Archive | Investor News/Analysis

7 businesses I would put in Canoa, Ecuador right now

Disaster breeds opportunity.

The ying and the yang, there is a positive side to everything if you look for it.

This fact has became particularly clear to me since I started investing in currencies online (more on that soon).

But particularly since the earthquake last April, here are 7 businesses I personally would consider putting in Canoa (if I had the time to do so).

1. Rentals- So I’ve heard from sources on the ground, since the quake acceptable American-quality rentals are few and far between.

2. ATM- Everyone I know who lives in Canoa complains there is no ATM, solve this problem somehow and you will be rewarded.

3. Coffee shop- A good one with inside and outside tables, right on the ocean, with WiFi and good pastries, yea, I’d like to see something like that here (think Sweet and Coffee).

4. Liquor store- with ample selection of both foreign and local liquors and wine plus a whole bunch of other hard-to-find edible goodies like thai curry powder, Heinz ketchup, etc.

5. Late night street food, but something different (like a taco bus)– Right now the late night options are limited to average hamburgers on the street, shwarma (kebab), and pizza (moan).  How about a taco stand or pita pit, that’s what I’d put.  Add hot dogs and you can appeal to the local crowds too!

6. Chinese food (Chifa)- According to sources, no Chinese in town currently, could be a big hit with both locals and foreigners.

7. Bathrooms/showers on the beach- Especially since the quake pretty much non-existent.  Def. a need.

So, what are you waiting for? Give it a go!

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

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Posted in Ecuador for Investors, Investor News/Analysis

Earthquake rebuild update from Canoa, Ecuador

This week I had the pleasure to chat with a friend that has lived since June of last year in Canoa, Danial Turner (not a property owner there).

He said he’s noticed a lot of changes in the picturesque town of Canoa, Ecuador on the north Ecuadorian coast which happens to be one of the hardest hit towns by last years April quake.

Hard to get an official count, but many agree about 30-40% or more of the town’s buildings came down.

According to Danial, he said Canoa is rebounding nicely, with a lot of vacant lots where buildings/houses used to be.

No more tent cities now as was the case when he arrived in June of last year.

He said the enormous government project which was going to occupy a whole city block on the beach has now been nixed. (Thank God.)

He said basic services are now fine, electric and water outages are rare, and the town even has city sewage treatment, a service most places on the Ecuador coast lack (they use septic tanks).

Carnival last weekend, normally a holiday weekend that produces a packed house for the town, was underwelming but not bad.

Many businesses have re-opened like the Surf Shack, an expat mainstay, where they have gringo nights on Tuesdays and he himself cooks on Thursdays (Danial is a retired world-class chef).

Friday night try the Suki bar where they have a new cook from England who is doing a great job.

He said there is a big new grocery store in town doing well also.

And that many of the condos owned by expats to the south of town have been repaired and are occupied once again.

He said security is not an issue as a big gringo he has not had any incidents and that the waves are still as good as ever!

He said tourists and expats have started to trickle back but still not coming in the numbers they were before the quake.

Big, new construction projects are still generally non-existent. Sounds like the big money is still spooked.

So next time you’re in the area give Canoa (one of my favs) a shot! You’ll be glad you did.

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

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Posted in Ecuador for Investors, Investor News/Analysis

How to save on your income tax in Ecuador

This week I filed my income tax return in Ecuador due every March (impuesto a la renta).

My accountant charged $30 and was done in 20 minutes.

It was so quick because she already handled my monthly sales tax declarations and already had the paperwork on hand.

Based on the monthly tax declarations for all of 2016 she quickly pumped out the annual return and submitted it.

When you file if you have employees insist that your accountant submits the form declaring how much you pay to employees.  That will lower your tax burden greatly.

If you show less than $11k in profits for the year you pay ZERO income tax in Ecuador.  And it’s a sliding scale on up to the highest tax bracket for folks who make more than $115k profit who must pay 35% tax.

See the 2017 scale and read more here. 

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

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Posted in Ecuador for Investors, Investor News/Analysis

Why you should start a tourism-related business in Ecuador now

2017 is the time to start a tourism-based business in a place like Ecuador where 80-90% of the foreign tourists are American (aka from the USA).

