The Panama 101 - E-Book

Guide to Living and Investing in Panama

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Chapter One

The Nuts and Bolts of Travel In Panama

Planes, Helicopters, Yachts, Hotels, Cell Phones, Rental Cars

 

When I first arrived in Panama's Tocumen International airport, "dazed and confused" was probably the best way to describe my state of mind.

You can probably relate to the sensation you feel when you arrive in a foreign airport after ingesting a dose of airplane food. You feel groggy, foggy and ready for a shower.

After two four hour flights, a four hour layover, plus an agonizing wait for immigration and baggage, my main interest at this point is getting to my hotel.

Panama's Tocumen International airport is actually quite small by most standards. This means every person who arrives comes out the same door where crowds of people wait holding signs, waving, hugging, kissing, clamoring about, or jostling to find their client. I've been to rock concerts with more room to breathe.

It was quite a shock to my system to have to wade into a crowd of strangers with all my luggage and push my way through the crowd without really knowing where I was going. Suddenly Spanish is the only language I hear.

The airport exit is only a few steps away which almost makes it seem too easy. Strangers start yelling "taxi" and try to grab my bags and drag me to their preferred taxi. I end up following one of the guys to a taxi and load my luggage into what I hope is a legitmate taxi.

Above: The view from a flight into Panama's domestic airport.

 

After a little more experience, I now know to ask for a "collectivo" which cuts my taxi fare to a third of the price and takes only a few minutes more. This is how Latin businessmen and other solo business travelers do it.

Or, better yet, I call one of the taxi driver's I have met over the years and they come to pick me up, making the initial transition that much easier. Arriving in Panama without knowing a good taxi driver is like arriving in a shark infested tank with an open wound. Your taxi driver is probably the most important ally you have in the early stages of your Panama exploration.

 

Above: Kite surfing has become popular in Punta Chame, one of the whitest sand beaches in Panama

In Chapter One of the Panama 101 - E-Book, we provide a list of hotels that offer excellent value and service, as well as phone numbers for a couple of my favorite taxi drivers. We explain the best way to get a Panama cell phone without having to sign up for a one year plan. We also list reliable companies who provide helicopter, yacht or charter plane services for the more exotic excursionist.

Here are a few other important tid bits included in Chapter One:

We hope you've enjoyed this preview of Chapter 1- The Nuts and Bolts of Travel in Panama.

 

 

 

Chapter Two

Where To Stay

Panama's Finest Hotels and Condo Rentals

Until recently, it was easy to find a room at a hotel in Panama. In the old days you could just show up with your bags on the day of arrival and get a better rate than calling ahead with a reservation. Over the last couple of years things have really changed.

With all the media hype about the Panama Canal expansion and Panama becoming the number one retirement haven, suddenly everyone and their dog was on their way to Panama to get a slice of the action and see what all the fuss was about.

Venezuelans have also been pouring in to check out Panama as a place to escape Chavez's severe socialism with their families, their businesses and their money. We are not talking about a handful of Venezuelans, we're talking thousands.

In fact, travel agents and visitors alike have been complaining that there are literally no available rooms in the major five-star hotels and even the dodgiest $15/night lodging in Caledonia (a somewhat rundown portion of central Panama City) are all booked up during the high season. The result is that room rates have doubled over the past two years. Business executives and prospective retirees were caught scrambling last minute, hoping for a cancelation.

Above: Located in one of our favorite boutique resorts, this loft rents nightly and is just steps from a beautiful beach.

Unless you don't mind staying in one of Panama's "push button" hotels (hotels rented by the hour to amorous couples), it's important to have a handy list of lesser known but equally charming hotels in Panama to call on when the all the name brands are full.

The Internet has made business really easy for the large chain hotels with their fancy web sites and corporate connections to travel agencies worldwide. But there are many hotels in Panama that offer great rates and excellent service but are not as easily found by punching "panama hotel" into your favorite search engine.

For this reason, you'll find the list of hotels outlined in Chapter 2 of the Panama 101 - E-Book very useful. This list applies not only to Panama City, but to some of Panama's other destinations such as Boquete, Bocas Del Toro, Isla Contadora, Pedasi and Isla Grande, among others. This specialized list includes some of the best boutique hotels, resort getaways, eco-lodges, and B & Bs not so easily found on the Internet.

