A quite common strategy in real estate business is what is called “house flipping”. We are talking about a strategy in which someone buys a property only to resell it in the short term, which is usually a few months or a year.

This flipping makes sense in some markets where the cost of properties is low, but in some jurisdictions that is not the case. That is where we find the option of buying pre-constructions.

Pre-construction projects in real estate are both convenient for developers who can achieve the cash flow for funding current and future projects, and the investor can have access to better prices or financing options.

If you are into the house flipping strategy through a pre-construction plan, there are things you need to keep in mind. The pre-construction option works very well if you are able to sell the property before having to make the final payment and before the property is completely built. However, if you are not able to sell and you don´t have the cash to close the property deal, you may end up losing everything.

I have consulted with one of our real estate experts in Mundo team and asked her for advice. In general, what my expert told me is that she does not recommend entering a pre-construction plan if you don´t have the cash to make all the payments and properly close the deals. Save the cash you have and enter a financing option so you can invest in the property without investing your cash reserve.

In this article, we present our Panama Property ladder, in which we explain the advantages of creating a property portfolio through a combination of financing and pre-construction deals.

And, indeed, Panama is one of our favorite jurisdictions for real estate investment for several reasons.

Panama´s value as a real estate center

The opportunities of investment in Panama are unique.

Since Panama got the full ownership of the Canal, in 1999, it has grown tremendously. They had to find a way to replace the cash flow and they did. With the implementation of interesting (actually, the right word is unique) residency options, they managed to attract many talented people from countries such as Argentina, Brazil, Uruguay and from Europe and the US.

Some of these residency programs include the Friendly Nations visa, the Panamanian investors visa, the reforestation visa and pensionado visa. Especially Panama became very appealing for its Latin American colleagues who found here a stable, dollar-based economy that could save them from the constant currency fluctuation and economic nightmares of their homelands.

But this was not it for Panama and the government released a very interesting program that attracted baby boomers especially from the United States. With the pensionado visa, any person that can prove to have a 1,000 dollar-a-month pension for life can achieve residency. In fact, besides from getting easy residency, retirees have access to enormous discounts in transportation, medication, entertainment, and other areas. Thus, Panama becomes a cost-effective option for American retirees who can find a much better life quality in Panama than with Uncle Sam.

Actually, we at Mundo offer a great real estate option which we have covered in another article, with a special program great for baby boomers. This project is called Generation Tower.

Another excellent residency program offered by Panama is the Panamanian investors visa, through which it is possible to obtain residency by establishing a 160,000 USD business in the country. This can be basically any business except for those that are exclusively reserved for Panamanian nationals (lawyers, doctors, and retail sales).

The Panama business is required to hire at least 5 Panamanian employees for each applicant, which have to be properly registered in the Social Security system and have to receive a salary of at least the minimum wage stipulated by law.

This program has certainly contributed to the establishment of business and the financial development of the region.

World class business center

Panama´s government were also smart enough to attract foreign companies and investors. The country has an exceptionally good location, being the bridge of the Americas, and they have been able to take advantage of this.

Today, Panama is home to more than 150 multinationals which have their regional headquarters here. These companies obviously hire hundreds of people both local and foreigners. And these foreigners need a place to live, which also makes the real estate market even stronger.

Panama also has another incredible advantage which is one of the most important engineering works of the last century: the Panama Canal. This beautifully designed project generates more than 2.6 billion each year, income which is invested in the country´s infrastructure. The government is constantly investing in projects such as highways, hospitals, transportation (like the metro) improving the quality of life and attracting even more investors and foreign talent.

We, at Mundo, love Panama and have recommended it as an investment center and especially as a real estate market for a long time. Today, with the pandemic situation, new opportunities have opened up for those who want to develop their real estate portfolio.

Since 1999, Real estate in Panama has grown on a continuous way. Now, the preconstruction market is very competitive and firm and, if you find the programs that are just being released, you are likely to find excellent deals and low prices.

There´s a developer in Panama, with 20 years of experience, who is now offering medium-term financing for some units in some of his buildings. This is a unique opportunity.

Also, our favorite developer, the Bern family, who have been in the real estate market for over 30 years, offers interesting deals available through Mundo.

Luckily, Bern´s best realtor has agreed to join us in an interview and explained the opportunities for investment in Panama. She also described all the projects and financing opportunities one by one.

In Panama, investors have generally focused on the upper end of the market, and lately a new niche has been discovered in the Panama real estate sector.

Many international companies choose to establish in Panama thanks to its business incentives and free zone regimes which offer excellent exemptions and advantages. You can read in detail about the advantages of the free zone in our Panama Country Page.

These international companies obviously hire foreign personnel and they need to be allocated somewhere. This has created a new need that needs to be filled and the investors in Panama real estate can greatly benefit from this. These people cannot afford luxury million-dollar apartments in the Cinta Costera, but they are looking for decent housing and apartments in central locations of the city, where they can easily access the metro, the office, or the schools. Investing in these types of properties will surely bring high returns and great benefit.

Contact us and start building your property ladder

To sum up, Panama, even during the pandemic´s nightmare, while other countries are seeing their economies sink every day deeper and deeper, still has a lot to offer to local and foreign investors.

The outlook for Panamanian real estate 2020 presents unique opportunities which you cannot miss. Contact us and find out the property deals we offer for Real estate in Panama. Let the land of birds and butterflies be your new home, or at least the home for your property ladder.

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