Why?

Because this is going to be a great year.

Being in the industry myself, I can’t help but notice the uptick in travelers so far this year.

Never before in the last 10-15 years has the dollar been so strong, the (DOW) markets at record levels and real estate strong all at once.

In other words, peoples 401Ks look great, their real assets on paper greater, and the dollar is stronger than its been in over a decade meaning you can buy more abroad. And people are realizing it.

Now, the strong dollar may have an adverse effect when drawing Europeans, Canadians and others outside the dollar zone, but who cares when your market is 80-90% Americans in a place like Ecuador?

So if you ever dreamed of opening a tourism-related biz in a place like Ecuador, now is the time to do it!

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

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Posted in Ecuador for Investors, Investor News/Analysis

Is this the best rental investment in Ecuador?

Many new expats in Ecuador gaggle over how cheap the rents are here.

Yet are unpleasantly surprised by how pricey the same properties are to purchase.

It’s true.  It often doesn’t add up.

But there are some opportunities here to make a nice rental return on a purchased property.

So far, I have one of the best returns I have seen in Ecuador renting in Guayaquil short-term.

I keep the place very booked (at least 90% occupancy).

It’s a 1 bedroom suite in a nice building with good location I paid $75,000 to purchase.

After I pay the $123 condo fee and $60 or so monthly electric bill there remains around $1000-1200 a month profit.

And I rent for just around $40-50 a night.

That’s about a 16-19% annual return.

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

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Posted in Ecuador for Investors, Investor News/Analysis

10 tips I’ve learned the hard way from 1 year of managing an AirBnb rental

{!firstname_fix},

I just passed the 14 month mark owning and managing rentals I promote primarily on AirBnb in Guayaquil. 

Previously, I had never done anything like it.

I’ve learned a lot.  Here’s a few things that first come to mind to help you keep your rental filled.

1. A little goes a long way.  Reading the reviews of my competition, I saw it’s actually easy to beat similarly-priced conpetition in your area, most of the other owners (especially in Ecuador) don’t care enough to include the basics like extra toilet paper, hand soap, hair dryers and extra hand wash clothes.  Details count. Think like a hotel.

2. Work the guard.  Preferibly have a rental in a building or gated community that has a 24 hr guard where you can leave the key/elevator card and who can help with basics like calling taxis.  This way, you will get ALMOST ZERO calls!  Better yet, I’ve learned the hard way (as there is no one to receive the key from outgoing guests) to put a door lock that has opens with a passcode you can reset after each guest.  Just email each guest the code of entry before they arrive.

3. Use signs.  Another great way to limit the amount of calls you get from frustrated guests (since you are not on-site) is to SIGN UP everything in the apartment like the WiFi code, how the hot water works and Cable and more. Also include a user guide with building and vicinity information.

4. Maintenance dude. Have a local maintenance guy you can call on demand to go fix things in the apartment when necessary. You pay per job, cheap in a place like Ecuador.

5. No small kids.  Deny people with large families and small kids. You just can’t trust it, too many moving parts or charge a higher deposit.  For a short rental its just not worth it.

6. Don’t accept walk ups!  Only accept people who book and pay ahead of time like through a site like AirBnb.  This way you verify their identity and have a certain go-between should something go array.  I’ve found people who pay with a credit card tend to be honest, reliable people compared to folks who pay in cash off the street for this type of rentals.

7. Reject short stays booked way in advance. Reject bookings for just one or two nights made months in advance!  Very important if you only have one or two units.  Learned this the hard way.  You don’t want to have to reject a month long booking because one night is booked half way through the month! Keep your options open.  Accept shorter bookings last minute only to fill your space.

8. High prices, big discount pricing.  To further deter shorter stays which tend to be less profitable and more hassle (without outright prohibiting them) set a HIGH nightly rate and offer LARGE discounts (like 40-50% is fine) for stays over a week or month which encourage longer stay guests and give them a “Oh, I got a deal” feeling.  And this way if you did get a shorter stay rental it ma be profitable enough to accept for you!

9. Find a local cleaner.  Find someone local who you can pay to go clean upon demand.  In Ecuador, I pay $15 to someone to go clean a one bedroom apartment I rent.

