Category: Investor News/Analysis

Evictions In Ecuador: How They Work, And What To Do When It Happens To Your Property

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“I can’t believe it’s come to this.” I said to my friend as I slid the ski mask over my face a few days ago.

“Got the switch-blade?” he asked.

“Yes.” I responded.

“Got the baseball bat?” He asked.

“Come on man, its Ecuador, ain’t no baseball bats here.” I continued.

“Ok, then got some stick you can use as weapon if needed?” He mumbled.

“Yes”. I replied as I slid it under my belt hiding it from sight.

“OK, lets go.” we both agreed as we walked towards the building, nodded at the security guy we’ve seen a million times and into the elevator we went.

I hoped this wasn’t going to get ugly, I thought, as we went up the elevator about to confront a tenant that did not want to pay the rent nor un-occupy the property.

Then I woke up.

My friend nudged me awake, I was daydreaming, waiting in the lobby of my condo building waiting for the tenant who didn’t want to pay to leave.

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He wasn’t leaving.  And I was angry.  Maybe it was the Italian in me, I don’t like it when people steal or try to cheat me.

First time this happened to me or one of my properties in Ecuador.

So what could I or you do in this situation?

I know the laws favor greatly tenants over owners here.  So I was worried.

For that, I talked to a notary/lawyer friend of mine in Guayaquil who prefers to remain nameless.

Here’s what she said:

The legal term for eviction is “desahucio” in Ecuador.  First, you have to go to a notary with your signed rental contract (does NOT have to be notarized) and ask for a document called a “desahucio” which you then have to serve the tenant.

They then have 90 days (3 months) to leave the premise by Ecuador law before you can come with the police and kick them out.  In the meantime, you will have to go to a rental-claims-court (juzgado de inquilinato) and file the claim.

What if you don’t have a rental contract like in my case because the rent was going to be short-term (1 month)?

You can make a declaration of ownership of the property and verbal contract (declaracion de un contrato verbal) with a notary to continue the procedure.

Then, I suggested another solution.  Quicker.  They’re not paying for services so can I just cut their services: water, electric, Internet?

She said yes, just do it.

And after one more warning (and one more night) I did just that with the building staff, first cutting the water, the electric then the Internet to the suite.

And sure enough, within 1 more day after that they were out of there on their own terms.  The whole ordeal of them being in there and us trying to charge them and them not wanting to pay (or leave) lasted about 6 stressful days.

I only let these guys in in the first place based on a recommendation from a friend (that i’m also not going to listen to anymore).

But to avoid situations like this with my short-term vacation rental business in Guayaquil, I have to stick to my rules of no walk-ups, and Internet pre-paid bookings only which I think will help prevent situations like this greatly.

And for rentals of longer terms, be sure you get that contract signed from day one for your property and screen your tenants carefully!

Common setbacks when getting electricity to your home in Ecuador: PART 4 Ecuador coast home build

This week, before the heavy construction begins, we had to bring electricity to our lot from nearby.
First, you may have to install your own transformer.

Just make sure it is at least 5 KW for every house you plan to connect to it.  And make sure the person who installs it is licensed or you could have a problem with the Municipal later!

In my case the whole installation including 3 posts to get the electricity to my lot cost about $3000.

When installing electricity in your home make sure the breaker box is hidden, Ecuadorians will often but the box right in the middle of their living room!  Ouch. #1 Queens Electrician NY | Contractor & Electrical Expert providing reliable affordable electrical services. There are mаnу еlесtrісіаnѕ and еlесtrісаl соntrасtоrѕ whо аrе considering ѕtаrtіng their оwn buѕіnеѕѕ. Thеу mау hаvе wоrkеd for аnоthеr company оr оrgаnіѕаtіоn for a whіlе аnd wаnt to hаvе thе freedom аnd flеxіbіlіtу of bеіng thеіr own bоѕѕ. After аll еlесtrісіаnѕ аnd еlесtrісаl contractors are оftеn wоrkіng оn their оwn аnd аrе uѕеd tо uѕіng thеіr own іnіtіаtіvе tо solve problems.Many of businesses and people hire them too when their work is as quality as that of http://elicon.dk/knx/installation. Whу nоt ѕtаrt уоur оwn buѕіnеѕѕ thrоugh frаnсhіѕіng, where еlесtrісіаnѕ саn uѕе thеіr own initiative but also get support fоr an array оf business disciplines.

