Rent or Buy?

When I was busy being a real estate capitalist pig in the US, the rule of thumb was that rent should be 1% of purchase price. Thus, if you bought a $80,000 house, you should rent it for $800/month. Some may say that the pretend interest rates in the US along with serious money printing may make those rules outdated it seems to me that the combination of the two pretty much keeps those rules on the realistic list.

In any case, what I have seen in Nicaragua is that rents tend to be more like 0.5% of the value of a property. I am not going to speculate on why that is the case but it is but one more reason why renting seems like a much better option than purchasing.

Sure, sometimes there is a real reason to but, in general, renting tends to be a better option in Nicaragua. Besides a financial benefit, you also maintain more flexibility.

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I think Nicaraguan houses in many areas are in a bubble

The friend who visited pointed out that people could buy good houses in Ft. Smith, Arkansas, recently remodeled, for $45K to $65K. I talked to a realtor in Cottonwood Falls, KS, about buying there and there were houses from $20K to $60K that were good reasonable house (I saw some of them when I visited). I also saw ads for places in Missouri and Emporia, KS, that were in the $12K to $50K range, and a friend knows a place in upstate NY where houses are going for $9K.

Much of what's for sale at the higher prices here for un-rehabbed houses is owned by people who inherited the properties. I don't think it's the Big Nuts of the US, but it's a little nuts. My landlady has dropped almost $10K in her asking price, and I suspect it will be high 30s or low 40s when she does sell it.

Since most of these are inherited houses with low taxes and where the owner doesn't have to sell to stop paying a mortgage, people can price them high and just wait (we haven't had any gringos looking at this one, though I'm the second USAno to live in this half of the house.

Rebecca Brown

I think that renting is

I think that renting is almost always better. But then again I don't tend to stay in one place for long periods of time and being an absent landlord can be an incredible pain in the backside even if you have a good property management company to deal with the day to day things for you.

People vastly underestimate the expenses of home ownership IMHO. It might be a lot less here in Nicaragua but you are still tied down once you buy.

maybe true in the US or Canada

because of the taxes one pays. In Nicaragua taxes are very low so the "carrying cost of the property is low, and appreciation is almost always much higher if you are pricing your property to a Gringo. If you are pricing your property to a Nicaraguan, it is almost always depreciation. If you are looking for luxury living in the place where you are happy (the right town), then buy and build since rent will be high. if you are looking for comfortable living then rent and renovate but if you plan to be there for a long time, buying is still attractive and avoids rent inflation.

One problem

Is the poor quality of housing here, especially in the north. If you want it comfortable, safe and clean, you almost have to build it yourself.

Another approach is get a long term lease on a place and remodel it (with the owners permission). the late Tony R. in Jinotega did this. Not my cup of tea, but it would get you your comfort for a fixed price without all the risks and hassles of ownership. If all goes wrong, you walk on a fixed number of dollars and no paperwork.

If you are on anything less than acreage, by all means rent. You cannot know what you do not know. Case in point, we were thinking of building in one neighborhood in Esteli, but the god-forsaken churches and the drunks drove us out. Coming from the first world, who would of thought that churches can be a public nuisance? You don`t know what you don`t know!

As I pointed out in my blog, if you want to live better than a hippy or a peasant, you are probably looking at 75k for a house. For most folks that is a lot to risk until you know the turf. If you did anything right, your house is overbuilt and overpriced and will be tough to sell.

I doubt the political situation will create a crash and burn scenerio for expats, but it will probably limit the number of newbies with money to burn.

Even if I moved to Panama, I would rent. Did I mention you don`t know what you don`t know?

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

Churchs

Your right! the churchs are louder than the bars sometimes. Got speakers, blow them out!

There's Something Undefinably

comfortable about owning your own place. It goes beyond common sense and the economics of rent vs buy (which I agree is often tilted in favor of rent).

No question that if it's an urban property a lot of homework is necessary. No question that if it's ANY property in Nicaragua a lot of homework is necessary, and some trusted help is essential.

We're in the middle of our second land purchase, an addition of an adjacent 10 Mz to the first 10 Mz we bought. The second 10 has a better spot for the well we want to drill, and it's really pretty. We have 400 feet of road frontage on the second parcel, and the power line runs along the road. We paid too much, but we got a good deal too. We will probably buy another 10 Mz of the same farm, a wooded 4 Mz corner, and that will be plenty for what we have planned.

I still want to do the off-grid thing, but having grid power access will make it simpler and less expensive. And if Nicaragua ever goes to net metering I'll be ready.

We used the same lady lawyer in Estelí who we used for the first purchase. Competent, a lot of integrity, teaches law, her spouse is a lawyer, kids; what I like to envision as the new Nicaragua. We went through the same process as before: Title examination, survey and plano (which I paid for), Promesa, deposit; -- then escritura and final payment. It went like clockwork the first time around.

