Investor News/Analysis – Page 3 – The Ecuador Insider

The Wrong Way To Close A Sale In Ecuador

“You did what?” I asked surprised at my new American friend who told me he just agreed to sell his car to an Ecuadorian girl.

He’s turning down dozens of people calling on his car every day (a car in high demand in Ecuador) because he already agreed with a handshake to sell and was planning on meeting her in a few days. No money exchanged.

“Naw! Man.” I responded.

Maybe that’s how you do business in North America, but that doesn’t work down here.

The first person to pay you in full for the car, get’s the car, that simple. Don’t be holding it for people!

Down here, if there isn’t at least a deposit paid, you got nothing, man!

Words are just hot air.

Handshakes are worse.

Checks are the equivalent of toilet paper, (seriously!) at least, when you don’t know the buyer in a deal like this one.

Particularly, when selling something in high demand down here like a car, if someone asks if they can pay in installments or whatever, tell ’em to f— off, you’re not a bank.

Cash in hand or deposited in bank account… then goods released.

That’s how you do business down here.

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Roof install costs on the coast of Ecuador- Ecuador house build weeks 5-10

Hi {!firstname_fix},

And on goes the roof!

I wanted to do a house in the typical Spanish style with the red clay shingles. Plus, I wanted to do a lighter-weight roof with “flex”, like the ones offered by Bradenton Roofer as they would be better for earthquakes than the typical cement roof (losa) common in Ecuador, which is why I’d to contact TheRoofClinic.com to ensure the safety of the house.

Also, I thought it would be nice in the case of a big quake the thought of gypsum and shingles above me appeals to me much more than blocks of concrete.

Plus, i decided to do a four-sided sloping roof with multi-colored clay shingles in a typical-Japanese style. Rare in Ecuador. Commerical roofing contractors faced this issue professionally. The primary item on a roof replacement estimate is the actual roofing material. The estimate will list the manufacturer and type of shingles the contractor intends to use. It will also show the style of shingle. Architectural or dimensional shingles are the most popular. They create more interest and often mimic the look of other roofing materials such as slate or tile. Well you can approch the firms having manufacturing facilities in mexico because they provide very high quality material. It may include color choice or options if design was part of the initial discussion. The estimate will also indicate the length of the manufacturer’s warranty for that type. You can check this site out for commercial and industrial roofing services.

But first came the metal frame…

Labor cost for installation of metal framework for the conservatory roof (3 days)= $500

anti-corrosive paint $82.50
metal beams for roof $1326
tape $9

Then came the plywood on which goes the shingles are held in place by a little bit of cement. The costs highlighted below are for the roof, the roof installation cost $580 and took about 2 weeks. Find further information or get a quote now.

Then came the shingles…

In Ecuador to lay roof shingles costs around $3.50 per m2, whereas most commercial roofing companies in Aurora Colorado take far less. When installing make sure there is a decent slope or you will have big leak problems later! Trust me, I know from a different property! The moral of your friend’s story and its lesson was clear, it is better to invest time and energy to find a qualified metal roofing contractor to install your roof in the first place than, it is to hire the wrong crew that has never installed a metal roof before, and will treat it as another asphalt shingle “get it done in one day” project. Now, that there were no questions remaining as to the importance of hiring a roofing company that specializes in metal roofing, your friend advised you to use a residential roofers Contractors directory broken down into categories by specialties; metal roofing contractor companies organized by location in the U.S, and by specialty categories such as standing seam and metal shingle installers.

According to Commercial Roofing Calgary, the roof on your home or business is the first line of defense when it comes to protecting your real estate property investment! Roofs are generally the most expensive single item that property owners will replace. When it’s time to have a new roofing system installed, it is often difficult to know which roofer to hire for the job! Homeowners should be skeptical of hiring their roofer based on price alone. When hiring a roofer, you generally will get exactly what you pay for! Hiring a roofer solely because they provided the lowest bid may result in a poor quality roof that may leak and diminish the curb appeal of your home.

Total roof install= 2 weeks.

The total spent on the roof for a three bedroom two bath house was $3,788.09.

See full costs below of weeks 5-10 of build project…

28.73 chimney
1239.41 plywood for roof
18.84 screws for roof
11.45 electric tubes
6 telephone
7.50 screws for roof
248.86 ceramics for balcony $7.60 per m2
9.22 latex paint
97.30 cable
15.73 bondex roof
11.28 disc for electric saw
8.00 grapa metalica
1492.90 shingles roof (165m2) for 145m2 house
3.00 electric outlet
3.00 gyprocks misc.
1.20 placa plastica
11.54 fachaleta
$580 manual labor for roof. $3 per m2
219.15 More shingles
$7.75 sack of cement
940 maestro Jimmy for foundation work (out of $9500)
150 metal door and install for water tank
3.00 teflon
13.20 tubes (codo)
17 breaker

