Category: Investor News/Analysis

Ecuador is closing its borders.

To many imported products that is.

I don’t necessarily agree with it, but it is what it is.

Like it or not, with policies like this there are always a few “winners” and often a lot of “losers” (like the end consumer who now has to pay more for inferior products).

But why not take advantage of the opportunity and start producing one of the products that has now become more restricted to import?

Like Chickens.

Already, one of Ecuadors most popular short-cycle “cash crops” among locals.

It’s great because every 6-7 weeks you “cash out” recouping everything you’ve invested and the take-home-profit.

And its one of those produce it and someone will buy it things.

Everyone eats chicken in Ecuador.

This week I had the chance to sit down with a veteran chicken farm manager at his place during my research.

Here’s the skinny… 

Start up costs, Investment

One of the great things about chicken farming is the small amount of land comparatively you need to get started.  Plus, the land itself can be in the boonies and CHEAP because thats ideal for a chicken farm.  You want to distance yourself from any sizable populations or neighbors cause they may not be fond of the smell.

You’ll need a lot with at least space for one farm house big enough for a sizable population of chickens.  Most chicken farm houses are 20 meters by 120 meters to be precise.  Thats 2400 m squared of land.  Not much.

The lot has to be flat and have a water source.

But many chicken farmers have more than one farm house, for instance 7, with a batch of chickens each, so they can be harvesting a new batch each week providing a steady income so this business pays for itself.

Each farm house this size holds 20,000 chickens.

You can chicken farm about anywhere in Ecuador, but it is ideal in the warmer regions of Ecuador like the coastal lowlands.

In warmer weather the growth cycle shortens to 40-42 days, while in colder highland areas the cycle can be more around 50 days.

Costs

This business is also nice because its not labor-intensive.

You’ll have to pay one farm house keeper per farm house.  They usually make the basic wage in Ecuador ($340/ month PLUS incentives totaling around $800/month).

Every 6 weeks you’ll have to pay about 10 guys $10 a day each for three days to round up the chickens for sale.  Total $300.

The food can run around $7000 per cycle (6 cycle).

Basic services like water and electricity aren’t much in Ecuador but could also cost a few hundred dollars.

The chickens themselves are bought young and little at $.40-.50 cents each.

In total, budget $70,000 USD to raise 20,000 chickens my expert explains.

Income and Production

After 6 weeks the chickens are sold (alive) for $.80 cents per pound. Each chicken weighs around 5.5 pounds.  Total= $4.40 per chicken roughly.

$4.40 x 20,000 chickens = $88,000.

Profit 

Talking in ballpark figures per farm house which holds 20,000 chickens over a lot of 2,400m2 the profit would be roughly $88,000-$70,000 TOTAL $18,000 every 6-7 weeks.

Then depending on personal preference anywhere from 5-15 days will be needed for farm house cleaning and disinfecting between cycles.

Risks

Of course, diseases are the biggest risk, thats why if you have multiple farm houses you want to spread them out and be sure to have only one farm worker exclusively per farm house.  He could carry a disease on his clothes from one house to the other.

But now a days the chickens come vaccinated and this is not a huge problem at all in Ecuador.

Selling the crop is not a problem, just make it and finding a buyer is relatively trivial.  What does vary a bit is the market price like most commodities.

Want more?

Like but what about the technical aspects of the actual chicken-growing, how to get started, buy the best chickens, find the best workers and more?

For that and more subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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Roses are big money here in the Andes.  

Both Ecuador and neighboring Colombia are deep in the business while flowers are chief exports.  

This week I had the chance to sit down with a 14-year vet rose farmer at his place during my research for my soon-to-be-released Insiders Guide to Agro-businesses in Ecuador.  

I’m also planning a little agro-investment of my own.  

Ecuador roses are considered higher quality than the ones grown in most countries because they were grown at a higher altitude giving them a natural longer-lasting shelf life.  

Grabbing his cup of tea, my friend began, “to start its much more profitable to buy comparable land and build your own farm from scratch.”

As most producing flower farms, if you can find one for sale, often go for a half million or more.  

Start up costs, Investment

But thats the kicker, if you know where (and how) to look, my friend states, you can find land ideal for flower growing for around $15-20k per hectare.  

And you’d need at least 3 hectares for the farm to be really profitable.  

Once you acquire the land, my friend continues, you’d need to invest about $60-70k per hectare to prepare the soil and build the greenhouses.

$15k x 3 = $45k PLUS $60k x 3 = $180k TOTAL $225k on the low end.

