Category: Newsletter

 

A Sweet Deal

A Sweet Deal

Actually this newsletter includes a couple of sweet deals…

Profitable Rental Or Resell Deal

The first opportunity I want to draw attention to is chance to purchase of a two bedroom house in Granada for just US$27,000. It is currently rented to a tenant/cuidador on a 6 month contract for just $100 a month. It should rent for $200 to $250 plus utilities.

A two bedroom house for under $30K in Granada is an attention grabber any day of the week. However, this property includes an adjoining empty lot that is a twin of the lot with the house situated on it. Subdivided, the two lots would have 30+ meters of road frontage each. Originally priced at US$33,000, this clear title property is a bargain.

It gets better… the owner will consider financing the purchaser for 36 months. This property will not last long! Contact Nica Investments now!

Fully Serviced Building Lots

New home contruction in Nicaragua is healthy, and as such prices of quality buidling lots is on the rise. However, I recommend caution when looking at building lots in developments that promise future infrastructure or features, such as golf courses, parks, resort structures, etc. In some cases the developer will need to sell lots to fund the promised infrastructure or features. It is not uncommon for sales to lag and promises made to purchasers go unfulfilled for a long while… or never materialize.

My advice is always to wait until infrastructure at least is in place or, if time is of the essence, to look elsewhere. This said, there are developments ready to go. One of there is Colinas de San Juan.

Located just 10 minutes from Granada city’s Central Park, Colinas de San Juan is comprised of beautiful, flat building lots situated on paved roadways, with utilities already in place. Each lot is approximately 1700 square meters and are priced from just US$32,500.

Paved roadway with streetlights

Paved road with streetlights and utilities already installed.

Check out the previous Nica Investment Newsletters.

Is it difficult to purchase real estate in Nicaragua?

Is it a difficult process to purchase real estate in Nicaragua?

Nicaragua IconThe simple answer to this often asked question is “No, it’s not a difficult process to purchase property in Nicaragua.” Foreign Investment Law 344 recognizes foreign investors’ rights to own property in Nicaragua and establish a business if they wish. Under Law 344 foreigners are permitted to own their property 100%, with equal rights to Nicaraguans.

Nicaragua offers incredible opportunities in real estate, from elegant colonial homes in Granada, the oldest European established city on the mainland of the Americas, to the beach front property the entire length of the Pacific coast.

Most of the real estate sold to foreigners are second homes sold to buyers from the USA and Canada. However, there are many North Americans and Europeans
relocating to Nicaragua to live permanently as retirees.

It is important to remember that real estate transactions and the supporting Nicaragua institutions are underdeveloped. Most purchases are cash transactions with the buyer and seller directly negotiating. There are real estate agents in Nicaragua, but legally they’re nothing more than middle men. The only person legally recognized to sell or lease a property is the registered owner. That said, it’s advisable to have a lawyer or individual knowledgeable in both Nicaragua laws and specific properties to consult with. I say this is because the titles of some properties have issues that can result in problems in transferring ownership.

Many properties in Nicaragua were confiscated illegally in the 1980s and ownership can or is being contested. Some properties were never properly registered in the first place, especially rural real estate. Thus determining who exactly is the rightful owner of a given property can be challenging. Even a comprehensive title search can fail to reveal ownership claims. Caveat Emptor, (Buyer Beware), is of tantamount importance when considering any real estate purchase in Nicaragua.

To be avoided completely if you are planning to purchase a property to build on are properties that have agrarian reform titles or supplemental titles issued by court order.

The Purchase Process

The process of purchasing a property starts with an offer being accepted by the buyer. A competent lawyer is needed to make sure there are no issues with the title or survey and, if there are, to resolve them BEFORE a formal promise of sale is agreed to. Once a promise of sale is created and agreed to, a NON-REFUNDABLE deposit of 5% to 20% is paid to the seller and a timetable for closing is set.