81.95 tank for water
73.18 supplies for tank
62.18 cement
210 gas
1810 of 2260 Gypsum drop off installation included materials. $15 per m2
$4.75 cable
17.50 screws for gypsum
160 last payment for electritian
17.65 outlet
30 transport for tiles
1598.25 porcelen for bedrooms at $15.98 per m2 (100m2)
1175.25 porcelen for bathrooms
1200 last payment maestro for laying foundation (out of $9500)
79.11 ceramic tiles
3.25 brush
13.50 screws
23 telephone calls
8.35 tubes varios
31.40 siicone
$103 bondex for roof
$105.69 electric cable
14.58 roof supplies
140 payment electritian
10.79 polimex
40 uplift metal framing for roof
63 stucco for walls
298.58 bondex for flooringWEEKS 5-10- TOTAL SPENT INCLUDING ROOF for 190m2 HOUSE: $12,207.

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3 things to consider before you lie on your property deed in Ecuador

This past week in this newsletter we touched on the reality of Ecuador property in that the municipally appraised values often are MUCH less than the real commercial values the property sells at.

I just want to inform on the reality of the situation, the choice is yours to put the real price you paid on the deed or just the minimum needed or the municipally appraised value.

But there are three things to consider when making the choice…

1. Do you need this property to get an investors residency visa in Ecuador?

If so then you MUST put at least $25,000 value on the property plus $500 for each dependent. Still valid in 2016.

2. How long do you plan on keeping the property?

Putting the lower amount can help minimize notary and municipal fees now at time of purchase and your yearly property taxes (predios), but keep in mind the next buyer might not want to put the lower amount meaning you’d get nailed with a hefty capital gains tax bill! So if you plan to keep the property for the long term this may not be an issue.

3. Is there any chance this property could be expropriated by the government? Like to widen a road (I’ve seen many times in Ecuador), or build a bridge, park, etc…

If so, keep in mind the government only pays according to the low-ball MUNICIPAL APPRAISED VALUE of the property but if you have the higher real value on the property you could make a good case that the property is actually worth that and get all or part of that higher value.

Now, the choice is yours!

Up goes the walls, costs and more: Ecuador building project week 2-3

Now with the floor and columns up thanks to http://www.cormacmetalspray.com.au/ now is time for the walls…

After building with blocks on this house, next time, I’m going to use bricks, why?

Although the labor time is much more, the walls won’t crack, are more solid and after all you may use less cement cause you don’t have to plaster over the walls when finished.

We used 15 cm wide blocks for walls and filled with cement for noise protection.

For a 190 square meter house that we are building on the coast of Ecuador. We needed 2100 cement blocks at 38 cents each. TOTAL price $798.

Cheaper than bricks, you bet, and much faster to build!

Why Ecuadorians lie about how much they paid for their property on their deed

3 things you got to know before you buy property in Ecuador…

1. Municipal’s official property appraised values in most cases are WAY out of wack, or under the actual market value. It’s common to see properties selling in the six figures while municipally valued at $5,000 USD or less.

2. The buyer of a property can put the real price she paid for the property on the deed but must put at least the official Municipal appraised value.

3. Ecuadorians HATE paying taxes, even more then we North Americans do, because I suppose we are more used to it.

Put these three facts together and most who buy property in Ecuador don’t put the actual amount they paid on the deeds but the minimum amount they must put which is the Municipally appraised value.

The reason for this is because it greatly lessens your tax burden, both for your transfer fees at time of purchase and also your annual tax payments (predios) due to the Municipal each year of ownership.

Here is a real life 2016 example of a property I am looking to buy and how putting the actual amount the owner is asking on the deed effects the transfer and notary fees you will have to pay at purchase plus the annual property taxes vs just putting the Municipally appraised amount.

Figures were attained directly from a notary in Ecuador.

Actual asking price of property: $77,000

$355 Notary fees
$760 Alcabalas (Municipal transfer fees)
$228 Junta de beneficencia (Municipal transfer fees)
$4000 capital gains tax or plusvalia (the seller pays)

Annual property tax payment if based on actual purchase price (predios): $190

Current Municipal appraisal of same property(and the current value on the deed): $37,745

$237 Notary fees
$377 Alcabalas
$120 Junta de beneficencia
$0 capital gains tax or plusvalia (the seller pays)

Annual property tax(predios) currently being paid based on current appraised value: $71

Conclusion: Buyer could save over $600 in notary and transfer fees/taxes at time of purchase by just putting the Municipally appraised value. Could also save over $100 a year in the annual property tax due. The seller would save greatly in the capital gains tax (maybe something the buyer could ask for concessions on from the seller for saving them so much in tax by not upping deed to actual value).

Possible consequences: Nothing I know of, everyone does it in Ecuador except when there is a bank loan involved in which case the bank does NOT take the Municipal appraisal but will send a guy to do their own for a more accurate figure on which they will base their loan amount to you.

The choice is yours.

Hasta pronto,

Dom Buonamici
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