When I first visited Nicaragua in 2002, purchasing real estate was not on my mind.  My plan was to learn how to surf in San Juan del Sur, climb a volcano on Ometepe Island and visit the colonial town of Granada. 

But three days after I arrived I was touring real estate and making offers.  The prices were unbelievable, the hype from Costa Rica was spilling over the border, and the beauty of the country mesmerizing.  A week later I signed a contract on an ocean view lot in a master planned community on the Pacific Coast and left a deposit with the developer.  

I'm happy to say that things turned out fine with the investment.  But it’s clear to me now that I had a serious case of ‘land fever’ - a highly contagious condition that affected many during the boom years.  I didn't take the time to understand how the market worked before I purchased.  I was lucky.

We shouldn't rely on luck when we purchase real estate.  Since 2002 I’ve moved to Central America full time, invested some more, and spent a lot of time studying the mechanics of the market and discovering how things really work in practice. 

The three things I should have known when I first purchased

1. 1) Official property statistics are not published in Nicaragua.   No one knows with any real certainty how many properties there are for sale, how many have sold during a particular period of time and what sales prices were paid.  (It’s not just Nicaragua; the same goes for Costa Rica, Belize and Panama).
2. 2)  ‘Open listings’ are the norm and duplication of listings between rival real estate agencies is common.  In fact many brokers do not have signed listing agreements with sellers. As a result listing information presented online is often vague and of low quality
3. 3) Brokers in Nicaragua do not have to undergo any training or qualification and their practice is generally unregulated.  There is a governing body for the real estate industry but most are not members.
   

Had I known this in 2002 what would I have done differently?

• I would have built a spreadsheet of asking prices for the main real estate categories in order to build my own comparative market analysis and start to get at the question of value.
• I would not have given my escrow deposit direct to the developer but to a third party.
• I would have taken out title insurance on my purchase.
• I would have toured with every broker who was active in my target region to be sure that I saw everything that was on offer.
• I would have chosen a lawyer who spoke English.
• I would have started the aggregation site for real estate in Central America that I'm currently working on much earlier than I did.

Proceed with caution
Nicaragua still offers great opportunities for real estate investors.  In fact the economic slowdown is teasing out some deeply discounted opportunties and developers are going to great lengths to woo buyers.  But take the time to understand how the market works on the ground, be prepared to do your own legwork, and proceed with caution.

©Claudia Gonella