Don't get caught in the international development trap!
One of the most common concerns when it comes to investing in international property is the simple fear, “What if it doesn’t turn out to be what I expected? I know investments can be risky, but how do I know that this property will be built on time?
Will it be developed according to the plans?
Will it actually look how it appears in pictures?”
It is vitally important to do diligent research when working with a developer in foreign countries. Worst-case scenarios range from your entire investment being lost to ending up with an empty piece of land in a “community” that will never actually be developed.
To avoid becoming one of the horror stories of international investment, read on. The Unfortunate Scenarios A few years back, an individual invested hundreds of thousands to purchase a condominium in a development on the coast at a fair price. He assumed it would be developed, with roads, a swimming pool, and a clubhouse facility based on the price that he paid and the promises of the developers. Years passed, he visited the property and was shocked to find that he was actually the owner of simply an empty lot.
The condominiums had not yet been constructed, nor had the roads or other infrastructure been built. Water main leakages were common, and the electricity was wired through carelessly constructed poles and cables. Promises of building soon to commence cannot placate that anxiety, fear, or anger when expectations have been formed and investments have been made. This scenario has happened countless times, and due to binding contracts, the individual is stuck making monthly payments on something that is the opposite of what was promised. Another unfortunate scenario can unfold if you don’t have someone checking on the property consistently.
If you don’t have a connection with a real estate agent or manager who can monitor the property, there is the possibility that somebody could become a squatter on the property and, after a year of living there, assume squatter’s rights. After that, you cannot retrieve the property. We illustrate these examples to show you that bad investments can happen, especially if you aren’t practicing due diligence in your investment research. If you aren’t working with a knowledgeable individual, you could become victim to the handful of greedy developers who only want your money and don’t want to build something that will generate a return on your investment.
How to Avoid the Horror Story
First of all, if you are working from your home in Canada or the United States to locate and acquire a foreign property, it is recommended that you work with a real estate agent who is on the ground in your desired region. In Ecuador, it is ideal when the agent speaks English but also has connections in the Spanish-speaking communities. Agents can introduce you to a wealth of properties only listed on licensed agent sites. They have access to countless properties with a myriad of purposes: farming in the country, renting in the city, or relaxing at the beach.
If you are working with an agent, make sure the agent has positive reviews from previous clients. If you take your time to select the right agent, the right agent can help you locate and purchase your ideal property. Then, once you have the property and are satisfied with the purchase, you can work with your agent to develop your ideas and transform the property into a renter’s paradise, a thriving farm, or a dream vacation home.
Things to Know about Investing in South America
Unfortunately, just trusting intuition is not enough when it comes to foreign investments. Language is a factor; many real estate listings have one price for the Spanish site and a different price for the English price. There are also lots of beautiful promises: the allure of a development on the coast, or a community of condominiums in the city. But it is vitally important to know who is developing the community and what their track record is. Never buy sight unseen, no matter what the developer promises.
Time does work differently in South America. For Ecuadorians, it is not strange to be a few hours, days, weeks, or months late on promises. It is part of the culture, and something to eventually embrace, but when purchasing a property it is important to choose developers who will stick to their schedule as closely as possible. Also, you must be diligent with the contract that you sign with developers. Read it carefully and work with a licensed individual to make sure that you have protections if the project is not being built on schedule.
There are obviously risks involved in any investment, but you can circumnavigate many of these risks if you work with a licensed real estate agent who understands the culture, the region, and the people. If you are interested in learning about the diverse properties in all regions of Ecuador, you can contact John Vollmecke, owner of Ecuador Homes and Land. With his experience and credentials, he will honestly assist you in the process of buying your new property.
DO NOT LET YOUR DREAMS TURN INTO NIGHTMARES!