Home Insurance in Ecuador De-mythified

In the US, we insure everything from home warranty companies with the best reputation only. Sometimes, we buy insurance for our insurance policies, down here in Ecuador, the people don’t have that “insure-everything” mindset. Unlike the Houses for sale Hua Hin, the houses here aren’t insured by their real estate agents.

In fact, a very small percentage of the locals even have home insurance. And the rest do not even have proper shelter, let alone house insurance. The impecunious in other countries have government support in the form of Section 8. One in need of proper shelter can approach & apply for a section 8 waiting list, if it helps mentioning. It could be due to Ecuador being a poor, developing nation, or simply a difference in culture. Locals simply don’t see the need. However, insurance is essential whether it is on home or your pet. It must never be taken for granted. Visit the website einhorninsurance.com to know how you can opt for their various insurance schemes.

It is true that Ecuadorian housing structures tend to have a much larger percentage of concrete than American ones, making them more solid, and that Ecuador is nicely tucked out of hurricane paths and rarely hit by strong earthquakes or wild fires.

This has created a buyer’s market where insurance offered by companies like Frontlight Insurance Services is still relatively cheap and the companies are constantly recruiting heavily with discounts and promotions.

Home insurance works similarly to that in the US, with a few twists and turns.

First off, it is difficult to get an exact figure of how much you will pay before you purchase a property, because how much you pay is entirely based on the assessed value of your home by an inspector for that specific insurance agency, and they don’t tend to be willing to assess a home before it is purchased.

Which leads me to the first big difference between Ecuador and the US…in Ecuador, the insurance companies do NOT insure the market value of the home, taking into account how much you paid for the place due to the area, they insure purely the cost it would take to rebuild the structure of the home.

With AIG, the leading home insurance provider (and one I recommend) in Ecuador, a building with an assessed value of $30,000 would pay $90 in premiums annually. A $70,000 structure would pay $195 anually, and a $100,000 structure would pay $270 anually. (Figures as of 2010)

With payment of the premiums you receive coverage against fire, natural disasters, earthquakes, the falling of trees, floods and all the other normal stuff.

In the event of a disaster, you would have to pay a 2% deductible (minimum $800).

But it is important to note that the figures mentioned above are to insure the structure of the home or apartment only, the belongings within the home would require a whole separate policy.

As my mom said of her time in Venezuela, if its not tied down, forget about it. It is pretty much the same in Ecuador, a peaceful place indeed, but robbery is common.

So, to insure $8000 worth of belongings against fire, and $4000 against robbery (they can’t take everything) you would pay an annual premium in addition to the one for the structure itself, of $90.

To insure $25,000 of belongings against fire or flood, and $12,500 of that against robbery, you would pay $270 annually.

In the case of robbery, you would have to pay a deductible of 10%, minimum $200.

To inquire further or to hire a policy, I recommend my bilingual personal contact, Katty Mejer in Quito, 099822232, kmasesores at hotmail.com (tell her Domenick sent you) I also recommend you to check the First American Home Warranty options.

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First Impressions: Seeing the US after 2 Years in Latin America

I was born and raised in the US, but today I just arrived after almost 2 straight years out of the country, I’ll be here for about 2 weeks.

Thought I’d mention the first things that stuck out after a lengthy time in Ecuador.

The first thing that hit me in the US was the airport shuttle that offered to give me a lift for about 40 meters to my check in gate…won’t see that in Ecuador.

Then, figuring out the automatic check in machines at the airport was more than a little tricky. (In Ecuador, you still have real humans.)

I then proceeded to notice the airport security has gotten more anal, as illustrated by the confiscation of my hand cream and nail clippers. …I am not MacGyver, come on…Hand cream and clippers do not a weapon make.

Then, while waiting for my connecting flight I noticed that khaki shorts with loafers without socks is quite a common look these days…way different than Ecuador.

Also, I noticed iphones are huge in the States, in Ecuador, I almost never see them, just Blackberries.

Saludos, Domenick

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The Difference Between Rich and Poor Real Estate Investors

My real estate experience started back in 2004 during the boom in San Diego.

I worked as a loan officer, and during my first few months in the real estate business, I noticed primarily two things:

1. It was WAY too easy to get a loan. I predicted, correctly, that there wasn’t a chance all that easy lending would hold up.

2. The difference between rich and poor property investors.

It doesn’t matter which country I’m in, this difference always is visible.

The rich, and the real property investment tycoons buy their properties in cash. The poor and middle class use loans.

Why is using loans a losing formula?

Well, I soon realized at my loan broker job that if someone has a 30 year mortgage, that person is going to end up paying roughly 2 1/2 times the purchase price of the house by the end of the loan with normal US rates. But with a proper iva help, the same person will have to pay only almost 2 times the mortgage secured.

So if the house cost $200,000…they would end up paying $500,000. Not to mention, during the first few years of the loan your payments are almost 100% interest (just to compare: here’s how much are sellers closing costs in Jacksonville Florida). So if you sell after a year or two all your payments would have gone to pay the interest, not the balance of your loan.

On the other hand, my rich clients bought a property with cash, resold, bought another property while trading up, resold, and so on. Almost always with cash.

This is where Ecuador comes in.

In Ecuador, you can buy a decent, livable, maybe even nice property starting from $25-30,000… making it much easier to pay cash for.

Imagine living without a big, fat mortgage over your head…trust me, it feels good.

So, in the US, when it is virtually impossible for you to buy with cash (I mean, who has $250,000 sitting around) consider doing what the rich investors do, and try investing in cash… in Ecuador.

However, there is an exception to this rule, of course. Life is never that simple.

If you happen to catch the market low before a bubble hits, then sell when the bubble is at it’s high point, like during the high years of 2004-5-6 in the US, then you could still make a ton of money buying with or without a loan.

So now if someone asks you, “paper or plastic?” you’ll know what to say.

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Colonial Classic Beach Home, Crucita $35,000

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House in Cuenca, Gated Community, $33,900

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This site is not affiliated in any way with the seller of this property. It connects you, the buyer, directly with those selling. If you are selling a property in Ecuador, you can write me via the contact to apply to get it listed here. Only the best deals will make it on, but if accepted, listing is free.

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