10. Reviews!  Let the client review you first on AirBnb, especially if you have something negative to say about them, cause once they review you, you review them and from what I see it is not editable by either side.


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

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Posted in Ecuador for Investors, Investor News/Analysis

1 Ecuador investment that beats the stock market

I’ve never been a fan of investing in the stock market.  

Especially now that it’s at record highs (terrible time to buy in).  

There’s just too much you or I don’t know, and too many others that know so much more.  

Instead, especially for a steady passive income I’d suggest to anyone it’s best to start a business in a place like Ecuador.

Like something new I’m looking into this week from Guayaquil.  

My 3-point formula is simple.  

1. Find a product or service you know well.

2. Someone local you can trust to manage or partner with who will front their time, all while you front the know-how to get started and capital.  

3. And about $5-10,000 only (you won’t be buying any property, just leasing).  Start with the basics, then scale up add equipment with the money you make in sales. 

Bonus tip: Ignore or selectively forget everything you learned in business school, where all they do is teach you to get analysis paralysis.  

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

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Posted in Ecuador for Investors, Investor News/Analysis

1 Cell Phone-Related Biz-Opp In Ecuador

“I’m starting to think this is hopeless.” I thought as I visited the fifth store dedicated to selling cell phone protective cases in Quito (Ecuador’s capitol city).

You see, in Ecuador, just like the cars on the road, due to the import restrictions there is a very limited variety of cell phones available locally.

And the cell phone case stores cater to only the most popular brands and models of phones in Ecuador.

Yet, there are many people like me who brought their phone from somewhere else. And my poor-little Motorola smart phone is not a common make and model here.

And it’s da-n near impossible to find a case for it.

But I’m not the only one, there are A LOT of people who bring a phone to Ecuador.

Good luck finding a case for it!

Searching online I had slightly better luck, but the one store I found across country said they were sold out of my case, but could order it and it would be here in a month!

I can only imagine what it’s like in the smaller towns of Ecuador to find a case for their phone.

I think this is an opportunity for someone.

You don’t even need a store front. Selling online in Ecuador would be enough.

This is one example of an under-filled niche in Ecuador. There are many similar ones.

I’d focus on what you know…

Why do I share this idea?

Because I already have a business at the current time and I need a case for my phone before I break it!

If you liked this you’d love my wekly newsletter on living and investing in Ecuador, fill in below to sign up now (you can unsubscribe at any time):

Posted in Ecuador for Investors, Investor News/Analysis

The Wrong Way To Close A Sale In Ecuador

“You did what?” I asked surprised at my new American friend who told me he just agreed to sell his car to an Ecuadorian girl.

He’s turning down dozens of people calling on his car every day (a car in high demand in Ecuador) because he already agreed with a handshake to sell and was planning on meeting her in a few days. No money exchanged.

“Naw! Man.” I responded.

Maybe that’s how you do business in North America, but that doesn’t work down here.

The first person to pay you in full for the car, get’s the car, that simple. Don’t be holding it for people!

Down here, if there isn’t at least a deposit paid, you got nothing, man!

Words are just hot air.

Handshakes are worse.

Checks are the equivalent of toilet paper, (seriously!) at least, when you don’t know the buyer in a deal like this one.

Particularly, when selling something in high demand down here like a car, if someone asks if they can pay in installments or whatever, tell ’em to f— off, you’re not a bank.

Cash in hand or deposited in bank account… then goods released.

That’s how you do business down here.

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Posted in Ecuador for Investors, Expat Lifestyle, Investor News/Analysis

Roof install costs on the coast of Ecuador- Ecuador house build weeks 5-10

Hi {!firstname_fix},

And on goes the roof!

I wanted to do a house in the typical Spanish style with the red clay shingles.  Plus, I wanted to do a lighter-weight roof with “flex” which would be better for earthquakes than the typical cement roof (losa) common in Ecuador.

Also, I thought it would be nice in the case of a big quake the thought of gypsum and shingles above me appeals to me much more than blocks of concrete.

Plus, i decided to do a four-sided sloping roof with multi-colored clay shingles in a typical-Japanese style.  Rare in Ecuador.

