Category: Ecuador for Investors

The dirt on Cotacachi, Ecuador: March 2014 Market Report

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.

Concrete, on the other hand, is a rigid pavement. Its function is simply to bridge soft spots in the soil. Poured concrete will crack and break due to loads, shrinkage, soil expansion, and frost heaving of the sub-grade. Concrete is one of the most vital materials in construction, but poured in place concrete makes a poor paving surface. This is due to its relative inability to flex and its low tensile strength. Some of the advantages of pervious pavers are that they can appear to be indistinguishable from non-porous pavers. They are a very attractive option for use on paths, terraces, driveways, parking areas or low-speed low-volume roadways. They come in a wide variety of styles, shapes and colors that can enhance your project site. They are as attractive as other styles of precast pavers. The driveway pavers Los Angeles, california is a long lasting, low maintenance cost product which looks great over time.

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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What Pablo Escobar taught me about life in Latin America

Many people don’t know this about me.

But my first ‘living’ experience in Latin America was when I lived almost a year in Medellin, Colombia.

I was young, 23 years old in fact.

And I have to admit I was mainly focused on going out, partying and chasing women.

But in the breaks from that, I picked up an internship with the Medellin Chamber of Commerce, export division.

While there, as an advisor to Colombian export businesses, I couldn’t help but notice one thing.

There was MAJOR opportunity in Latin America for a ‘gringo’ like me.

You see, day after day I met folks with great products and great ideas, but they needed help penetrating the North American market.

They were clueless.

Heck, they needed a ‘link’.  Someone that knew the culture and knew a bit about marketing to Americans.

No where can I illustrate better this fact than from a 4 minute movie clip from one of my favorite movies, Blow, when the main character (a gringo) meets Pablo Escobar, and goes into business with him.  Watch it here. 

No, I never met Escobar personally, but I did meet quite a few people who were fatherless because of him.  Not good.

And of course, I don’t suggest getting into illegal businesses like the main character did, why when theres plenty of legal ways to make money?  But the lesson is the same.

Which brings me to my point for today.

I’m actually a pretty average guy, average intelligence, was an average athlete, 5’6, soft-spoken, usually not a leader, chances are you’ll have trouble hearing me even when you are 3 feet away… in the USA I’d probably be someones ‘office b*tch’ aka ’employee’.

But I can attribute any successes I’ve had in Latin America to 3 superpowers.

By superpowers I mean things that set you apart from the pack.

1.  “Being” a gringo.  As mentioned above, many people in the business environment of Latin America will ‘listen’ to you just because you are from up north, many have a respect that is visible.   You really do have an innate sense of how other gringos think, what they want, and what makes them tick.  Knowledge that someone trying to sell something to them is certainly going to covet.

2. Speaking Spanish.  Take a few months when you first arrive and learn that sh*t.  Really, in order to get the most out of living here like the friendships and business opportunities you’ll need to learn it, without it you can’t be ‘the link’.

3. Knowing marketing, specifically Internet Marketing.  This is undoubtably where the world is going, where the world is, its how businesses get clients, cheaply, and many Latin Americans are not as schooled on this topic as North Americans.  That’s the key in literally anything you want to do down here, import, export, tourism, real estate, etc… Don’t believe me, just check out an Ecuador airlines’ website, (like Tame) even those multi-million dollar guys don’t get it.  The good news is you can learn this skill, often by self-teaching yourself online like I did.

With those three powers you can do some serious damage down here!

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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Whats it really like living in Olon, Ecuador? – 1 expat response

Ahhh, Olon, Ecuador, one of my favorite beaches on the coast of Ecuador, and certainly a growing ‘expat hot spot’.

Olon is a few kilometers north of Montanita, about an hour north of Salinas (which has the nearest airport), an hour south of Puerto Lopez, and about 3 hours south of Manta.

For me, with its golden cliffs and gentle waves Olon has a special, Californian-laid-back feel, and its got one of the widest beaches in Ecuador making it one of the nicest walking beaches in Ecuador.  Its also unusually green, whereas once you pass the point at the south end of Olon which separates Montanita from Olon, from there south the coast is actually quite dry, brown and arid while from Olon north to Manta the coast is actually quite green and lush.  I know, its strange.

