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Not sure if you saw my email from earlier today about how I passed on a potential master lease.
Yesterday, in Panama, I looked at another furnished rental property I could lease for $400 a month. It has been rented for $650 (the landlord said) but has high tenant turn over. I passed on this house because it is functionally obsolete. That?s a big problem with properties in Panama. Many houses were not designed with ?flow? in mind. The owner or builder of this house did not plan where to put a refrigerator in the kitchen, so the only place to put the fridge is the living room. Talk about weird! With a great big refrigerator in the living room, there is no place for a TV or stereo system. When you?re sitting on the sofa, you get to stare at the refrigerator. To make matters worse, you actually had to go through a bathroom to get to one of the bedrooms. Crazy!
Luckily, not all houses in Panama are like this. Another problem you have to be careful of in Panama are houses in neighborhoods where the house looks great but the neighbors have a lot of roosters or a pack of dogs that bark all the time.
New investors will often buy (or master lease) anything they can get cheap or anything they can buy with seller financing or a lease option. Owners of nice houses in not so nice neighborhoods are often very motivated to sell at below market prices or with creative financing. But you should pass.
I probably could have got this house for $350 a month but it would be hard to keep it rented at any price because of the strange layout with the fridge in the living room and needing to go through a bathroom to get to a bedroom.
Hold out for nice houses with good layouts in nice neighborhoods — this will attract tenants who will pay on time and stay a long time.
Two thoughts:
Old Russian proverb: “Buy the neighborhood, not the house.”
When I moved to the “little town” in 1983 where I still live today, there were neighbors who kept enough chickens that the roosters were a reliable alarm clock. There was no need to set one to get up in the morning. Not a big deal; I grew up on a farm where this was normal. Then the town grew, and grew, and grew … large enough to hire the bureaucrats with hard drives full of regulations, which ran out the roosters. I’d trade the bureaucrats for those roosters in a skinny minute.
It’s gotten so bad in some US cities that if you try to garden at home, the city will send out a SWAT team. My point is not to look for ways to get into a war with the city, but to match the neighborhood with the kinds of people who would most appreciate it.
–Dee
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