Category: Investor News/Analysis

OK, so it’s been a bit over 6 months since I finished my Tiki Hut building project on the coast of Ecuador near Montanita.

It’s hard to declare something a success when you finish building it.

You gotta wait and see how it actually rents.  And now, the numbers are in.

3 tiki huts built with oceanviews near Montanita in a little over 6 weeks.  Plus a remodeled ‘budget’ 4 bedroom house with oceanview, subcontractors at https://northernlightsexteriors.com/ providing windows installation and roofing service.

There are also to as high impact windows, impact-resistant windows, or storm windows. But regardless of what they’re called, hurricane impact windows perform some vital functions, one among which is to guard your house and shield you and your family from the devastation that violent weather can create. Hurricane Impact Window Installation, provide superior protection during a storm . Since they’re an integral a part of the structure of your home, there’s less chance for the wind to travel around them and tear them faraway from the wall, something which will happen with storm shutters. They also simultaneously let light enter an area while protecting your carpeting, furniture, and drapes from the damaging effects of ultraviolet rays. They require little or no effort to manipulate; all you would like to try to to during a storm is to form sure that they’re closed securely and locked.

4 VERY different styles.

Well, here are the final conclusions and what I learned renting each and what Id do different next time…

Tiki Hut 1, I bought this All-wooden hut pre-built from a builder I know from the Ecuadorian Amazon, Tena region.  It took 3 days for them to install it on my location elevated a few feet above the ground.  It has a wooden balcony, wooden floor, wooden walls, a “sing”roof, a beautiful oceanview, one bedroom, one bathroom, a sink, kitchenette, mini-refrigerator, WIFI, one queen bed, closet, one full bathroom with The Original Frameless Shower Doors and a hot electric-powered shower with a tile floor and vinyl-covered walls. Saalfeld Construction Roofing proved very professional.

I had to tile the floor myself first laying a small web or rebar, then laying a 5 cm layer of cement, then laying the tile… and then I had to stick vinyl on the bathroom walls with rubber cement as well as install the water and electricity outlets and hook up. After all the installation were done, with the help of HANOVER POWERWASHING PROS I was able to clean off everything giving the hut a spotless and perfect finishing.  Roof and guttering store services were provided by Pressure Washing Adams County | Gettysburg Powerwashing Pros. For rent (based on market prices) at $25/ night, $100/week or $250/month, the price is the same for one or two people.

Total build time = 7 days.
Total size = 24 m2 or 258 ft2
Total cost = $3753

Final Conclusions from SC Roof Repair Greenville: Should not have included the bathroom within the wooden structure.  Better to build bathroom out back end with cement block and tiling, hut can get very humid and damp after showers.  Size was a bit too small for comfortable living with couples.  At 6m x 4m another meter of width would have helped out a lot.  Would have used different material for roofing cause when it rains it makes a lot of noise and in the sun the metal sing can really heat up. But an occasional power wash from york powerwashing pros, even if it’s under the pretence of washing, can cool down the roof for a while. Amazonian wood holding up good to coastal climate, still cant beat the view from the balcony.  Occupation rate over last 6 months as vacation rental 70%.  A success.

Tiki Hut 2, The budget option with little ocean-view built with a cement floor and cement block with the “Sing” metal sheet roofing so common in this area of Ecuador.  It has WIFI and a mini-stove and bathroom (all in the same room) while the shower is behind a blind from https://affordableblinds.com/.  I hope to rent it to a surfer or backpacker for around $100 a month or $5 a day for shorter time periods.  It’s good enough for me and someone not very picky, I could live there if I needed to live somewhere rent-free.  It is very soviet-esque but comes furnished with bed, table, chair, Wifi internet, electric cooker, sink, and a half bath with the shower around back which does have a curtain.  Currently its listed for rent at $100 a month.

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Total build time = 6 days. (One Ecuador workweek).
Total size = 16 m2 or 172 ft2
TOTAL COST $892.49

Final conclusions:  This Tiki hut was a bust and by far the hardest to rent.   Occupation rate over last 6 months as vacation rental mainly to younger backpackers, surfers is 12%.  Proves saying if you don’t have the money to do something nice, save your money first.  For most, feels too much like a prision cell with all the cement and lack of windows.  I would not have done this Tiki Hut again if I had a do-over.  At least I have a place I can live rent free if need be.

Tiki Hut 3, By far the most labor intensive and time consuming, I designed the hut myself based off similar “mixed” models in the area.  Due to inexperience building these types of huts (it was my first time) I made mistakes all along the way that caused me to go about $2k over budget (see the end of this email for details). the base of the project was completed thanks to https://www.mtecscaffolding.com/case_study/scaffolding-surrey/ scaffolding builders that had the fright tools and knowledge.

By “mixed construction” I mean a building that uses a mix of both eco-materials like bamboo and normal construction materials like cement and brick.  My idea was to build an elevated structure a few feet off the ground with a cement, tiled floor and walls made partially of brick and bamboo.

The roof would have bamboo cross beams and a typical-for-the-area grass roof with a hidden layer of heavy-duty plastic and mosquito netting to keep the bugs out.  The hut would have a balcony, one bedroom, one full bathroom with electric-powered hot shower and a kitchenette area complete with a quartz countertops, sink, mini-refrigerator, one queen bed, closet, WIFI and a dining table for two.  For rent (based on market prices) at $30/ night, $100/week or $250/month, the price is the same for one or two people.