If anyone wants specifics or names please PM me.

I doubt too that the political situation in Nicaragua will create problems for ex-pats. Daniel's brother Humberto must regale him with tales of CR's prosperity, due at least in part to all the ex-pats who have settled there, bought property and built homes and businesses. There's risk, sure, but any investment carries some risk along with the potential return.

Owning the land is smart.

A lot of people go wrong with what they put on it.

por favor...

to explailn, please.... i am 15 years away from building....

"Maybe, just once, someone will call me 'sir' without adding, 'you're making a scene." -Homer J. Simpson

no container..

or earthbag..construction..something u can resell

I Agree

Just like CR there will be more and more upscale retirees (and other investors) coming to Nicaragua in the future. A retirement of $8-10K /month is not unusual for someone who's finishing a career with Boeing or some other big company. It's not going to be the cheap living they are looking for, it's going to be the opportunity to something truly unique with the rest of their lives.

They (or more precisely, their wives) will want something that looks more like what they left behind. Many are NOT going to want the adventure ?? of building their own dwelling. They will be looking for a turnkey, profitable coffee farm, a cacao plantation, or some other business that at least pays its way, a bookstore/coffee shop in SJdS, for example.

I like the whole earth bag thing but there are some are very real limitations, and I'm not sure that the construction cost is going to be that much less than conventional methods, especially when you add a functional interior or want a second story.

You can overbuild here too, look at the youtube videos of Holly Beck's place in SJdS.

She put in a foundation sufficient for a ten story hotel - either someone got to her or she has big future plans :)

Look at those Zapatas!

http://www.youtube.com/watch?v=cBMEBOM6iCc

Interesting that you mention

Interesting that you mention Holly Beck, yes there are all these vids of her building her place and even a full episode of House Hunters International where she supposedly buys a place for her surf camp in northern Nicaragua. But if you check out her page she actually runs her Nica camps out of a really nice little eco resort called ElCocoloco. Which by the way is a nice little spot run by three Canadians, dedicated to plowing all the money back in locally and they run a charity called Waves for Hope. Just an interesting bit of trivia.

holy cow!

those were some big zapatas! you are right, that is a huge foundation.....

i was thinking about a one story.... too old to go up and down stairs....

and now i was thinking of not going wiht the earthbags bc cinder blocks take up 8 inches of space versus 18 inches for earthbags. my lot is really small, and i want to maximize useable space.....

I like the 1 and a 1/2 floor outside look

A cathedral ceiling I guess. Functional for air movement and cooling fan space.

For example, Look at the old Nica wood homes in town and make notes of the functional style. Height, small bedrooms (sleep) and a back courtyard (private lounge) front porch (passing visitor centre) etc. Then build one out of poured concrete or block.

After a year of living here you will build 40% less house than you thought you needed and have 40% more outside areas like a simple shady rancho for a hammock (away from the house and the sound of the washboard and telly novelas.)

Another "rent first" reason

This is but one more reason why renting first makes sense. If you are used to living where, for at least part of the year, being outside is somewhere between uncomfortable and just downright dangerous, you are very likely to build a lot more inside space than you need.

A good example is my house in Estelí. While the livingroom area was more than big enough to have the dining area in it, we elected to put it outside in an area covered by the second floor of the house but open on two sides. For the average person from Houston or Boston, that was not going to be a consideration.

You can see what I am talking about in this photo.

Don't the various biting insects

limit your out-of-doors supper enjoyment? I thought that you had vampire-like mosquitoes in CA.

Not here

Up here in Tisey we are above the "mosquito line". In Estelí there are some but nothing serious. Certainly not as bad as much of the US south.

Dengue in Esteli

It runs in spurts. Since mosquitos only live so long and only fly so far and have to spread the disease, population density plays a part. In 5 years here, one family member got it twice (probably playing soccer at school) and one neighbor kid in Tisey got it. The wind really helps limit the mosquito population, but once they get established in a house or other building there are often more mosquitos indoors than out. Same same for some budget hotels in Nicaragua.

On the outskirts of Esteli we have a steady supply of zancudos plus the biting knats so i spray the yard every 1 to 2 weeks. Biting ants are a big problem but the zancudo spray seems to zap them too.

The key to outdoor comfort here is to have as much area under roof as possible in outdoor porches or covered patios. Someday a screened porch would be an nice addition. Some wind protection helps too in the early dry season (North American winter).

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

The mosquitos in the US South...

...don't carry malaria or dengue.

Some areas have a time when the mosquitos are out in force and everyone just closes the house off for a while (friends who live near Lake Apanas have to do this for about an hour around sunset).

