to ocean ($577/m2 of construction)

2. 820 sq mts beachfront with 10 ft concrete fence; 12 year old about 2600 sq ft 2 story house, 5 bedrooms 4 bathrooms, large patio and balcony.  $110,000. North San Clemente

3. San Jacinto, Carchi, 98 hectares, 4 hectares in platanos and coffee, cacoa, two bedroom, two bath house up, one bedroom one bath down. 2 kitchens, big patios, beautiful views, cloud forest, four streams, river frontage, tilapia pond, $132,000, purchased in Dec 2012.  ($1346/hectare of land)
4. San Clemente
-the actual purchase price:  $85,000, including parking space and storage locker
-the type of property and age: condo, pre-construction, estimated completion March 2015
-meters squared of land and construction: 1.5 acres of land, 1 unit in 54 unit complex, 1,250 sq. ft, 2 bedroom, 2 bath, plus 250 sq. ft balcony
-approx date of transaction: Oct. 2012  ($733/m2 of construction)

5. Beachfront 3 bedr 1 1/2 bath house $100k Sept 2013.
Ayangue

$75,000
Vacant land right on the beach
600sq meters
approx date of purchase: 9/11/13  ($125/m2 of land)
Puerto Cayo

1. Lot in Gated Community.  $82,000
beach front property (new subdivision)
1250m2 (May 2012)
lot is right on the water… community has pool, club house, tennis courts, street lights, sidewalk etc.  ($66/m2 of land)

2. Mirador San Jose NEAR PUERTO CAYO
I paid around 24000$ but I’ve received 15% off on the original price because me and my friends bought 3 lands.
nobuilding yet, I have 5 years to built something
lot is 2160 meters squared.  (May 2013)
gated community, 400m from beach, board walk, 40 min from Manta   ($11/m2 of land)

3. puerto cayo 4000 square meters … cleared…city water…..1/4 mile from ocean with 180 view of pacific and 180 view of foothills….14.50/square meter….buying now.

4. 1. Lot in Gated Community.  $140,000
beach front property (new subdivision)
1000m2 (Sept 2013)
pool, club house, tennis, paved roads, common areas, social event center.   ($140/m2 of land)

Manglaralto

1. beachfront lot
$45/m2,  4400m2 total $198,000.
Nov 2012

2. 2 bedr/2 bath condo on the beach right next to Montanita in a gated community with amenities for $112,000. It will be finished in August 2015.

3. 800 metros Via Dos Mangas, Manglaralto, Santa Elena. One km from beach
actual purchase price: $20,000
Bare land, 2000 M2 land, no construction
December, 2012   ($25/m2 of land)

 

Montanita

17 room Hotel with stunning oceanview near the point in Montanita
Listed at $390,000… sold $230,000, APR 2012.
Olon

$185k
2 story house one block off ocean 4 bedr, 3 bath with balcony
Manta
1. Cuidad Del Mar, 100 meter condo, Plaza Del Mar
Overlooking the ocean, best subdivision on the Coast, Fully Furnished
2 bedroom, 2.5 bath, storage, parking space
Built 2012.  $154,000
2.Central Manabi near Pichincha.
$165,000 us
Farm land no livable structure (has primitive costal farm house with open air type construction…. Stilt house is the best way I can describe it, but not livable to US standards)
90 HA
Purchased April 2013

 

3. Manta
92,500
condo, 3 years old
90 m2
Aug 2011
4. Condo with oceanview in highrise beachfront
new construction
$225,000 (1800 ft2 or 167m2)  ($1347/m2 of construction)
5. Manta
180,000
condo on the beach, new construction
150m2  ($1200/m2 of construction)
Aug. 2011
6. Manta
68,000
condo, ocean view, new construction
78m2  ($872/m2 of construction)
Feb 2012
7. Manta
205,000
Condo on the beach, new construction
153m2 ($1340/m2 of construction)
Dec 2012
8. Manta
200,000
Condo on the beach, new construction
150m2 ($1333/m2 of construction)
Dec 2012
9. Manta
225,000
Condo on the beach, new construction
150m2 ($1500/m2 of construction)
Dec 2012
10. Manta
80,000
condo, ocean view
78 ($1026/m2 of construction)
Mar 2013
11. Manta
30000
land in development
900m2
Apr 2013
12. Manta
110,000
Condo on the beach, new construction
70m2 ($1571/m2 of construction)
July 2013
13. Manta
250,000
Condo on the beach, new construction
150 m2 ($1666/m2 of construction)
Sep 2013
14. Manta
7,500
land in development
230m2
Aug 2013
15. Manta
95000
condo, construction just completed
100m2
Aug 201316. Manta.  $169,000
6th floor condo, 3 bedroom, 2.5 bathroom, 1 garage & storage, big deck of the spare bedroom, giant deck of living room
living space 118 MS, decks 105 MS
August 2012
2 blocks of the beach, fantastic view