Above all else its great for folks looking for a quiet small town to sleep, yet still near the social scene of rowdy Montanita.

Today lets chat with an expat about what life is really like from the ground…

Enter Mrs. Defrain.

Why did you choose Olon?

My husband and I had been coming to Salinas and Montanita for about 2 years, and we decided to see if there was anything for rent in the area.  We found a very small unfurnished house in the middle of Olon for rent and we got a very good deal because we signed a year lease.  (We had to supply our own appliances.)

Montanita is a lot of fun, but it is loud.  Very very loud.  My college-aged son likes to visit Montanita when he is here in Ecuador.  Montanita is getting very built up and the available rentals seem to cater to short term visitors. If you have had the occasion to hire a limo service you might have done your homework and shopped around to compare rates. Most people choose a less expensive service for events such as proms, but with the financial saving comes a drop in quality. For more important events, such as weddings, for example, quality is something that should not be compromised. But when you set about looking for limo services you will notice that prices can vary considerably.  When you want the simplest Ann Arbor Limo Service, airport service, taxi service, Ann Arbor wedding limos, party bus rental or the other sort of transportation call us. Don’t make the error of trying to find the most cost effective limo price, make certain to travel and appearance at the vehicle you’ll be getting for your event. Toronto wedding limo, we provide to the best limo service. At Ann Arbor party bus we earn your continued business by offering the foremost competitive rates today. From the instant you call Ann Arbor Limos to the instant we drop you off at your final destination Ann Arbor Limos will show you why we are the simplest limo company within the Ann Arbor area. Ann Arbor Party Bus has perfected the art of customizing transportation to any individuals needs. The town center has had problems with sewage smell, and they are working on that with the assistance of Plumbing Contractors Tucson.  It’s a great place to visit but we did not want to live there.

We had never been “beach people” before.  My husband has learned to surf, or as he says it, “push a large board around in the water for a couple of hours every day.”

The beach in Olon goes for miles, from the point on the north end of Montanita, all the way up to La Entrada.  We have a lot of beach at low tide, and even have quite a bit of beach at high tide.  Some beaches in Ecuador disappear at high tide, but not in Olon.

How long have you lived there?

My husband and I have lived in Ecuador since June 2011, and have been in Olon for 9 months.  We still have an apartment in Cuenca, and stay there every once in a while.  We are building a small house here and plan to relocate.

There are some ex-pats who have been in the Olon area for several years, some like us just for a few months.

Tell us a little about yourself? 

My husband is retired.  My career was IT Project Management, but I have had 4 books published and now I am focusing on writing.  We chose to come to Ecuador from the US West for another adventure.  We looked in Thailand, Mexico and Peru.  Ecuador seemed to have the best balance of cost, environment, infrastructure, and proximity to the US.

What are the biggest positives and negatives to living in Olon in your opinion?

Two reasons that we enjoy Olon are the beach and the community.  The Malecon has quite a few thatched roof restaurants to choose from, all with an ocean view.  Olon is very clean and graffiti-free for the most part.

The community here is wonderful.  This includes the ex-pat community as well as the locals.  When you live here, you have to be part of the community.  The area is too small to hide out.  For example, when there is a local wedding or Quinceañera, the street in front of the family’s house is blocked off.  A festival tent is put up, and speakers the size of small trucks are put on a stage.  The whole town gets to experience the event, whether you are invited or not.

Olon, it seems to us, is a town in which not much is hidden away.  People are out on the streets day and night, visiting, sometimes drinking, and often dancing.  There are several events a year in which local dance groups compete against each other.  Because we live near the square, we have seen and heard them practicing the moves for months.

One midnight I heard something besides techno-pop music in the square; it was more traditional Andean music.  I woke up my husband and we watched a dance troop of about 20 people in Andean costumes dancing in their little black slippers, with wide straw hats in their hands.  Then the men bowed, put their hats on their heads, lifted up the ladies and spun them around in unison, and then moved away.  The traditional dancing went on, without conversation, for 4 dances.  Then they turned the music off and walked silently away.  My husband and I looked at each other in amazement.  Another Brigadoon moment in Ecuador!  We have never seen the dance troop since.