But first came the metal frame…

Labor cost for installation of metal framework for roof (3 days)= $500

anti-corrosive paint $82.50
metal beams for roof $1326
tape $9

Then came the plywood on which goes the shingles are held in place by a little bit of cement.  The costs highlighted below are for the roof, the roof installation cost $580 and took about 2 weeks.

Then came the shingles…

In Ecuador to lay roof shingles costs around $3.50 per m2.  When installing make sure there is a decent slope or you will have big leak problems later!  Trust me, I know from a different property!

Total roof install= 2 weeks.

The total spent on the roof for a three bedroom two bath house was $3,788.09.  

See full costs below of weeks 5-10 of build project…

28.73 chimney
1239.41 plywood for roof
18.84 screws for roof

11.45 electric tubes
6 telephone
7.50 screws for roof
248.86 ceramics for balcony $7.60 per m2
9.22 latex paint
97.30 cable
15.73 bondex roof
11.28 disc for electric saw
8.00 grapa metalica
1492.90 shingles roof (165m2) for 145m2 house
3.00 electric outlet
3.00 gyprocks misc.
1.20 placa plastica
11.54 fachaleta
$580 manual labor for roof. $3 per m2
219.15 More shingles
$7.75 sack of cement 
940 maestro Jimmy for foundation work (out of $9500)
150 metal door and install for water tank
3.00 teflon
13.20 tubes (codo)
17 breaker
81.95 tank for water
73.18 supplies for tank
62.18 cement
210 gas
1810 of 2260 Gypsum drop off installation included materials. $15 per m2
$4.75 cable
17.50 screws for gypsum
160 last payment for electritian
17.65 outlet
30 transport for tiles
1598.25 porcelen for bedrooms at $15.98 per m2 (100m2)
1175.25 porcelen for bathrooms
1200 last payment maestro for laying foundation (out of $9500)
79.11 ceramic tiles
3.25 brush
13.50 screws
23 telephone calls
8.35 tubes varios
31.40 siicone
$103 bondex for roof
$105.69 electric cable
14.58 roof supplies
140 payment electritian
10.79 polimex
40 uplift metal framing for roof
63 stucco for walls
298.58 bondex for flooringWEEKS 5-10- TOTAL SPENT INCLUDING ROOF for 190m2 HOUSE:  $12,207.

ecuador-house-for-sale

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Posted in Ecuador for Investors, Investor News/Analysis

3 things to consider before you lie on your property deed in Ecuador

This past week in this newsletter we touched on the reality of Ecuador property in that the municipally appraised values often are MUCH less than the real commercial values the property sells at.

I just want to inform on the reality of the situation, the choice is yours to put the real price you paid on the deed or just the minimum needed or the municipally appraised value.

But there are three things to consider when making the choice…

1. Do you need this property to get an investors residency visa in Ecuador?

If so then you MUST put at least $25,000 value on the property plus $500 for each dependent.  Still valid in 2016.

2. How long do you plan on keeping the property?

Putting the lower amount can help minimize notary and municipal fees now at time of purchase and your yearly property taxes (predios), but keep in mind the next buyer might not want to put the lower amount meaning you’d get nailed with a hefty capital gains tax bill!  So if you plan to keep the property for the long term this may not be an issue.

3. Is there any chance this property could be expropriated by the government?  Like to widen a road (I’ve seen many times in Ecuador), or build a bridge, park, etc…

If so, keep in mind the government only pays according to the low-ball MUNICIPAL APPRAISED VALUE of the property but if you have the higher real value on the property you could make a good case that the property is actually worth that and get all or part of that higher value.
Now, the choice is yours!

 

Posted in Ecuador for Investors, Investor News/Analysis

Up goes the walls, costs and more: Ecuador building project week 2-3

Now with the floor and columns up time for the walls…

After building with blocks on this house, next time, I’m going to use bricks, why?

Although the labor time is much more, the walls won’t crack, are more solid and after all you may use less cement cause you don’t have to plaster over the walls when finished.

We used 15 cm wide blocks for walls and filled with cement for noise protection.

For a 190 square meter house that we are building on the coast of Ecuador.  We needed 2100 cement blocks at 38 cents each.   TOTAL price $798.