 

Punta Blanca

900 m2
close to, but not ocean front
land only
$45 K   2013 APR  ($50/m2 of land)
 Santa Elena (near Salinas)

$80,000.  concrete house 3/3 con casita y piscina grande, appx. 30 anos
5000m2 lot.  Oct. 10, 2011 house is beautiful with fruit trees.
Crucita

1. $21,000
Beachfront lot gated community
374m2 ($56.15 per m2)

2. $65,000
4 bedr, 2 bath house
15 yrs old
beachfront, good condition
APR 2012

Playas

1. PLAYAS Duplex 2000sq ft 2 units 3 bed 2 bath. Beach front  concrete built 5 years ago. Purchased 2012. $105000

2. 4 bedr 3 bath house 2 blocks off beach, small oceanview.  20 years old.  $38k.  Purchased APR 2012.

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Growing palm oil in Ecuador, profitable or not?

“Jeeze, I’ve never seen a road like this,” I thought, this week, as my teeth rattled and face winced along one particularly trying road deep in a palm oil grove.

I was in one of the top places in Ecuador for palm oil growing, La Concordia, a small town tucked deep in the sticks about a half hour from the rough and tumble city of Santo Domingo, Ecuador.

You gotta put your money somewhere.

Keeping it invested in paper US dollars is a well-documented no-no.  Gold may be a better bet, but lets face it, if sh#t really hit the fan, people don’t need it, they need food, they need water.

That’s why one of my next plays will probably be in an agricultural investment, and honestly, its hard to  beat Ecuador for that.

The land is so fertile (and relatively inexpensive).  And farm hands come cheap.

There’s so much water.

Need a specific temperature?  Just find the right altitude in Ecuador, cause its there.

My Ecuadorian friend, and also active palm grower, who I met at a conference I was teaching at this week in La Concordia began to explain…

“Palm Oil is one of the most profitable crops Ecuador has to offer.  At least in this area.”  He started.

Palm Oil is mainly used for cooking, and primarily exported.  The oil is obtained through the fruit this particular variety of palm produces.

palm oil farm ecuador la concordia

The harvest…

Palm oil trees begin to give fruit around year 2, and continue to do so until they are about 25 years old.

Once harvesting begins, you’ll continue to harvest every 20 days for the life of the plant.

One big plus of this product is that it is relatively NOT very labor intensive.  No constant watering is needed.  There is a rainy season, starting in January which then goes for a few months, and that is when the plants receive the water table they need for the year.

The costs…

Most small to medium sized palm farms (20 hectares or less) don’t even have any full time employees, just one live-on watchman.

All farm owners do is hire two guys to come to harvest every 20 days.

One plucks the fruit off the trees with a hook, the other one loads the fruit on the donkeys which take it to the trucks which then take it the nearest factory that proceeds to cook the plant and extract the oil.  They are paid based on output ($15 per harvested ton).

This is another one of those products where no marketing is needed.

You make it, you’ll have a buyer, which is usually the nearest production factory.  As a marketing guy I appreciate that.

The only thing that changes is the market price.  Which for this product doesn’t fluctuate too greatly which usually resides between $150-250 per ton.

Farms start to become particularly profitable when they are at least 20 hectares large.

Each hectare can fit 140 palms.

You can buy the palm trees an inch tall for $1.  Or you can buy them already a year old for around $6.  The best time to plant new palms is in late December or January when the rainy season begins.