We wake up to the smell of bakeries close by, and go to sleep to the smell of grilled meat at Leila’s.  Sometimes the local wild donkeys add their “perfume” to the air. So, it’s advisable that you buy an AC unit.

One thing that is a challenge for us are the stray dogs, or the dogs with neglectful owners.  As dog lovers, we find it difficult to see the condition of these dogs.  One friend is in the process of working with a vet to build a dog shelter, in which injured strays can be taken for treatment.  She is also starting a spay/neuter center.

Approx how many resident expats live in the area?  Are there any weekly meet ups new expats should know about? 

There are Saturday afternoon meet ups in Olon and in Montanita during the high season.  Wednesday nights alternate between Olon and Montanita.  There are many formal and informal get-togethers.  Sometimes the magic just happens spontaneously at a local tienda on the highway.

I am not sure how many ex-pats live in the area, but over the year I am guessing around 200.

The ex-pat community is very welcoming and just plain nice.  There are inconveniences to living here, and we try to help each other.  For example, it can be difficult to get certain greens and veggies here.  Many people have gardens and share seeds and produce. While this happens, unwanted visitors like Rabbits, Voles, Woodchucks, Deer, Chipmunks, Squirrels. All eat leaves or fruits of plants in vegetable gardens. Symptoms include: Large parts of the plant are chewed off. When it comes to unwanted nuisance wildlife, bats, squirrels and raccoons get inside attics regularly. DuPage animal removal is a growing need among Naperville Illinois residents to professional animal removal services. As of 2020, bats in the attic were the biggest complaint among homeowners needing professional wildlife control services.

There are quite a few ex-pats who have built houses here, and they are extremely helpful in providing advice, contacts, and sources.  My husband and I are grateful for our friends and neighbors here every day.

Locals who live in Olon year round are always very nice, too.

What is there to do in and around Olon?

We have a book group that meets monthly, and ex-pat meet ups on Wednesdays and Saturdays.  Bird watching is superb.  Beach activities such as surfing, boogie boarding, swimming, and just walking the miles of beach are just outside your door.  You can go outside every day.  What’s a little drizzle now and then?

We usually see friends whenever we walk outside our door.  Visiting is high on our list of fun activities.

Because we live at the beach all year, we are very happy when it’s Monday.  From Monday to Friday morning, we usually have the beach to ourselves, even in high season.

We are never bored, even sometimes when we want to be!

Where do you do your shopping? 

We do the majority of our grocery shopping in La Libertad.  We put ice in the coolers and load up any friends who want to go along.  It is usually 4 to 5 hours for round trip for travel and shopping.  We go about every 10 days.

It’s important to keep a good shopping list, as there is no running back to the store easily.

Some fruits and veggies, as well as eggs, are available locally.

Do you go to Montanita often?  What for? 

We go to Montanita to go to the bank, for surf board repair, and for our monthly Book Group.

What are rental prices like in the Olon area? 

Rental availability depends on time of year.  A rental that is $300 in the off season may be $800 Jan – March.  Longer term rentals are mostly found via social contacts, and are rarely advertised.  It may take a while to find what you are looking for if you are very restricted in what you can tolerate, price range, or location.

If someone wanted to rent a house, my suggestions are:  find any place you can afford for a few months in the area, meet your neighbors and talk to people.  You will probably eventually find what you want.

Understand that there are times in the center of Olon in which sleep is impossible due to celebrations in the square.  Friends that live over a mile away can hear the music.  Sometimes our dog hides under the bed and whimpers, it is so loud.  This is part of the coastal culture and there is no reason to fuss about it.  It is all part of the package:  if you are part of the neighborhood, we are all in this together.

What are average purchase prices in the area?  Know of the prices of any actual transactions? 

We searched for a lot to build upon in October/November 2013.  We bought a small lot about a half mile back from the beach.  Beach front property is available, but it is at least $100 per square meter.  Lots away from the beach can vary, but in Olon at the time we were looking were averaging $40-$50/square meter.  Land up in the hills may be as low as $20-30 per square meter.  Those lots may have additional costs for bringing in electricity and water.

Prices are going up and up.

What businesses does Olon lack and need? 

