Some investors opt to purchase lots of land and then build their own home. While this is feasible here in Nicaragua, due to relatively inexpensive costs of land, labor and supplies, it is by far the slowest way of moving into your dream home. Red tape and bureaucratic hurdles will slow you down considerably. Another major consideration before doing this is land accessibility to electricity and potable water. If your lot does not have electricity and drinking water, don’t expect the government to hurry to accommodate you. There are many others already waiting in line.
Check out building codes and regulations in the area where you are planning to buy before putting down money. Sometimes what you hope to build will not be permitted. And once you have the property, you are better off getting a Nicaraguan contractor or lawyer who knows how to work the system to get your building permits for you. If you show your gringo face in the permit office, you might be in for a long road ahead.
If you plan to dig a well on your property, consult with technicians to make sure the well will supply enough water for the number of people who will live on your property, and that the well will last through the dry season.
An American is restoring this colonial home
Due to the electricity and water considerations – as well as road accessibility, sticky land title issues, limited cell-phone reception and other factors – many foreigners opt to either buy into a development project that will help them solve those problems, or buy a fixer-up to remodel.
Many foreigners who want to build a home here buy a plot of land that has been subdivided by one of the numerous residential development projects on the Pacific coast, or in Managua. Many of these projects already have the infrastructure in place (water, drainage, electricity, roads), and work with local architects and contractors, essentially walking you through the process.
Speculating
Nicaragua’s hot real-estate market has attracted lots of recent buyers who hope to purchase properties and flip them in two to five years for a nice profit.
But before speculating on a real-estate investment, we suggest you educate yourself by studying the Nicaraguan real estate market and practicing due diligence in your homework.
The market is ripe for speculation, especially in Granada and along the Pacific coast. Some investors have bought old colonial homes in Granada, invested $3,500 in a new roof and paint job, and flipped it for a quick $10,000 profit. Even if you buy an old house in Granada and sit on it for a couple years, you will most likely be able to sell if for a modest profit down the road, if current real-estate trends continue.
Still others have bought up properties along the Pacific coast and are waiting for the new coastal highway to go in before cashing in their chips.
Granada Vrs. The Pacific
One of the biggest dilemmas confronting real-estate investors looking to buy in Nicaragua is whether they should go for the colonial charm of Granada, or the sun and sand of the Pacific coast.
Both markets are smoking hot, with appreciation rates that have – in some cases – tripled in the last three years.
In Granada, it is currently hard to find anything available in the colonial sector for under $100,000, whereas three or four years ago you could buy a fixer-up for $40,000, or less. Foreigners are moving in fast and buying up homes. Construction is booming and the town is growing at a rate that is almost appears like a time-elapse still photography effect. They new mayor, Alvaro Chamorro, is committed to developing good relations with the ex-pat community, and is working to improve citizen security and infrastructure, while streamlining government and reducing the wait time for building permits.
On the Pacific, there are some 20 different development projects that have popped up, all since 1997. Some of these developments are selling turnkey homes and condos, while others are selling subdivided plots for construction. Plots of land in April ’05 (when this chapter was written) were selling for anywhere from $40,000 to $310,000, depending on size and location. The benefits of buying a plot on a development project are many: infrastructure, security, title insurance (inquire about this before you buy), water, electricity, phones, community, and a central office to help guide you through the construction process. In the case of the turnkey residential developments, you have all of the aforementioned benefits, plus you are saved the headache of building. The benefits of buying your own land for construction are that: 1) it’s cheaper, 2).more privacy. If you go it alone, however, note that all the burden of infrastructure, finding a water source, getting permits, finding an architect and building will be on your shoulders.
Another consideration on the Pacific coast is unclear property boundaries. On the Pacific coast, many of the lots don’t have what’s called a catastral number. In other words, the dimension of the lots have never been registered, which can lead to property disputes later on by neighbors who claim to have overlapping properties.
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