Tag: invest in Nicaragua

 

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.

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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Confusion Is Normal When Shopping For Real Estate In Nicaragua

4 for sales signs on one propertyAnyone looking for real estate in Nicaragua who actually visits the country discovers there’s a glaring difference between online shopping and being here looking for a buying opportunity. It’s an understatement to say that it is confusing compared to the nice, tidy websites with posted prices.

The first shock most people have to deal with is that there’s no “listing agent”. Every property in Nicaragua is offered for sale by the owner… no matter what prospective buyers may believe or have been told. True, some sellers don’t want to bother with the selling process so may use the services of a go between. However, that go between can be anyone… a property manager, a lawyer, a relative or friend, or a “merchant” specializing in real estate. I say “merchant” because there is no such thing as a “real estate brokerage” in Nicaragua. At least not as a North American or European would understand the term to represent. Anyone can sell real estate, no matter if they have any prior experience or training of any kind.

Nica Investments only deals with the owners of property seeking to sell or lease. The mandate the company operates under is to advise clients seeking to purchase real estate as to the true value of a property, the potential for equity gain and/or income from a property, what renovations may be required and the cost, and if there are any grounds for concern surrounding a specific property. We’ll then walk clients through the purchase process and assure the property is transferred without incident.

Nica Investments does not add on an amount over and above what the seller wishes to receive as a commission. This is the norm in Nicaragua. A seller will offer a property to “selling agents” at what the seller wants, net. The agent must then add on an amount over and above that sum. Nica Investment clients retain our services on a per diem basis, and task Nica Investments with negotiating the best terms and purchase price possible directly from the seller.

Nica Investments also negotiates leases, which in Nicaragua is often a more advantageous approach to securing a property for business use. See Which Is Better – To Rent Or Buy for more information about leasing over purchasing property in Nicaragua.

Nica Investments does not maintain a list of properties for sale or rent, “listings” as a prospective renter or purchaser from North America or Europe would expect to see. There is no point. We do inform clients of outstanding properties through our newsletter or on our website, under Investment Opportunities. However, these properties are being offer for sale by owners. Nica Investments deems these properties we highlight to be exceptional because of price, location, size, view or a combination of these reasons.

If a property is priced well it sells quickly. Too quickly to make advertising it practical. Such properties Nica Investments will inform clients of directly via email and open negotiations on behalf of a client who retains us to do so.

If a property is overpriced or has issues prohibiting its being sold, it will last long enough to make advertising it worthwhile. However, it’s unlikely to sell quickly so it’s a waste of time and energy in most cases. Besides, in Nicaragua virtually every property in private hands is for sale. There are rare exceptions, but well over 90% of homes, raw land and commercial properties throughout Nicaragua can be purchased from the owner whether or not it is being overtly offered for sale.

What Nica Investments does is source properties that meet the client’s parameters. These parameters are type of property, price range, location, land use, size, and so on. We then approach the owners of properties that meet our clients’ criteria directly and attempt to negotiate an equitable agreement to purchase or lease.

To learn more about purchasing or leasing property in Nicaragua, sub scribe to our newsletter, follow us on Twitter or Facebook, or contact us.

Buying Real Estate in Nicaragua

MombachoIf you’re planning to invest in real estate in Nicaragua it is important to use common sense. There is an old saying, “If it seems too good to be true, it probably is.” Caveat Emptor, “buyer beware”, applies in all real estate purchases the world over, but is especially applicable when buying property in Nicaragua.

Do your due diligence…

Nicaragua employs a civil law system. This differs from the common law system of the United States, Canada and European nations. Civil law is based solely on statutes, so there’s no facility to reach a compromise resolution should problems arise.

The official language for all real estate transactions in Nicaragua is Spanish. However, it is possible for an English contract to be legally binding. The English language contract is only legally binding though if it is presented to the court. The contract will have to be translated into Spanish, after which a judge will interpret the contract, and verify the signatures. The judge’s interpretation of the contract will be binding, even if that interpretation is not exactly how the buyer and/or seller understood the transaction it to be.

Hotel de Sonrisas, Granada, Nicaragua

Court proceeding in Nicaragua take time… months, sometimes years. So you do not want to have to depend on judicial arbitration to resolve any issues that arise while purchasing a property. Therefore it’s imperative to have all the i’s dotted and the t’s crossed. Half of the clients Nica Investments serves are purchasers who seek assistance in sorting out a real estate purchase that has gone bad.