The Ministry of Health does a fairly good job in town of spraying and leaving biological controls for the sorts of mosquitos that carry dengue (breed in standing water in jars, tires, etc., and don't fly more than 300 feet/yards (?) from where they hatched).

One reason for second floors on houses and for the houses on stilts out in RAAN and RAAS is to get above the mosquitos.

Rebecca Brown

Interesting

A cousin who grew up in Estelí living in, at best, sub-standard housing moved to Florida a couple of years ago. I don't know how old she is but she does have a 10 year old daughter so that's a lot of years in Estelí. In any case, she never had dengue in all her life in Estelí but got it in Florida.

I remember that it may also be in Texas.

Basically, it's not in SC or North Carolina. Interestingly enough, SC has elephantitus around Charleston, and most of the Atlantic Coast to Philadelphia used to have yellow fever and malaria. These days, not.

Some part of Jinotega Department have a small biting fly that hurts quite a lot and which can carry one of the other tropical diseases, though not a lethal one.

The one case of dengue I've heard of from the employer of the person affected was from around Lake Apanas. Friends who live there have seen Chagus bugs -- which can be vectors of the long term time bomb of tropical diseases (Chagus disease has a long incubation period that leads to serious heart damage -- another reason for masonry houses, no drop ceilings, and cultivating friendships with lizards).

I think you wrote that Esteli was dengue-free until the hospital treated some cases and mosquitos got infected. Or someone else told me that when I was visiting Esteli. Jinotega has had both malaria and dengue in recent years -- I suspect that people who are well-fed have more resistant immune systems.

The various mosquito species seem to be frequent fliers -- Philadelphia now has a day time flying mosquito species. If it's the same one that spreads dengue here, life could get interesting.

Rebecca Brown

interesting and informative

Here, in not the south of the USA, but New Hampshire, we have a black fly season that will drive you insane if you were to sit outside. We also have mosquitoes that. Carry West Nile disease. we have to pack a good way up the mountains to escape the blood suckers.

insects

I have traveled to some pretty remote spots in Central America, like the east coast of Costa Rica where it's a 4 hour boat ride to get there, cloud forests, and the islands of Bocas del Toro, Panama, where they closed the malaria station only 10 years earlier, and I have yet to see any place with insects that bother you, much less drive you insane like the mosquitoes, black flies, deer flies, shad flies, and ordinary flies in Ontario. Window screens are part of the Ontario building code.

Wow! I would never had thought...

Incredible. Only in Europe have I experienced that level of out door bug freedom in spring/summer/fall. You understand my black flies querie. Here, and for two years I lived in the Caledon Hills above Toronto, on that escarpment. I have fond memories of Orangeville, and its small surrounding towns with those small, friendly, chef owner-operated Pubs.

Long before

Long before I was pub age, I lived in one of those small surrounding towns, but I know what you mean about insects because I assumed they would be far, far worse down south. Most summer evenings, I can't even sit in my backyard in Ottawa and I don't mean for only an hour. The mosquitoes drive you inside and they're nothing compared to being in the bush.

In North Bay, Ontario, the highways have been closed due to shadflies. They have a really short season where they come out of the water, breed and die, making the highways slippery. In Cornwall, I have seen the dead ones swept into piles a foot high.

If you want to see some of

If you want to see some of those foot high piles of shad flies come by my place sometime lol. Bad combo of living on a lake and having a cedar hedge. Before we got central air we couldn't leave any lights on after dark for about a month of the year as they can fit through screens.

That sir, seems sensible and it is quietly beautiful

Echos of India for me. Good photo. Similar physics adjustment to the environmental reality. All stone, open design, plants and birds. In India, before the rains, we would sit up on our flat roof - shaded, catching any errant slight breezes. Then later, in the night, we would lie naked on the marble floors to cool, as the government had turned off the power; with flashlights, we would play hand/finger shadow games against the parchment-colored stucco bedroom walls. And laugh together at the changes in our lives. Life is indeed a friendly snake eating its own tail. Many reasons to be proud of your vision fyl ~ incarnate and practical. I suppose that there are no frightful snakes in NICA land, right? (;-) In India, we had monkeys everywhere. They occupied the squirrel eco stratum.

No squirrels in town here

Used to be monkeys in the local town park, but they got eaten during the war. Lots of black vultures, which eat anything dead. I haven't seen any snakes in town. Geckos come out at night and hunt moths against windows when room lights are on, sometime inside the house.

Out in the country, all sorts of stuff. The local long tailed weasel has a mask like a raccoon and there are agoutis and various other mammals. I recommend a visit to El Jaguar out this way if you can afford it and enjoy birding.

Rebecca Brown