Hotels are not your only option, condo rentals are also in vogue. Instead of a hotel, travelers today prefer the authentic experience of staying in a furnished condo. The benefits include having a fully functional kitchen, more space to spread out, more privacy, and a more culturally rewarding "life-like" experience. Most units are decked out with high-speed Internet, satellite TV, and cell phones for visitor use.

Above: Having your own kitchen is convenient, especially for longer stays.

For weekly stays or longer, we would highly recommend a condo rental as long as you go with the right property management company. If you don't, you could be snuggling up with a Panamanian cockroach at night, or be robbed blind by the friendly maid with five passports (each of a different nationality).

There is a big difference between furnished, and elegantly furnished. We've heard horror stories about smelly furniture and sagging matresses. One guest we heard about arrived to a sink full of dirty dishes.

To help with your selection, in the full version of the Panama 101 E-Book we have identified two professional property management companies with good reputations; places we would recommend to our mother-in-law-to-be. The best property management companies have strict standards for quality of furnishings, cleanliness, and have a lower staff turnover that offers better service and security.

The longer your stay, the more appealing a condo rental will be. The companies we recommend offer discounts for longer-term stays.

We hope you've enjoyed this preview of Chapter 2 - Where To Stay in Panama.

 

Preview of Chapter Three

Where To Live and Invest in Panama City

A Neighborhood By Neighborhood Breakdown

Many expats and retirees loathe the idea of relocating to a large city. The heat, traffic, and pollution may not be conducive for a tranquil, stress-free lifestyle.

However, after three weeks of lying in a hammock, many would-be beach bums long for busy Italian restaurant, live Cuban salsa, or an evening of fine wine and jazz.

Even if Panama City is not your final choice as a place to reside, this is Panama’s primary hub for business and transportation and it is best to become familiar with what the city has to offer.

Panama City is the only place in Panama with true urban zest - the only real city in Panama.

Other places in Panama such as David, Bocas Del Toro, Las Tablas, Coronado and Penonome may be called "cities" but they are really more like towns and villages. In many ways, Panama City could be considered the only true city in Central America by many international standards.

Above: The sun sets while the tide washes into the marina at the Intercontinental Miramar Hotel.

The wide range of fine restaurants, theatres, and nightclubs in Panama City can make it an exciting place to be. Panama's true Latin flare and cosmopolitan traits come alive in the evening and often last until dawn and beyond.

Add shopping centers, tropical parks, recreational facilities, modern hospitals, international schools and universities, and it becomes clear why many expatriates choose to settle here. No other city in Panama offers the same breadth or depth of entertainment and infrastructure, and Panama far outshines the other Central American capitals when it comes to cosmopolitan ambiance.

Despite Panama City's relative size, those who live here soon realize how little of the city they actually use. The central backbone of Panama City is the banking district, which is comprised of eight distinctive neighborhoods: Bella Vista, Obarrio, El Cangrejo, Marbella, Patilla, Punta Pacifica, San Francisco and La Cresta.

There are also a few attractive outlying districts such as Casco Viejo (Panama's historical district), the Panama Canal Zone (including Amador, Ancon, Clayton and Albrook) and Costa Del Este.

Above: Large tropical trees drape over this district on a pleasant sunny day in Panama City.

 

Above: Homes in one of the former U.S. military bases provide comfortable living for the new residents.

 

Above: A child plays in a narrow historical passageway. Modern Panama City looms in the background.

 

Each neighborhood described in the Panama 101 - E-Book offers its pleasantries and drawbacks:

-- One of the neighborhoods is known for it's wide range of eateries and nightspots.

-- Wander this area to enjoy its bohemian air and vibrant student population.

-- This neighborhood is so "Miami" you half-expect Don Johnson from Miami Vice to roll up in a white convertible.

-- The prize for Most Construction Cranes Within a Ten Block Radius" goes to this neighborhood.

-- This part of town blends 1930s architecture with Jewish and Muslim inhabitants.

-- One of our favorite neighborhoods is located on a hill top overlooking the city.

-- This former U.S. military base projects itself over the Panama Bay offering 270 degree ocean views including a close-up of the Panama Canal.

-- Some structures in this part of Panama City date back to the 16th century. Today, funky bistros, hip jazz clubs, and eclectic galleries dot the cobblestone backstreets.

-- This part of the Canal Zone is attracting all kinds of international businesses, tech companies, NGOs and training centers and is home to many employees from the Smithsonian Tropical Research Institute.

-- High fashion and high retail, including a place called the "Snob Shop", attracts shoppers and desparate housewives to this district.