Following are some tips to help with a purchaser’s due diligence and to avoid problems:

  • Hire An Attorney – Have your own attorney capable of speaking your language. Your lawyer will look out for your interests. Do not depend on an attorney hired by the seller or the seller’s agent.
  • Conduct A Thorough Title Search – Be sure to carefully review the chain of title to the land being purchased. The chain of title to be reviewed must trace back at least 30 years. If the property being purchased is located on any body of water, even a river, the full chain of title dating back to before 1917 is required.
  • Agreement To Purchase Terms – Be sure the agreement states the purchaser will receive a free and clear title without any encumbrances, including mortgages. There must also be a clause stating that the purchaser will be released from any purchase obligation if there is a serious issue with the title, and that any deposit will be returned.
  • Make Sure the Property is Properly Surveyed – Assure that the survey marks all the corners of the lot. Also, be sure the survey is an approved, official (cadastral) survey, which will bear the official stamp and a signature.
  • Escrow and Closing Process – In January 2011, the Nicaraguan National Assembly approved a new Trust Law. Unfortunately the regulations have not been issued yet. Local companies are already offering escrow services but it isn’t wise to use them until the regulations to the Trust Law are approved. If you do you may find you have lost your money. Nica Investments prefers to deal with US banks and take advantage of their escrow services. On rare occasions this insistence has resulted in a seller refusing to cooperate, but most legitimate sellers are happy to work with US banks provided the purchaser is covering any escrow fees and transfer costs.

Securing Your Interest In Nicaragua Real Estate…

It is recommended that all real estate transactions be registered in the Public Registry. This include a purchase, lease, mortgage, possession right or any other transactions. Nicaraguan law isn’t clear as to whether the Public Registry serves as a means to establish property rights or serves merely as a means of publishing an existing right, but it is advisable that any claim to a property be registered. That said, the Nicaraguan legal system does recognize the registration of a title as establishment of property rights, so title must be properly registered with the court.

Different government agencies involved in the registration process in Nicaragua constantly change, while existing agencies add new requirements. These changes to the registration process make the registration of a property title challenging, so it is recommended that purchasers employ the services of a competent lawyer or real estate acquisition consultant like Nica Investments.

Important Differences In Real Estate Transactions…

Worth noting is the fact that “real estate agents” in Nicaragua are not the same as their counterparts in the USA, Canada or Europe. There are no “real estate brokerages” in Nicaragua as foreigners would understand them to be. Nor are there trained, licensed and monitored “real estate agents”. In fact, there is no Nicaragua equivalent to “real estate boards”, nor is there anything like a “Multiple Listing Service” (MLS) that monitors and tracks real estate transactions. To find comparable property values one has to search titles. Unfortunately this can be a futile effort because often the selling price is reduced so the buyer will pay less transfer tax, or the price is inflated to secure more financing from an institutional lender.

Only owners of a property sell their real estate. Anyone presenting themselves as the seller’s agent is generally a middle man, with the exception of estate lawyers. In most cases the seller has demanded a net amount they want and these middle men will add on a profit margin for themselves. The additional amount is often significant, far more than the few percent USA, Canadian and European realtors could hope to receive. This is in part due to the need to have a negotiating cushion, but of course greed is a factor too.

There are rare occasions when an agent for the seller is granted an exclusive right to sell a property on behalf of the owner. If you’re told such an agreement exists, demand to see it. I’ve yet to be shown anything granting exclusivity other than by lawyers in possession of a Power of Attorney. However, I’m not saying that there may not be exclusive agreements a seller and an agent entered into… just that I have never seen one. If no exclusivity exists it’s possible the same property will be advertised by other agents for more or less money, so research is recommended.

All real estate transactions must be carried out through a Public Deed (known as an Escritura Pública), to be legally binding in Nicaragua. The Public Deed must be written in Spanish and it is the responsibility of the purchaser to retain a translator if he or she does not understand the language.

When purchasing a property the buyer must make sure that the public deed transfers possession and ownership, that the size of the property is verified with a surveyor’s map, and bounds are detailed in the title document, and it’s approved by the Cadastral Office. The purchaser must physically inspect the property to ensure that it’s in accordance with the topographers’ map and the property description on the Public Deed.

