Category: Ecuador for Investors

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. Then I talked with this amazing company called Jim Wilson & Associates where these professionals showed me the properties I was looking for.

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!

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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Refer to visit ThePattisallGroup.com to find more updates on real estate sector .

8 things to know before you visit Salinas, Ecuador

“It was too cloudy.”

“It was a ghost town.”

I hear things like this all the time when people describe Salinas, Ecuador.

They just don´t know.

Right now I´m checking in from Salinas, Ecuador on a bluebird sunny day.

The ocean is sapphire blue and very inviting, not a cloud in the sky, and I´m surrounded by women in bikinis (at least thats what Im noticing).

People are on their balconies drinking beer with their friends.

Whats not to like?

But you have to know a few things before you visit (or live in) Salinas to get the most out of it… and be sure to define what you want.

1. Know the weather.  From mid-December to early-May most days are sunny and warm.  From late-May to mid-December its generally overcast.  It makes a big difference!  The ocean turns from blue to grey.  All year it almost never rains on this peninsula blessing it with low humidity.  For me, April is the best month to visit.  Right now!

2. The seasons.  If you like being surrounded by people, come in the high season from late December to early April, specifically on the weekends.  If you like empty beaches come from late April to early December.

3. When to buy.  If you are looking to purchase real estate, be sure to go in low season, when the weather is bleak, and everyone has their ´for sale´ signs out.  The difference in amount of inventory available is astonishing.  The best months to property hunt are August, September, October, right in the midst of low season and when the high season still seems far off.  In high season, almost all the locals and expats take down their for sale signs to enjoy their property. As I speak here in April there is very little for sale.  Ill be back in two months.

4. Where to eat.  People who say they dont like the food here must not have known where to eat.  Try the local treat, fish fillet soup “Chupe de Pescado” at the Restaurante Herminia on the Malecon.  Try eating where the locals eat at the open-air food court Picanteria Super Fausto near the Bank of Pichincha.  Try anything on the menu labeled with ” al ajillo (garlic flavored seafood)” “encebollado”, “ceviche”, ” sancocho” all delicious choices.  For something fried you could always try the “camarones apanados (breaded shrimp)” or the cangrejo (crab).

5. Where to hang out and stay.  Do you want to hang out with other foreigners or the locals?  To find the expat-gringo crowd hang out at the Smokin BBQ next to the El Carruaje Hotel on the boardwalk or try the bar at Hostal Aqui or the restaurants at Big Ralphs or Cocos Hostal.  Go elsewhere if you prefer to hang with the locals.  For cheap places away from the gringo scene you could try any of the many smaller hotels one row back from the ocean like Marvento or Salinas Suites which usually oscillate around $20 per person depending on the season.   For a luxury place try the Barcelo.

6. What to do and where to shop.  Whale-watching is good fun and possible from late-July to early-September.  People dont realize but at the local travel agencies on the boardwalk you can also hire banana boat rides, four-wheelers and even deep-sea fishing or scuba.  For those living in the area to find any household items you may need try the big box stores at El Paseo Shopping Mall.  To get the freshest seafood at the best prices try the Mercado de Mariscos in La Libertad.  For local handycrafts try the handycraft market near the Banco Pichincha on the boardwalk.

7. What its really like.  Take it for what it is.  Salinas from the beginning was built not as a tourist destination but as a weekend retreat for the wealthy folks from Guayaquil.  Another way to store their wealth.  Its a row of high rise condo buildings along the ocean.  If you go one or two blocks back it gets bleak fast as it pretty much looks the same as it did 10 years ago with not much investment.

8. The best beach?  Chipipe vs the main malecon/ San Lorenzo area.  Chipipe, tucked away in a cove, is the nicest beach in Salinas yet most miss it and stay on the main malecon beach area and then come away unimpressed with the beach at Salinas.  Other nice beaches nearby Salinas include Playa Rosada and Ayangue.

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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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. We have acquired licenses and various other documents for the region, including pay as you go food delivery insurance, and are slated to start very soon.

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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Why I left Cuenca…

 

I hear it all the time…

“Man, Cuenca was too da** cold and rainy.  I came south to get away from that.  But the coast is too hot and humid for me, I think Ecuador is not for me.”

You’re right.  It’s freakin cold!

Cuenca doesn’t have eternal spring weather like what you’ve probably read elsewhere online, for me, its more like eternal late fall.  I’m talking late October early November in the midwest here.

Cuenca, Quito and Loja are simply cold.

The coast is hot.

But this is the tropics man, all you have to do is find the right elevation that gives you your ideal year round climate.

Like instead of Cuenca, try nearby Gualaceo, Paute or the Yunguilla Valley.  They all are mountain towns that have warmer, yet not too warm, weather.  For you, maybe just right.

Instead of Quito, which is too COLD for me, try living in one of the lower valleys nearby like Tumbaco or thr Valley of Los Chillos, both have much more pleasent truly eternal spring-like weather.

Instead of chilly, overcast Loja, try more mild, sunny nearby Malacatos, Zaruma or Vilcabamba.

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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21 Things you can ONLY see in Ecuador

That’s the reason we travel, right?

To see stuff we can’t see in our home country.

Well, here are 21 things you could never see in the USA or Canada (or elsewhere for that matter) but you CAN see in Ecuador.