Once a purchase is completed, the process of registering a property takes approximately 65 days. The detailed steps to registering a property in Nicaragua are outlined here: The Steps Involved In Transferring Nicaragua Real Estate.

The transfer tax to be paid by the purchaser is incremental, meaning the more expensive the property, the great the percentage of the value is due as transfer
tax. The current tax schedule is…

  • Up to US$50,000 = 1% of the purchase price
  • US$50.000 – US$100,000 = 2% of the purchase price
  • US$00,000 – US$200,000 = 3% of the purchase price
  • Over US$200,000 = 4% of the purchase price

If you have any questions or wish to discuss the purchase or leasing of a property in Nicaragua, contact us.

Granada City Lacks Self Storage Facilities

A hot investment tip… which I have to admit isn’t my own. A client brought it to my attention that Granada, Nicaragua, lacks adequate self storage facilities. I did a quick check and sure enough, there is a single self storage facility in the entire city, and it is pretty much full all the time.

There is an abundance of storage yards for vehicles offering spaces that can be rented by the day, week or month, only one of which is indoors so totally secure. However, there appears to be only one self storage facility offering secure, individual storage units. I assume this is because the cost of open storage is minimal while to offer secure, individual storage units is more expensive. By more expensive, I’m thinking $2000 per unit using cinder block construction on a concrete pad, metal roof and a standard, overhead garage doors. This may not sound like a huge investment, but to build a dozen or more units, it would be well outside the affordability of many Nica land owners.

View of Granada city, Nicaragua

Self Storage facilities have never been something I’ve paid attention too as an investment or business opportunity. My involvement has been limited to offering commercially zoned land to storage companies, and as a customer. I have used self storage units in the past, and I know well that when you need one, you need one, period. Odd that I wouldn’t have seen them as the potential investment gold mine they are… in the right market. Granada city appears to be the right market.

Besides being cheap to construct, self storage units are also attractive because the land acquisition cost can be minimized. A high visibility location would be preferred, of course. But when you’re offering something people need, they will find you. Granada’s one existing self storage facility is not in a high traffic location, nor is it even visible from the street unless you’re parked right in front and looking directly at it. As long as a property has street access, and electricity and water available, it would be ideal for a self storage facility.

A self storage facility of 20 units would cost around US$40,000 to build. Surveying costs, architectural fees, building permits, land registration, taxes, etc. would add another $6000. Exact land transfer and legal costs would depend on the purchase price of the land.

Based on the existing storage facility, 20 self storage units within Granada or on the city’s outskirts would generate $9600 per year ($40 per month, per unit net after taxes). If land cost is capped at $50,000, and construction of 20 units is US$46,000 we’re talking about a gross annual return of 10%. Figure in maintenance, staffing and property taxes, it is reasonable to assume the net return will be at least 7%.

My client that enlightened me has two adjoining lots in a quickly gentrifying area of Granada city that would be perfect for self storage units. He is selling only the land, but he’d be willing to build a self storage facility on the property if a purchaser desired a turnkey operation.

As always, if you have any questions about land acquisitions or establishing a business in Nicaragua, contact us.

Super Rent To Own Deals

Unfortunately this particular rent to own opportunity is no longer available. However, contact us to learn of other lease to own or seller financed opportunities in Nicaragua.

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Super Restaurant/Bar Opportunity

Sorry, this opportunity is no longer available.

This is the gist of an email I send out to someone interested in leasing restaurant/bar space at Hotel de Sonrisas, located at 401 Calle El Arsenal. That’s two blocks north of the Calle La Calzada, Granada’s nightlife area, and next door to San Francisco Convent & Museum. It’s also next door to my office… and as a disclosure, it’s my hotel as well. I had to evict the previous restaurant operation over a breach of contract issue.

Hotel de Sonrisas logoThe restaurant is licensed along with the hotel to sell food and beverages. The restaurant operator will need to apply for a liquor license in the operator’s own name, but can operate temporarily under the existing license.