The purchaser is advised to insist on vacant tenancy. If anyone is living on land, domiciled inside a main or out building, or a tenant in a residential or commercial property, insist that the seller have them vacate. It can be a lengthy and costly undertaking to remove both legal tenants and squatters. No matter what relationship the seller says the occupant has, insist that the seller will provide vacant tenancy, and that includes the seller if it’s the seller’s home being offered for sale. I personally know of two cases where the seller was paid the full amount of the purchase then refused to vacate the property. These were not transactions I was involved in, but I know of the buyers’ trials and tribulations.

Special Laws, Rules And Regulations…

Depending on the type or origin of property being purchased or leased, special regulations may affect properties rights.

Coastal Law

The 2009 Coastal Law applies to property bordering beaches, rivers, lagoons or lakes, or any other body of water. The Coastal Law regulates private and public domain, coastal access, as well as the use and development of properties located in these areas.

According to the law, the open area between low and hide tide, plus 50 meters from the high tide mark is open to public use. Regulations established in this act may also affect ownership, use, construction, lease, and possession rights beyond the 50 meter boundary with such properties. Real estate transactions involving waterfront properties require a thorough due diligence that traces back the title to before 1917, or to when the title originated.

No Objection Letter (Carta de No Objeción)

The Attorney General’s Office requires a No Objection Letter to register real estate that historically belonged to the Nicaraguan state, or are coastal properties, properties previously owned by cooperatives, titles that are based on a Supplementary Title, and properties whose titles were obtained through Laws 85, 86 and 88.

Registration of titles of properties that fall under one of these categories is not possible without a No Objection Letter. Once you initiate the registration process of one of these properties, the Cadastral Office will request this letter. Once registration goes through the Cadastral Office, the Public Registry will also request the No Objection Letter.

The process to obtain a No Objection Letter can vary from time to time. It is recommended a purchaser visit the Attorney General’s webpage at www.pgr.gob.ni for the latest requirements. It is also recommended that the services of an attorney or competent real estate acquisition consultant be retained. Failure to obtain a No Objection Letter will result in a denial of the registration of a title. The best approach is to insist that the seller of a property falling under a category requiring a No Objection Letter provides it, or an official document stating a No Objection Letter is not required.

Border Law

The 2010 Border Law prohibits foreign ownership of some properties located along the border. It is necessary to confirm the status of any property within close proximity of any of Nicaragua’s land borders. A good rule of thumb is to assume all properties within ten (10) kilometers of a border fall within the 2010 Border Law restrictions.

Indigenous Community Properties

Properties that belong to indigenous communities fall under special regulations and ownership is not transferable. This is important to know because there are people actively trying to sell land belonging to indigenous communities. It is possible to acquire concessions or lease rights, but it is not recommended to do so because any disputes over rights that may arise are difficult to settle. Environmental use and development laws also apply to a vast majority of properties owned by indigenous communities. Many of these properties cannot be used to build on. Nica Investments policy is to avoid properties belonging to indigenous communities.

Conclusion

What has been shared here is current as far as the rules, regulations and laws pertaining to real estate purchases in Nicaragua as of January 1, 2017. The one constant in Nicaragua real estate investing though is that nothing is constant. Rules and regulations change, and occasionally new laws are passed or existing laws modified. It is strongly advised that anyone looking to invest in Nicaragua real estate engage Nica Investments as their acquisition consultant and/or retain the services of a reputable and competent Nicaraguan attorney. Doing so will assure your property buying experience goes smoothly and disappointment is avoided.

Tourism In Nicaragua

Tourism in Nicaragua has grown to become the country’s second largest industry. Tourism is expected to continue its almost 10% annual growth as well, because President Daniel Ortega has stated his intention is to use tourism to help alleviate the nation’s poverty. To this end, Law 360 was decreed. The law offers foreign investors in tourism the best investment incentives in all of the Americas.

Adding to its popularity as a vacation destination, Nicaragua has the lowest crime rate in Latin America according to Interpol, with only 12 crimes for every 100,000 citizens.

Click here to visit HotelLaCalzada.com

Nicaragua only has one international airport, Managua’s Augusto C. Sandino International Airport, which efficiently welcomes more than 1.3 million tourists annually (2016). Two-thirds of these tourists were from other Central American countries, 290,000+ were from North America and 80,000+ from Europe. Of those that come for recreation, their principal activities include surfing, hiking volcanoes and enjoying the country’s unique, natural beauty.