Income and Production

You’d then be able to fit 80,000 plants per hectare.  

And each plant gives one rose per every 3 months.  

The roses sell to importers in the USA for around $.25 cents per rose FOB wholesale.  Europe pays more, often offering around .35-.38 cents per rose.  

My friend continues, “but you have to time your production right to hit the predictable demand surges (and price upticks) around western holidays like Valentines Day.” 

Costs

My friend explains that organic fertilizers and other irrigation costs total about $1000 per hectare per month.  

Plus you need about 8 pickers per hectare making the basic Ecuador wage ($340/month each) and you’ll need one sales manager ($1200/month), one production/farm manager like him for ($1500/month), one secretary (minimum wage $340/month) and one export coordinator ($5-600/month)who is in charge of filing all the paperwork needing during exporting and getting the permits.

Profit 

3 hectare farm= 240,000 plants= 240,000 roses every three months = 80,000 roses monthly sold at the lower USA importer price of $.25 a rose = $20,000 net income.  

Land and general production variable costs 3 hectares ($1000 per hectare per month) total=$3000 PLUS labor costs $1500+$1200+$600+$8500= $14,800

But with time as your retain the best pickers you can greatly reduce the number of pickers you need and reduce the labor cost even more if you manage your own sales.  

Total (conservative) estimated monthly profit projection of 3 hectare flower farm = $5200.  

Risks

There aren’t many risks to flower growing in Ecuador, that’s why its such a big industry.  

If there is a frost, it would only kill the flowers, not the plant, but this obviously isnt common in Ecuador where here on the equator you can bank on the climate being the same and predictable all year round.  

But unlike other crops in Ecuador where all you have to do is produce it and drop it off at the processor at the corner, and they’re guaranteed to take it, with roses you actually have to get out there and sell and hire a full-time sales manager or you could be left with unsold flowers on your hands.  Find out more details at https://valintrycrm.com/salesforce-consulting/.

What about the technical aspect of the actual flower-growing part (which you know nothing about)?  

That’s what you hire a farm manager to do.  

So where’s best to find land ideal for flower farming and the best farm managers?  

For that and much more subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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I get it all the time.

People know I’m in the hotel biz…

…and they tell me they have a property and are thinking about putting a hotel in Cuenca.

But truth is, I would NOT put a hotel in Cuenca, except for one type.

You see, Cuenca is already loaded with good hotels, and they’re cheap!

An acceptable option at $10-15 per person per night can be found quite quickly.

The type of hotel I’d put in Cuenca is an apart-hotel.

The difference is the rooms will often be mini-apartments with at least two different ambiances, a living/cooking area and the bedroom.

Unlike normal hotels the rooms have a kitchen or place to cook as most people would get tired of eating in the street for weeks on end.

And they are meant for longer stays.

Usually a few weeks, maybe a few months at a time with of course special weekly and monthly rates.

And they often serve as a “half-way” home for folks who recently arrive in Cuenca and begin the search for their permanent home.

An apart-hotel is a great option for people because agreeing to rent something long-term before they arrive and see it is a big mistake.

Best to look around once here.

And at least initially its nice to take advantage of a few of the services of a hotel like an attentive, knowledgable front desk staff, laundry service and WIFI Internet from day one yet still be able to cook for yourself and enjoy the privacy of your own place as you get your feet wet in a new country.

You could even sell off the individual suites to private owners and continue to manage them and rent them out in a property-manager-type role.

The really neat thing is you could promote it as both a hotel and a condo rental.

There are already a few of these type hotels that exist in Cuenca, but I’ve seen the demand in the area to justify another well-located good one.

More so by far than anywhere else in Ecuador, a lot of expats are moving to Cuenca.

That’s the hospitality niche I’d attack in Cuenca.

Any takers?

You can count me in.

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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“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.

Similarly, Heating and air conditioning repair can be as much a part of our lives as our heating repair is, check this website https://www.accurateelectricplumbingheatingandair.com/electrical-services/ and get a quote.

After all, air conditioners have a complex system consisting of compressors, piping and ducts, heat exchangers, and electrical components that need to work in unison efficiently at all times. Unfortunately, they don’t and therefore, we need an efficient air conditioner service like AC repair Spring TX conveniently located near our neighborhood, which can fix our system professionally and in a short period of time.

Waychoff’s offer complete service and repair on all makes and models of warmth pump systems and air con systems. Waychoff´s is the top ac repair companies in jacksonville florida.

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!

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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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 .