Category: Ecuador for Investors

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:

First Name
* Email
* = Required Field

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:

First Name
* Email
* = Required Field

How to open a PO Box in Ecuador

,

Contrary to popular belief, Ecuador does actually have a decent post system (Correos Ecuador).

The problem often is the place where you are living or renting doesn’t have an easily find-able address.

My first house purchase in Ecuador had the legal address… “The white house near the Hospital in Manglaralto.”

Yikes.

So to receive mail in these cases I suggest opening a PO Box… its easier than you think.

Just go to your nearest Correos Ecuador Post Office with a copy of your passport, your real passport and a utility bill from where you live (it doesn’t have to be in your name) and ask for a BUZON.

The rent price is $22 a year and iits about the size of a shoe box… you get the key.

If items larger than that come for you, you’ll get a slip in the box saying to ask the receptionist for your larger package.

Thats it. Foreigners who are not residents of Ecuador can open one as well with just their passport.

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:

First Name
* Email
* = Required Field

The 3 Most Visited Beaches In Ecuador

This week I got an email from a subscriber…“Hey Dom, I’d like to put a business on the beach in Ecuador, and from your experience, what would be the top3 most visited beaches in Ecuador, based on visitors and not whether they are foreigners or nationals?”

ME: Well, I don’t have the exact statistics (I don’t think anyone does!) but from my experience I’d say the mostvisited beaches in Ecuador are…

1. Montanita- Been THE big, new hot spot on the coast for foreign and local tourists alike since 2011.  This place is packed shoulder-to-shoulder on weekends and holidays but has tourists year-round, every day of the week.

2. Salinas- For decades this peninsula has been the go-to beach getaway destination for locals from the nearby city of Guayaquil, and also from the Cuenca area, and since about 2011 been growing in popularity with foreign expats.  The problem is the noticeable lack of beachfront hotels because most of the boardwalk is covered by condo buildings limiting tourism growth.

3a. Atacames/Tonsupa- For decades its been the go-to spot on the coast for locals from Ecuador‘s capital and second largest city (Quito).

3b. Playas- Another up-and-comer, its proximity to the largest city in Ecuador (1 hour from Guayaquil and a new road coming) helps a lot.

3c. Puerto Lopez- Popular with foreign tourists due to the whale watching (July-October) and its proximity for day-trip excursions to “the poor man’s Galapagos” The island of Isla de La Plata.  But its proximity to one of the largest cities on the coast of Ecuador (Manta) as well as Porto Viejo helps a lot to attract locals on the weekends and holidays.

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:

First Name
* Email
* = Required Field

$3,500 Beachfront lot minutes from airport in Ecuador, 250m2

esmeraldas beachfront lot

Today’s Ecuador deal of the day is in an area of the coast that has been completely overlooked by foreigners, yet I don’t understand why because its nice with huge deals to be had and just minutes from an airport with daily commercial flights to Quito.

The area was also not effected by the recent quake.

The lot is 250m2 beachfront to highway.  The highway access is great.  The lot also has water and electric hooked up and did I mention, its right-on-the-water beachfront with no road or boardwalk in front?

The lot is located minutes from the town and airport in Esmeraldas headed to the north.

The owner is asking $3,500 USD negotiable.  (I’d try to knock another $1000 or so off that.)
The only thing I’d check out further before buying is what type of deed the owner has, is it a right of possession from the local communal or a proper notarized, municipally-registered deed?  It was not clear when I was talking to the owner on the phone.  Either way for this price if you like the lot after visiting I’d consider it.  The ownership is still indefinite either way, the main difference comes in the sales process when buying or selling.  (But a municipally-registered deed is always a safer bet.)

To contact the owner of this lot please call 0991969909 (Spanish only), I can not answer any further questions about this lot because I have NOTHING to do with it, I just saw it advertised through my grapevine, and for beachfront, wow, what a deal.