You’ll need to invest about $1 in fertilizer per plant twice a year to keep the plants healthy.

You’ll also need to pay a worker $.15 cents per plant to clean the shrub away from around the basin of the plant.  Three times a year.  This comes to about $63 per hectare per year.

You’ll also need to fumigate 2 or 3 times a year which costs around $50 per hectare.

You’ll also need to pay the trucks (considering you dont have one) about $5 per ton for them to haul your product to the processing factories.

“My costs usually run around 20% of my sales in this business.” My friend continued.

Why palm oil?…

One big benefit is that palm is not something that is often stolen, like other crops, due to the weight of the product and also that the factories will not buy stolen product.  They will only accept product with registered tax Id numbers (RUC).

Also, due to the low maintenance and lower risk of robbery, being an absentee owner is more than commonplace, it is the usual.

So no, you don’t have to live there,

Possible sales and profits…

Each hectare of producing Palm can produce on average 2-3 tons of product every 20 days.  The really effcient farms, like a few in Ecuador and many in an experienced Palm oil producing nation like Malaysia, can often produce up to 5 tons of product per hectare.  Each ton sells for the market price which fluctuates around $200… leaving $150 in profit per hectare for the farm owner…

So for a 20 hectare farm that means in the worst case scenario with low market prices ($150/ton) and a farm producing a mere 2 tons per hectare would produce $6000 in monthly sales and leave a profit of around $4000-$4500 a month.

For that same 20 hectare farm at the best case scenario with higher market prices (around $200/ton which the factory pays you the farmer) and a highly efficient farm producing 5 tons per hectare the monthly sales can be as high as $20,000 per month.  With about $13,000-15,000 of that being the estimated profit.

The investment and ROI…

Land ideal for palm growing in the area that is not harvested can be had starting around $3000 per hectare.  But you’d have to wait 2-4 years to start harvesting.  Producing farms with plants in full harvest in the area start to sell for around $5,000-8,000 per hectare.

This week I’ve visited a few 20 hectare sized farms for sale with producing plants for sale in the $6k per hectare range.  So assuming even the low ball figures gathered from friends in the area, that same farm acquired for around $120k could get its money back within 2.5 years.

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1 Costly Mistake when Buying a Business in Ecuador

 

When I first bought the Guayaquil hotel business with a friend of mine 2 years ago I made this mistake.

And it was costly.

And I see a lot of foreigners who buy in Ecuador do the same thing cause they’re ignorant of Ecuador employment law.

The mistake I made was I didn’t ‘clean house’ and start new with my own employees when I bought the business.I inherited one employee from the past regime who stayed on.  For a while.

I didn’t realize the mistake I made until I had to let him go.You see, in Ecuador when you fire someone, or lay them off, or they leave, you have to “liquidate (liquidar)” them.Meaning you have to pay them a lump sum severance payment equal to 25% of all the money they’ve made while working for you.

For instance, for a minimum wage worker in Ecuador making $318 a month, letting them go after one year of work would mean a mandatory severance payment of about $900.

So what most Ecuadorians do, and what you must do too when buying an active business in Ecuador, unless someone is actually vital to the business, when you buy a business in Ecuador have the previous owner liquidate and get rid of everyone.

It may not feel good, but “negocios son negocios” (business is business).

Because if you keep them on whenever it is they leave you will now have to pay them the liquidation payment for the entire time they have worked for the company, even though the company changed hands, doesn’t matter.  And the employee can sue you if you refuse to pay it.

But the person selling you his business won’t tell you this!

Oh no, he’ll say things like you should keep the employees, they’re great workers and very loyal… yea, yea, yea.  After all, it’s better you liquidate his employees after he’s out of the picture than him now.

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5 years on the coast of Ecuador, a unique perspective

manglaralto ecuador

The beach just south of Montanita, Ecuador.

 

Perspective.

You get it after spending time in a place, and boy is it helpful when investing in property.