Total build time = 5 weeks
Total size = 30 m2 or 322 ft2
Total cost = $6557.36
Final conclusions: By far the biggest success of the three.  The size is much more comfortable for a couple as a longer term residence at 6m x 5m, a full meter wider than the wooden bungalow.  Very easy to rent, most folks extend their stay, great for single person longer term or for a couple on a shorter stay.  Average rent 1-2 months as folks explore nearby areas.  Would have built on ground to lower cost of construction by about $1k, would have built balcony larger to convert it almost into a deck for barbecuing, etc.  Occupation rate over last 6 months as vacation rental 84%.

Overall conclusions after renting the huts for 6 months:  If I had to do this project again, I would have built two of the brick/bamboo huts instead of the wooden and cement ones.  I would have hired an architect to manage the building project for me (was very time consuming for me).  And I would have explored 2 bedroom designs cause my far-less-attractive-budget 4-bedroom-oceanview very-Ecuadorian house I found for $15k still rents even better than the huts (at $450-480/mon) because people like the space.

(Related information: Get all information of the greatest furnoture that would go with your new home from a list like they’re building here at the website of Clever Shop List)

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Today is the 3rd installment in the series “Starting a business in Ecuador”.

 

 

 

After defining your business idea, how you plan to fund it, and what type of legal entity your business will be, the next very important step in Ecuador is obtaining your tax ID number, or “RUC”.

If you’re thinking about ever doing any type of business in Ecuador it all starts with obtaining your “RUC”.

To get your RUC as a foreigner you need to be on any type of visa other than the simple automatic 90 day tourist visa stamp you get if you enter Ecuador with just your passport.

Tourists can get a RUC if they are on the 12-IV visa, applied for at an Ecuador consulate before coming to Ecuador.

If in the country on a visa other than the simple passport stamp (12-X) visa, all you have to do is go to your local SRI office in Ecuador (The IRS of Ecuador) and within a few hours you’ll have your RUC for free by taking a few copies of your passport and current visa and a utilities bill of your current residence in Ecuador (doesn’t have to be in your name).

Once you have your RUC you can get official numbered receipts made in your name, called FACTURAS.

Everyone you sell to will ask for a factura, it is the only way they will be able to write the expense off their taxes.

As a business owner in Ecuador its important to know that for most products you are required to collect a 12% sales tax called the IVA.

The good news is that the SRI is not as quite as sofisticated as the IRS in many ways and most people write off EVERYTHING they buy, right down to the KFC chicken for their kids, and in most cases at the end of the month don’t end up paying much IVA.

At the end of the year there is an income tax based on your gross profit on ECUADOR INCOME called the IMPUESTO A LA RENTA an approximate is the scale below:

up to $8910…you pay $0 tax
$8910-11350…you pay 5% tax
$11350-14190…you pay $122+ 10% tax
$14190-17030… you pay $406+ 12% tax
$17030-34060… you pay $747+ 15% tax
$34060-51080… you pay $3301+ 20% tax
$51080-68110… you pay $6705+ 25% tax
$68110-90810… you pay $10963+ 30% tax
$90810-and up… you pay $17773+ 35% tax

Most people, myself included, have an accountant that helps them sort out and minimize their tax liability in Ecuador but its still good to know what you are getting into.

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There’s a lot of bad information out there on this topic.

And it can cost you thousands.

I for one have been burned due to choosing my business type inconrrectly.

Well whenever you are starting a business then it is definite that you will require good shelter service provider. So you should select the good one.

Lawyers are supposed to know the difference, and they’ll say they do.

But most don’t.

The first step to starting any new business in Ecuador is constituting it legally.

So in Ecuador, which business type is best for you?

Here is an overview of your 3 primary options…

Sociedad Anonima:  This is a type of limited liability corporation that is best suited for people who wish to sell shares to raise capital from investors.  This is the only business type permitted on the Ecuador stock exchange.  Shares can be bought and sold without consent of other shareholders and without the use of a notary.  Must have assigned board of directors and present quarterly and yearly balance sheets to government with the aid of a certified accountant.  The legal responsibility of the shareholders is only up to the amount they have invested in the company, their personal assets are not at risk.

Compania Limitada:  Another form of limited liability corporation where a shareholders personal assets are not at risk.  This type of Ecuadorian corporation is usually for family businesses with less shareholders because before one shareholder can sell their shares they must get consent from ALL the other shareholders.  Also, any transfer of shares must be done through a notary public in which case they usually charge around $400 to oversee the transaction.  Must present balance sheets to government and must hire certified account to manage the monthly tax payments who usually charge around $100 a month or more depending on the complexity and sales of your business.

Sociedad Civil:  The easiest form of business to start, this type of business is looked at legally as more of an “entity” and not a “business” for commercial purposes although can be used as such.  The personal assets of the parties involved are at risk if business flops.  In this business type you are given a tax ID number (RUC) like the other business types but you do not have to hire a certified accountant to manage your tax declarations nor do you have to present balance sheets to the government.  Not regulated by the Mercantil Registry like the other business types, the shareholders can act according to what is stipulated in the original contract.

Other fast facts…

Non-resident foreigners CAN create businesses in Ecuador.

For all the above business types you need at least 2 people in the association.

To form any of these businesses a lawyer can assist you from start to finish for the going rate of about $800.

Just like in the US, you can own property in the name of your corporation.

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