You can get 15%-20% cap Rates.

[Martyn]

I've been in apartments since i was 18, when i bought a duplex and a 4 plex.
Then it was easy to get a building for 15 % cap rate this would give large positive cash flows even at 7%.

In canada now cap rates are anywhere from 3% to 7%. depending on the city. This is normal negative cash flow or a very small positive.
So i have looked throughout the world, and found Panama.
The going cap rate is 15 to 20 % cap rate for residential, 20 to 20% for most vacation rentals.
No heat bill,
low taxes,
low crime rate.
Very stable.
instinctive programs.
Foreigners have same rights as locals with regards to realestate.

 

[Thomas Beyer]

20% cap rates exist usually for a reason.

Any new area, especially outside of the developed world needs to be researched in-depth, be it Panama, Mexico, Uruguay or Iran. Many markets make excellent destinations for investments but one has to be very mindful of not only the usual property due diligence but also of local laws, local customs, gangs, bribes, taxes, interest rates, fees, foreign ownership restriction, currency exchange rates and repatriation of money eventually.

Why don't you enlighten us about a typical 15-20% cap rate deal, what kind of mortgage, if any, one can get, taxation issues etc ..

 

[Martyn]

Tomas,

Yes I have got 2 lots down there building a retirement house, and one jungle cottages, so i have gone through most process. I am starting on my 3rd lot to build a vacation rental unit.

The level of gangs is around Canada level, or corruption is approx the usa's. Interest rates are about 6%. On titled land there are no foreign restrictions, and they use the US dollar. I think its unfare to put mexico, urrguray iran and panama in the same catagory.
compared to the US, 24% crime index more than Panama

google : panama crime compared to the usa.


They will have a 70% increase in there GDP next year when the canal is finished.

For number for beach prject projected for the apartment complex (12 units. 6 - 2 bedroom 6 1 - bedroom. )
all in USD.
lot 64,000$.
building cost completed 755,000$

Rental weekly 2 bedroom - 1000$ high season (6 month) = 156,000
700$ low season. = $109,200

Rental weekly 1 bedroom - 800$ high season (6 month) = $124,800
500$ low season. = 78,000.

Total $468,000

expenses:
Hydro : $ 24,000
water: $1800.
Management: $1560 ( wages are 15 to 20 usd per day.)
Insurance: 2200
Taxes : see exempt for 5 years. Google panama land tax.
Vacancy = 28%
Net profit : $307 400.00 Cap-rate 37%

A sale price for this would be approx 1.2 mill giving the closer to 20% cap rate.

 

[RE123RE]

Hi
Interesting.
Are you sure Management is $1560 (wages are 15 to 20 usd per day) ?
Not sure i understand the math.
Also, Vacancy 28%?
What if it is 66%?
28% sounds like a guess. which is fine it is anyway. but check the area, other similar type properties and talk to owners like you to get a better estimate.
Are there possible collection issues, or thanks to standard payment method none? If there are, add it to vacancy for a better CAP estimation.
Good luck. Interesting project indeed.
Thanks