What You Need to Know Before You Buy

Sunday, August 12, 2007

Land sales are booming in Nicaragua, and chances are, if you mill around long enough in the country, someone will offer you a piece of property. No matter how tempting the proposition or how trustworthy the seller seems, use a real estate agent from an established firm to investigate and purchase property. Many properties in Nicaragua are in dispute, and having local knowledge and experience is enormously helpful in determining the legitimate landowner. Re/Max and Century 21 are active in Nicaragua; walk-ups and appointments are both accepted.

U.S. banks will not finance property in Nicaragua. Thus, you will need cash for both the deposit and the balance of the parcel you wish to buy. If you hope to lock into a property before leaving Nicaragua, you will need to make at least an "earnest money" payment (typically $1,000), which often is not refundable. (I was fortunate that my seller agreed to return my money.) You can make a deposit and subsequent payments via wire transfer.

No matter where you are considering buying land, these are the five commandments of real estate investment abroad, as outlined by Shelter Offshore ( http://www.shelteroffshore.com), a foreign investment specialist.

1. Never buy property in a country you have never visited.

2. You're only buying what is included in your sales contract. So, if you've been told that a development will have communal amenities or that a golf course is planned, you have no guarantee that these perks will materialize. Base the value on what you see now, not on projected growth.

3. Before buying, first rent a place in that country to get a real sense of the daily challenges, security situation, neighbor relations, etc. Many experts recommend renting for a year, to experience all four seasons. This should also give you valuable insight into the real estate market.

4. Every promise made and all property specifications and inclusions should be written into your sales contract. Electricity and water supply also should be confirmed in the contract.

5. Don't assume the value of your overseas land will go up or, if it is enjoying a period of growth, that it will never stop rising. Ergo, do not pin all your financial hopes, dreams and ambitions on foreign property.

-- J.B.

© 2007 The Washington Post Company