GranadaAccording to the INTUR, the Ministry of Tourism of Nicaragua, the colonial city of Granada is the preferred destination for tourists. The city’s central park hosts many vendors of traditional foods, as well as arts and crafts. Line up along the west side of the part are horse drawn carriages for visitors to take an affordable tour of the city. If your understanding of Spanish is limited, be sure to select a carriage driven by a guide who speaks your language because their knowledge of the city and its historical sites is both interesting and informative.

Just outside the Granada city limits visitors are able to take boat tours of the Granada Islets, or visit Mombacho Volcano, a popular day trip for anyone interesting in doing a little hiking up into a cloud forest. Laguna de Apoyo is another popular destination for tourists visiting Granada.

The cities of León, Masaya, Rivas, and San Juan del Sur are also popular tourist destinations. Cruise ships have been docking in San Juan del Sur since January 2000, bringing with them an average of 50,000 tourists annually.

The Corn Islands, located about 70 km east off the Caribbean coast of Nicaragua, near Bluefields, is another popular tourist destination.

Rural and community based tourism

CECOCAFEN is an organization of coffee cooperatives in Northern Nicaragua that manage a rural and community based tourism project. The project was developed with support from Lutheran World Relief. Tourism provides farmers with new opportunities in alternative markets and diversify their income. CECOCAFEN offers visitors the opportunity to visit a coffee farm, learn about coffee craftsmanship, stay overnight on a coffee farm and explore the area with a community guide.

Eco-tourism

Home to 78 protected areas covering over 20% of its landmass, Nicaragua is home to 7% of the world’s biodiversity. This is more than Costa Rica. With so much biodiversity, the country’s tourism industry has develop a popular eco-tourism sub sector.

Ecological tourism aims to be ecologically and socially conscious. It focuses on local culture, wilderness, and adventure. Nicaragua’s eco-tourism grows every year, with three principle eco-regions, Pacific, Central and Atlantic, which contain volcanoes, tropical rain forests and agricultural land.

Hotel de Sonrisas, Granada, Nicaragua

Nicaragua is home to the largest lake in Central America, about 700 species of birds, and an abundance of unspoiled natural beauty. Despite all this, it is still the least visited country in the region. However, the lower number of tourists keep prices low and add an “off-the-beaten-track” appeal to the country.

Nicaragua is also home to Bosawas, located in Northern Nicaragua, which is the largest rainforest north of the Amazon in Brazil. It also holds the largest lake in Central America, Lake Cocibolca, also known as Lake Nicaragua. Lake Cocibolca attracts a great many tourists annually, most of whom visit Ometepe, a large volcanic island formed by two volcanoes, where they explore the flora and fauna found in the Charco Verde Nature Reserve.

Nicaragua’s rich biodiversity also attracts many tourists to protected areas such as the Indio Maíz Biological Reserve, which holds a higher number in species of trees, birds, and insects than all of Europe combined.

Visa regulations (2016)

Tourists from Afghanistan, Albania, Angola, Armenia, Bosnia and Herzegovina, China, Cuba, Ecuador, Ghana, Haiti, Iraq, Jordan, Lebanon, Liberia, Mali, Mozambique, Nepal, Nigeria, North Korea, Pakistan, the Palestinian National Authority, Romania, Sierra Leone, Somalia, Sri Lanka, Sudan, Syria, Vietnam and Yemen require a visa to enter Nicaragua.

Other tourists can obtain a Tourist Card for US$10 valid for up to 90 days upon arrival, provided the visitor is in possession of a valid passport with at least six months left before expiry. There is also a US$32 departure tax that is usually included in a round-trip airline or cruise ship ticket. However the departure tax is not usually included in the price of a bus ticket, and of course must be paid by visitors who arrived by car or private boat.

Which Is Better – To Rent Or Buy In Nicaragua?

North Americans, Europeans and a great many others are taught that ownership of real estate is one of the best ways to grow wealth. The rise in real estate value adds to one’s personal net worth. It also provides tax benefits that can be used to shield other sources of income.