It would be very handy if Olon had an ATM.  We have to go to Montanita for cash.  There is currently one ATM in Montanita which can give more than $100, and there is a Banco Bolivariano bank with a teller and an ATM (usually $100 limit).  There is often a long line to use either ATM or to get to the teller.

The other business that would be handy is a larger grocery store.  There are small vegetable stands and a mini-Tia which has many staples.  It would be nice to have more variety close by.

Where in Olon would you recommend to live, which sectors?  And conversely are there any areas of Olon or nearby to avoid? 

Olon is very small, as are the towns north of here.  There is a choice between being right in town in Olon, on the beach, or up in the surrounding hills.  It all depends on what you want.

The main thing to understand, in my opinion, is that some of the remote areas just out of town can present access challenges during the rainy season.

Dos Mangas, to the east out of Manglaralto, has very nice lots for sale if you have a car and would like to be more up in the hills.  City water is available quite far up the road.  It is very beautiful, with jungle-like greenery yet only 20 minutes from the beach.

Where do you go for your healthcare needs? 

As far as healthcare goes, there is a doctor on the main square in Olon, and he is open several days a week.  We see him if we have a bad cold or tummy troubles.  Our regular doctor is in Cuenca, where we still have an apartment, so we see him for our regular checkups.  There is a small emergency clinic in Manglaralto, about 20 minutes from Olon.

People who are thinking of relocating to this area should be healthy and mobile.  If you have a chronic health condition in which you need to regular be treated, it is likely that you will need to go to the Salinas area (1.5 hours away) or Guayaquil (3 hours away) if you need to see a specialist.  It is a lot different from Cuenca, where several large, modern hospitals are a short taxi ride away.

People should realize that part of the charm of the area is that it is not yet as dense as Salinas, but that also means that the conveniences and amenities are fewer.  This includes serious health care.

Where do you fly into or out of?

Guayaquil is the closest major airport.  Olon is about a 3 hour bus ride or car drive from the GYE airport.  The roads are new and very good, with a new “cutoff” near San Vicente just opened in the last year.  This saves a lot of miles.  NOTE FROM DOM: JUST A FEW WEEKS AGO FLIGHTS STARTED GOING TWICE A WEEK FROM QUITO TO SALINAS.

Do you have a car?  Do you feel like you need one living in Olon?

People ask us whether it is necessary to have a car to live on the coast in Olon and the nearby communities.  While my husband and I have a car, many of the ex-pats in the area do not.  The ex—pat community is wonderful here, and we all pitch in to help each other.  For example, you cannot take a dog on the CLP bus, so we often car pool to take our dogs to the specialty vet in Guayaquil.

There are very good local drivers for the day if you need to pick up large items, although the saying is “If an item is smaller than a VW bug, you can put it on the bus.”

For about one dollar, you can take a taxi to Montanita.  The bus runs several times an hour during the day for 40 cents.

There is very good bus service to Guayaquil, and in fact if we are just going to Guayaquil for the day we often take the CLP bus.  The CLP is a “4 Star” bus, very clean, and the movies are PG rated.  (I have seen some horror flicks on other buses that have made me cringe.)  The CLP buses can be found at the Guayaquil Terminale Terrestre at window 83.  The cost is currently around $6.00.  It leaves Guayaquil at 5:00, 6:00, 9:00, 13:00, 15:00 and 16:30.  The CLP leaves from their bus station in Olon and goes to Guayaquil at 4:30, 5:30, 9:45, 12:45, 14:45 and 16:45.

Between Olon and Puerto Lopez, or Olon and Salinas, there are currently no high speed buses, but the local buses run all day.

Over the course of the year, what’s the weather in Olon really like? 

We have been told that, weather-wise, this has been a “weird” year.  Normally in January and February, it is hot during the day and heavy rains at night.  We have seen very little rain this Jan and Feb.  Our experience is cool, dreary and rainy June to November, with a few days here and then of brilliant sunshine.  November to May is mostly sunny and very warm, or hot.

We do not have aircon.  We use fans and stay almost comfortable on very hot days.  Some of the ex-pats have aircon in the bedrooms.

My husband and I actually like the off season very much:  the beach is wide open, it is nice and cool, and the town is pretty quiet.  It is a good time to get to know your neighbors.  There were times, though, that we went to Cuenca just for a bit more sunshine.

