Surprise! The best real estate buys aren’t where you might expect

Nicaragua: Biodiverse and Beautiful

Aram Terry originally went to Nicaragua with purely altruistic motives. After graduating from college, the Nashville, Tenn., native spent two years in Nicaragua with the Peace Corps working on small-business development. But Terry was so taken by the country that when his Peace Corps stint was over he decided to stay and open his own small business: Aurora Beachfront Realty, a real estate brokerage specializing in oceanfront vacation property.

For Terry, the reasons to stay and build a life and a business in Nicaragua were compelling. For one thing, he found the country to be well stocked with natural treasures, like rain forests, active volcanoes, and, of course, beaches. “The southern coast to me is the most attractive part,” says Terry, whose company is based in San Juan del Sur. “It’s really hilly and there are these rocky bays with white sandy beaches. You have the lakes close by, and it creates a constant offshore breeze.”

It’s not just surfing that attracts potential second-home buyers. The reef off the country’s Caribbean coast attracts divers from around the world, and not far inland from San Juan del Sur is Lake Nicaragua, a magnet for adventure travelers looking to kayak, hike, mountain bike, or simply relax and explore Granada, a well-preserved colonial town on the lake’s shores. In total, 17 percent of Nicaragua’s land is devoted to nature preserves, and 7 percent of the world’s biodiversity can be found in this relatively small nation. This bounty of attractions and activities is enticing North Americans to purchase beachfront second homes in Nicaragua.

Some exceedingly good bargains are also part of the appeal. Indeed, Terry’s company offers spacious three-bedroom condos in a development built right on the beach south of San Juan del Sur that includes a clubhouse, restaurant, and pool. The cost is about $275,000. Terry says it’s also possible to get half-acre lots with views of the Pacific Ocean for as little as $35,000. Beyond the increasingly popular San Juan del Sur, Haskins of InternationalLiving.com says large, four-bedroom houses right on the water are available for $100,000.

Financing Considerations

These low prices are due in part to the fact that Nicaragua is very much still a developing country. While travel to and from the United States is easy, the country’s infrastructure still needs some work. “It’s not for everybody. It’s not for people who are going to be complaining about the roads, or power going out,” says Terry. It’s also difficult, though not impossible, to get mortgage financing, which means many buyers must use equity from their U.S. homes and pay cash. Title issues are also more complicated, and both Terry and Haskins urge potential home buyers to enlist legal help to guide them through the process.

Not surprisingly, Nicaragua also has an image problem, the result of revolution and civil war. But Terry doesn’t see these events of recent years as having much, if any, impact on the market for second homes in the country. In fact, if anything he sees a potential silver lining should development slow up a bit. “The rate it was going was unsustainable, and things were getting developed ahead of infrastructure,” he says. “I would like to see a different approach to developing that is more community aware, instead of a pure pillaging.”

Panama: A Beachfront Bargain

Don King had a dream. After working as a marine biologist in Micronesia for four years, King (no, not the boxing promoter) decided he wanted to open a resort in the tropics. So, along with a couple of college buddies, King started to scope out potential beachfront sites in Central America, including countries like Belize, Honduras, and Costa Rica. But he learned something unexpected during his research. “Both the ex-pats and the Costa Ricans themselves who live near the border were saying you should be looking in Panama,” he recalls.

The reason: Costa Rica had been so successful at making its beachfront real estate appealing to North Americans that bargains were becoming harder and harder to find. Panama, on the other hand, has many of the same attractions as Costa Rica — including mortgage financing, title insurance, and an easy process for buying a second home — but at much lower prices. King discovered this when he landed in Bocas del Toro, on the Caribbean side of Panama. Having come from south Florida, where oceanfront lots typically cost $1 million plus, he was shocked to find that he was able to buy a property with 300 feet of beach frontage for less than $50,000.

King was even more thrilled by what was available in the town itself. “I really fell in love with it. I am a marine biologist and there is a beautiful marine system here, a tropical forest, and two indigenous tribes,” he says. “I thought it was perfect.” Instead of opening up a tropical resort, though, King opted to set up a real estate company, Bocas del Toro Realty Services, which offers beachfront second homes and condos for as little as $90,000. The money King generates from his real estate company goes to fund a wide variety of local projects he’s launched, including a school to educate indigenous people, an experimental farm, and a number of environmental conservation initiatives.

Elsewhere in Panama there is plenty of activity in the beachfront second-home market, which has emerged seemingly instantaneously. “Three or four years ago we would not have considered Panama to be relevant in any regard; it wasn’t on our radar screen,” says Christopher Hill, CEO of Stewart Title Latin America. “And almost overnight it has become a major player.”

Part of that emergence is due to an aggressive upgrade of the country’s infrastructure, as well as the generous Pensionado program, an initiative developed by the Panamanian government to lure North American retirees to the country. Immigrants with a guaranteed income of $500 a month receive steep discounts on everything from entertainment to home-closing costs. “These draw the seasoned baby boomers who are tired of the cost of living in the United States or other more discovered countries,” says Asia Sherman, manager of public relations with Azueros.