However, in markets were rents are low and property values are high, such as they are in some Nicaragua real estate markets, purchasing a property may not be the most financially prudent approach. This is especially the case in commercial applications. Why invest hundreds of thousands of dollars to purchase a building when you can rent the same property for a few hundred dollars a month? True, there is no depreciation of the structure to offset profits, but the rent paid is a business expense and the cash saved by not having to purchase the property can be working for you elsewhere.

Click here to visit HotelLaCalzada.com

Why is this so? To understand why a building with a price tag in the hundreds of thousands to millions, such as a hotel property, can be rented for just a few hundred dollars a month, a few thousand at most, you need to understand the Nicaraguan mentality towards real estate investment.

Most Nicaraguans do not trust banks, and with just reason. Recent Nicaragua history is littered with instances of bank failures. Plus there are few trusted investment opportunities. So to safeguard inheritances and money earned, Nicaraguans will hold onto real estate they inherit and purchase real property whenever they can. The average Nicaraguan with land holdings is not a sophisticated investor and doesn’t need to be for a property to serve its purpose… safeguarding his or her money.

This mentality means that appreciation and even rental income is of secondary concern. In many cases Nicas will purchase acres of raw land for cash and make nothing at all from it. They’re happy knowing they have land that will never be worth nothing, as many bank savings turned out to be. Imagine being someone who inherited a property that was sold  and the money banked or all of your savings was deposited in the bank, only to find you were left with nothing when the bank failed. Now you can appreciate the Nica mindset.

So it’s possible to find a property for farming, manufacturing or to use as a hotel, B&B, restaurant or retail outlet for very little per month. Offer the owner of a locked up colonial house, warehouse, commercial building or land a set amount for 5 to 10 years and in all likelihood they’ll agree to rent it to you.

Hotel de Sonrisas, Granada, Nicaragua

The property owner continues to safeguard his or her savings and the tenant gets a property at an affordable monthly rental amount. In all likelihood the property will require some leasehold improvements, in which case the owner gets improvements made to his or her property. Plus he or she knows the property is being maintained. On the tenants end, he or she can write off leasehold improvements and the cost of maintaining the property as business expenses. It’s a win win…

To learn more about rental opportunities in Nicaragua, contact Nica Investments.

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The Steps Involved In Transferring Nicaragua Real Estate

I generally take care of the following steps for my clients, whether they’re buyers or sellers. However, I thought I’d share the steps that must be gone through so my clients can appreciate a few of the many formalities I attend to on their behalf. Also I want to be sure anyone wanting to go it alone is properly informed as to the steps required and which party to a transaction is expected to handle which aspects.

las_penitas_beach

Las Penitas Beach. Photo by AirTransat

These steps are based on the assumption the property is already registered and that there will be no change of use involved. In the case of a property being purchased that is to be subdivided from a larger parcel of land, and a new title created, or the current use of the land is to be changed, additional steps are required.

1. Obtain a Libertad de gravamen (non-encumbrance certificate) from the Registro Público de la Propiedad Inmueble y Mercantil (Land Registry)

The non-encumbrance certificate, or libertad de gravamen, is an official document that shows all the encumbrances that are currently on the property. It also lists all of the owners of the property since its first annotation. The certificate must be obtained by the seller before starting the transaction formally.

A certificado a manera de titulo (Title) is required to apply for the non-encumbrance certificate. A replacement title can be obtained from the registry if the original title has been lost. The cost is NIO 100.

A certificado de historia registral (certificate of historical registration), is a document related to the non-encumbrance certificate. It is a list of all previous transactions related to the property. This document will list transfers and re-registration of the title. This document can obtained at a cost of NIO 100. An additional fee of NIO 50 is required for every additional past transaction listed.

2. Obtain a Solvencia Municipal (tax clearance certificate) from the Municipality. A tax clearance certificate must be obtained by the seller from the municipality. Provided the seller is up to date with tax payments it should take only one day to receive the tax clearance certificate. The fee is NIO 20 to receive the document immediately, or if it is possible to wait until the next business day it is free of charge.

3. Next, a notary must prepare and sign the public deed. A notary public prepares and notarizes the public deed of purchase and sell between seller and buyer. The preparation of the deed is an exclusive act of the notary. The notary will review all past transactions from the record book at the Land Registry using the documents obtained above, and verify the ownership of the property.

Notaries generally estimate their fees for this service based on a percent, which varies between 1.5 and 2% of the property value according to agreement between the parties and notary. Allow 2 days for this phase of the process.

