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A couple in their mid-70s has been trying to sell their house for 8 years but there have been no buyers and few lookers. It’s a beautiful 4000sf three-bedroom three-bath house with spectacular mountain views on a 4-acre coffee farm… in Panama. Originally they were asking $850,000, then $750,000 then $650,000 then $550,000 and even offering seller financing with 50% down.
She has serious medical problems and would really like to move back to the United States to be closer to their children and grandkids.
The house is not selling for THREE reasons:
(1) their house is surrounded by small houses that cost less than $50,000. When potential buyers drive through the neighborhood it makes them nervous. Internet service in this area is not so good too.
And, (2) most buyers who move to the area are looking for a house under $200,000. It’s rare to find anyone wanting to pay more.
And, (3) it is difficult to get financing to buy real estate in Panama so most sales are for cash buyers. But there are very few cash buyers in that price range. A mortgage requires 20-30% down. All mortgages must be paid off when you turn 70 and you need to get a life insurance policy naming the bank the beneficiary just in case you die before the house is paid off.
Other than Social Security, all their assets are tied up in their real estate. They can’t move until it’s sold. They need the cash out of the house to buy another house in the US when they move back. They don’t want to be a long-distance landlord with a rental in a different country.
They are not alone! There are hundreds, if not thousands, of sellers in Panama who cannot sell their house in Panama for all the same reasons.
Real estate agents are basically worthless in Panama. They are great at getting listings but they don’t have a clue how to do marketing for buyers and they don’t understand creative financing.
Imagine, being trapped by your real estate that will not sell. Do you see some opportunity???
What would you do?
I have several questions but no idea of the answers.
It sounds like the house was seriously over-built for that area. So here are some puzzles:
Is it possible, financially reasonable, and legal that the house could be either remodeled into multi-family rentals or condos? And if so, are there reasons why neither of those ideas would work in that area?
Is it possible that a satellite hookup could help solve the internet access issue?
Is the 4 acres of coffee farm land too small to lease out to a capable coffee farmer? Had the owning couple been generating any income from the coffee acreage or had that land been lying fallow for some time?
Are there potentially higher and more profitable uses for that coffee acreage? With Mexico about to open up a huge marijuana market, that will have to get Panama’s attention. If Panama chooses to imitate Mexico, could that bump up the value of that coffee acreage? Across the globe there is increasing interest in vertical farming of plant crops on small acreage, and some higher value generating crops on that 4 acres might bring in some unexpectedly high yields.
Is it possible to rethink the owner couple’s plan to buy somewhere back in the US and instead consider renting if enough rental income could be generated in Panama with local management via a master-leasing operator who would only take a small cut from such revenue? [This is a terrible time to be investing in a home in the US as we head into a huge financial crash.
The house could be used as a bed and breakfast or a small retreat center.
It already has satellite but it’s still super slow in that area
There is talk that Panama will allow marijuana someday. If that ever happens, that would definitely be a higher use for the land. But for now, the coffee is grown on a steep slope so coffee is the best use of that land. Some of the best coffee in the world is grown in Panama. Most people who have a little land grow coffee.. even me.
Anyone else have ideas on how to solve this one?
This one had me stumped Jackie. What are your thoughts on it?
There are not many solutions for this one unless you got an option then did some creative marketing, like a Highest Bidder Sale, to get the house sold.
I’d tap into international buyers on multiple facebook groups and websites.
You could do aggressive advertising in the town where they want to move to look for an exchange opportunity.
The only other alternative is to find a house you can buy with seller financing in the area where they want to move to so they can move in there then do a master lease on their house in Panama so the cashflow would cover the payments on the house they want to live in. The coffee farm could be leased out for additional cash flow.
With SO MANY houses in Panama in this same situation, there is an opportunity for those who have the time to pursue them. Unfortunately, I don’t have the time because my Panama businesses keep me busy.
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