-- You might spot Donald Trump or one of his Apprentices driving Ferraris and Mercedez SUVs in this part of Panama City.

As diverse and Panama City is, all of the above neighborhoods are crowded into a fairly tight area, which causes all kinds of traffic congestion and noise pollution. Buses and taxis race down the main avenues creating a "Dukes of Hazard meets Monster Truck Rally" show.

For investors, real estate has been selling briskly in Panama City and returns on investment have been staggering... but will the boom continue? We have our opinion, which may be shocking to some. More about the investment side of things to come in future chapters.

We hope you've enjoyed this preview of Chapter 3 - Where to Live and Invest in Panama City.

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Preview of Chapter Four

Panama's Resort Communities

Living and Investing in Tropical Beaches and Cool Highlands

 

Ahhh... white sand beach, fresh mountain air, "you can have it all in Panama..." or so say the glitzy promotional magazines and glossy sales brochures.

The Internet is full of slogans like "Panama - your perferct paradise", or "make your dream come true in Panama".

Alongside these promising phrases, you'll see a variety of smiling happy people set among artificially rendered construction plans with all the trimmings.

Some of the sales pitches look like they belong in a computer video game, just waiting for you to enter in as the main character.

But what are Panama's resort communities really like? It's one thing to crave the images of paradise. But do you really want to invest years of your life and/or your life savings in a place you've hardly researched?

Well if you're expecting to find paradise on Earth in Panama, we don't want to burst your bubble. For some people, Panama is just what the doctor ordered. In the Panama 101 - E-Book, we try to offer a balanced perspective on Panama's resort areas, the good, the bad, and the ugly.

We figure you've probably been around the block enough times to know that everything in life comes with its challenges and rewards. In fact, rewards usually don't come to you if you don't overcome a challenge first.

Our mission is to shed some light on the subject and help you save time by helping you to narrow your focus. Panama may be a small place, but most people don't want to spend a few months traveling the entire country looking for their sweet spot.

This chapter is designed to do some of the background research for you. We hope that when you read the words in our E-Book you are able to say, "That's it, that's the spot!" Actually, your author has read words in other publications that "turn a light on" and have subsequently lead him down his current path of enlightenment. With any luck (or fate, as it may be), one or two "lights" will go on after a few of you read the contents of Panama 101.

Outside of Panama City, there are two main lifestyle elements to choose from; coastal and highland. Coastal areas tend to be hot and tropical year round (daily highs around 89 F - 92 F), whereas the highlands are generally about 10 degrees cooler. There are a variety of differences among the environment, the culture and the infrastructure, all of which are laid out in more detail in Panama 101.

 

This chapter mainly focuses on Panama's resort communities. While the true definition of a resort community and overall implications of this term is beyond the scope of this book (and may well become the starting point for a new book), for our purposes a resort area simply refers to "a place that has begun to attract foreign visitors seeking recreation and tourist-like amenities".

A resort community is a place where the impact of foreign investment and foreign visitors is clearly visible. When we say resort community, we are talking about coffee shops with espresso machines, supermarkets with imported olives and more than one kind of cheese, high standard hotels in the vicinity, plenty of tourist paraphenalia, and a generally beautiful and attractive environment where tourists and expats feel safe and nurtured.

Since Panama is in such an early stage of development, the line between "resort community" and undeveloped agricultural village can get blury. One of the big attractions about Panama compared to other countries in Central America is that even the most "undeveloped" part of the country will for the most part be very safe, comforting, and offer all basic services (like gas, food, clean driking water, cold beer, cell phone signal, paved road access, and someone friendly nearby to help you).

In Panama, you cannot accidentally take a wrong road and get lost in the jungle, it's more organized than that. Although you could get lost in Panama City and have to bribe a taxi to lead you out, the cost of the bribe is so affordable, you should have taken a taxi in the first place.

So the point of this chapter is to introduce the established resort areas. We'll leave the up-and-coming areas of Panama for a future chapter.

The primary resort areas in Panama today are Coronado - Farallon, Isla Contadora and the Pearl Islands, Boquete, El Valle/Sora, and Bocas Del Toro. All of these areas are within one hour of Panama City either driving or flying. Below is a brief summary of each.

Above: Coronado is home to some of Panama's largest and most privileged beachfront estates.

