Monday, May 10, 2010
Dear Reader,
Ecuador has my attention because it offers some of the cheapest real estate values in the world today. For example, you can buy a high-end 1,000-square-foot condo on the beach for less than $100,000...or a comfortable mountain retreat for less than $50,000. Last year, Ecuador topped International Living's Retirement Index. Here, you can live in year-round spring-like weather high in the mountains. Or, you can choose from 1,400 miles of coastline and great beaches.
In the past two years, I've made four scouting trips to Ecuador. My last trip focused on the stretch of coast which offers the most opportunity. I'm talking about the stretch of coast between Pedernales and San Vicente. This stretch of coast should have your attention because:
-The coast is stunning, dramatic and green for much of the year.
-Buying here will position you ahead of the Path of Progress.
-The real estate values are amazing.
On the coast near Jama, $105,000 buys you a beach home in a fine community. You can buy large parcels of beachfront land just off the main highway outside Canoa for $800 per acre.
This is Ecuador's nicest stretch of coast. Here, virgin forest covers dramatic hills. The beaches are pristine, empty, and beautiful. For much of the year the foliage is rich and green. The water is clear and blue...in places, it can look like the Caribbean. Close by, you have roaring Pacific surf. The ocean views remind me of Nicaragua's dramatic south Pacific coast when it's lush and green after the rains.
My base for this trip was the beach town of Canoa. Canoa is twenty minutes from San Vicente. Today, San Vicente is linked to Bahia by a ferry. Work on the construction of a bridge is well advanced. Canoa is a beach town of dirt roads and regular power outages. It's popular with surfers and back packers. High-end it ain't. It's basic and comfortable at best. I've seen beach towns like this before...in Greece, Thailand and Mexico. I've seen beach towns like this become chic and trendy over a decade. This could happen here. My favorite stretch of coast however is north of Canoa. This stretch of coast has remained undiscovered because it's difficult to get to. That's set to change. In fact, most of the improvements are well advanced.
Access to, and along, this stretch of coast is set to improve dramatically. This area is set to become the closest beach area to Quito and its new international airport. Construction on a new highway from Quito to Pedernales is well advanced. Much of it is complete. The remaining stretches are expected to be complete within a year. This highway links up with the main highway that connects Atacames and Manta. Work on this highway is 90% complete. I saw work crews busily working on the remaining stretches.
Work is also progressing and well advanced on the bridge from Bahia De Caraquez to San Vicente. It's due for completion in October, ahead of schedule. It will be the longest bridge in Ecuador. According to Ecuador's President, Rafael Correa, this project is second only to Quito's new airport in importance for Ecuador's tourism industry. With good cause. Sometimes, when traffic is heavy and with certain tides you could wait up to four hours to catch a ferry.
San Vicente has a shiny new (and staffed) airport terminal. Last year Ecuador's Icaro airline announced that it would start 737 flights to San Vicente with a 4 day per week service. Subsequent to this announcement, Icaro was bought by LAN. With the changes this route hasn't started yet. I expect this route to be back up and running in the near future.
This is a stretch of coast where you could build a small condo project...maybe with friends and/or family
Let's consider a hypothetical example.
You and four friends...or family members...or partners... get together and buy a beachfront plot of land just on the edge of one of the beach towns that dot this stretch of coast. For $200,000 you could buy a parcel big enough to build thirty condos...say, 800 square feet each. I saw suitable pieces of land along this stretch of coast when I was there.
Each condo would have a view of the ocean. The only thing between each of these condos and the beach is the pool.
At a build cost of $55 per square foot, it would cost your gang of five $1.32 million to build these thirty condos. That brings the outlay to $1.52 million (land plus build). Each of you takes two condos. That leaves twenty condos to sell.
Beachfront condos like this could sell for $100 per square foot--$80,000. That gives a sales value of $1.6 million. This covers the outlay for the construction and land acquisition in my hypothetical example.
Of course, this example is very simplistic. There are cash flow challenges, permits and approvals you'll need to get...and sales and marketing costs aren't included. Taking on any project like this involves some level of risk...and work.
Bottom line, though: this can be done. Do things right, and you and your four friends can each walk away with two free condos...and have your initial stake returned. This is the best stretch of coast to do this. The land prices are low...intrinsic value and upside potential are high.
You should check out this stretch of coast for yourself. My contact on the ground Gary Swenson, (JavaScript must be enabled to view this email address), can help you out. He's the developer at Coco Beach (where you can buy a beach house for $105,000), but he also acts as an agent and broker in the area. Tell Gary what you are looking for, and he will find you the right land at the right price.
Ronan McMahon
P.S. Also, you should have a look at this: my report from my visit to Gary's project Coco Beach.
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