Cheaper than bricks, you bet, and much faster to build!

Posted in Ecuador for Investors, Investor News/Analysis

Why Ecuadorians lie about how much they paid for their property on their deed

3 things you got to know before you buy property in Ecuador…

1. Municipal’s official property appraised values in most cases are WAY out of wack, or under the actual market value.  It’s common to see properties selling in the six figures while municipally valued at $5,000 USD or less.

2. The buyer of a property can put the real price she paid for the property on the deed but must put at least the official Municipal appraised value.

3. Ecuadorians HATE paying taxes, even more then we North Americans do, because I suppose we are more used to it.

Put these three facts together and most who buy property in Ecuador don’t put the actual amount they paid on the deeds but the minimum amount they must put which is the Municipally appraised value.

The reason for this is because it greatly lessens your tax burden, both for your transfer fees at time of purchase and also your annual tax payments (predios) due to the Municipal each year of ownership.

Here is a real life 2016 example of a property I am looking to buy and how putting the actual amount the owner is asking on the deed effects the transfer and notary fees you will have to pay at purchase plus the annual property taxes vs just putting the Municipally appraised amount.

Figures were attained directly from a notary in Ecuador.  

Actual asking price of property: $77,000

$355 Notary fees
$760 Alcabalas (Municipal transfer fees)
$228 Junta de beneficencia (Municipal transfer fees)
$4000 capital gains tax or plusvalia (the seller pays)

Annual property tax payment if based on actual purchase price (predios): $190

Current Municipal appraisal of same property(and the current value on the deed): $37,745 

$237 Notary fees
$377 Alcabalas
$120 Junta de beneficencia
$0 capital gains tax or plusvalia (the seller pays)

Annual property tax(predios) currently being paid based on current appraised value: $71

Conclusion:  Buyer could save over $600 in notary and transfer fees/taxes at time of purchase by just putting the Municipally appraised value.  Could also save over $100 a year in the annual property tax due.  The seller would save greatly in the capital gains tax (maybe something the buyer could ask for concessions on from the seller for saving them so much in tax by not upping deed to actual value).

Possible consequences:  Nothing I know of, everyone does it in Ecuador except when there is a bank loan involved in which case the bank does NOT take the Municipal appraisal but will send a guy to do their own for a more accurate figure on which they will base their loan amount to you.

The choice is yours.

Hasta pronto,

Dom Buonamici
Quito Airport Suites
Guayaquil Airport Suites Mall del Sol
Puerto Cayo Real Estate

Posted in Ecuador for Investors, Investor News/Analysis

Driving from the Ecuador highlands to the coast through the backdoor in HALF the time (just 3 hours)

Many of us expats (myself included) in Ecuador prefer to live in the Andes Mountain region due to the mild, cool climate (and lack of mosquitos) in the center of the country and then invest in a second home or take vacations to the coast.

By Andes region I mean the area starting in Tulcan in the north, then going down through Ibarra, Otavalo, Quito, Ambato, Riobamba, Cuenca, Loja and then on to Peru.

But most who’ve driven it knows it takes 6-8 hours easy to get from Quito to the closest points on the coast.  From Cuenca, it’s a good 3 and a half hours to Guayaquil, then another 2 hours to the closest beach.

Most don’t know there’s a back way to the coast…

In fact, you can get from Ibarra in the mountains north of Quito to the north coast in just 3 hours!

And the road is well paved, scenic and EMPTY too.  It connects Ibarra to Lita, then on to San Lorenzo on the northern most tip of the Ecuador coast.  From there you turn south and within about 45 minutes you are in Las Penas and the other beaches north of Esmeraldas.

When I took this road (route 10) recently I didn’t see a single truck and very few other cars during the whole 3 hours I was on it.

Great for anyone that wants to try the road less traveled by or for someone who wants to live in the Mountains in someplace like Ibarra, yet be close to the coast!

 

Posted in Ecuador for Investors, Investor News/Analysis

Evictions In Ecuador: How They Work, And What To Do When It Happens To Your Property

{!firstname_fix},

“I can’t believe it’s come to this.” I said to my friend as I slid the ski mask over my face a few days ago.

