Buying Land To Develop In Central America

There are two main investment strategies for buying land in Central America. The first involves purchasing a large parcel, generally with limited infrastructure. The aim is to subdivide the property and sell off smaller lots to end-users. These are typically serviced at a minimum with water and electricity. The second investment strategy is to purchase vacant lots within a real estate development, preferably with some infrastructure already in place. Then the buyer either builds houses on the lots before resale, or flips the vacant land once development has moved forward, making a profit.

The ‘Path of Progress’

The most important thing in either approach is to choose the right location for the land investment. Central American markets are generally less developed than US markets, so you want to position yourself in the ‘path of progress.’ Local trends are important. This includes finding out whether any infrastructure improvements are planned, or if tourism is on the rise. For example, the airport at David in Panama is undergoing expansion in order to accept international flights. The government in San Juan del Sur, Nicaragua is expanding port facilities in order to accept more cruise visitors. The road that runs the length of the peninsula in Placencia, Belize has recently been paved. All of these are positive signals for developers looking for maturing real estate destinations.

No MLS in Central America

Central American countries do not have an MLS, so investors need to do their own legwork to see which properties are for sale. They need to seek out all real estate agents in the market they’re interested in to build a local network of contacts to supply them with information.

Data is hard to find

Official property data is not available in Central America, so it’s difficult to determine whether something is a good value. There are a few sites popping up online, such as Reveal Real Estate, which will provide some analysis, but you’ll have to compile most of the date yourself.  They show that Nicaragua real estate has a lower price point than real estate for sale in Belize, Panama or Costa Rica.

Protect yourself with due diligence

Before you risk your money, hire a competent attorney to dig into the property’s title history. It’s also a good idea to speak with local planning authorities about your development plans, verify water sources and electricity provisions, and whether any improvements are needed. Make sure that your money is enough not only to cover the original purchase, but also any improvements that might be required.

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