The monthly rent for the space of approximately 65 s/m, plus use of common area hotel seating, plus a kitchen, plus a unisex bano, is US$250.

An additional US$100 will be paid monthly towards common electricity, water and WiFi. There is a separate booster/modem for the restaurant included in the hotel’s Claro (ISP) account.

Outside seating is available, but the renter must pay the applicable Alcadia (city hall) fee for the number of tables and chairs the restaurant operator wishes to have. The price at the moment is 50 Cordoba (US$1.80) per table, per month.

There are tables and chairs, a ceiling fan, lighting and some decoration included with the rent of the restaurant space. Any additional tables, chairs or decorations the operator requires are the responsibility of the renter.

A beverage cooler belonging to Coca Cola and made available to the hotel is in the restaurant. Currently nonalcoholic beverages are sold to hotel guests. The hotel will cease selling beverages to guests and ask Coca Cola to reassign the cooler to the restaurant operator. A beer cooler was also to be provided by the brewery but delivery was put on hold.

The kitchen is equipped with a stove and fridge. Both are relatively new and in good working order. Also included in the kitchen are various pots, pans, utensils and assorted kitchen items that would be included with the rent of the restaurant. Any other equipment, utensils, flatware, cutlery, pots or pans the restaurant operator may need are the responsibility of the operator.

Natural gas for the stove/oven is the responsibility of the operator.

The restaurant has both an entrance from the street and another from within the hotel for the convenience of guests. Both are gated and can be locked with a padlock to which only the restaurant operator need have a key. If the renter wishes to use the west side of the building for seating, which city hall has given verbal permissions to do, there is a gated doorway to accommodate serving customers seated outside.

There is a unisex bano for use by restaurant guests and staff. The cleaning, supplying of soap, paper towels and toilet paper, maintenance and repairs needed for this bano are the responsibility of the restaurant operator.

Any renovations or modifications to the restaurant space, bathroom or kitchen are the responsibility of the tenant. However, before any renovations or modifications are undertaken the hotel must be informed of what is to occur. This is to make sure there will be no issues with the fire department or INTUR (the agency responsible for tourism, or that the work is not going to require a building permit. If a building permit is required securing one is the responsibility of the restaurant operator. This restriction does not include painting of walls, changing of light fixtures or other cosmetic changes.

A US$150 damage deposit is required from the renter. This amount will be returned provided none of the supplied furnishings, kitchen appliances or bano fixtures are damaged or are missing at the time the lease period ends.

The Alcadia currently permits the restaurant to have a single sign over the south facing entrance, on Calle El Arsenal. Signage is the responsibility of the tenant. It is possible to add a second sign to the west side of the building. It would be the responsibility of the restaurant operator to apply to the Alcadia for the second sign and to pay any applicable fees.

That’s it. Pretty simple and cheap. This is because I want food and beverage service in the hotel as a convenience for guests. Also, properly promoted a bar and restaurant will attract attention to the hotel, and as a full service hotel allows me to maintain higher room rate than a B&B. Currently the hotel is categorized as a B&B because we serve only breakfast and there are no facilities for guests to purchase lunch or dinner. The hotel would stop making breakfasts for guests and purchase them from the restaurant.

If you’re interested in operating a restaurant/bar in Granada, Nicaragua and want to get up an running with minimal investment, this is the opportunity you’re looking for. Contact me and I will send photos.

The Challenges Of Banking In Nicaragua

A Deterrent To Some – An Opportunity For Others.

Nicaragua banking laws are always in flux and changes are common. This is due to the fact the Nicaragua banking system is dependent upon the USA banking systems providing clearing house and transaction forwarding services. Basically the US Federal Reserve dictates what Nicaraguan banks can and can not do. Although there are ongoing efforts to reduce this dependency, for the foreseeable future nothing is expected to change.

