Over an Acre of Ocean View for $48,000

Saturday, Sept. 6, 2008

Read more about investing in foreign real estate in International Living Postcards—your daily escape

Dear International Living Reader,

I recently went on a retreat in Rancho Santana, Nicaragua, with members of my Real Estate Trend Alert group. We met here to review the results of my July scouting trips to Berlin, Brazil, and Panama.

While analyzing deals during our retreat I got distracted...even relaxed. Hard not to when this (picture above) was the view from our meeting room. Along the southern Pacific coast of Nicaragua are rocky outcrops and pounding surf…the ocean views are magnificent…both surf and swimming beaches are world class...and the sunsets here are the best in the world. I had forgotten how spectacularly beautiful this stretch of coast is.

There’s a reason that Nicaragua’s southern Pacific coast had drifted off my radar:

The property market in Nicaragua experienced two major setbacks in the last two years. First, the election of Daniel Ortega was followed by a nervous “wait-and-see” view of the market. The second blow came from the subprime crises and fears of recession in the U.S.; the real estate market in Nicaragua was dependent on U.S. investors, who rapidly dried up.

The market stalled.

This is the same Nicaragua I’ve always known and loved, where the people are friendly and warm. But there have been positive changes, such as improvements to airport terminals and to the road that takes you from Managua south to San Juan.

I travel a lot in my line of work (I’ve been to 14 countries in the past 12 months alone), and nowhere else do I savor the sights and sounds as I do here. Nowhere else offers me a complete escape from life’s stresses as Rancho Santana does. One Real Estate Trend Alert reader commented that he couldn’t live here… I’m not sure I could live here full time, either, as it is a bit too quiet and relaxing for my hectic lifestyle. But I like to spend as much time as I can here and to share the experience with family and friends.

As a real estate investor, I ask myself what will happen next for Nicaragua’s property market. Very little this year, in my view.

The market will come back, however…the question is when. Real estate like this can’t stay undervalued forever. On this coast, you can buy property for one-tenth of what you would pay across the border in northern Costa Rica...and just a small fraction of what you would shell out a mere five hours away in California.

It’s difficult to predict what will happen in the next few years, but I imagine five to seven years from now prices in Nicaragua’s southern coast will match those on Costa Rica’s northern coast.

Today, in the high-end resort community of Rancho Santana, $48,000 buys you an ocean-view lot of over an acre. Your neighbors live in houses like the one pictured above, and you can still buy in for a minimal fee—developer financing on lots is available at 2.9%. With building costs in the region of $65 to $85 per square foot, you can build a fine house in this haven of tranquility for $150,000. If you are looking for a quick flip, this market isn’t for you, but it’s ideal for long-term value or as a pure lifestyle purchase.

I have put an offer on an estate lot of over an acre listed for $48,000. If accepted, I plan to build in three years' time. Is my heart overruling my head? Maybe…well, probably…but then what’s wrong with allocating a portion of your portfolio to an investment you’ll truly enjoy? I’ll certainly enjoy it more than a new gas-guzzler.

If you wish to find out more about this relaxing community, go here.

Ronan McMahon

P.S. I am still taking in new members for my Real Estate Trend Alert service. We're heading back to Fortaleza, Brazil, Oct. 15–19, for our second RETA scouting trip along this stretch of coast. You can sign up today, just follow this link.

Editor’s Note: Full disclosure: Ronan McMahon is the director of Pathfinder, a real estate scouting and marketing company. Rancho Santana is a client of Pathfinder.

Read related IL Postcards:

- Nothing but Fun at Rancho Santana

- The Latest Scoop on Nicaragua

- Discovering Nicaragua’s New Value Play