Hardly any individuals feel certain to accomplish electrical work around their home or business, even in Southern California. In the event that they need to include a light apparatus, supplant a roof fan, or need a phone framework introduced in their new office, they should call upon an electrician to take care of business. Here is On Call Hamilton Electrician always ready for you.

Make sure the light switches are just 100-110 cm off the ground so kids can reach them, often in Ecuador if not told the workers will install the sockets too high.

Also, make sure the voltage is 110 for normal sockets and 220 for the oven and AC installations. Keep in mind that elесtrісіаnѕ muѕt mаkе sure that any еlесtrісаl іnѕtаllаtіоnѕ using standby generators get installed properly to ensure your home’s safety.

Elесtrісаl testing ѕhоuld be соmрlеtеd by a ԛuаlіfіеd electrician like people from electrician hope island аt ѕресіfіеd реrіоdѕ аnd іѕ dереndеnt оn thе type оf property being tеѕtеd. Elесtrісіаnѕ will сhесk for any deterioration аnd аlѕо оn аnу nеw work, which іѕ rеԛuіrеd to bring the іnѕtаllаtіоn uр tо сurrеnt ѕtаndаrdѕ.

Additionally, most electricians in Ecuador charge per point, or per socket installation.  We paid $8-12 per point (or socket).

Often electricians will tell you you need more expensive cable than you really do so they can steal it, careful!

For sockets 12 cable will suffice, for AC or oven 10 cable is ideal.

How to get hotel-type-dollars for your rental in Ecuador- Property Management Opp

“No, I don’t do rentals.”

That’s a phrase I hear a lot when talking to real estate agents in Ecuador.  Particularly foreigners who are working in Ecuador as real estate agents. AirBnb Managers will manage and treat the visitors with care and patience. Our team is committed for best client service. Give us a call and we won`t disappoint you.

But I think they’re missing the boat.

Especially now in 2016 as many locals and expats are opting for renting over buying. But if you plan on buying you may want to look into the two storey home builders perth so you can build your home the way you want. Visit TerraInc.net to find a reliable building contractor. Maybe it’s distrust in the local government, or the strong dollar, or earthquake worries.  Everyone has their reasons for deciding to rent.

I started my property management business in Guayaquil a bit over 6 months ago and it’s been going great.

And I think it’s a BIG opportunity for other foreigners all over Ecuador.

Ecuador (especially on the coast) just doesn’t have many good, professional property management options.

Many people just lock up their house or condo and leave (which you shouldn’t do in Ecuador due to the risk of break ins of obviously vacant properties). Action Lock Service mobile locksmith will surely reduce the rick of anyone breaking into your house, with this service installed you can relax knowing that your property is safer than ever.

Plus, a lot of foreigners are only here part-time and need someone honest to pay the utility bills, property taxes and maintain the general up-keep of the property while their gone.

And most importantly, show the house, charge the clients and be the liaison for the tenants when problems arise. How I do this business in Guayaquil (although I live in Quito) is pretty simple, and similar to what I’ve seen others doing in other parts of Ecuador.

Here’s what I’ve done:

You can start with not even buying a property, like I did.  Just rent long-term.

Less risk.

And then sublease for shorter-terms.

Be sure the owner knows what you’re doing at the beginning and is Ok with it.

Find one unit to begin and expand as needed.

Find a unit in a great location for your ideal client (tourists, expats, etc.), with a 24 hour guard/receptionist and preferably in a building or community that offers the same amenities of a hotel (like a swimming pool, gym, etc.)

Find a location with a bunch of eating options around and your guests won’t even care if you don’t offer a restaurant or breakfasts.

In case that you can’t find your keys or you left them inside your house, NYC Locksmith has a professional team ready to assist you with new keys and more security.

You can still beat the hotels in the area, especially for longer stays (weeks to a few months), because your unit has a kitchen, living room and generally more space and privacy than a hotel can offer.  Plus, hotels charge per person and restrict guests in the rooms which you won’t.

Having your units in buildings with 24 hour staff means you don’t need to hire ANY employees!  I just have one young, nice bilingual guy who I pay to fix problems as they arise and coordinate cleanings between guests which I pay per job as needed getting a “factura” or official receipt making the work contract-work only.

If things keep expanding I may hire him full-time in the near future meaning I’d have one employee.

We leave the key with the guests name on it at the reception and the guest is instructed to request it at check in.

Promote and charge 100% online with prepaid bookings only.  Because you or none of your direct salaried employees will be there to charge when guest arrives.

