Category: Investor News/Analysis

This week I had the pleasure to interview Olga Plavidal, one of the most knowledgable people I know on the Cotacachi real estate market.

Cotacachi is a small mountainous community a few hours north of Quito, and 15 minutes from Otavalo, which has experienced quite an influx of North American expats in recent years due to many factors like its healthy lifestyle, low costs and mild, comfortably warm year-round climate.  For me, its one of those few places in the world, and even in Ecuador, where you really don´t need heat or AC in your home and you re still comfortable.  Rare.

So lets turn to the local expert on the ground to get the dirt on whats really going on in early 2014…

Enter Olga.

1.    Why did you choose Cotacachi?  

–       I came to Ecuador 3 years ago, stayed in Quito for a month and was making short trips to various destinations. When I came to Cotacachi for a day trip, my soul whispered me: ‘That’s it, darling, that’s your home…’ Some places looked like from the fairy tales to me!

I’ve been captured by the beauty and the cleanness of the town. Every morning the owners of the stores wash the pavement in front of her/his business with soap (!) There is hardly any signs of deterioration on the pavement. I have the same quality of pavement back home, but I work with a Gettysburg based sealcoating company and they fix it regularly. They beautify their exteriors with flowers. People are very friendly and they greet you on the streets even if they don’t know you. Gorgeous views of 2 volcanoes of Cotacachi and Imbabura and the stable climate, like May time all year round. Even at the rainy season we have just occasional showers in the afternoon and over the night. Hardly ever until the afternoon.

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2. What do some expats complain about in Cotacachi?  Or why some folks decide not to stay in the area?  

–       Some foods are not available that you’ve used to – but use your creative juices and find the alternatives, lots of them! Probably, not too many things to do, as they might think. However, we have lots of activities here now; new businesses are popping up and many volunteer activities as well. But it’s everybody’s choice if they just want to stroll from one restaurant to another and gossip on everything, or to get pro-active in many new opportunities that we have to offer now. Many business opportunities are still not here. You chose this country to live in. Get creative and go for your dream! Turn your hobby into a new venture and create the lifestyle that you desire!

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3. What are current market prices like in the different areas of the town and for different types of property and the per meter price of vacant land in the area? 

–       Depends on the area. Closer to the center, the higher the price, of course. The typical Ecuadorean house, not the new one, can be around $250-300 per m2, while the new construction in the gated community can run up to $750 per m2. You pay for what you get – quality of construction and finishing materials, security of the gated community, etc.

The land is the same – the closer to the center – the higher the price. $40-50 per m2 closer to the center and smaller lots, and can be $15-17 per m2 just outside the town for the bigger acreage. Again, it all depends on the location, neighborhood, views, size, and many other aspects to consider.
4. How has the market performed over the last year?  over the last 3 yrs?  over the last 5 yrs? 

–       It’s steady growth of about 15% a year, the more people get to learn about Ecuador, the more they come here. The property prices have tripled here in the last 3-5 years. They will be still growing, but there’s still a great chance to get them cheaper than in the US or Canada. If you want to get more detail about heating and cooling repair services, then click this url . Also, please consider that you don’t have to pay cooling or heating humongous prices, property taxes for most of the properties are under $100 a year (!). You can go to this web-site for more about the heating and cooling repair service. The heating, ventilation and air conditioning system in your home plays a crucial role in making the household members comfortable even in extreme seasons.

Giving it due care and attention is therefore important, otherwise, you will be suffering certain consequences like having to pay for incredibly expensive machine repairs or replacements. To prevent anything like this from happening too soon, you can avail of the ac repair services rendered by professional HVAC companies in your area. These people usually have the skills and knowledge required to provide solutions to any trouble or concerns you raise in regards to your unit.

Also, what you pay for food, services and some other things are incomparably cheaper that in the US and Canada. You have to weigh all this on your scale and don’t just look at the property prices, but rather the whole picture of your monthly spending here. You know it yourself that you can live here comfortably under $1,000 a month, even renting a modest property, or under $500 if you own it.

5. Do you see any notable tendencies in the local real estate market?  

–       I sure do. More people are looking now into income producing properties, businesses to support them in case there will be some political changes, affecting their lifestyles. They are looking mostly for B&B’s, restaurants, farms and agricultural land. However, there are still quite a few folks who’ve built their nest-egg, sold their property back at home and want a nice comfortable home to live here peacefully.