“Got the switch-blade?” he asked.

“Yes.” I responded.

“Got the baseball bat?” He asked.

“Come on man, its Ecuador, ain’t no baseball bats here.” I continued.

“Ok, then got some stick you can use as weapon if needed?” He mumbled.

“Yes”. I replied as I slid it under my belt hiding it from sight.

“OK, lets go.” we both agreed as we walked towards the building, nodded at the security guy we’ve seen a million times and into the elevator we went.

I hoped this wasn’t going to get ugly, I thought, as we went up the elevator about to confront a tenant that did not want to pay the rent nor un-occupy the property.

Then I woke up.

My friend nudged me awake, I was daydreaming, waiting in the lobby of my condo building waiting for the tenant who didn’t want to pay to leave.

He wasn’t leaving.  And I was angry.  Maybe it was the Italian in me, I don’t like it when people steal or try to cheat me.

First time this happened to me or one of my properties in Ecuador.

So what could I or you do in this situation?

I know the laws favor greatly tenants over owners here.  So I was worried.

For that, I talked to a notary/lawyer friend of mine in Guayaquil who prefers to remain nameless.

Here’s what she said:

The legal term for eviction is “desahucio” in Ecuador.  First, you have to go to a notary with your signed rental contract (does NOT have to be notarized) and ask for a document called a “desahucio” which you then have to serve the tenant.

They then have 90 days (3 months) to leave the premise by Ecuador law before you can come with the police and kick them out.  In the meantime, you will have to go to a rental-claims-court (juzgado de inquilinato) and file the claim.

What if you don’t have a rental contract like in my case because the rent was going to be short-term (1 month)?

You can make a declaration of ownership of the property and verbal contract (declaracion de un contrato verbal) with a notary to continue the procedure.

Then, I suggested another solution.  Quicker.  They’re not paying for services so can I just cut their services: water, electric, Internet?

She said yes, just do it.

And after one more warning (and one more night) I did just that with the building staff, first cutting the water, the electric then the Internet to the suite.

And sure enough, within 1 more day after that they were out of there on their own terms.  The whole ordeal of them being in there and us trying to charge them and them not wanting to pay (or leave) lasted about 6 stressful days.

I only let these guys in in the first place based on a recommendation from a friend (that i’m also not going to listen to anymore).

But to avoid situations like this with my short-term vacation rental business in Guayaquil, I have to stick to my rules of no walk-ups, and Internet pre-paid bookings only which I think will help prevent situations like this greatly.

And for rentals of longer terms, be sure you get that contract signed from day one for your property and screen your tenants carefully!

 

Posted in Ecuador for Investors, Investor News/Analysis

Common setbacks when getting electricity to your home in Ecuador: PART 4 Ecuador coast home build

This week, before the heavy construction begins, we had to bring electricity to our lot from nearby.
First, you may have to install your own transformer.

Just make sure it is at least 5 KW for every house you plan to connect to it.  And make sure the person who installs it is licensed or you could have a problem with the Municipal later!

In my case the whole installation including 3 posts to get the electricity to my lot cost about $3000.

When installing electricity in your home make sure the breaker box is hidden, Ecuadorians will often but the box right in the middle of their living room!  Ouch.

Make sure the light switches are just 100-110 cm off the ground so kids can reach them, often in Ecuador if not told the workers will install the sockets too high.

Also, make sure the voltage is 110 for normal sockets and 220 for the oven and AC installations.

Often electricians in Ecuador plan to make most their money on the cables they steal from you!  So be very careful with this!

Additionally, most electricians in Ecuador charge per point, or per socket installation.  We paid $8-12 per point (or socket).

Often electricians will tell you you need more expensive cable than you really do so they can steal it, careful!

For sockets 12 cable will suffice, for AC or oven 10 cable is ideal.

Posted in Ecuador for Investors, Investor News/Analysis

How to get hotel-type-dollars for your rental in Ecuador- Property Management Opp

“No, I don’t do rentals.” 

That’s a phrase I hear a lot when talking to real estate agents in Ecuador.  Particularly foreigners who are working in Ecuador as real estate agents.  

But I think they’re missing the boat.  

