Palo Alto Weekly

Real Estate - September 14, 2012

Real Estate Matters

Build a dream home in Palo Alto for under $550,000?

by Nancy MacLeod

The first question is not "how" or "why" to build a home in Palo Alto for less than $550,000, but "where"? The answer is Panama.

My favorite area in Panama is Boquete, known as coffee country, which is located in the rain forest. Palo Alto is one of the neighborhoods in Boquete, which has a population of 30,000, including 7,000 ex-pats from around the world. Boquete is located between 4,200 and 4,500 feet above sea level; the year-round temperature is between 65 and 75 degrees. The entire area is blanketed with greenery and magnificent flowering plants; the air is fresh and fragrant and with each breath one feels invigorated.

Land is plentiful in Panama. Areas throughout the country vary in temperatures depending on elevation. The wet season is from April 15 to Dec. 15. The usual day starts a little overcast from sunup to 8:30. By 9 a.m. the skies are blue until one hears thunder between 2:30 and 4 p.m. It may or may not rain for a few hours depending on your location. One may see lightning and hear thunder alerting that somewhere near the clouds are crying and magnificent rainbows are formed.

The average price for a top-quality home on 1 or more acres in Boquete with amenities similar to what one would find in Palo Alto, Calif., is $550,000 — where a typical asking price could be $4+ million. Of course the California home would not be sitting on an acre or more.

There are numerous reasons why one would wish to own a home in Panama.

The home may be a second home or your primary residence. The people are happy and friendly, the currency is the U.S. dollar, which has much more buying power than it has in the U.S.A. Land is plentiful, extraordinarily beautiful and incredibly inexpensive. The tap water is safe to drink. Many people chose filtered water only for a more pleasant taste. It is helpful if one speaks the native language, Spanish, but many Panamanians speak English so communication is comfortable.

Panama has a first-world infrastructure including a U.S.-style capital city with high-speed Internet, the second largest Free Trade Zone in the world, a banking sector with more than 100 separate banks and a population of 3,300,000.

Panama is the business capital of the Americas. The World Economic Forum ranked Panama as the second most competitive economy in Latin America.

Panama was selected by both Forbes and Business Week magazines as one of the top places in the world for retirement.

Panama has foreign investment incentive laws, a simplified tax structure and boasts a 7.5 percent GDP growth rate.

The final question is how to secure a home. Once you have found the property you wish to purchase, employ an attorney to guide you through the transfer process. The majority of properties are held in trust and the corporation will be transferred into your name. The buyer will then own the corporation and can gift it in a number of ways, to a spouse, child, relative, etc. and no taxes are paid upon transfer. The initial transfer is taxed at 2 percent of the purchase price. There is no property tax for 20 years if you build a home.

A Multiple Listing Service "MLS" does not exist in all of Panama and although the real estate agents are licensed through a government agency, as a rule, the properties do not have exclusive listings with one agent.

A suggested outline to follow, should one decide to purchase in Panama, would be as follows:

1. Find a lot in your favorite area of Panama. Explore the different elevations and experience the temperature changes. From the highlands one can see both the Pacific Ocean and the Caribbean.

2. Employ an attorney to assist through the process of land transfer and securing your ownership.

3. Apply for a visa (which may take up to six to nine months). The Panamanian government wants to see evidence of income.

4. Employ an architect.

5. Employ a contractor.

6. Collect and choose materials for your home. Many products are available in Panama but many of your choices and preferences may be from other countries, which will need to be transported to your location.

7. Employ a landscape gardener. Many beautiful plants are readily available and flourish in this tropical wonderland.

Or if you wish to purchase an existing home skip items 4 through 7.

Nancy MacLeod has run an independent boutique real estate firm, Homes2Buy.com, since 1999. She was named Palo Alto Realtor of the Year in 2011. She can be reached at nancy@homes2buy.com. She wrote this while visiting and exploring the tropical paradise of Panama.

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