6. Where in the city is best for an expat to invest and where are some areas to avoid?

–       To avoid is definitely the areas out of the city, where the Indigenous communities are occupying. If you decide to live in one of those communities, you should be really adaptable to their lifestyle and culture. Otherwise, the whole city of Cotacachi is not so big, let me know your desires and I’ll do my best to assist you in finding the best place for you!

7. For someone looking to invest in a rental property, what would you advise them and what type if property should they buy and where to keep it rented?

–       Most of the folks are looking to rent in the center of Cotacachi, a few minutes walk to the center. It’s easier to rent it out. Inexpensive, maybe Ecuadorean style home with all the basic furniture. Many renters want it for a short period of time, up to a month or a bit more, so that accommodate them, as it’s cheaper then hotel and gives them more privacy.

8.  What are the prices of nearby farm land and what types of crops are most common in the region?

–       The most common crops here are corn and beans, avocado trees are abundant as well, lemons and oranges grow well here, tree tomatoes (it’s a local fruit), potatoes, tomatoes, cucumbers, lettuce, cabbage – so many things, this soil is so rich, I think that whatever you stick in it, will start popping up J

Prices can be very different, depending on the location and the size of the land. $1-10 per m2.

9.  What other opportunities do you see for investors in your area?  In other words, what would you do with $100-200k in your area right now?

–       I’d buy some good rental property that will bring some good ROI. Also, land for development or a good inexpensive land for agriculture. No matter what the future holds for us, people will always need the place to live and the food to eat.

10.  For renters, what are the average rental prices looking like?  What are the normal rental terms?  

–       Depends on where and what you rent. Gated communities can be $600-1,000 a month, all furnished and really nice. But you can find a small local Ecuadoreans apartments for $100 unfurnished, or a bit more furnished. All depends on your choice of lifestyle and budget. My friend rents now a 1 bedroom furnished apartment with a good size kitchen, full bathroom for $200 a month. Please, don’t ask me for rentals, I usually don’t do them.

11. What’s one thing most people don’t know about Cotacachi?

Gee, Dom! That’s a big one! Please don’t limit me on that one! Let me list some of them, at least:

–       You’ll pay for anywhere going in taxi in Cotacachi just $1, don’t even ask the driver ‘how much’, it’s just a buck, wherever you go. Can be $1.25 or even $1.50 if this is 5-10 minutes to the properties that are a bit out of town, Like Yana Pamba, El Batan, Jahua Pacha.

–       You can have a really nice lunch in a local restaurant, if you ask for ‘almuerza’, not going for ‘a la carte’, which is from the menu. Just from $1.75 in many little  local places, at the food court/bus terminal as well, to a fancy ‘La Tourista’ on Bolivar street for $3.50 – awesome! Just don’t forget the magic word ‘almuerza’, write it down now, or they will bring you ‘Menu del Dia’ and will charge you twice for a little bitty added to it.

–       Do you know that you can drink the water from the tap? Yes, it’s safe! It comes from the Cotacachi volcano and goes through the purifying facility here in Cota, and straight to our homes.

Thank you, Dom for interviewing me, hope that will help some nice folks to get some better ideas about living here.

Welcome to Ecuador Realty! And, please check my website for the best properties in Imbabura area: http://chantal-realty-ecuador.com

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Do you want the long or the short answer?

The short answer is … no where.

Keep your money in your home country except for what you need.  Remember, this is a country where from one day to the next a bank could close shop, put a lock on the door and say “adios” with your money.

Kind of funny hearing this from a supposed “Ecuador expert”.

But it is what it is.

It happens.

In fact, to two differnet banking institutions in the last year (2013-2014).

However, I know if you are going to live or invest here it sure is convenient to have a local bank account.

One you can withdraw from anytime without fees or hefty exchange fees.

So in this case I offer you the long answer…

There are only two banks in Ecuador where I suggest you have your money.

1. Banco Pichincha.  Its the biggest bank in Ecuador (the yellow one) and has branches everywhere you want to be. Nonetheless, it is important to note down the swift code of the bank you have an account in. It’s where all the locals have their money in Ecuador.  Its the institution everyone uses to do business.  If this bank closed up there would be major riots in the street, in other words, the government would not let it happen.

One thing I’ve learned when living abroad, if all the locals are jumping off a bridge, damn it, you better follow suit!  There is a reason for everything all though we may not see it at first and think, “huh, that’s stupid, I’m so much smarter than they are. (not true!)”

2. Banco del Pacifico.  This bank is the other decent option, albeit with far fewer branches, this is also one of the safest places to stash your cash in Ecuador because it is owned and managed by the government.

