The Next Costa Rica, Part III: Your Own Getaway in Paradise--Hassle Free

Dear International Living Reader,

Yesterday, I told you about a good opportunity to buy an oceanfront lot on Nicaragua's Pacific coast...a place to build your own beach house in paradise.

The thought of building in another country, though, can be daunting--finding an architect and a builder...managing the construction process...selecting the finishes...dealing with problems long distance. Maybe this isn't something you're ready to take on.

Now, in Nicaragua, you don't have to.

Developers are seeing that there is a market for turnkey units, and new development projects have recently come online to accommodate buyers looking to invest in a second home on this country's coast...but not interested in building themselves. Of course, you won't be getting a custom design with all the little features you might like to have. Most builders offer one or two models to choose from for economies of scale. In some cases, you can select custom finishes, but you'll pay for that privilege.

One of the new turnkey developments I want to bring to your attention is situated just outside San Juan del Sur. This little resort town was an important tourist destination for both Nicaraguans and foreigners before the Sandinistas. Today, it is trying to re-establish its position on the tourist's itinerary. Recently, a high-end hotel opened up on a hill overlooking the bay. From all accounts, the hotel is usually full, and the level of service is excellent (I had lunch there a couple of weeks ago). Right now, though, this is the only place catering to better-heeled tourists. Which means there's a hole in the market.

To fill this niche and to provide high-quality second homes for lot owners, the development known as Villas de Palermo is building turnkey units that fall under Law 306 (the country's tourism incentive law). Each villa will be a two-bedrooom/two-bath two-story unit with 1,600 square feet of construction. Under Law 306, owners will be able to use their units themselves for up to 30% of the year, but the remainder of the year, the villas must be in the rental pool. In return, owners pay no property taxes for 10 years and enjoy an 80% reduction in income taxes for 10 years. The developer is putting in place a management company to market and manage the villas as rentals.

The property itself is about five minutes from San Juan, situated in low hills that allow for open views to the town and the bay. In fact, the views are better from this property than from within town. And the developer building these Villas de Palermo owns the surrounding land, so future development should be with an eye toward preserving the views.

Using the developer's figures (which I believe are conservative), the projected cash return from income, assuming owners use their full 30% of time, is around 4%. Calculate in the value of the owner's usage, and the return jumps to 15%.

The first phase of this development is already sold out. Prices have gone from $139,000 to $149,000 for Phase 2…and the developers have plans to raise prices $10,000 every seven units, depending how quickly the properties sell. At $149,000, these are a good value, so don't wait long before following up.

For more details, contact the International Living office in Nicaragua at Nicaragua@internationalliving.com

Regards,

Lief Simon
Real Estate Editor, International Living

P.S. There's another turnkey beach house opportunity you should know about right now. Details tomorrow...