Coronado-Farrallon refers to a long stretch of beach starting one hour west of Panama City and continuing down the InterAmerican highway for about 45 minutes. This is by far the most developed beach area in Panama, with three major beach resorts and several new residential projects planned or under construction. Despite all the new building going on, the beaches don't feel busy and are rarely crowded. Only the beaches in the immediate vicinity of the big resorts such as Coronado Golf and Country Club, Playa Blanca and Decameron Beach Resort, will you actually see groups of tourists.

One element lacking in this part of Panama is a "beach strip" or promenade. Normally in most beach oriented tourist zones around the world you'll find a strip of shops, restaurants, cafe's and bars that you can walk to while enjoying the beach environment. There are a few shops and restuarants at the entrance to Coronado, including El Rey 24 hour supermarket, but this commercial strip is a mile or two back from the water so it takes the beach lifestyle and ambiance out of the shopping and dining element.

Above: Contadora offers gorgeous turquoise waters with excellent snorkeling.

Isla Contadora is best accessed by plane which takes roughly one hour from Panama's domestic airport in Albrook. The island's main attraction is the pristine white sand beach and turquoise water. If you are looking for a postcard island getaway, this is your place. The island is tiny, however, with a very small population so don't go expecting a row of shops, restaurants, bars, or services. The surrounding islands in the Pearl Island Archipelago, while beautiful, are practically uninhabited apart from small fishing villages. New resort projects are planned on some of the lesser known islands for those looking for an isolated yet gorgeous island getaway to call home.

Above: Boquete enjoys a temperate highland climate among gently rolling hills.

Boquete is a lush valley surrounded by rolling hills and mountains, including Volcan Baru, Panama's highest point. The highland climate convinces many expats to immediately start wiring money in an effort to secure their retirement dream home. Flowers, fruit trees and coffee plantations dot the landscape with streams and rivers around every turn.

The only drawback here is the significant cloud and rain felt for about seven months per year (May - November) although the mornings tend to be clear and sunny. Boquete has developed somewhat of an expat community and the town is undergoing a serious facelift with new restaurants and shops being added. Not much in the way of nightlife here though and David (the nearest larger city) is only slightly more exciting after dark.

Above: Bocas is a boaters paradise with many homes built over top of the calm Caribbean waters.

Bocas Del Toro is basically the only established tourist destination on the Caribbean side of Panama. Bocas town is located on Isla Colon which connect to Panama City via a one hour flight. Bocas is a great place for boaters, the locals all get around from island to island by boat and sailors can take refuge in one of the nearby marinas.

Bocas town has a funky beach ambiance, primarily frequented by backpackers and eco-minded vacationers. Nightlife can be fun here although selection is limited. For retirement, however, the area lacks a lot of basic infrastructure... grocery selection is poor, health care services are rudimentary, and Internet is slow. Bocas receives more rain than anywhere in Panama, which takes the fun out of most boating adventures.

Above: Sweeping countryside and ocean views characterize the area around Sora.

Sora/El Valle are actually two separate villages located in the highlands 75 minutes and 90 minutes west of Panama City respectively. El Valle is the larger of the two, but still has under 5000 inhabitants. Both areas are naturally beautiful and Sora offers sweeping views to the Pacific Ocean and beaches which are about 25 minutes down a winding mountain road. Both areas have a very rural feeling without much to offer in terms of shops or services. If you find this drawback to be a common running theme among Panama's resort communities, it is, and the result is that expats and retirees looking for urban infrastructure and amenities gravitate toward Panama City.

We hope you've enjoyed this preview of Chapter 4 - Panama's Resort Communities.

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Preview of Chapter Five

The Basics For Expats

Language, Society, Visas and Banking

 

Most Panamanians speak at least some English... right? Uh... not exactly.

The reality is, "most" Panamanians do not speak English, not even a little English.

Sure, your hotel receptionist, your banker, your lawyer, and your real estate agent will speak English.

But chances are, your taxi driver, your maid, your neighbor, the bank teller, the person at the supermarket checkout, the plumber, the cable guy, and 90% of everyone else in Panama will not be able to converse in English.

If you don't speak Spanish, the language barrier represents the single biggest challenge for you to overcome in order for you to enjoy your time in Panama. And if you think listening to "Learn Spanish in A Week" while on the plane to Panama will give you the basics you'll need to get by, you are in for a big surprise.

In Chapter Five of the Panama 101 E-Book, we go over some tips and pointers about how to learn Spanish for real, and why it is so important that you make a serious effort to speak Spanish.

Above: Yes, that's legal. And you'll learn to crave what he has inside those coolers.