It’s like making friends with the bully in grade school so they don’t pick on you.

Heck, I know I did it, this is the same difference when the government seems to be the one going around ordering banks and credit unions (cooperas) in Ecuador to close these days.

Extra tip:  Be sure to keep no more than $25000 in any one bank account in Ecuador, that is the amount your money is insured to and in the event of a bank closing you’d be one of the first people to get your money refunded.

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Manglaralto Beach, Ecuador

Everyone loves Montanita.

But nobody actually wants to live there.  Unless you’re a 20 year old hippy.

It’s a neat mix of a traditional bohemian-Ecuadorian surf village turned mega-tourist attraction.

And its a great place to meet people, eat, drink or party.

But to live, for most, it’s just too noisy, too scandalous, too touristy.

There’s restaurants, heaps of hotels for every budget, travel agencies, surf shops, discos, bars… in a word, it’s fun.

And since 2009, when the local Ecuadorians started to discover the town, it’s absolutely exploded.

All year every weekend the place is packed, and during the high seasons (Jan-Apr and Jul-Aug) its got loads of travelers midweek too.

But what a lot of people don’t realize is there is a sleepy little town right next to Montanita that actually shares the same beach head.

And yes, it means you can walk between the two in a little under a half hour.

Yet most people just skip it.

They don’t even realize its there.

Its 4 km away from the center of Montanita, in fact, it is a 5 minute drive or 30 minute walk along the nice, wide, sandy beach.

Welcome to the town of Manglaralto, the town next to and just south of Montanita.

Manglaralto is still as local as it gets, like Montanita was maybe 10 years ago.

Theres one guy that sells chicken (for cooking), another street shop tucked away that sells the beef, another little nook sells the vegetables, and there’s one guy that come out in the mornings and sells the fresh fish.

You learn as you go.

It’s real quiet, the streets actually look quite empty or dead most days and there’s only 3 or 4 streets that run parellel to the ocean, a little park with a church and a landromat, a hardware store and 2 or 3 small hotels, thats it.

But it does sport the only hospital along this stretch of the coast, and its free to all (public).

Also, a little less than a year ago in early 2013 the streets of this tiny town were paved, which is HUGE.

But the reason I mention this town is the opportunity.

I discovered this town by accident 2 years ago when I bought a little dinker house there.

Not many foreigners live here full time yet, but there are certainly more than when I first bought 2 years ago.

And I can tell you first hand that the demand for rentals in the area is HUGE, being a quiet place to sleep near the action but not right in it as most prefer, and its the ONLY town that shares a beach with Montanita (one of the biggest tourist destinations on the coast of Ecuador).

So like most, eat or party in Montanita, then catch the $1.50 5-minute cab ride to sleep in peaceful Manglaralto.

Specifically over the last year or two, developers have started to move in to the southern end of town starting a few small subdivisions, but deals can still be found like the $15,000 4 bedroom house I found and bought 2 years ago.

Small 250 m2 lots in and near town can be found in the $10,000 range.

Oceanview lots go for anywhere from $30-60 per m2.  A lot a block or two back from the beach with no view can go for half that.

But you have to look, cause prices are all across the board.

It’s still one of those neat opportunity areas where prices have already risen a bit but you can still find a deal.

But mostly know that Manglaralto is not only a cool, peaceful place to live, but also one of the best places (at least top 5) to put a rental property on the coast of Ecuador.

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I know what you’re thinking.

Where’s part 1-9 of this series?

Well, they were released about this time last year and tell the story from step one of how I found an undervalued beachfront lot near Salinas, Ecuador, legalized and resold it.

Well, about a year later, it’s now sold.

First, the specifics… 

In October of 2012 I bought a 500m2 lot right on the beach in a small fishing village 30 minutes south of Salinas near the town of Chanduy for $4000.   The lot was cheap for a number of reasons, the lot was located in a rather impoverished, completely undiscovered area of the coast, the papers of the lot were out of date and needed to be legalized (or attained for the first time), and the previous owner didn’t know much about marketing and sales.  The lot took about one month to legalize and cost around $500.  (No lawyer fees except for the notary.)

Then, in November of 2013, after negotiating I came to an agreement to sell the lot and sold it for $8000, a price where I still made money and the buyer still got a great deal (even for Ecuador) on a front-line beachfront lot.

How I sold it?

Due to time constraints and other priorities, I didn’t spend much time or money marketing it, all I did was post it on my own blog ecuadorealestate.org as well as on viviun.com .  Nothing else!  I didn’t list it in Spanish, or in the local paper (like I planned), or with any real estate agents.  Then I left it be.  And after a lot longer than I thought I had a buyer, a year later.