Any new infrastructure developments in the area of note? 

More streets in Olon have been paved in the last year.  Other towns nearby, including Curia and Las Nunez, have had street paving projects.  Our water is “city” water, and we do not have a cistern.  There are times when the water is turned off, either for maintenance or from usage.  In Olon, as in most of the small towns here, sewage is handled via individual septic tanks.

How do you get internet in your home?  How do most access the Internet, is it tough to get? 

My husband is retired, but I have clients in the US.  I need to have reasonable internet.  We have 2 internet connections at the house:  CNT ($30/month) and Interdatos ($35/month).  We have both so that we generally have one up if the other is down.  Also, I can be working while my husband is talking to family on Skype.

Like a lot in this area, either you can go to Santa Elena to fill out paperwork, or you can have someone help you.  In our case, friends helped us get both internets set up.

How can we get in touch with you if we want to know more? 

Please email Michele at [email protected].  I can provide info on our book group (second Monday of every month), on the new dog shelter, and any other help I can give.  We are all in this together.  Thanks for listening.

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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An Ecuadorian Real Estate Tale of Woe

I got this email this week from a subscriber in distress…

A definition of “woe” is “things that cause sorrow or distress; troubles.”

The suggestions that I am about to share are what my husband and I learned from our personal tale of woe as it relates to buying an apartment on the Ecuador coast. We’re happy that we’ve been able to employ local residents of Connecticut. We believe that this makes us a better service provider and we strongly believe that it gives us the ability to serve the residents of Connecticut Location much more efficiently. We believe in giving back to the community! When you work with us, you can rest assured knowing you’re helping a local business and a local family.

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Here are 10 suggestions that we learned on our odyssey to purchasing an apartment.  For example, we learned the hard way that there can be a big difference between the purchase of and the owning of real estate in Ecuador.

We began the purchase process in January, 2011, and gave the final payment for the apartment June 2011.  We are still waiting for the deed almost 3 years later.

Suggestion #1:  Be weary of purchasing an apartment in an unfinished building.  Just because a crew is working on a construction project today, does not mean that they will be there tomorrow, or that the project will ever complete.  (It took 6 extra months to get our interior finished, but it is now finished.)

DOMS TAKE:  THE RULE IN ECUADOR, ´DONT PURCHASE WHAT YOU CANT SEE (UNLESS YOU GET IT VERY VERY CHEAP AND ARE WILLING TO TAKE THE RISK)´ IS A GOOD RULE TO GO BY, SERIOUSLY!  I FOLLOW IT.

Suggestion #2:  A notary is an attorney, but he is not your attorney. A notary is responsible to review each contract from a legal perspective.   That does not mean that they can keep you from signing away your rights, and apparently it also does not mean that they will make sure that real estate law is written into the contract.

Suggestion #3:  Get your own attorney.  Depending on where you are from, you may not be used to bringing an attorney to the closing.  It is vital that you do this.  In our case, our first attorney facilitated many meetings with the builder in the attempt to get our deed.  I am sure he meant well.

DOMS TAKE: I DONT AGREE WITH THIS, ADDING AN ATTORNEY TO THE EQUATION CAN OFTEN BE A COSTLY MISTAKE AND FURTHER COMPLICATE THINGS AS MOST ATTORNIES IN ECUADOR WILL GLADLY TAKE YOUR MONEY WITHOUT HAVING THE SLIGHTEST CLUE OF HOW TO HELP YOU.  ONLY ADD AN ATTORNEY TO THE MIX IF THEY COME HIGHLY RECOMMENDED BY A TRUSTED NEUTRAL SOURCE.

Suggestion #4:  There are multiple levels of meaning in real estate contracts.  There are the written words in Spanish, the literal translation, the verbal explanations to your questions, the actual law, and then real estate law that can be enforced.

For example, there was a clause in our contract about capital gains taxes.  Despite the explanation at the closing, we later learned that the underlying meaning was that we were responsible for the capital gains tax for the entire apartment building up front, not just on our apartment and not just when we sold our apartment.  This meant payment of the capital gains taxes when the builder registered it with the city. At that time, since taxes would need to be paid on all improvements to the bare land, we were on the hook to pay what was expected to be many thousands of dollars. We were able to get this clause in the contract changed later by a different attorney.