So what does this mean for an investor in Nicaragua real estate or an entrepreneur planning on doing business in the country?

Each case is different… However, a rule of thumb for all transactions is the need for a clear paper trail detailing where money is coming from, and where it is going to. Likewise, the purpose of the transaction has to be clearly spelled out. This is not a problem for retirees purchasing a home. Nor is it a problem for an investor purchasing a business. But for transactions that are not as simple as a straight out, single payment purchase, there can be some challenging hoops to jump through.

In most cases, someone buying a lot will agree on a price, transfer funds to a US bank escrow account or to a Nicaragua lawyer. When confirmation of funds are in hand the sale is completed. Then the purchaser’s lawyer then registers his or her lot. The challenge, if it’s going to manifest itself, will appear when the new property owner wishes to construct a home or other building on the property.

I’m not talking about red tape hurdles. They exist, but are dealt with in due course and are little more than a hindrance. The challenge can be in paying for the necessary architectural and survey work, the buying of building materials, and paying a contractor and/or subcontractors. Every transfer of funds over US$10,000 is flagged and must meet specific disclosure rules and regulations. A succession of transfers under US$10,000 is usually identified as suspicious and flagged as well. I strongly advise against trying this tactic as it will great further problems.

If possible, it is best to have a very exact construction estimate and transfer the entire amount at one time, placing it with a local bank or lawyer. Both have to adhere to the same requirements though, so only which option is more comfortable is the deciding factor. This transfer will require the same reams of documentation, but once the compliance department at whatever bank is receiving the funds is satisfied, the funds are made available. If for some reason a transaction is not deemed kosher, the transfer of funds is reversed and the cash returns to where ever it originated from.

The issue gets complicated for people buying a lot and intending to build as funds are available. A once popular investment strategy, it is now a lot of work to manage… even for Nicaraguans living and earning abroad, then applying their income to the construction of a home in Nicaragua.

The same situation can thwart an entrepreneur wanting to build up a business in Nicaragua. Actually, it has in the case of a client of mine. If a property is to be leased or purchased, that is one transaction. If money is needed to do renovations, alterations or construct premises, that is another transaction, perhaps numerous transactions. All will need to be reviewed by the transacting banks, both in the USA and in Nicaragua. My client had a tight deadline so abandon his efforts to develop a business in Nicaragua because of the difficulty the banking system presents. At least 30 full time jobs and millions in investment walked away with him.

The banking process obviously stymies money laundering, but it does more to stymie legal development. However, there are a couple of solutions…

The first solution is to have a foreign bank guarantee a domestic loan for their client, basically cosigning a locally managed line of credit. The investor can draw on the cash locally and the investor’s own bank abroad pays off the amount each month. Interest in Nicaragua runs between 9% and 25% per year, so paying debt off as quickly as possible is recommended… even if that means borrowing abroad to do so.

A second solution is something a client surprised me with. Through his credit card issuer he set up a massive line of credit, and instructed his bank to pay any amount off that came due. He took out significant cash withdrawals to pay contractors and suppliers, and used his credit card to buy locally any building supplies, fixtures, appliances and so on that were needed. The transaction fees were less than the international bank transfer fees, and he had no need to declare credit card purchases because each transaction was well documented. Large cash advances did require some documentation, but it was enough to bring in facturas (invoices) that had to be paid. The invoices were very detailed, included the local value added tax, known as IVA, and clearly identified the recipient of the funds. It was a very smooth, and virtually problem free process.

If you have a building project or business acquisition that you may require advice on, feel free to contact Nica Investments.

One Man’s Loss Is Another Man’s Gain

Nica Investments LogoNica investments does not maintain “listings” of the same Nicaragua real estate offered for sale by every realty company or individual in the country. Nor does Nica Investments tack a sign on the wall of a house that already has one, two, three or even four other signs stating the obvious… this property is for sale and I want to be the person who sells it.

