Finding The Right Financing For You
This will be my last blog covering the various ways you can finance property in Panama. In recent weeks, I’ve covered options such as developer financing, self-directed 401(K), foreign and domestic traditional mortgages, using the equity in property you own in your home country, lease-to-own, and using family cash gifts avoiding taxes. There are other ways, of course, to cover a purchase price, such as seller-financing, but those are unique and should be considered individually.
The blogs discussing the various options in detail can be found in this section of the Empresas Bern website: https://www.empresasbern.com/noticias/?lang=en, but I want to caution that while the information is provided, it is important for every buyer to decide what is right for them individually.
Work With People You Trust
It is imperative that you work with a developer or real estate professional that you trust and who has a long history of providing quality real estate options, especially since you may be working in a different country and perhaps a different language. My father, Herman Bern Sr. started Empresas Bern in our garage over 40 years ago. I wasn’t six-years-old so much of my childhood centered around work sites, listening to my parents’ plan, and worry about keeping the business growing, accessing the changing needs, and building Panama, the country they love. It’s been an amazing education and I’m grateful for their insight and hard work every day.
Some of what I learned early on was that I was responsible for my own research, decision making and being confident in my ability to choose what was right for me. I learned how to ask the right questions of the people in the know and figuring my comfort level.
How Risk Tolerant Are You?
Some people can tolerate risk and others cannot. Some need to pay cash and be finished with it, while others will assume debt and work diligently to make taking the chance profitable. Just remember, be thorough, run the numbers and then run them again, consider unique situations such as tax incentives, close-out properties, pre-construction pricing, location, and government regulations, just to name a few. Do the research and figure the numbers realistically.
We are currently in an unusual time with the implications of COVID-19 affecting so many facets, both good and bad, in how we move forward. There is no question the Panamanian government has introduced a number of initiatives designed to benefit the foreign investor who is ready to purchase real estate. We probably will never see programs this strong again and let’s hope not if we have to pay for them with another pandemic.
Capitalizing On Incentives
If investing while we move forward from this global pandemic is something you can tolerate, I can easily say, this is a good time to capitalize on the incentives. There are tax programs benefitting the individual investor directly as well as other government programs aimed at helping developers regain normalcy while passing on the incentives to the buyers.
Tourism, which ultimately benefits investors in rental properties, has tax incentives amounting to 100% of what is spent marketing Panama. Increased tourism means the creation of good jobs and a growing middle class. It is difficult to even estimate the pent-up demand for travel considering the world has been in lockdown for over a year. Think of the weddings, the family reunions, the family vacations.
More Multi-National Companies
The government of Panama is currently courting multi-national companies even more aggressively than they have in the past, knowing foreign investment is vital to Panama’s continued growth. When multinational corporations select Panama for a regional headquarters, they bring jobs, highly educated employees with trailing families, and the need for housing. Savvy investors will be ready when the housing market returns to rapid growth.
The US economy continues to grow and for some individuals the ability to diversify their economic portfolio, based on that growth, is appealing. Panama has one of the strongest economies in Latin America and certainly the strongest in Central America. The government has been careful with debt while maintaining a positive lifestyle for Panamanians, so the country is poised to capitalize on everything from major infrastructure projects (fourth bridge, subway, road improvements, new twin cruise pier, and new convention center), to the opening of the copper mine, a continued strong services sector and increased utilization of the Panama Canal.
If you are considering foreign real estate investment, we’d love to talk to you at Empresas Bern about what financing option and type of property might be best for you individually. And if you are a cash buyer, we have some incredible prices available on some of our most sought-after properties. Please don’t hesitate to send an email to [email protected] or call 507-214-2376.