Here are some other common misconceptions prospective expats have about living and investing in Panama:

"I can just walk into a bank and open a bank account"

"It's so hot down there, I'll just bring shorts... surely everyone wears shorts."

"It doesn't matter which lawyer I use, they all know the law and work basically the same."

"With all my investment income, I should qualify for the pensioner's visa."

"Panama is tax free. I won't have to pay any taxes on my income or my investments once the money is down there."

"I'm sure the cost of living must be dirt cheap, I'll save a fortune by moving to Panama."

Above: Panamanians are a very diverse mix of people. In a typical Panamanian scene, you'll see a Kuna indigenous woman like the one pictured above dealing with a banker in a suit, while a farmer sporting a Panama hat drives up in a luxury SUV.

Probably the most common questions we get are related to Panama residency visas. This is the ID card you get when you successfully apply to become a Panamanian resident. There are several different ways to get one and there is a lot of conflicting information out there about the requirements, the application process, how long it takes to get one, which one you should apply for, etc.

In the Panama Free Report, we explained why you shouldn't apply for the small business visa, because your employees are now tied to your visa application, making it almost impossible to fire them without ruining your visa process (and they know this). In the full version of Panama 101, we cover each visa in more detail, giving you the facts you need to make an educated decision.

We also go over some of the cultural idiosynchrosies that can make your life or business in Panama very difficult. In Panama 101, we give you a "heads up" on what to watch out for when things aren't working out for you, and the best way to go about solving your problem.

Above: Watch out for these buses... they're called diablos rojos (red devils) and they don't yield for pedestrians.

Here are a few "BIG MISTAKES" many foreigners make in Panama, without understanding why it is a mistake:

- the neighbor invites you over for lunch, but you already had lunch, so you politely decline his offer

- your lawyer says he can title your "rights of possession" land, so you go ahead with the land purchase

- you call the electrician to make an appointment for next Wednesday, you are surprised when he doesn't show up

- you sign a real estate purchase contract that is written in English

- you try to fire your maid for theft, and you assume you won't have to pay "severance".

We all make mistakes, that is part of life. Our goal is to help you minimize your mistakes so you truly do find the lifestyle and investment you are looking for in Panama without losing your Hawaiin shirt in the process.

We hope you've enjoyed this preview of Chapter 5 - The Basics For Expats.

 

 

Preview of Chapter Six

Buying Real Estate in Panama the Smart Way

The Complete Guide to Finding and Securing Your Property

 

Whether it's a luxury beachfront condo, a secluded mountain getaway, or an inner city historical building, there is something for everyone in Panama.

There are also plenty of opportunities to lose your shirt, and yes, we're talking about that hawaiin-style shirt with a palm leaf print that you bought especially for your new Panama lifestyle.

With the construction crane considered to be Panama's new national bird, it's getting more and more difficult to seperate the good eggs from the bad ones... the solid investments from the bottomless pits.

Artistic renderings, slick web sites, and chatty sales reps make the allure of buying property in Panama all the more enticing.

But how can you be sure the "rendering" will resemble "reality" at some point in the not too distant future? How do you know that the land the cousin of the taxi's driver's brother-in-law pointed out to you from the motorboat is really yours now, or that it was even his to sell in the first place?

With so many people looking to cash in on Panama's real estate boom, a few poor souls are bound to get the "yuca", Panama's slang term for getting ripped off. And in Panama, one who delivers the "yuca" is actually considered by his or her peers with a touch of envy if not full blown heroism. For your Spanish lesson of the day, a yuca is a starchy root vegetable grown in Panama and other tropical nations which may be distantly related to the turnip or potato.

Above: Construction cranes abound in Panama City as thousands of new condos go up to meet the frenzied pace of demand from buyers around the world.

 

Above: A fixer-upper in Casco Viejo, Panama's historical district, begs for TLC... diamond in the ruff or rotton apple?

In Panama, don't look to the consumer protection agencies, the justice department, or your government's embassy for help. Chances are, if there is a problem with your investment, you'll have very little recourse. Your best bet is to properly research your property beforehand and get some reliable and impartial legal advice to represent your interests.

And therein lies one of the biggest challenges for doing business in Panama, securing reliable and impartial legal advice. Not all attorneys in Panama were created equal... far from it. Finding a good attorney in Panama is like looking for a mango under a mango tree, most of them are rotton, and you have to turn the good looking ones over a couple of times to see if any bugs got inside. What makes things even more challenging is that the honest and trustworthy attorneys are not necessarily the most effective.