What Nica Investments does is locate well priced properties in ideal locations that our clients would do well purchasing. One such purchase opportunity is about to become available.

There are five adjoining lots in the initial phase of a subdivision that were previously considered sold. The term of the existing agreement to purchase is about to expire, and the seller has already moved on to phase two. They will be offered for sale at the end of this week.

The lots are on a paved road, are fully serviced, flat and ready to build on. The lots are about 58 meters deep and the approximate frontage of each is 30 meters.

The seller is asking US$34,900 per lot. However, he would be open to negotiating with a purchaser interested in buying all five lots. It is possible the seller would even consider a joint venture partnership with a developer willing and able to construct five homes. Assistance with marketing would be provided, and construction would have to begin within 60 days of an agreement being reached.

My personal recommendation to clients is to purchase all five lots at as good a price as can be negotiated, then resell them… with houses constructed on each. Why do I suggest this? Because this subdivision is not one of the pie in the sky developments that dot the Nicaragua landscape. All of the seller’s available lots in phase one are sold except for these five. Within the first phase there are already homes built and occupied, and others are under construction. These lots front a quality paved road, with water, electricity, and streetlights already in place… not promised and unfulfilled, as is so often the case in Nicaragua.

Soon the infrastructure for phase two will begin, and soon after the marketing of phase two lots will commence. It’s a sure bet that when prospective phase two purchasers start to drive past these few remaining phase one lots they’ll not last long.

To find past editions of the newsletter, as well as subscribe to future editions, visit Nica Investment Newsletters.

A Novel Way To Own A House In Nicaragua For $0

I was approached by a gentleman who asked me to represent him in the purchase of a property in Nicaragua. OK… that is what I do. So I laid out my standard terms, US$100 per diem plus expenses, one week paid in advance.

No problem!

Once retained, I asked what I’m to be tasked with. What follows is the most novel approach to getting a house in Nicaragua for free I’ve heard yet. I say ‘yet’, because this is not the first time a client has earned a house for free. The usual approach is for a client to buy land, subdivide, and then sell off enough lots to pay for the initial land purchase and construction of the client’s own home. Although this seems like a simple approach, and is pretty much a sure thing, it can take years to reach one’s goal. This client said he’d already sold seven of the eight houses. He’d live in the remaining home himself and it would be his for FREE.

Apparently my new client thinks outside the box. Read on to appreciate just how far out of the box he is…

Initially, I was asked to find land. It had to be large enough to accommodate four 1000 s/m lots. Done.

The next undertaking was to have the parcel subdivided. That’s in the works too.

At the same time, the preferred house plan is to be reworked by a Nicaragua architect to meet the code here and incorporate local construction materials and techniques. That too is already in the works.

The initial house plan is for very attractive duplexes, each side having three bedrooms, two bathrooms, large kitchen, dining area and living rooms, with space for a garage, atrium or dipping pool.

The Novelty Of This Approach

The architect is to provide my client with a list of building materials, mostly American standard plumbing fixtures, lighting fixtures, gas appliances, cabinetry, and so on that isn’t available locally, or is available but cost prohibitive. All of the items on the list, up to US$45,000 per house, will be imported duty free using an incentive available to pension retirees applying for residency status. All of the new home owners are over 45 years old obviously, and qualify to take advantage of a one time importation of building materials duty free.

It seems my client had done his research. As the ‘general contractor’ he expects to be able to build his home and own his parcel of land for free. He will collect US$70,000 per dwelling, and expects the entire development to cost less than US$490,000. My preliminary number crunching, which includes the cost of materials purchased abroad, shipping of the eight containers, construction and land acquisition appear to make this dream a reality.

An added plus is that each new resident is able to import a vehicle with a value up to US$25,000, provided it is less than ten years old, and US$20,000 worth of personal household items. The car can be sold after 5 years without any penalties.