4. Obtain the Cadastre certificate at INETER (National cadastre). INETER is the national cadastre and is in charge of surveying the land and keeping a database on the plots and boundaries. This certificate is necessary to obtain the cadastre valuation at the DGI. This step requires 2 weeks and the fee is NIO 300.

5. Obtain Cadastre valuation at the DGI. Parties to a real estate transaction must obtain the Cadastre Certificate and request a valuation from an inspector. In practice, the Cadastre requires a special power be granted to notaries or any other person when the interested parties cannot themselves manage this procedure. The closest similarity to North American or European proceedures would be the issuing of a limited power of attorney. If the parties can go to the Cadastre themselves, they do not need to grant anyone a special power to act on their behalf. The Cadastre will require the original property title (that of the Seller).

This step in the process requires about 21 days and costs NIO 50 and is paid using Tax Stamps. In cases in which a special power must be granted, the costs rises of course. It will cost about C$ 2,000 in fees for the person who will go to the Cadastre, and C$ 1,000 for the notary who will previously authorize and issue the special power.

6. After the cadastral certificate is obtained, an inspector from the Catastro fiscal – Direccion General de Ingresos will visits property to assess value. Generally it is required to pick up the inspector and drive he or she to the property. It will take the inspector about one week to write the report on the value. The cost is 20 Cordobas and it usually takes from 2 to 3 days for the inspector to have time to inspect the property.

7. Payment of Income/Transfer Tax at the Administracion de Rentas – Direccion General de Ingresos, or Tax Administration Office. This is an agency of the Treasury Ministry. The percent to be paid is established depending on the Cadastre Value. The Cadastre value usually not the same as the market price. For the payment of the transfer taxes, the fiscal authority takes as a base of calculation the highest value between the sale price in the public deed of purchase and Cadastral value. Fees of NIO 4 + 2 stamps of NIO 10 need to be paid to make the payment.

The transfer tax rate of 1% was established by an injunction (“amparo”) declaring the increase of the 2003 Ley de Queda Fiscal unconstitutional. An amendment to the Nicaraguan fiscal law entered into force on January 1st, 2010 (Law 712 published in the official Gazette No. 241 of December 21st 2009), changing the tax according to the following sliding scale, from 1% of the value of the property to the following percentages: 1% for properties with a value between US$1.00 and US$50,000.00, 2% for values between US$50,000.01 and US$100,000.00 and 3% for values above US$100,000.01. According to Article 87 of the new Tax, the property the transfer tax is calculated and paid as follows: 1% for properties with a value between USD1.00 and USD 50,000.00, 2% for values between USD 50,000.01 and USD 100,000.00 and 3% for values between USD 100,000.01 and USD 200,000.00 and 4% for values above USD 200,001. Fees of NIO 4 + 2 stamps of NIO 10 need to be paid to make the payment.

8. Apply for registration of the public deed at the Registro Público de la Propiedad Inmueble y Mercantil. In English Land Registry or Real Estate Registry. Parties file the public deed at the Land Registry for its proper registration. The amount is calculated based on 1% of the cadastral value, with a maximum fee of NIO 30,000. This payment is made directly at the branch of a commercial bank that is located inside the Land Registry Office. The notary applying for registration will charge C$500 as fees. At submission, the request for transfer is recorded, signaling priority rights over the property. The registration of property transfers is very slow and can take longer than 90 days. When finalized, the Land registry will write in the original deed, the book and page where the transfer was recorded. This document is then returned to the notary with all the other certificates provided. The Land registry operates with paper documents. However, the sale deeds are scanned and almost all past records are digitized in Managua. In the rest of the departments in the country, records are not always accessible digitally. Newer transactions (less than 1 year) are not always digitized. Any person can access past deeds with computers at the Land registry at no cost. It is possible to track the status of the deed registration online through the website: www.registropublico.gob.ni/servicios/consultatramite.aspx.

15 days is an expedited procedure. 1% of cadastral value is the registration fee and NIO 500 notary’s fees + 20% of the registration fee for the expedited Procedure.

9. Apply for name change at the Municipal cadastre. The new owner needs to update the records at the municipal cadastre in order to be able to pay the real estate taxes. It should taken only 1 day and there is no cost.

As always, if you have any questions about purchasing, renting or selling real estate in Nicaragua, contact us.