1.  When pulled over by the cops, Ecuadorians tend to get out of their cars and walk over to the cops and try to reason with them.  If you tried this in the US you would be shot dead on sight and left to lie there in your own pool of blood.

2.  Getting honked at while sitting at a red light.  I’ve only seen this happen in Ecuador, and a lot.  If you tried this in the USA you would make the evening news as a victim of road rage.

3.  Self-made speed bumps.  Thats right, especially along the coast, a lot of folks in small towns decide from one day to the next they’re going to make a speed bump.  Usually they are perfectly camouflagued and right at the end of a speedy curve, yes, they’ll rattle your teeth all right.

4.  Unrefrigerated Milk in a box.  I never seen this in the USA, but its commonplace in Ecuador.

5.  Women in high heels in a grocery store.  No, they are not on their way to a wedding or something, Ecuadorian women will put on heels to go grocery shopping.  Better than the other extreme, boy, did I get tired of watching lazy American college girls who roam around all day still in their pijamas.  I for one hope that trend stays in the US.

6.  At 5’6 getting on a crowded bus I can often still see over the tops of everyones heads.  In the US I would be catching the draft of ‘silent-but-deadlies’ on my forehead.

7.  Love motels.  Maybe I was too nerdy but I never saw one of these in my first 20 or so years of life while living in the USA.  Love motels in Ecuador are pay-by-the-hour places with heart-shaped beds, no windows, and all the channels on the TV are p orn.  You go there to do one specific thing and leave.  My first time in one they looked at me funny when I asked if there was a 10 minute rate.  Seriously, in 10 minutes I’m done, showered, shaven and smoking my second cigarette. Unless of course I have one of my bubblers and in that case, it might take a little longer.

8.  Gas station gas pumpers.  This is a long extinct career in the USA.  But every gas station in Ecuador has them.  I guess they think pulling a lever is too complicated for people.  But what is the training like for these people that help you pump your gas?  I can see it now, “OK men, easy and steady, aim high, don’t go crazy with it, if you get it on the rim you’ll hear it from the misses.  And if you shake it more than 3 times you’re playing with it.”  Maybe thats why only men seem to be qualified for this one.

9.  Coca cola in a bag.  So what happens if you order one of those famous, standard $1.75 Ecuadorian plate lunches to go?  That’s right.  They will give you the coke in a bag.  To look as Ecuadorian as possible you need to proceed to bite the corner of the bag and “suck that titty”.  Come on, don’t be a baby, (no pun intended) we’ve all done it at one point, or various points, in our lives.  Other wierd things in bags can also be seen like ketchup, mayonesse too.  Strange.

10.  Carrots larger than a grown mans forearm.  At the sight of one of these massive carrots one female tourist asked me if everything in Ecuador was that big?  Why yes mam it is.

11.  Cars with 100% tinted windows and police-style strobe lights.  This seems to be permitted in Ecuador cause I see it eveerywhere.  Too bad its not permitted in the US or I would have lost my virginity 2 whole years sooner in that parking lot that one time.  Men understand, this is an important monkey to get off your back.

12.  Roosters that crow at midnight.  Anyone that has lived in the countryside of Ecuador can sympathize with me on this one,  Must be the equator, but rooster in the countryside of Ecuador have a seriously messed up internal clock.

13.  Watching the Metro door close with so many people packed in that someones arm is stuck out the door as the tram starts to pull away.  Only in Ecuador.

14.  Beer and dogs on the beach.  Ah, I remember in when I lived in Southern California dogs were quarantined only to a few very specific beaches and beer was a big no no and could even get you arrested.  In Ecuador, Ecuadorians don’t go to the beach to surf, or jog, or any of that lame stuff.  They go to drink beer, and lots of it!  It would be tough to find an Ecuadorian beach without beer and at least a half dozen stray dogs roaming the cuff.

15.  Chicken feet soup.  theres just some parts of animals we’re not used to seeing in our food, or for sale at the grocery store, like chicken feet, bull balls, kidney, and more.

16.  Screwing screws in with a wrench.  Thats right, I’ve seen Ecuadorian construction workers screwing in screws with a wrench.  I swear, give them a shovel and a hammer and they can build you a house.

17.  Leaving your dirty food tray on your table at the mall.  Thats right, just get up and leave it, if you try to throw it away in the bin you may be tackled from behind.  OK, maybe not, but you are putting someones job in jeapordy who is in charge of cleaning the dirty trays.

18.  Watch as an old lady tries to get off a moving bus.  Ahh, only in Ecuador.

19.  The Drivers Ed class where they teach Ecuadorian drivers that stop signs at night really mean, “flick your headlights, honk twice and then drive right through”.  I guess they couldn’t fit all that text on the sign.

20.  The freelance eye-drop seller that tries to sell on the bus, but when he actually puts it in his own eye to show how to use the product he has to brace himself and wince to get it in.  Can I see that health registration again, please?

21.  The floor-to-ceiling mirrors in the handycap stalls in La Escala Shopping Mall in Cumbaya, a suburb of Quito.  I’ve never seen this anywhere and whoever thought of this should be shot.  I mean, come on, who wants to watch themselves and they’re ‘giving birth’ faces as you re sitting there on the pot?  There’s a certain amount of self-respect you lose for youself after watching yourself in this position.

I know, please don’t rush over to Expedia and buy your ticket to Ecuador too fast now, ok?

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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