Your Panama Home, Rent or Buy?

This question come up quite a bit. I’m am no expert on anything but I thought I’d share a few thoughts.

The advice that you will hear from everyone who isn’t trying to sell you something – live in your intended location for at least six months, preferably over a year before you even think of buying something. You need a test run of living here beyond the honeymoon phase. You need to be sure you like the country, the culture, the people, and the pace of life. You need to be sure you like the climate in both the rainy and dry season. Most important, you can make friends and connections. Through them you can learn more about the area, learn what is a fair price for a property, and probably find likely places to rent or buy. There is no MLS here. This country runs on relationships. Your local friends can help you a lot.

OK, you have been here a while and it’s time for some decisions. Renting vs buying is an individual decision based on many factors.

We are happy renters.

  • At this stage of our lives we don’t want the responsibility of caring for and maintaining a house. We are happy to address little things but if the septic overflows or the fuse box blows up, the landlord is responsible.
  • Our money is in the bank, not in a house. We don’t have a hefty bank account or income, so we feel better having quick access to our money if something unexpected would happen.
  • If we change our minds or circumstances, it’s very easy to leave. We have no mortgage or equity to lose.
  • If something happens to both of us, our kids would be responsible for wrapping up loose ends. In our case the neighbors could have the contents of the house and the keys would be returned to our rental agent. There would be nothing more significant than a used car left behind.

We also know some happy home owners

  • A house can be a good investment and you can built up equity. You lock in your price and no one can raise the rent or ask you to leave.
  • I have heard some people say they prefer investing in a Panama property rather than than leaving that money in the US.
  • You can do whatever you wish to the house –  remodel, build, make changes however you like and they are yours to enjoy, and they hopefully add to the value to the house.
  • You have real roots in the community and the locals will see that you have made the commitment to live here.

But, there are some downsides to both options.

As a renter, the landlord can ask you to leave or raise the rent. You don’t know what you will be paying next year or in 10 years. I have heard about landlords who can be difficult to work with, who don’t want to fulfill their responsibilities, or who cause other problems. Even if allowed, you don’t want to make many improvements to someone else’s property.

As a home owner you will need to sell the house at some point (or your heirs will). Sometimes houses take a long time to sell. Certain styles, locations, ages, and price ranges can really limit your pool of potential buyers. If circumstances cause you to leave Panama, it is difficult to manage, sell, or rent a property from a distance. Renting doesn’t always work out either if you can’t get a tenant, or you get a bad tenant who damages your home or leaves unpaid bills.

I have been talking with quite a few people lately who are thinking about moving to Panama. Hopefully these thoughts will be helpful. A mistake can be financially and emotionally costly.  I’d much rather see everyone happy with the decisions they have made, and happy with their new lives in Panama.

 

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About Kris Cunningham

We live in David, Chiriqui Provence, Republic of Panama! This blog is about some of our experiences in our new country.
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21 Responses to Your Panama Home, Rent or Buy?

  1. Anonymous says:

    Thank you for the info! I really hope to meet you someday Kris.

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  2. jim and nena says:

    Hola Kris,
    Another plus to renting is that you can try renting in a location for 3 or 6 months then move to try another area; rinse and repeat until you find your spot. Renting also offers the ability to pull up stakes when the new neighbor with the 24/7 boom box moves in across the street. Noise ordinances are extremely hard to enforce there.

    Buying a place leads to 2 more decisions: buy existing property or build new. Both decisions require one to look carefully into what can happen.
    There are endless stories of folks thinking they were buying property only to find out that the property they bought isn’t really theirs. The same properties have been sold several times to different people and the guy selling and the money are gone. Buying ROP property can have some interesting twists, as well. The same scam artists who once sold “beachfront” property in Florida have found a home in Panama.

    Building a new place can be death by a thousand cuts torture. The paperwork, schedules, weather, and mañana can be enough to drive one to drink.
    jim

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    • Yes indeed, I have heard many horror stories too and it’s not just gringos. Our Panamanian lawyer neighbor was so disgusted that his house was a year behind schedule that he just walked away from it. We have all seen the houses on the market for literally years, especially the expensive ones.

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  3. Buy Quick, Sell at Leisure, 2,3,4,5 years to sell is not uncommon. Look at Richard Detrick in Boquete, he has been trying to sell for over 3 years and has lowered his price $300,000! I met a widow in Boquete, her husband died 5 years ago and she still has not been able to sell. A friend in Pedasi has had a beautiful 2 bedroom, 2 bath, nice large tropical garden, top of the line kitchen renovated home that she is only asking $99,000 for and it has been almost 2 years since she completed the renovation.
    We rent because we want the option to move if we so desire, just like Kris and Joel, no strings.

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    • Richard Detrick is still asking around $700,000, right? That’s a pretty small pool of buyers. I would think your friend’s $99,000 home would have much better luck, but there are never any guarantees that a buyer will come forward for any home. Nah, we don’t want to get tied up in all that and here in David, rents are so inexpensive we’re even less motivated to change our circumstances.

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  4. I’m 100% convinced about renting. I’m in the “no ownership” phase of my life! Owning “stuff” as you spoke about in your previous post (BTW – loved that George Carlin link!) just ties you down and limits your freedom. I want my one suitcase and backpack and my dog and I can pull up stakes and move as often as I want. I’m looking forward to exploring a lot of Panama by renting different places 3 to 6 months to a time until I find my right fit. I can’t think of anything that makes me happier than having that kind of total freedom! 🙂

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    • We kind of have the best of both worlds. We have been here almost 4 years so it really feels like home. But we have the freedom to walk away if we ever wanted to. But we also got very lucky to have landed in our right fit on the first try.