Some areas of the coast have stayed drearily the same since 2008 attracting little internet nor foreign investment.  While other areas have flourished.
And since most of the expats in Ecuador have arrived after 2009 when International Living Magazine began really pushing Ecuador its rare to hear an honest 5 year perspective from someone who was on the coast of Ecuador before (me in 2008) while researching for the first version of my now-somewhat famous Insider´s Guide to Flipping Properties in Ecuador.  

 

This was before I lived here full time.  I´ve now been here two years now as a full time resident.But I still remember my time on the Ecuador coast in 2008 like it was yesterday.  And my trip from Esmeraldas down to Salinas setting up shop in each little town I came across.

 

Well I just completed the trip again, in August of 2013 going from Salinas to Esmeraldas, town by town, researching for my new Map Pocket Guide to the Coast of Ecuador.  

 

So what are some of the biggest changes Ive noticed on the coast from then to now?

 

Salinas is about the same as it was 5 years ago.  Prices are roughly the same, so is the level of development.  You can find a nice oceanview condo in a newer building starting around $80-90k and up.  A block back or in older buildings you can find condos for half that, same as in 2008.

The beachfront of Playas has really boomed since 2008 with tourism businesses, while the areas north and south of town have also been developed and bought up primarily by the Guayaquil weathly.  When in 2008 the property here you could get for pennies on the dollar, now its hard to find a beachfront home for less than $100k.

Heading up the coast in the small towns of Ballenita and Ayangue pretty much look the same as they did 5 years ago with relatively the same prices… with one exception, the beachfront properties have soared.  In 2008 in these places you could still find small, vacant beachfront lots in the $10-20k range, now if you can find the vacant lot it would be almost triple that.
Montanita has experienced an incredible boom!  In 2008 there were just a handful of hotels made out of bamboo sticks.  And you could find a house right in the center of town on the beachfront for $50k, (like I did, but I didn´t pull the trigger which Im still bummed about) or a vacant beachfront lot in town for $30k.  Now forget about it, the place is a true tourist mecca on the coast and there is very little for sale for anything under $100-200k right in town.  The difference, the local Ecuadorians discovered the place.  Now you will often see more Ecuadorian tourists than foreigners on a given day and the businesses that have come in reflect the new target for the local businesses, the Guayaquil and Quito weekend getawayers.
Continuing north, in Olon the area called ¨Oloncito¨ has really attracted a small army of foreign buyers skyrocketing the prices where Ive seen nice American-quality two story homes a few blocks back from the beach be sold for $160-190k.  However, the town of Olon has not changed much since 2008 with just a few foreigners which have now bought right in the center of town.Further north the San Jose area, a favorite of the Guayaquil wealthy to have a beachfront hacienda, still pretty much looks the same as it did in 2008, with the same high prices (if you can find anything for sale).  Hard to get your hands on one of these beachfront cottages on 1000m2 of beachfront for under $150-200k.Then comes Ayampe, a tiny town that was completely overlooked in 2008 when one guy pretty much owned the whole place and was willing to sell you any piece you wanted for around $10 per m2, now is the perfect example of what just a few foreign buyers buying in can do to the local prices with land prices now often 4 or 5 times that.Neighboring Las Tunas and Salango still pretty much look the same as they did in 2008, dreary fishing villages void of foreigners and investment.

Puerto Lopez now has a much more developed beachfront with the malecon extending from one side of the bay to the other, in 2008 the development stopped at about the estuary.  The rest of the town still looks the same.

Heading further up the coast Puerto Cayo, San Lorenzo and San Mateo still pretty much look like they did in 2008… as lazy, seemingly vacant, fishing villages with little development.

But there is building (by foreigners) going on in Puerto Cayo.Santa Marianita, the top beach in Ecuador for kite surfers, also still pretty much looks the same as it did in 2008, but the northern end is now thoroughly developed with villas cut into the terraced cliffs.

Manta still looks relatively the same as it did in 2008, but with several new beachfront towers.  Prices have risen too, now many beachfront condos start around $1200 per m2.  The area that has really grown is the area just south of the city of Manta with several new monsterous developments that have been built or are being built.

Continuing north, Crucita in 2008 was a hole, an ugly little fishing village and party town for young people from Quito.  Now the beachfront has really been revamped with businesses and investment and there is a steadily growing expat community, all of which have arrived within the last three years or so.  Just a year ago you could have found a nice two story house right on the beach for $65k like a friend of mine did.