Another of my duties will be to monitor the importation of both the building materials and household furnishings, then arrange inland transportation to the building site. I understand the new homeowners are going to be driving their vehicles to their new homes, which will be completed and fully furnished when they pull into their driveways for the first time.

This is actually going to be a fun project. I’m sharing it because I would like to work with similar groups to do the same thing.

If you wish to discuss any sort of investment in Nicaragua, please contact us.

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How I’m Giving Back To Nicaragua

I don’t think I’ve shared my story as to why I’m in Nicaragua in the first place, nor why I’m so positive about this nation’s future. A brief history…

I was traveling from Canada, via a flight to Mexico City, then overland to Montanita, a town on the Santa Elena Peninsula in Ecuador that’s known for its surf beaches and bohemian vibe. A friend and client wanted to purchase a small beachfront, surf resort for his daughter and asked me to go scout out some options. I decided to take my time and make it a vacation/business trip since I wasn’t on a deadline. This turned out to be a bad idea that eventually ended well.

I was robbed in Honduras by four banditos, right at the frontier. Long story made bearable… I didn’t win the day but I did damage one of my assailants and his friends fled. I left Honduras, entered Nicaragua, and the next day informed the Canadian Embassy of what happened. I worried I’d caused a minor international incident. The embassy informed the Honduras government I was available should they wish to talk with me, and asked that any inquiries go through official channels… nothing ever came of it.

I was expected to stay in Managua until money, credit and debit cards, and documents that were stolen could be replaced. I was not enjoying my time in Managua, so I contacted a travel writer friend who has spent a lot of time in Central America. He suggested I head to Granada, assuring me that since I liked Antigua, Guatemala, so much I’d enjoy its Nicaragua sister city. I was in Granada only a couple of days before I realized I could live stress free, affordably, and make some money if I stayed. Other than visa runs I’ve been here since July 26, 2014. My client and friend had a heart attack and passed away soon after I arrived in Nicaragua. Since I was no longer committed to go to Ecuador I started looking at opportunities within Nicaragua.

Mombacho volcano seen from Lake NicaraguaI discovered Nicaragua was very pro foreign investment, especially in the tourism industry. I’ve done reasonably well in Nicaragua, and the Nicaraguan people I’ve met are wonderful. Appreciative, I decided to give something back. Through the two hotels I have interest in, Hotel de Sonrisas and Hotel La Calzada, I’ve started a program in which the children of single mothers can attend English classes at a private school. Tourism is the industry with the greatest employment opportunities, and it’s already the nation’s second largest employer after agriculture. However, to be deemed employable by tourism industry businesses, a Nicaraguan needs to speak some English. Most do not because it’s not a subject offered in public or church run schools. Solution, offer the opportunity to learn a second language myself. Classes started this past week for a handful of kids. More enrollments will follow with new students being added each 3 month semester.

At the moment this is an on the books scholarship or sponsorship program funded by the two hotels. We will later offer those children that stick with the courses an internship, maybe even permanent employment. If I calculated the need correctly, the demand for English speaking young people in the industry may make it necessary to increase pace and seek funding. We’ll see.

A second means of giving back… I’ve adopted as my cause assisting the local hospital with basics; bedding, pillows, equipment, etc. I had a mild stroke brought on by soft tissue swelling from an inner ear infection. Most expats, myself included, go to private clinics and hospitals. However, the closest hospital was not one of these. Known as the Japanese Hospital because it was Japan that build it for the Nicaraguan people, I was admitted, treated and released to the care of my personal doctor. The entire process cost me US$192.00 and I’ve made a 99% recovery. My right ear and the surrounding area have limited feeling, and although no one else seems to be able to see it, I swear I have some disfigurement around my right eye.

