Panama real estate has become attractive to many investors, but buying property in Panama isn’t without peril, and many first-time investors are left screaming after making a few poor decisions. Here are 12 mistakes to avoid when investing in Panama real estate:
1. Believing sellers and agents who say that you can easily resell a property: Real estate agents all over the world use this line to make property seem more attractive, but selling isn’t always as easy as they suggest. When a market reaches its tipping point, investors can quickly become desperate to get rid of their properties, and no one profits except the ones who got out early. I.e. the one who who used the ploy of an easy resale.
2. Buying a property without seeing it in person: In an age where online shopping is booming, purchasing property without seeing it with your own eyes may seem sensible and time-efficient, but virtual tours, photos, and “reliable sources” don’t mean everything. Photos can be doctored and a property can be portrayed in an overly positive light. Do your own due diligence, even if it means hopping on a plane. If you aren’t willing to travel to the spot before you buy, then you probably shouldn’t be buying in Panama at all.
3. Obsessing with beachfront property: First-time investors seem to believe that the dream property is a waterfront lot without considering how much maintenance and attention is required and without realizing how many investors later regret buying a beachfront property. Beachfront real estate in Panama—and in every other country—will always be a scarce commodity, but it won’t always the most sensible option. Before you become obsessed with the idea of living directly on the beach, consider properties near the beach, or with views of the beach. These properties are often less expensive and more practical.
4. Falling in love with the first property you see: There is a line from a Lil Kim song: “Love is blind, and it’ll take over your mind.” She was referring to a gangster she once loved who was shot 23 times, but the phrase also applies well to Panama real estate. Even if you think you have found your dream property, it is essential to shop around if only for the sake of comparison.
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5. Investing with a partner you don’t know extremely well: Passing acquaintances and “that nice couple from the U.S. that you met at the hotel” do not make good partners in real estate. A business partnership requires trust and shared ideas about the nature of the investment. Even if your partners turn out to be trustworthy, what happens when they decide to make poor decisions on your behalf? You’re stuck up mierda creek without a paddle. Be sure to keep good contracts and hire a good lawyer in advance.
6. Hiring a big-shot lawyer: Investors will frequently boast: “My lawyer is the oldest in Panama” or “I have the card of the lawyer to Ruben Blades.” Even if you have a well-connected lawyer in Panama, he’s most likely funneling your work to someone else. In most cases, it’s better to find a smaller firm who will work harder, charge less and provide better personal service. Connections are of paramount importance in Panama, but you’ll have more success if you create a real and reliable relationship with your lawyer rather than relying on a prestigious name.
7. Expecting continued good service from an agency/developer after purchasing: Panama may have a large Hospitality industry, but is not a customer-service oriented place. Once agencies and developers have their money, you will often no longer be prioritized as they focus on new clients and new paychecks. Make sure you have everything that you need before you pay.
8. Trying to go around an agent for a better deal: Panama is a small place, and word travels fast. You can be blacklisted very quickly if you try to go around anyone. If you plan to stay in Panama for a while or make a serious investment, playing dirty can come back on you further down the road.
9. Trying to do your own construction: It takes time to make the required connections for labor, permits and materials in Panama, and whether you’re building a large compound or a simple retirement retreat, you will save time and and money if you let an experienced developer do the job. If you really want to be part of the construction, then at least partner with an experienced builder.
10. Investing big money with a first-time developer: The construction boom in Panama City and other regions has brought an increase in the quantity of contractors, but not the quality. Many are unqualified, and with a lack of materials, labor, and buyers, many will make big mistakes or fail all together. Of course, even reputable developers make errors, but hiring an older, more established name will increase the odds of your success.
11. Assuming a project will be completed in the projected time: It is exceptionally rare for a construction project to finish on schedule in Panama. Without exaggeration, it’s best to allow for six months or more past the projected completion date. As revealed in The Panama Real Estate Report many projects in Panama don’t even come to fruition.
12. Waiting too long to invest: As mentioned above, being patient and conducting proper due diligence is crucial, but taking too long to invest can ultimately cost you just as much. In a booming area, a property may stay on the market for a year, but its price could double or triple in that time. Only consider Panama real estate seriously if your funds are secure and ready for the moment you find the right opportunity.