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.
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.
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…
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.
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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