Especially now in 2016 as many locals and expats are opting for renting over buying.  

Maybe it’s distrust in the local government, or the strong dollar, or earthquake worries.  Everyone has their reasons for deciding to rent. 

I started my property management business in Guayaquil a bit over 6 months ago and it’s been going great.  

And I think it’s a BIG opportunity for other foreigners all over Ecuador. 

Ecuador (especially on the coast) just doesn’t have many good, professional property management options.

Many people just lock up their house or condo and leave (which you shouldn’t do in Ecuador due to the risk of break ins of obviously vacant properties).  

Plus, a lot of foreigners are only here part-time and need someone honest to pay the utility bills, property taxes and maintain the general up-keep of the property while their gone.  

And most importantly, show the house, charge the clients and be the liaison for the tenants when problems arise. 

How I do this business in Guayaquil (although I live in Quito) is pretty simple, and similar to what I’ve seen others doing in other parts of Ecuador. 

Here’s what I’ve done:

You can start with not even buying a property, like I did.  Just rent long-term.  

Less risk.  

And then sublease for shorter-terms.  

Be sure the owner knows what you’re doing at the beginning and is Ok with it. 

Find one unit to begin and expand as needed.  

Find a unit in a great location for your ideal client (tourists, expats, etc.), with a 24 hour guard/receptionist and preferably in a building or community that offers the same amenities of a hotel (like a swimming pool, gym, etc.)

Find a location with a bunch of eating options around and your guests won’t even care if you don’t offer a restaurant or breakfasts.

You can still beat the hotels in the area, especially for longer stays (weeks to a few months), because your unit has a kitchen, living room and generally more space and privacy than a hotel can offer.  Plus, hotels charge per person and restrict guests in the rooms which you won’t.  

Having your units in buildings with 24 hour staff means you don’t need to hire ANY employees!  I just have one young, nice bilingual guy who I pay to fix problems as they arise and coordinate cleanings between guests which I pay per job as needed getting a “factura” or official receipt making the work contract-work only.

If things keep expanding I may hire him full-time in the near future meaning I’d have one employee. 
  
We leave the key with the guests name on it at the reception and the guest is instructed to request it at check in.

Promote and charge 100% online with prepaid bookings only.  Because you or none of your direct salaried employees will be there to charge when guest arrives.  

You can also charge a security deposit in advance online with a service like PayPal which you can refund later with a click.  

As you expand you can begin to manage other properties in the area for other owners for a percentage of the rent.  In my experience, once you’re in the game, they’ll start approaching you!

For instance, in Cuenca and Salinas, two Ecuador expat hot-spots where I see a lot of opportunity for this type of business.  You could rent nice, furnished places where tourists want to be in the $3-400 range long-term and turn around and sublease for shorter stays in the $50 a night range.  

You’d have to cover the utility bills but in Ecuador that’s not much, so you could net around $1000 a month from one unit.  If you keep it full, which I’ve found do-able.  

One thing is for sure, managing rentals is MUCH EASIER than managing a hotel or B&B which requires 24 hour employees (or handcuffing yourself to the site)!

To promote AirBnb.com is a great start, but it’s fascinating to me how different it is promoting essentially a vacation rental compared to my 19-room hotel(b&B).  To learn more about that fill in the blanks below…

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Posted in Ecuador for Investors, Investor News/Analysis

The exit tax advantage foreigners have when buying property in Ecuador

Just like with any Economic decision, there are winners and losers, positives and negatives.

Recently, I used the ever-heightening exit tax (now at 5%) the Ecuador government has put on any money (and now cash) you wish to take out of Ecuador to my advantage in a property deal in Guayaquil.

A friend of mine was about to buy a property and had already agreed on the purchase price after a tough negotiation with a wealthy Ecuadorian owner.

But I had an idea.

As I know wealthy Ecuadorians pretty well and what makes them tick (I partnered with one in my first biz in Ecuador).

-I know almost all of them take one or two “shopping” trips a year to the USA.

-I know they almost all have bank accounts in the USA.

-That they HATE paying taxes and are generally cheap. While in my experience, the poor and middle classes are actually very spendy and don’t save a dime.

-Have almost “zero” liquidity. All the money is usually tied up in businesses, inventory or property.