What I learned from the experience?

– That contrary to popular belief in Ecuador it is possible to take publicly owned “communal” land and privatize it and legally deed and register it in the notary, municipal and property registrar just like any other privately-owned property if you get some knowledge on your side.  But it can be a process and is a bit risky cause you never know.

– That if you buy property in an undiscovered, out-of-the-way location it is NOT a short-term play and will take you a lot longer to turn than you thought, even if the property is nice and right on the ocean (ideal).

– That the quality of the beach and proximity to a legit city with shopping and other services is important.

– That it will be a harder sell if NO other foreigners are in the area.

– That simply being beachfront is not quite enough to ask what other beachfront lots in more discovered, developed places on the coast are asking ($80-$100 per m2) .  If I would have got that I would have sold for around $40-50,000!  I started by asking $20k then I lowered to $16k but I didn’t start seeing any real interest until I lowered the asking price after several months to $12k.  Albeit I didn’t do a whole lot of marketing.

– That stating publicly on my blog how much I paid for the lot doesn’t help to sell it for a profit (duh).

– That using an agent probably would have been a good idea, it’s just that I had a bad experience with an agent previously.

– That there are a lot of areas on the Ecuador coast that are actually pretty stagnant while other areas are moving quickly.  Best find the areas moving quickly (which Ill cover on future newsletters).  For instance, this lot had a ‘for sale’ sign when I bought it that had been there 6 years!

– Not to waste time with all the (dozens) of tire-kickers online, the person who is actually going to buy your lot is probably someone already in Ecuador beit foreiger or local.
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Even if you don’t like to party, party towns are good places to base yourself as you explore the nearby areas of the Ecuador coast. Even if you merely take a limo service from Sacramento to Napa Valley, you can get to enjoy a ton of things along the way.

The places to eat.

A larger variety of places to stay at a much lower average cost.

It’s easier to meet more people.

And you have access to services that you wouldn’t have in more remote locations, like laundry, internet, organized activities, etc.

Everyday I ask other foreigners where they plan to travel on the coast of Ecuador.

And they always tell me the same damn thing, “Salinas, Montanita, Manta, Canoa”.

Yet theres one popular party town on the coast that is completely overlooked by foreigners.

Atacames.

For me, Atacames arguably has the nicest beach of all the locations mentioned above.

It certainly has one of the widest beaches of the country, and one of the few white sand beaches lined with coconut palms in Ecuador.

Beaches with good surf are nearby.

And beaches that are coves with flat water great for swimming are just a short Tuk Tuk ride away (in neighboring Sua).

Plus, when the other beaches mentioned above are likely overcast, you can usually count on Atacames to have sun.

Nightlife. Check, Ecuadorians know how to party, trust me on that one.

Accommodations. Cheap and plentiful with budget places starting around $10 per person and the nicer places around $20 per person.

Food. You bet. Each region of the Ecuadorian coast has their own unique blend of seafood gastronomy. But the north coast has the best cuisine out there! Try the seafood in coconut curry (encocados) or the seafood in nut based curry (cazuela) and you won’t be dissappointed!

Foreigners. Almost none to date yet the area has been popular with Ecuadorian tourists for weekend getaways (particularly from Quito) for decades.

Airport/Hospitals. Yes and yes. Atacames is one of the few beaches within just 20 minutes or so from an airport reachable by commercial flights (Esmeraldas). Plus, being just 15 minutes or so from Esmeraldas there are plentiful private health clinics and free public hospitals available.

Safety. This has been the knock on Atacames as most folks think its too close to Colombia for comfort, but actually its still several hours from the border (like a place called Quito), and with the added police force I believe safety has improved greatly over recent years.

The locals. Different from the rest of the Ecuador coast, the locals are mulatos by ancestry. And by far the friendliest and best looking people on the Ecuador coast.

Real Estate. Cheap! The best deal I see this week in the area is a finished and FURNISHED 20 room, 20 bathroom hotel one block from the beach right in the center of town built just 8 years ago complete with reception, oceanview terrace, and cistern asking $170,000 negotiable.

But the owner sounded like he’d go down even lower, I’d try for around $150,000. Its possible, and it would be a steal.

Im a hotelier myself, and I can tell you, to furnish a 20 room place (well) you’re looking at easily $45,000. And depending on the state of the building (which looks good in the photos) at this price it could pay for itself in 2 years if you market it right.

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