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 on this https://www.cleaningservicesbroward.com/commercial-cleaning-services/  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 price was pretty reasonable, if you ask me.

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It is a gadget that removes hot air from your room and recycles back cooler air thanks to the Eco plumbing heating and air conditioning technology. Although in a generalized way, we perceive conditioning to be cooling of the air, in fact, the term air conditioning-in a broader sense-refers to controlling of temperature, humidity, and dust to provide optimum human comfort. Hence, such a system needs a complex maze of electrical, mechanical, and various other components to keep it working properly. Minor faults and defects can possibly be fixed at home,otherwise, you need help from a qualified air conditioner contractor to get to the root of the problem, specially when the problem is so big that it requires a new air conditioning installation.

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. and when the room gets really hot many air conditioning services can fix and maintain the device.

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. Other than this if you need Estate planning lawyer then refer this side www.parlinlaw.com.

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. A surveillance security system works a deterrent in a lot of cases. Instead of catching criminals in the act, you actually scare them away see it here. 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. Bingo, I thought. This is not what you learn about when you are learning how to get your real estate license. Although important, the real learning happens on the street and everyone knows it.

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 a 24 hour heating and cooling ,   while foreign renters prefer privacy (no onsite caretaker) and NEED WIFI Internet while a TV and AC are not so important, but the use of other security measures such as outdoor cameras and surveillance from Alarm New England could be essential for the security of these rentals. View your camera system through IOS & Android apps. A web portal is also available for viewing on any computer, view publisher site for more details about Analog cameras, many of which are currently being used in existing surveillance systems, tend to produce very poor quality videos especially if the subject is too far or constantly moving. This makes them slightly less useful when trying to identify incidents, persons, or specific details. Mammoth Security takes advantage of HD Digital Video Cameras that are fast and capable of producing video footages several times clearer than an analog camera’s output. HVAC services Goodlettsville includes a thorough inspection of all parts of your HVAC equipment, with our highly trained team making sure your system is delivering safe and effective air conditioning all year round.

Hiring air conditioning services from professionals will help you keep a good maintenance and be sure that your house has a good air flow and avoid health issues.

About HVAC service read more here. These comprehensive checks mean your system should always be working as intended. Need to change your air conditioning unit now? Well these workers can help you out, so that you don’t need to do it all alone.

– 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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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!

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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.

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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.

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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.

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