-And are fearful of the current regime in Ecuador and trying to get some of their assets out of Ecuador.

Keeping all that in mind I told my friend to ask for a 3% discount and extra concessions on the already discounted, agreed-upon price if the payment was made to a USA account instead of brought to Ecuador.

The Ecuadorian owner knew it would cost him 5% to take the money out of Ecuador, so he gladly agreed.

For my friend, an American buyer, it was the same for him to pay from his US account to an Ecuadorian one or an American one (no tax on bringing money to Ecuador, just the wire fee of like $45).

So there you have it, one way to use the new exit tax to your advantage in Ecuador getting an extra discount on a property purchase.

For more on this topic please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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Posted in Ecuador for Investors, Investor News/Analysis

Is Ecuador the next Venezuela?

I’ve been in a few communal showers, but thankfully never in a prison one.

And so I’ve heard, dropping the soap is “how it starts”.

Similar to that… Ecuador is currently on a predictable path to become another Venezuela.

I for one hope it doesn’t happen, Ecuador now is certainly NOT Venezuela, still very capitalistic, but it’s just history, man.

Like when a country elects a fiery, entertaining ruler who instigates racial prejudices and violence, we know what happens.

Yea, or do we?

Like for the president to kick out the congress, install his own people, intimidate the press, eliminate term limits, install capital controls. On and on it goes until one day you think.. “oh sh*t!”

Like one Venezuelan client of mine said, “Yea, the marches, that’s how it starts, but it doesn’t do a da** thing.”

This week the president just followed the next step in his plan to convert Ecuador into another Venezuela, or Cuba…

Right now, on any amount you try to transfer out of Ecuador over about $1,000, you have to pay a 5% exit tax on the whole amount. And the max you can take out of Ecuador in cash is $10,000 tax free.

Well, the new proposal by the president wants to lower the max on the tax-free cash limit to $1,000. Effectively putting a nice cap on ALL THE MONEY in Ecuador.

Want to take it out? Going to pay that 5% tax.

Among other proposals lost in the wash are what Venezuela already has in place, like putting limits on how much Ecuadorians can spend abroad on their credit cards, etc.

My take, I’ve always been one to say you should never put more than 10% of your total portfolio in Ecuador. Ecuador’s a nice diversification, but that’s it.

Especially now, any money you put in Ecuador better be able to generate you over well over 5% return a year or its simply not worth it.

For more on this topic please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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Posted in Ecuador for Investors, Ecuador Q&A, Investor News/Analysis

The 3 Most Visited Beaches In Ecuador

This week I got an email from a subscriber…“Hey Dom, I’d like to put a business on the beach in Ecuador, and from your experience, what would be the top3 most visited beaches in Ecuador, based on visitors and not whether they are foreigners or nationals?”

ME: Well, I don’t have the exact statistics (I don’t think anyone does!) but from my experience I’d say the mostvisited beaches in Ecuador are…

1. Montanita- Been THE big, new hot spot on the coast for foreign and local tourists alike since 2011.  This place is packed shoulder-to-shoulder on weekends and holidays but has tourists year-round, every day of the week.

2. Salinas- For decades this peninsula has been the go-to beach getaway destination for locals from the nearby city of Guayaquil, and also from the Cuenca area, and since about 2011 been growing in popularity with foreign expats.  The problem is the noticeable lack of beachfront hotels because most of the boardwalk is covered by condo buildings limiting tourism growth.

3a. Atacames/Tonsupa- For decades its been the go-to spot on the coast for locals from Ecuador‘s capital and second largest city (Quito).

3b. Playas- Another up-and-comer, its proximity to the largest city in Ecuador (1 hour from Guayaquil and a new road coming) helps a lot.

3c. Puerto Lopez- Popular with foreign tourists due to the whale watching (July-October) and its proximity for day-trip excursions to “the poor man’s Galapagos” The island of Isla de La Plata.  But its proximity to one of the largest cities on the coast of Ecuador (Manta) as well as Porto Viejo helps a lot to attract locals on the weekends and holidays.

For more on this topic please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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Posted in Ecuador for Investors, Expat Lifestyle, Investor News/Analysis


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