I did not notice much when I was a patient, but later I had occasion to visit a hotel guest in the same hospital. I was shocked to find that there were no pillows, few sheets for the beds, and very little in the way of incidentals needed by staff to do their jobs at peak efficiency. Apparently everything was stolen by patients, visitors and staff over time. Petty theft is a problem in poorer countries, and Nicaragua is no different. Anyway, once I’ve worked out with hospital administration what they need and how they intend to thwart future thefts, the plan is to seek donations of whatever it is the hospital needs and have it shipped in.

My reason for sharing my personal story and the causes I support is to highlight how little effort and money it takes to make a huge difference in this country. It’s the same with investing. A small investment in any business venture that creates jobs will have a positively impact on the lives of employees and their families. This is why foreign investment is sought by the Nicaraguan government, and why the country’s leadership is so pro business.

Opportunities are abundant here, so there is something for everyone and every budget. For more information contact Nica Investments.

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Invest In Nicaragua Tourism

Back in November Daniel Ortega won the election and is President of Nicaragua for five more years. I’m not going to give any sort of political commentary, just state my personal opinions… Nicaragua faces new challenges so the continuity in government administration is a good thing. No matter what one may think of him personally, or his political leanings, Daniel Ortega has repeatedly proven he’s capable of dealing with external and internal challenges. Enough politics…

Daniel Ortega has publicly stated that tourism will be the industry that lifts the Nicaraguan people out of poverty. To this end, he has initiated decrees that assure tourism continues to grow at close to 10% annually. Therefore, investors considering investing in real estate or entering into a business venture in Nicaragua should put their money in the country’s tourism infrastructure.

Hotel La Calzada

The incentives offered to investors in tourism are the best in all of Central America, probably in all of the Americas. Besides tax relief and utilities subsidies, the government agency responsible for tourism administration, INTUR, has proven itself to be an excellent partner in my personal experience.

San Juan del Sur beach view

I’ve been involved in three separate hotel operations in Nicaragua, and currently operate two of those hotels. So my knowledge and advice is based on first hand experience. Because of my intimate knowledge of the tourism industry here, I recommend anyone looking for a business venture consider something tourist related.

If real estate investment is what interests an investor, consider real estate related to tourism. My first and foremost recommendation is hotel, hostel, resort or even B&B properties. One does not need to be an experienced hotelier to capitalize on an investment in accommodation properties.

Property investments that would lend themselves well to taking advantage of all the perks available to tourism industry investments fall into two categories for investors not interested in actually operating a hotel, hostel, B&B or resort. These are developed and undeveloped properties…

Developed Properties

Tourist accommodation facilities an investor purchases but does not wish to operate can be leased to an operator. In fact, these are probably the best rental income returns one can generate in Nicaragua.

A hotel, hostel, B&B or resort property can also be managed by a professional hospitality company. In most cases a fixed rent amount is more attractive as a ROI. However, it depends on the property and the term and condition of the management contract itself. Some high end, and/or well situated properties can prove very profitable, thus generating excellent returns.

Undeveloped Property

There is still a abundance of undeveloped real estate in Nicaragua that would lend itself well to tourism use, and much of it is available at reasonable prices.

An investor seeking to invest only in land, but wanting to take advantage of the perks available to tourism infrastructure investors, can do both. I recommend an investor in land suitable for a tourism development enter into a joint venture partnership with a hotel or resort developer. The joint venture partnership would be structured so that the investor contributing the land shares interest in the competed facility, reaping a share in any benefits available. It would be the responsibility of the joint venture partner to develop the property. Once completed the JV partner can operate the business or a third party management company can be introduced.

I’m currently working on one of each of these two scenarios… One is a closed up hotel/hostel property with huge potential that, if purchased by a client, would then be leased out to an established operator for a fixed amount per month. The other is an impressive ocean view, hill top property. My client will purchase the property and then transfer interest in that property to a joint venture partnership. The partner in the joint venture will develop the property. Once construction is completed, the JV partner will operate the resort, sharing income and any perks with my client.

If you have any questions about investment in the Nicaragua tourism industry or investing in Nicaragua in general, feel free to contact me.

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