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    • jim and nena says:

      Hola Diane,
      I would love to have just a suitcase and backpack. I may have to set fire to what I have to get there!
      I think if I could get to the suitcase/backpack level, I would just spend 6 months at a time all over Panama and never settle for one place. Panama has enough variety that you can pick a completely different environment every 6 months. Some folks have made a retirement out of house sitting for absent owners so you don’t even have rent payments. Several owners are gone for months at a time and need someone to watch the property.
      jim

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      • This reminds me of the many times I threatened to hire a dumpster when we were preparing to move.
        House sitting? Great idea!

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        • I have a friend who house sits all over the world through Trustedhousesitters.com – actually that’s how I met her – she house sat for me here in dull old Raleigh NC for a month over December two years ago, when I took a long vacation with my daughter to cpvisit friends and relatives inIndia. Poor thing was bored to tears (nothing to do in Raleigh in December!). She’s retired, a couple years older than myself (or more).
          As a matter of fact, I’ll have to sign back up,with them to find a house sitter in December this year if my plans to visit Panama come to fruition. The two official cats! The two feral cats! The fish! Oh dear.

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  5. Beverly says:

    We normally winter in Puerto Rico. We were just looking at renting a car again for our stay. $1000.per month is the best, I can do. Our 1 bedroom condo on the beach is $850 per month. The more we read these blogs, we are ready to give up PR. and try Panama. We are not wealthy people and we can no longer afford to pay the price for a car rental & the condo. I am searching for flights now and we plan to look around the area of David for rentals. Would it be wise to have something set up for 1 or 2 weeks while we look over the area for a monthly rental . Is renting a car for a month that costly in Panama? Keep on writing for us, we enjoy the news.

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    • Hi Beverly! Yes, I would make arrangements for a place to stay before you arrive, but I’m not the type to just wing it. I expect you could find somewhere last minute without too much trouble since there are a number of hotel and hostel options. I don’t know about car rentals though, but I believe that would be fairly expensive. There are buses and taxis everywhere and they don’t cost much. Maybe you could just rent a car for part of your stay? Cowboy Dave in Boquete is said to have the best car deals around. I’ve also seen a place in David I’ve been meaning to talk with so I’ll let you know. The usual businesses are here – Avis, Budget, etc but they may not tell you that the mandatory insurance can about double the price of the car.

      Thanks, glad you enjoy the blog 🙂

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    • Robert & Helen says:

      @Beverly. One can rent a car at Cowboy Dave, even with an option to buy it after a month. Around Boquete one does not need A/C in the house. So your monthly bill will be around $ 20.Make sure that you will have fast internet from Cable Onda and good water supply. PR is mostly bi-lingual. Panamá NOT.

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  6. Robert&Helen says:

    Kris, you are fully right. The market for existing homes in Panamá is very slow, if not bad. Especially over 90 K. Building costs (excl. land) goes from $ 400 – 800 per square meter, depending on the finishing and materials being used. Over 400 homes are for sale in the Boquete region. Richard’s Detrich’s beautiful home and coffee plantation might be sellable with a reduction of 40% – 50%.
    We built a nice beautiful large home in Saint Lucia (Caribbean) finished March 2005. Sold with 70% profit in July 2009. Built a smaller one in 2011 and sold it to British people in 2014 with a 28% loss.

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    • 400?! Wow, didn’t realize there were that many. That’s a lot of people waiting for their money, and while the house is on the market you still need to maintain it. That also sounds like a lot of people leaving the Boquete area for whatever reasons.
      Your experience also points out that depending on market circumstances, you might take a considerable loss when you sell.
      I heard somewhere that a realtor is doing well to sell one property a year. It’s not very good from their side either.

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  7. Robert&Helen says:

    Yes one has to maintain a house, insure it . That adds about 3% – 4% per year. So the value has to increase about 4% a year in order to cover cost. If you paid the house cash. Very few realtors left in Boquete. Quite an accurate evaluation of a house. 11 to 15 times the yearly rental is is usually a price to buy. In general, not always. Your house would be between 51K and 64K. An old friend of mine in The Netherlands bought some streets with apartments, always at this formula. With success, with the tenants in it.
    .

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  8. Our house would be at least $80K, judging by what others have sold for in this neighborhood. In our situation we aren’t too motivated to buy, especially since we love the house, the location, and the neighborhood. Even a lot here is about $30K,

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  9. Carole says:

    Love your thoughts on renting and buying. I agree with what you said on the renting, we are spending a lot of money repairing things in our home. It would be nice to spend that money on a vacation. We would just have to fine the right place and landlord. Things are going slow here, my husband has to take a month trip to France, his mother is sick. So not sure what plans are in our future at this moment. Thanks again for the imput, you are always so informative.

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    • I remember how long it takes to wrap everything up and get ready to move. It’s a huge job if you’ve been in one place for a while. I’m sorry to hear your husband’s mom is sick and I hope she’s feeling better quickly. Thanks, glad you enjoy the blog, and I’ll send good thoughts your way that you can keep making forward progress.

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  10. Lots of good information here Kris, both in your post and in the comments. Wonder why there are so many moving out of Boquette?
    As for ‘stuff’ – Diane has a compelling idea: one suitcase, a backpack and a dog. Perhaps substitute the suitcase for saddlebags – and a horse. With a pannier bag for the dog when it gets tired and could use a ride (provided of course that it’s not a very large dog – which, alas, is my preferred size in dogs). Now wouldn’t that be nice – *sigh* – Wendy

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