DOMS TAKE:  THIS CAN HAPPEN IN ANY COUNTRY, I THINK THE PROBLEM HERE WERE THE THINGS LOST IN TRANSLATION BECAUSE MAYBE YOU DONT SPEAK GREAT SPANISH.  GOOD TO HAVE CONTRACTS PROFESSIONALLY TRANSLATED BY A NEUTRAL THIRD PARTY YOU HIRE.

Suggestion #5: If you are buying any real estate that is under construction, make sure that you include a penalty clause for quality of construction and time to complete.  You must make that penalty large enough that it has everyone’s attention.  You must do this no matter what anyone tells you.  If you cannot get this, then walk away.  Walk away before you give them a penny.

While you are at it, get a penalty clause for delivery of the deed.

DOMS TAKE: BETTER YET DO AS ECUADORIANS DO AND FOR PRE-CONSTRUCTION ONLY AGREE TO FORK OVER A SMALL PERCENTAGE OF THE PURCHASE PRICE FOR RESERVATION, FOR EXAMPLE SAY $2,000 ON A $60,000 CONDO.  PAY IN INTERVALS AND TRY NOT TO PAY A LARGE PERCENTAGE UNTIL THE PLACE IS FINISHED (ECUADORIANS ARE PARTICULARLY BAD AT FINISHING) AND YOU HAVE YOUR TITLE LEGALLY REGISTERED.

IF YOU LET THEM BULLY YOU INTO PAYING EVERYTHING OR ALMOST EVERYTHING UP FRONT THAT IS THE LAST TIME YOU WILL EVER SEE THEM, SERIOUSLY!

Suggestion #6:  Have your attorney confirm that your building and apartment are legally registered with the city.  Our first attorney said everything was ok, in that the developer owned the lot, the construction permits were proper, and it was legal for them to sell apartments.  None of this was true.  Make sure the attorney shows you the papers.  Then have a different attorney check the papers.  Update: Recently the land ownership, the permits, and the permissions have all been resolved with the municipio.

DOMS TAKE:  THIS IS ACTUALLY EASIER TO CHECK THAN MANY REALIZE IN THE LOCAL MUNICIPAL OFFICES ALL UNDER ONE ROOF YOU CAN RESEARCH BUILDING PERMITS, BUSINESS LICENSES AND MORE.

Suggestion #7:  This is really important.  Do not make that final payment until you have the deed.  Until you have the deed, all you have is a promissory note to someday get the apartment deed.  You need the deed to sell the apartment, as well as to legally rent out the apartment, and to get an electric meter.  The holder of the deed is on the hook to pay the alicuota (home owner’s fees.)  If you are waiting to get the deed, you are not responsible for paying the alicuota.

We had been assured up front that we would get the deed on our apartment 3 days after we made our final payment and took possession.  After we paid the builder the final check and moved in, they told us that we would get the deed “surely within 6 months,” or December of 2011.  We are still waiting as of February 15, 2014.

While we are talking about payment, make sure that the checks are made out to the building company, not to an individual.  Make sure they give you a signed receipt. Cancelled checks are not considered a receipt.

DOMS TAKE:  A GOOD LAWYER CAN OFTEN HELP CLEAR UP TITLE ISSUES, BUT IF A PROPERTY LOOKS LIKE IT MAY HAVE TITLE ISSUES, STAY AWAY, ACTUALLY IT IS EASIER TO CHECK UP ON THAN YOU THINK, EACH PROPERTY HAS A TAX ID NUMBER (PREDIO) SURROUNDED BY OTHER PROPERTIES WITH TAX ID NUMBERS AND THE TITLE IS REGISTERED IN THE PROPERTY REGISTRAR WHICH YOU CAN VERIFY, IF IT IS NOT REGISTERED DONT BUY IT UNTIL IT IS.

Suggestion #8:  Be careful of having your visa tied to real estate.  Since we own a promissory note and not an apartment (because we do not have the deed/escritura,) it is fortunate for us that we do not have our visas tied to the apartment.  We have been told that if a visa is tied to a particular piece of real estate, that a new visa would be required if that real estate is sold.  There is a cost in time and money to transferring visas.

