5 insider tips to real estate investing in Central Ameria

1. Make title insurance a non-negotiable

We recommend taking out title insurance for all your purchases in Central America.  Though the process can at times be bureaucratic and cumbersome (and realtors like to remind you of this) it can unearth potential problems with your title before it is too late.  Seeking title insurance will force your attorney to delve deeply into the title history of your property and follow a set of criteria in their reporting.  

Seek out well established title insurance companies that have a track record of offering polices in Central America, such as First American or Stuart Title.  With both of these companies your insurance policy will be paid for in the US and any claims are made to the company in the US.

2. Power of Attorney

When purchasing in Nicaragua, it’s important to remember that you have to be present at the time of closing so that your signature can be witnessed by a notary public.  If you’re not planning to be in the country, the best idea is to leave a power of attorney with a trusted contact who lives locally.  You will need your passport in order to create a power of attorney. This typically costs US$75.00 or less. 

The alternatives are more expensive and time-consuming.  You could arrange for the Nicaraguan notary public overseeing the closing to fly to you where you are (commonly for a signing at an airport), or go through a rather long winded process of documentation and certification (and sometimes re-certification) at your nearest Nicaraguan consulate.

3. Understand momentum affects

The bulk of foreign investment into the real estate and tourism sectors in Nicaragua is focused on the south-western part of the country.  You can see this patterns in our Nicaragua maps.  It can be tempting to seek out areas where there is less activity, for example beachfront areas further north on the Pacific coast, but before doing so, remember to ask why there is a price differential and whether this is likely to change in the future.

Remember the mantra: location really is everything.  The south west is Nicaragua’s tourism heartland and an area with great appeal.  It’s no surprise really that this is where there is most development activity.  This is not to say that there won’t be price appreciation and development on beach areas further to the north or that good gains can’t be made.  But it’s worth asking whether a significant price differential that you've found will likely remain into the future.

4. Choose a good attorney

The general level of credibility and professionalism that attorneys exhibit can vary considerably between different countries.  When purchasing in a Spanish speaking country like Nicaragua, it makes sense to find an attorney who speaks English (unless of course you are fluent in legal Spanish) and who commits to keep regular communications with you throughout the due diligence and closing process.  Remember that you may be out of the country over this period and communication via email will be important.  Always ask for a written title opinion.  It’s surprising how many closings take place without one.
 
In Nicaragua, you can get a list of good attorneys approved by major title insurance companies.  Sellers have been known to try and persuade buyers to use their own legal team for property purchasing.  Our advice is to employ independent legal advise at least to review (if not draw up) the purchase contract you are signing and check the title history on the property.

5. Don’t leave your brain at home

There never seems to be a shortage of people willing to sell you overseas property in Nicaragua from your taxi driver to the helpful person on reception. But remember there is very little regulation of their activities.  Having said this, most of the problems we hear stem from a lack of care on the part of buyers rather than because of an unregulated market-place. When abroad, investors can forget all the things they would do if purchasing property at home.  They get caught up with it all, ignore the basic steps like taking independent legal advice — and end up signing things they do not understand.

Want more tips? Read our combined list of insider tips.