The beachfronts of neighboring San Jacinto and San Clemente have really soared in prices and been improved with development, attracting a steady new contingent of expats, but from a block back from the ocean onward the towns still look the same as they did in 2008.
Further north, Bahia has had many of its buildings renovated and its streets cleaned, but it still looks about the same as it did in 2008, still more a playground for the Quito wealthy with over-priced real estate as it was in 2008.While the towns heading north from Bahia (San Vicente and Briceño) still look the same as in 2008 even with the new bridge… Canoa has really exploded!  In 2008 you could find beachfront land in the $10-60m2 range, now the average range goes starts more around $60-90m2 and up.  A close second to Montanita, there are now about 10 times more hotels and restaurants than in 2008.  Along the southern end of Canoa many foreigners have bought in and are building their own beachfront villas or condos.  Another place local Ecuadorians have just recently discovered and is a hot spot for weekend get aways.Heading north from Canoa, it gets very remote and very green very quick, as it did in 2008.Besides for a few small yet flourishing developments like Coco Beach near Jama with 1000m2 beachfront lots starting around $70 per m2 or totaling $70k, this whole stretch of coast until Pedernales as well as the rather rough-looking city of Pedernales with an unattractive beach still looks about the same as it did in 2008.

Heading north from Pedernales the towns of Cojimes, Mompiche, Muisne, Same and Sua all of whoch have expericed very little to no foreign investment nor significant move in prices since 2008.

Of course, with the exception of the newish 5 star all inclusive resort near Mompiche, Decameron, which didn´t exist in 2008.

But I was surprised to see how little spillover the new resort has affected the town of Mompiche, which still looks about the same as it did in 2008 (with very few tourists) before the resort went in.

Atacames, as it did in 2008, continues to have a thriving beachfront area and a seedy underbelly that caters almost exclusively to the Quito weekend get away crowd.  But there has been little noticeable new development.
Tonsupa, just to the north of Atacames, has really exploded, but it has followed the mold of Salinas in that the explosion is not meant for tourists but for the affluent Quito locals looking to have a trophy beach condo they can visit 2 or 3 times a year.  The number of condo highrises now rivals that of Salinas. In 2008 there were many less.

Esmeraldas hasn´t attracted much investment at all and is still the same seedy city you wouldnt want to walk around after dark.

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When to buy, rent or visit on the coast of Ecuador?

when to go to coast of Ecuador

Businesses close their doors.  Even hotels lock it up.

Not a soul in the streets except the occasion street dog.

It´s cloudy and a bit brisk… everyday.

Welcome to the low season on the coast of Ecuador.

It also happens to be the best time to search for and buy real estate.  You´ll find many more properties for sale and eager owners looking to sell at bargain prices.

So when is the low season?

Depends where you are on the coast.

Right now, in August, we´re right in the middle of low season on the southern coast, from Manta down to the Salinas/Playas area.  Low season on the southern coast or area south of Manta is generally from May to early December.

High season from Salinas to Manta is from late December to early April.  If you have a rental, take advantage and jack up the price, cause you´ll still be able to find a renter.

Its the sunniest time of the year with blue-bird days mixed in with the occasional rain storm.  It also happens to be when North Americans are looking to escape the dreadful northern winters.  It´s also when school children along the Ecuador coast have their summer break meaning Ecuadorian families are traveling in full force.

On the northern part of the coast, or from Manta to Esmeraldas, it´s different and more complicated.

The high season is from late June through August, when Quito and the highland people have off from school.  The immediate days around Christmas, New Years, easter week (semana santa, April) and Carnaval (in February) is also high season and very packed.

At least on the beaches in and around Esmeraldas the sunniest months of the year are August, November, March and February.  The rainy months are December, May, June, July and October.

So in the low season …buy… in the high season … sell (but you´re not going to want to, cause your place will probably be rented at a good price).

And for renters, I´d say no reservation is needed for low season stays, you can often find options simply upon arrival, but for the high season reserve months in advance!

And if you´re forced to look for sun in the middle of the year, go north my friend.

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