The best way to secure a good law firm in Panama is to go with a recommendation from someone you know and trust. Larger firms are not necessarily to be preferred over small ones, but "discount shopping" when searching for legal advice is highly discouraged. This is not an area of your life where you want to be cutting corners.

Referrals from established organizations like the Pan-American Chamber of Commerce (PanAmCham) can be a good starting place, and talking to other expats can be another good reference as long as they are not somehow expecting to gain from the transaction. Panama is a small place and bad news travels fast... if an attorney has taken advantage of an expat, chances are the whole community knows about it. In the full version of the Panama 101 E-Book, we identify a couple solid law firms with excellent reputations.

Above: Panama's Pacific coast attracts ambitious residential projects in a stunning natural setting.

Assuming you do have a good attorney, there are a few other pitfalls to look out for. There are several different types of property ownership in Panama, not all of them are "titled ownership" which is the safest form of ownership in Panama. A few types of property ownership are riddled with risks and uncertainties and should probably be avoided.

Foreigners often get roped in to this type of ownership because the price is so much lower than a comparable titled property. Panamanians tend to be smart business people; if a price seems too low, there is a reason for it. In Panama 101 we offer a breakdown of all the different types of ownership and restricted ownership zones within Panama to help you distinguish between them all.

In Panama's current pre-construction bonanza amid tightening global credit and rising inflation, we wouldn't be suprised if some 20% of projects currently pitched on the market never get built. If we're right, a lot of deposit money will be at risk in the next few years and you don't want your investment to be among the pile of losers.

While there is no sure fire way to guarantee your builder will deliver, the best way to guard against construction risk is to buy something finished. In this way, you know exactly how much the bank will finance and you know with more certainty what it is that you are buying. If you must buy pre-construction, ask to see previous projects completed by the developer and ask to see their building permit. A solid track record is worth paying a per-square-foot premium over a start-up company with little or no development experience.

One of the biggest mistakes a foreigner can make is to jump in head first for what appears to be an outstanding, below market deal. While these deals do exist, they are usually found by someone in the know and not advertised blatantly hoping for a sucker to take the bait.

As any experienced real estate investor knows, the source of the information leading to a good deal is an excellent indicator as to the validity of the opportunity. Good opportunities can take time to uncover. Be patient, talk around, build relationships, and always do your due diligence before signing any contracts or handing over deposit money.

Above: A dramatic sunset evokes wonder along one of Panama's many undeveloped coastal hidewaways.

There are different practices and procedures for conducting due diligence for different types of properties. Condos require a different form of investigation than raw land. Beachfront property has unique risks that must be considered and island property in Panama is the most challenging of all from a legal standpoint.

While your attorney should be able to do the appropriate investigations, our experience has been that attorneys can make mistakes, overlook questions, or simply not know what to look for (or not care). At the end of the day, you are responsible for the security of your investment and that means going in armed with as much knowledge and information as possible.

We hope you've enjoyed this preview of Chapter 6 - Buying Real Estate in Panama the Smart Way.

 

Preview of Chapter Seven

Rental Income and Property Management

How To Successfully Rent Your Panama Property

 

Renting a property in Panama can be a big headache for a few different reasons.

First of all, there is a lack of qualified property management companies out there, especially if your property is located outside Panama City.

Second, there is no centralized system for listing your property for rent. This means you may have to use multiple advertising services and/or rental agents, to try to get the word out about your property for rent.

Which of these methods will actually work and how to go about advertising your property for rent is something we cover in more detail in the full version of Panama 101.

Two Types of Rentals

Before you consider advertising your property for rent, you need to consider whether or not you want to rent out your property on a long-term basis (usually six months or longer) or for short-term periods (less than six months, and in some cases weekly or even nightly). If you decide to rent your property for a longer term, you may not need to provide appliances or furniture for the tenant.

If you want to rent your property monthly, weekly, or nightly, prospective guests will expect a fully furnished property complete with appliances, kitchen utensils, bed sheets and anything else they might need during their stay. Obviously, which style of rental you offer may depend on whether or not you yourself plan to use the property in the near future and if you have already purchased furniture, kitchen appliances, etc. In Panama 101, we provide a list of contents your property should contain if you plan to rent it on a monthly, weekly, or nightly basis.

Above: Nicely decorated properties that show well on the Internet are bound to fetch a higher rental rate.

