How to Upgrade your Life while Spending Less

Wednesday, January 27, 2010

Dear Reader,

It’s hardly surprising that for many, a low cost of living now tops the list of priorities for choosing the right second home destination.

Over the last eighteen months, we’ve all felt the financial pressure of the global economic crisis. Stock markets fell. Banks failed. Pension plans and savings took a hit, along with the equity in our homes.

While our financial future is uncertain, one thing’s for sure: you can live a more luxurious lifestyle overseas, for less than it would cost back home. You’ll definitely notice the low prices in countries such as Costa Rica, Nicaragua, Panama, or Uruguay. However, when it comes to an ultra-low cost of living, you can’t beat Ecuador. You can relocate here and live on as little as $600 a month. And, in Ecuador, you’ll be surprised at just how affordable your dream beach condo or mountain retreat is, too.

I asked Mike Sager for some sample prices. Mike, originally a Californian surfer, moved to Ecuador’s Pacific coast in 2006, and he’s now a real estate broker that we work with. I knew that Ecuador was affordable from my trips there…but I’d forgotten just how affordable it was, until I saw Mike’s pricing:

Gasoline: $1.45 a gallon
Propane: 17¢ a gallon
Langoustines (Norway Lobsters): $2 a pound
Mahi-mahi/Tuna: $1 a pound
Milk: 80¢ a liter
Beer: 22-ounce bottle of Pilsener, 75¢ from a store (or 65¢ if you buy it straight off the truck). In a bar or restaurant, that same bottle will cost $1-$2
Chicken: $1.25 a lb, or $1 from a street vendor
Bananas: 5¢ each—regardless of how big or small they are (around 18¢ a lb)
Bread: 80¢ a loaf for white or wheat
Eggs: 12¢-15¢ per egg in stores-and 10¢ from a street vendor
Live in maid/cook: $150-180 a month

The produce here is among the best you’ll find in the region…super-fresh, a good variety, and a bewildering array of potatoes of every size, shape and color.

As you can see from Mike’s breakdown, you can afford a live-in maid or cook. They’ll help with laundry, cooking, cleaning, and shopping. That frees your time up…for relaxing, socializing, and hobbies.

It’s not just the cost of living that’s lower here. Real estate prices are some of the best values you’ll find, especially for beachfront. A true toes-in-the-sand condo, with good quality construction and finishings, runs around $750-$1000 a square meter along Ecuador’s Pacific coast. That’s less than half the price per meter for beachfront that you’ll pay in Panama, Nicaragua or Costa Rica.

Mike Sager has three-quarter acre ocean-view lots starting at just $20,000, close to Montanita (Ecuador’s surfing hotspot). He has a 9-bed 8-bath home too, overlooking the ocean, with a pool and tennis court. There’s over 3,000 square feet of living space, and the home is fully furnished. You could use it as a family residence or perhaps as a B&B. The asking price is $235,000—and the annual property tax is just $236. Contact Mike here for more details on these and other properties along Ecuador’s Pacific coast: (JavaScript must be enabled to view this email address).

In Ecuador’s elevated highlands areas, you’ll save even more. The cooler spring-like weather means you won’t need air conditioning or heating.

One property in Cotacachi, a mountain village a 90-minute drive outside Quito, caught my eye. I’d seen it pre-renovation, and the recently finished building looks great. It’s four-storeys, formerly an office, and converted into three apartments. It’s centrally located. The higher floors allow views of the entire village, and both Mt. Imbabura and Mt.Cotacachi. The condos are fully furnished. The price is $189,000, including the furniture…for the entire building. Potential rental income is in the region of $21,000. You could rent two units out and keep one for yourself. If you are interested, contact (JavaScript must be enabled to view this email address).

In Cuenca, Ecuador’s cultural capital and home to an active expat community, a modest property budget will get you a nice home. $55,000 buys you a centrally located condo, with 1100 square feet, and close to theaters, restaurants, museums, and language schools. Spending a little more—$89,000, gets you a brand-new 3-bed, 3-bath 1600 square foot townhouse within walking distance of shops, supermarkets and good restaurants.

Ecuador is the easy way to maintain—or even upgrade—your standard of life, at a reduced cost. The country is attracting more expats, who avoid the cold northern winters here—or (like International Living’s Dan Prescher and Suzan Haskins), escape the summer heat.

It’s worth mentioning that if you can’t live without those familiar brand names you find on the supermarket shelves back home, Panama is a better bet. Yes, the cost of living is higher than in Ecuador, but you’ll find Betty Crocker, Paul Newman salad dressings, and Oreos, and the prices for these branded goods are similar to those in the US. That’s not true of elsewhere in the region—if you can get these items, they usually cost significantly more.

Ecuador and Panama both have a retiree program. In both countries, that allows you to import your household goods and a vehicle tax-free. Both also offer 50% off entertainment (movies, concerts, and theaters), discounts on bus, boat and train fares (and even airline tickets), monthly energy bills…the list goes on. When dining with pensionado (retiree) friends in Panama, I’ve let them pick up the bill before paying my split—cutting the cost of dinner for us both.

You can get residency in Ecuador using your property, too. Investing $25,000 in real estate (plus $500 for each dependent) is all you need for an investor visa.

Coincidentally, both Ecuador and Panama use the US dollar as currency. That means no fluctuating exchange rates to worry about, or calculators to figure out how much your grocery items cost. It makes like-for-like comparisons on living costs and property prices easier.

Margaret Summerfield