Are you seeking investment strategies in the Panamanian real estate market? As we mentioned in the article “3 Great Opportunities in Panama’s Real Estate Market”, this market is one of the most attractive in Latin America due to its economic stability, cultural diversity, and strategic location.
Panama offers investment opportunities for various types of projects, including residential, commercial, tourism, and ecological. Furthermore, it provides fiscal, legal, and migratory advantages that facilitate access and profitability for foreign investors. We have detailed all of this in our blog.
Moreover, this industry is a growing sector in the country with high demand and a diverse offering of quality properties. According to the latest report from the Panamanian Chamber of Construction (CAPAC), the value of home sales in the first half of 2023 exceeded one billion dollars, representing an 18% increase compared to the same period the previous year.
With all of this in mind, in this article, we will discuss four strategies for investing in the Panamanian real estate sector:
Buy and Hold for the Long Term
An effective investment strategy in the Panamanian real estate market is to focus on seeking long-term appreciations. In other words, selecting properties with growth potential that can increase in value over time due to factors such as location, demand, urban development, or construction quality.
These properties can generate passive income through renting, allowing for the amortization of the investment and regular profits. Furthermore, rental income can serve as collateral for financing the purchase of the property through mortgage loans or personal loans. This way, financial leverage can be utilized to acquire more properties and increase one’s wealth.
While this strategy may seem obvious, it is quite feasible in a country like Panama, where the financial sector is quite friendly to this type of investment.
On the other hand, long-term property management involves maintaining it in good condition, making improvements that enhance its value, and seeking reliable and solvent tenants.
It’s also essential to stay attentive to market fluctuations and sales opportunities to maximize profits. To facilitate this management, you can rely on the services of a professional real estate agency (contact us to assist you with this).
Flipping, buying and selling in the short term
Another investment strategy in the Panamanian real estate sector is flipping, which involves quickly buying and selling properties to generate fast profits. This strategy is based on several components, such as:
- Identifying buying opportunities below market value: Investors can search for properties that are inexpensively priced for various reasons, whether due to their poor condition, legal issues, or even though they are in high-demand areas, they are being sold at clearance prices. These properties can be found through auctions, foreclosures, wholesale sales, or via a network of contacts.
- Renovating and improving properties to increase their value: Investors can make necessary renovations to make a property more attractive without investing too much money or time. This approach aims to achieve a reassessment of the property’s value.
- Marketing strategies to quickly find buyers: Investors must promote the property through various channels, such as the internet, social media, classified ads, or real estate agencies. They also need to set a competitive price that allows them to obtain a good return on investment and attract potential buyers.
Due to the dynamism of the Panamanian real estate market, this strategy is quite feasible for all types of real estate assets.
Property Rental
The third investment strategy in the Panamanian real estate sector that we will mention is property rental:
This city attracts many tourists, making property rental a lucrative sector.
This strategy involves generating passive income through the leasing of real estate for short or long periods. To implement it, the following points should be taken into account:
- The investor must seek properties with a good location, good condition, proper layout, and adequate furnishings. These properties should be in areas with high rental demand, such as the city center, tourist areas, or commercial zones.
- It’s essential to know how to set a rental price that allows for a good return on investment but is also affordable for potential tenants. To do this, a market study should be conducted, comparing prices with other similar properties in the area.
- Understanding the legal aspects of this economic activity is crucial. For example, drafting an appropriate lease agreement that outlines the rental conditions, including duration, deposit, responsibilities, and rights of both parties. It’s also essential to maintain good communication with tenants, address their needs, and resolve any issues.
- Naturally, advertising strategies are also necessary to continuously attract tenants. Investors should promote the property through various means, such as the internet, social media, classified ads, or real estate agencies. Platforms like Airbnb are also commonly used.
Diversification is the best investment strategy in the Panamanian real estate sector
Despite the opportunities present in Panama’s real estate sector, like any market, it is not without risks. Therefore, diversification is important:
This means investing in different types of properties and in multiple locations to reduce risk and increase profit opportunities.
Investing in different types of properties allows you to take advantage of the strengths of each market sector. For example, residential properties often have high demand and good rental profitability, while commercial and industrial properties can offer higher long-term income and appreciation.
Additionally, each type of property has its own characteristics, requirements, and challenges, so a good understanding of the market and customer needs is essential.
Finally, remember that if you wish to invest in the Panamanian real estate market, Uncover Panama can provide professional guidance. Contact us for assistance!