 

Panamanian Government Regulations

If you plan to rent your property on a long-term basis, the Panamanian government has strict rules as to how the deposit money is supposed to be handled and a property owner can be in trouble if these rules are not honored. Another question we cover in the Panama 101 is how the Panamanian government taxes rental income and how to ensure you are in compliance with the tax law.

 

Assessing Rental Demand and Advertising

Another challenge related to renting your property is knowing what kind of demand exists for property rentals in Panama and how much you should ask for rent. Since there is very little market data to go by, smart property owners will spend some time researching the market to see what other property owners are offering and talking to property managers in the area where their property is situated. There are a handful of different property rental web sites that may be useful as research tools and potentially as advertising tools, all of which are listed in the Panama 101 E-Book. Posting notices in popular hotels, cafes, restaurants and other local establishments can also be effective.

 

Above: A nice selection of art and enhance the perceived value of a rental property and make it more attractive.

 

Use of Photos

One element we find constantly overlooked by people interested in renting their properties is the inadequate use of photos. Whether you are advertising on the Internet or posting printed flyers, a photo is literally worth a thousand words. Photos are a critical element to attracting a tenant, and yet, all too often we see advertisements with only one small photo, or a few photos that don't really show the property very well. A good rule of thumb is to use LOTS of photos and make those photos LARGE.

People want to SEE exactly what they are getting into... many prospective tenants fear that a place will actually turn out to be a dump so providing lots of photos helps to put their mind at ease. As obvious as this sounds, time and again we see very poor use of photos on the Internet and in flyers. In today's age of digital cameras and laser printers, the use of large, clear, high resolution photos is the best way for delivering almost any "for rent" advertising message.

Above: Seletion of furniture can make a big difference toward attracting a higher-end clientele.

 

Selecting A Property Manager

Professional management vs. unprofessional. Good property managers in Panama are few and far between and the good ones charge a reasonably high fee. In our opinion a good property manager is worth every penny... just think of the list of things that can go wrong while your property is rented while you are most likely out of the country:

• your tenants walk off with some of the items in your property
• your tenants arrive, but the person who is supposed to have the keys is unavailable
• a toilet overflows, the power goes out, the computer crashes, there's a mouse in the house... you get the idea.
• your tenants damage the property, but a security deposit was never collected so you are liable for the expense

The difference between a good property manager and a bad one is, a good manager will simply deposit the rent money into your account, deduct the expenses, and take care of any problems before you hear about them (no news is good news). A bad property manager needs your help to solve problems that should have been avoided in the first place. Consult Panama 101 for a list of good property managers.

We hope you've enjoyed this preview of Chapter 7 - Rental Income and Property Management.

 

Preview of Chapter Eight

Six Spots Overlooked by the Speculators

Uncovering Fantastic Real Estate Deals in Panama's Next Hot Spots

 

When I stumbled on Boquete, a quaint coffee farming community, back in the spring of the year 2000 alarm bells started ringing in my head.

Several indicators told me that real estate prices in this part of Panama were going to explode.

The only trouble was, I really didn't have any capital back in those days. The best I could do was to start building a web site as a tool to tell others about this place and panamaatyourservice.com was born.

At that time Boquete was my main focal point and as Panama's international exposure evolved I eventually started covering other areas of the country.

As anyone who purchased property in Boquete back in 2000-2001 will tell you, prices have since gone through the roof. Most Boquete investors would have made five to ten times their money (at least) over a three to five year period.

In fact, Bocas Del Toro went through a period of dramatic price increases even before Boquete did. A few years later, Panama City had its wave of big price increases in 2005 - 2006. Any investor who was even one year ahead of the curve by investing in any of these places before the boom could have easily doubled or tripled his or her money.

Of course, real estate worldwide went through a giant leap of gains and there is no guarantee that process will continue at such an alarming pace. However, the fact that real estate in some parts of the world today is priced too high, and is or may soon experience a drop in value, makes it even more important to look for investments in places that offer real value... places that hardly budged through the whole global real estate mania that ocurred over the last three to four years.

Above: No highrise towers or snazzy resorts yet on this undiscovered beach hideaway!

That's right, there are places in Panama today, where real estate prices have barely budged. These are spots where the speculators didn't bother to look because the area was not blasted all over the Internet or it wasn't mentioned by any of the big media players. There are places in Panama today that still hold real value... places that are not over-built, over-leveraged or over-hyped. In the full version of the Panama 101 E-Book we identify six spots completely overlooked by real estate speculators and international investors.