You can also charge a security deposit in advance online with a service like PayPal which you can refund later with a click.

As you expand you can begin to manage other properties in the area for other owners for a percentage of the rent.  In my experience, once you’re in the game, they’ll start approaching you!

For instance, in Cuenca and Salinas, two Ecuador expat hot-spots where I see a lot of opportunity for this type of business.  You could rent nice, furnished places where tourists want to be in the $3-400 range long-term and turn around and sublease for shorter stays in the $50 a night range, but you definitely need to check the Office Space to Rent in Asoke.

You’d have to cover the utility bills but in Ecuador that’s not much, so you could net around $1000 a month from one unit.  If you keep it full, which I’ve found do-able.

One thing is for sure, managing rentals is MUCH EASIER than managing a hotel or B&B which requires 24 hour employees (or handcuffing yourself to the site)!

To promote AirBnb.com is a great start, but it’s fascinating to me how different it is promoting essentially a vacation rental compared to my 19-room hotel(b&B).  To learn more about that fill in the blanks below…

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The exit tax advantage foreigners have when buying property in Ecuador

Just like with any Economic decision, there are winners and losers, positives and negatives.

Recently, I used the ever-heightening exit tax (now at 5%) the Ecuador government has put on any money (and now cash) you wish to take out of Ecuador to my advantage in a property deal in Guayaquil.

A friend of mine was about to buy a property and had already agreed on the purchase price after a tough negotiation with a wealthy Ecuadorian owner.

But I had an idea.

I contacted the Stoner Law Offices for proper guidance through the laws regarding buying and selling of properties. And as I also know wealthy Ecuadorians pretty well and what makes them tick (I partnered with one in my first biz in Ecuador).

-I know almost all of them take one or two “shopping” trips a year to the USA.

-I know they almost all have bank accounts in the USA.

-That they HATE paying taxes and are generally cheap. While in my experience, the poor and middle classes are actually very spendy and don’t save a dime.

-Have almost “zero” liquidity. All the money is usually tied up in businesses, inventory or property.

-And are fearful of the current regime in Ecuador and trying to get some of their assets out of Ecuador.

Keeping all that in mind I told my friend to ask for a 3% discount and extra concessions on the already discounted, agreed-upon price if the payment was made to a USA account instead of brought to Ecuador.

The Ecuadorian owner knew it would cost him 5% to take the money out of Ecuador, so he gladly agreed.

For my friend, an American buyer, it was the same for him to pay from his US account to an Ecuadorian one or an American one (no tax on bringing money to Ecuador, just the wire fee of like $45).

So there you have it, one way to use the new exit tax to your advantage in Ecuador getting an extra discount on a property purchase.

For more on this topic please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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Is Ecuador the next Venezuela?

I’ve been in a few communal showers, but thankfully never in a prison one.

And so I’ve heard, dropping the soap is “how it starts”.

Similar to that… Ecuador is currently on a predictable path to become another Venezuela.

I for one hope it doesn’t happen, Ecuador now is certainly NOT Venezuela, still very capitalistic, but it’s just history, man.

Like when a country elects a fiery, entertaining ruler who instigates racial prejudices and violence, we know what happens.

Yea, or do we?

Like for the president to kick out the congress, install his own people, intimidate the press, eliminate term limits, install capital controls. On and on it goes until one day you think.. “oh sh*t!”

Like one Venezuelan client of mine said, “Yea, the marches, that’s how it starts, but it doesn’t do a da** thing.”

This week the president just followed the next step in his plan to convert Ecuador into another Venezuela, or Cuba…

Right now, on any amount you try to transfer out of Ecuador over about $1,000, you have to pay a 5% exit tax on the whole amount. And the max you can take out of Ecuador in cash is $10,000 tax free.

Well, the new proposal by the president wants to lower the max on the tax-free cash limit to $1,000. Effectively putting a nice cap on ALL THE MONEY in Ecuador.

Want to take it out? Going to pay that 5% tax.

Among other proposals lost in the wash are what Venezuela already has in place, like putting limits on how much Ecuadorians can spend abroad on their credit cards, etc.

My take, I’ve always been one to say you should never put more than 10% of your total portfolio in Ecuador. Ecuador’s a nice diversification, but that’s it.

Especially now, any money you put in Ecuador better be able to generate you over well over 5% return a year or its simply not worth it.

For more on this topic please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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