The allure of Panama can also be attributed in part to the plethora of appealing coastal locations. There are a host of beachfront areas two hours southwest of the capital off the Pan-American Highway. As in Nicaragua, she adds, it’s possible to find modestly priced homes near relatively secluded beaches on this stretch of the Gulf of Panama.

Honduras: A Diver’s (And Movie Star’s) Paradise

It was divers, not surfers, who first flocked to Roatán in the Bay Islands off the coast of Honduras. “They have been popular with divers for years,” says Haskins. And there are still plenty of reasons for divers, and others, to flock to Roatán. “It’s a gem. There are white-sand beaches that go on for miles, crystal-clear warm waters populated by beautiful rainbow-colored fish. It’s just heaven on earth for a diver,” Haskins adds.

People also come to Roatán for its old-world charm. “Roatán is not an island that has, or ever will have, high-rise hotels or condominiums lining the beaches,” says Steve Hasz of Roatan Life Real Estate. “People come here not for glamour, but for a Hemingway-like version of Key West,” he says.

And word about the quality of the beachfront property available in Roatán has clearly gotten out. According to Michael Cox, owner and manager of Roatan Brokers Real Estate, a tremendous amount of real estate activity is taking place on this island of about 80,000 inhabitants, including the construction of two golf courses, one of them designed by Pete Dye. “There is somewhere north of $500 million in current proposed construction, including the extension of the current pier for Royal Caribbean, and a second pier for Carnival,” he says. “There are also something like 4,000 condos under planning or under way, and a 912-room hotel.”

Cox has seen this kind of beachfront development before. In the 1960s, he was in Maui trying to sell half-acre waterfront home lots for $5,000. People then thought he was crazy, saying nobody would ever travel that far from the mainland United States to get to a vacation home. “I’m basically doing the same thing now as I was doing then. People are always looking for a second home and a place to retire in a better climate,” he says. “This has everything Maui had, plus the barrier reef — one of the top dive spots in the world — and gambling. And it’s closer to 90 percent of the United States than Maui is.”

The Stars Are Coming

As confirmation of Roatán’s emergence as a hot spot, Cox points to recent visits by celebrities like Michael Douglas, Richard Gere, and Cameron Diaz. Of course, with the growing interest in Roatán, prices have increased during the past few years. Today, many beachfront condos cost between $249,500 and $2.2 million.

With so much activity in Roatán, bargain hunters have also begun to look elsewhere in Honduras, where prices are still quite cheap. On the other Bay Islands around Roatán — Utila and Guanaja — prices for condos, homes, and house lots are generally much lower. On the Honduran mainland too, particularly in the beachfront town of La Ceiba, more and more real estate is for sale at bargain prices. The Honduran government has made it extremely easy for foreigners to buy property, and in many places it’s possible to get title insurance from a company like Stewart Information International. Financing, however, is more difficult to obtain.

Dominican Republic: Bargains and Golf

If you’re looking for a bargain in the Caribbean, set your sights on the Dominican. Located on the Caribbean island of Hispaniola, which it shares with Haiti, the Dominican Republic has long been overlooked by second-home buyers. The result: some very good prices. “We say it’s the least expensive place to buy in the Caribbean these days,” says Haskins.

However, people are catching on to the fact that the Dominican Republic is a wonderful place to own beachfront vacation property. The north coast of Hispaniola, which has long been a lure to European vacationers and backpackers, is increasingly popular among those seeking adventure holidays. Around the towns of Puerto Plata and Cabrete, which boast easy access to mountains and spacious beaches, mountain biking and scuba diving are extremely popular. Cabrete is also known for its excellent windsurfing and has hosted the World Windsurfing Championships.

Not everything on the island’s north coast is geared toward bargain hunters. Both Punta Cana and Cap Cana have become destinations for wealthy Europeans and North Americans. And the prices and facilities reflect that, says Haskins. “Arnold Palmer is building a signature golf course that he calls his Pebble Beach, and it’s going to be extraordinary,” she says. “And the places there start at $800,000 and up, but it is one of the most beautiful beaches you’ll see in the Caribbean.” Not to be outdone, Jack Nicklaus is designing three golf courses in Cap Cana, with many of the holes right on the stunning oceanfront.

Haskins recommends investigating a small town called Las Terrenas, which is on the north coast of the Semana Peninsula. It is a polyglot place, where people speak French, English, and Spanish and cultures mix easily. “It’s a really interesting place. There are little French bakeries, and most of the local people live not on the beach but along the road that cuts through town. They don’t care to live on the beach,” she says. Which, of course, means there are plenty of places for foreigners to set up a home on the ocean.

Whichever country you decide to investigate, Stewart Information’s Creekmore believes there are plenty of opportunities to make a good investment and find a place that you love. “I see the region becoming the most viable second-home market coming up in the next two to five years, depending on what happens here in the United States,” he says. “Clearly, if things stay flat for an extended period, I think these countries will do very well.” — Chris Warren