I laugh when foreigners get excited about a 10% annual return in Ecuador… heck, you can get that depositing your money in certain savings accounts here like we’ve covered in past newsletters.
Actually, there are a ton of ways you can do much better than that…
Today, we’ll cover one way savvy investors with higher budgets are multiplying their money within a 1-2 year time frame in Ecuador.
Subdividing.
Basically, buying a big lot of several hectares, subdividing, urbanizing and reselling the lot in small chunks.
It’s a great opportunity in Ecuador because you can still find big undeveloped beachfront lots of several hectares (1 hectare= 2.47 acres, 1 hectare= 10,000 sq. meters) for $1-2 per square meter, and there is a steady, growing demand of folks looking for small lots of, say, 500 square meters or so for personal use on or near the ocean paying $15-60 per square meter. (Figures are as of now, April 2012.)
Often, the bigger the lot, the less you’ll pay per meter squared.
For instance, yesterday in my B&B in Guayaquil I sat down with a few young, ambitious Ecuadorian fellows who have a several dozen hectare lot beachfront on the Ecuador coast.
After first undertaking the difficult task of finding a buyer who wanted to buy the whole lot (at $2 per square meter = $1.2 million (a lot of money!)) they have decided to subdivide, invest in access roads and bring water and electricity to each lot.
They plan on selling the beachfront lots of around 500-1000 square meters (good for a decent sized house with small yard) for around $15-60 per square meter ($7500 and up) depending on the location.
To legally subdivide in Ecuador you will first need to “unify” (unificar) the lot in the local Municipal office and present your project in plans designed by a licensed architect in Ecuador.
It’s not an easy process.
It will probably cost you around $5,000-30,000 in over (and under) the table fees and take anywhere from 2-6 months to be approved.
Upon approval the Municipal will send inspectioners that measure the lots and issue the separate titles for each one at which time you will be able to begin selling piece by piece.
But the lots will be worth a lot more if the lot is “build-ready” meaning there is water, electricity and road access to each one. Most savvy buyers won’t buy without it.
But it may not be as costly as you think to bring services to your lots, for instance, digging a well in Ecuador that can provide water for up to 12 lots costs around $2000.
Also, from my experience I recommend investing in an entrance gate and a place where your community members can shop for basic foods.
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