DOMS TAKE:  AGREED!  BEST TO GO FOR A PENSIONERS VISA BASED OFF A PERSONAL INCOME SOURCE OR A PROFESSIONAL VISA BASED OFF YOUR COLLEGE DEGREE.  AN INVESTORS VISA SHOULD BE THE LAST CHOICE.

Suggestion #9:  It has been our experience that there is no equivalent of real estate title insurance in Ecuador.  Proving ownership of real estate is a problem in Ecuador. Hundreds years of European occupation, various coups and revolutions, discrimination and land confiscations have created a mess when it comes to proving property ownership.  This is a huge ongoing problem.

How gladly I would have paid the few hundred dollars for title insurance.  It would have been far less than the attorney fees we have paid and continue to pay.

DOMS TAKE:  ACTUALLY ITS NOT SO BAD NOR ANY WORSE THAN IN NORTH AMERICA, THE USA WAS ALSO COLONIZED AND HAS HUNDREDS OF YEARS OF OWNERSHIP HISTORY.  JUST DIFFERENT SYSTEM.  ACTUALLY THERE IS TITLE INSURANCE (AMERICAN TITLE FOR ONE IS HERE) BUT NO ONE GETS IT BECAUSE IT IS VERY EXPENSIVE.  I PREFER TO BUY PROPERTIES THAT HAVE HAD THE SAME OWNER FOR A LONG TIME AND BUY FROM OWNERS WITH ROOTS THAT INSPIRE A BIT OF CONFIDENCE AND ARE EASILY LOCATABLE IF YOU NEED TO FIND THEM.

Suggestion #10:  Be lucky.  We hired “experts”, we bought from one of the most famous builders in Ecuador, we hired translators, we stayed on top of the process, and we continue to nudge the building owners to do the right thing.  So far, nothing has moved the builder to give us our deed.

DOMS TAKE:  ITS DIFFERENT IN THIRD WORLD COUNTRIES LIKE ECUADOR.  PEOPLE BOTH RICH AND POOR HAVE BEEN ON SURVIVAL MODE THEIR WHOLE LIVES SO THINGS LIKE ´ETHICS´ AND ´DOING THE RIGHT THING BECAUSE ITS THE RIGHT THING TO DO´ DONT EXIST.

THE ONLY THING THEY RESPECT IS FORCE OR THREAT OF FORCE, YOU GOT TO SHOW YOUR TEETH SOMETIMES DOWN HERE.  IT IS WHAT IT IS.

THE GOOD NEWS IS AT LEAST ITS NOT AS INTENSE AND AS ´IN YOUR FACE´ AS OTHER COUNTRIES LIKE INDIA WHERE I HAVE WORKED.  YOUD BE SURPRISED HOW FAST THEY START TO MOVE WHEN YOU STOP BEING THE NICE GUY.

THIS IS ALSO TRUE WITH GRINGOS WHO HAVE LIVED IN ECUADOR A WHILE WHO OFTEN ATTAIN ECUADORIAN-LIKE BUSINESS PRACTICES.  NOT EVERYONE, BUT IT HAPPENS.  DONT THINK YOU CAN TRUST SOMEONE JUST BECAUSE THEY ARE FROM YOUR HOME COUNTRY!  MAKE THEM EARN IT LIKE YOU WOULD ANYONE ELSE.   THIS WAS THE FIRST LESSON I LEARNED LIVING ABROAD WHILE IN THE DOMINICAN REPUBLIC.

Conclusion:  Buying property can be a surprisingly simple, painless thing that takes less than a week start to finish (or it can be excruciatingly bothersome like the instance above).  The key to avoid a similar situation is to not buy something you cant see and to only buy properties with a properly registered, easily verifyable and transferrable title.  Hire professional help if you can find a recommended person, for any issue, as for example if you have problems with pests, then hire professionals from the Pest Zone Pest Control to help you with this. Don’t wait for cockroaches and rodents to infest your home and spread harmful bacteria to your family when you have the experienced pest professionals from pest control Olathe Ks at your disposal.

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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Where to bank (safely) in Ecuador

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.

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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