But where are these places and how would I know for sure that they are THE next places to boom? Well, nothing in life is certain, especially when it comes to investing. However, one advantage your author has is that I know what things were selling for in some of the hot areas before they became "hot". I know the baseline values established by the local Panamanian markets. There are places today that still share those original baseline values.

The other advantage I have is I have been to all of these places and seen what has happened over the years. I've watched areas boom, one after the other, not only in Panama, but all over the world. There is a common occurrance in the world whereby warm, tropical and beautiful locations slowly but surely become "discovered". Yet, by the time most of us discover it, it is already too late to find a bargain.

Back in the year 2000, almost nobody believed me when I said certain places in Panama had boom potential, least of all the Panamanians themselves. I wrote an article back in 2001 announcing my views and you can read it here.

Above: The Panamanian wealthy class own massive estate homes in this highland paradise, yet prices are still reasonably low due to lack of international media and Internet coverage.

The reality is most people, Panamanians included, had NO IDEA that people from all over the world would invest millions of dollars into one of their humble fishing villages. NOBODY EVER expected that a struggling coffee community would be considered the world's number one retirement haven. No one had a clue that a tiny village that just happens to have a SURF BREAK, would also make a prime location for million dollar beachfront estates.

The point is, there are places TODAY that have practically the same attributes, the same potential, and the same benefits as those high-priced areas had before they became high-priced. These are places where ten acres of land with ocean view only minutes to the beach sells for $75,000. In one safe, comfortable community, a two bedroom house will set you back $50,000. If you want more land, check this highland community and scoop up 200+ acres of beautiful, lush farmland with a cool highland climate and year round stream for under $200,000. Home sites one of these prime areas, 20 minutes to all the new golf and beach resorts sell for just $25,000.

If you are looking for bargains like these though, you won't find them by searching the Internet. Why not? Because no one BELIEVES that any foreigner would want to buy property in one of these overlooked areas. There is no point advertising a property on the Internet if the only potential buyers you can expect are local farmers and fishermen.

Above: This is how real deals get discovered in Panama (no english signage, no web address, and no global real estate brokers to market this stunning ocean view lot).

 

If you want to find deals like these, you have to know where to start your search. In Panama 101, we've identified six areas that are poised to "pop". If you don't believe me, come back to me five years from now and if real estate prices haven't tripled in every one of these six spots, I'll give you three times your money back for every dollar you invested to purchase your Panama 101 E-Book.

I am only half-joking here. As amazing as it sounds, most people believe a place needs to have something special for tourists to take note and real estate prices to really take off. Actually, one of these "special" characteristics is the fact that there are no tourists or overbuilt resort complexes to be found! Yessiree, it a lack of hotel and resort development and a lack of tourism that is one of the most important "special traits" a place needs for prices to really go sky high. Apart from a lack of tourism development, an area only needs sheer tropical beauty and friendly easy-going locals to become the world's-next-great-but-undiscovered retirement haven!

Eight years ago, there was nothing overly special about Boquete. It had the natural beauty and the easy-going locals, but there were no tourist facilities, no golf courses, no coffee shops, no gated communities, no international cuisine, and no tourism services of any kind apart from one river rafting adventure company that closed down for half the year. A few smart investors at the time said, "perefect, just what I am looking for".

Above: Panama is blessed with a lot of nicely paved roads leading to nowhere in particular. But is this the road to nowhere, or the future road to riches?

Local property owners in undiscovered areas are not real estate speculators. They are selling their property because they don't want it anymore, and they would prefer cash instead. They don't want to wait or "speculate" that a new resort or golf course "might" happen at some unknown moment in the future, they want their money today.

But wait, you might say, isn't it wrong to buy up all the property from the locals and later turn around and sell it for a fortune? Isn't there something wrong about these foreign invaders? Isn't it bad for the environment, the culture, and the social fabric of these communities? These are good questions for those of you who want to do the right thing and who care about more than just money. I respect people who think outside of their own self interests. In Panama 101 we address some of these issues head on.

In our view, it is not wrong to purchase land from someone who wants to sell it, what matters is what you do with the land after you buy it (and that part is up to you). Now go ahead and order our E-Book and find out for yourself where these six spots are that are overlooked by the speculators. Our E-Book is paper-free and no trees were cut down to print it!

We hope you've enjoyed this preview of Chapter 8 - Six Spots Overlooked by the Speculators.

 

Click Here to Order the Panama 101 E-Book

 

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