Condo Investment In Panama City: A Guide To Buying Smart

If you're looking to invest in a condo in Panama City, you'll be pleased to know that the country welcomes foreign investors with open arms. Panama City offers a diverse range of settings, from the vibrant metropolitan hub to the tropical beachfront or the quiet mountains.

The first step to buying a condo in Panama City is to find a property you like. You can work with a real estate agent who can guide you through the process and explain the pros and cons of each property. It is also important to seek legal advice from a qualified attorney to manage the title search and gather necessary documents.

When considering a condo in Panama City, it is crucial to look beyond the purchase price and factor in overall ownership costs, such as property tax, building administration, and maintenance. Additionally, the age of the condo can impact its sale price and tax advantages, so it's essential to weigh these factors carefully.

With a booming economy fuelled by the Panama Canal expansion, now is an excellent time to consider investing in this tropical paradise.

How to find a condo in Panama City

When looking to find a condo in Panama City, there are a few things to keep in mind. Firstly, it is important to engage the services of a reputable real estate agent who can help you navigate the market and find a property that meets your specific needs and requirements.

There are a variety of condos available in Panama City, ranging from luxurious beachfront properties to more affordable options. The average price of a condo in Panama City can vary depending on factors such as location, quality, and overall cost. While Panama City condos may be cheaper compared to cities like London or New York, they might not offer the same value when compared to cities like Miami or Medellin.

When considering the cost of a condo, it is important to look beyond the purchase price and take into account factors such as property tax, building administration fees, and maintenance costs. Condos in Panama City may have lower monthly fees due to lower labour costs and generally lower material costs. Additionally, newer condos in Panama may have tax advantages, with a 20-year property tax exoneration that is fully transferable to new buyers.

When searching for a condo in Panama City, it is advisable to utilize online resources and real estate websites that allow you to filter properties based on your budget, desired location, and specific features you are looking for. These websites often provide detailed information about each property, including virtual tours, photos, and property descriptions.

• Avenida Balboa, Torres del Pacifico Penthouse: This beautiful oceanfront penthouse offers stunning views of Panama Bay. It has 4 bedrooms with en-suite bathrooms, a kitchen, an additional bedroom and bathroom, hardwood floors, and 3 parking spaces.
• Bella Vista Costanera Building Luxury Condos: Located in the heart of Panama City, next to a park with ocean views, these elegant condos offer top-of-the-line social areas and amenities.
• Punta Pacifica PH Bellagio: This exclusive apartment offers luxury and comfort in a sought-after neighbourhood. It features 4 bedrooms with en-suite bathrooms and walking closets, a closed family den, a large terrace with ocean views, a large kitchen, and 3 parking spaces.
• Los Libertadores: This 2-bedroom apartment is located on the 6th floor, offering pleasant views and a tranquil atmosphere. It is well-lit and spacious, with an open living and dining area, a functional kitchen, and a bathroom. The building provides access to public transportation and proximity to shops, restaurants, and green spaces.
• PH Pearl at The Sea, Costa del Este: This impressive 3-bedroom apartment offers luxury and spectacular views of the sea and promenade. It features a closed kitchen, a den, a balcony with sea views, a laundry room, and 2 parking spaces.

Remember to do your due diligence, carefully review all the available options, and seek professional guidance to make an informed decision when purchasing a condo in Panama City.

The pros and cons of using a real estate agent

Using a real estate agent can be a great help when buying a condo in Panama City. Here are some pros and cons to consider:

Pros:

• Expertise and Connections: Real estate agents are professionals with extensive knowledge of the local market, including the different neighbourhoods, property values, and upcoming developments. They can provide valuable insights and help you navigate the complex process of buying property. Agents also have a wide network of industry connections, which can give you access to more property options and make the transaction smoother.
• Negotiation Skills: Real estate agents are skilled negotiators who can help you get the best possible deal. They know the market trends and can advise you on pricing strategies, saving you time and money.
• Paperwork and Legalities: Buying property often involves a lot of paperwork and legal requirements. Real estate agents can guide you through the process, ensuring that all necessary documents are in order and helping you avoid potential pitfalls.
• Saving Time and Effort: Agents can do the legwork for you, from searching for properties that match your criteria to scheduling viewings. They can also handle the back-and-forth communication with sellers and their agents, making the process less time-consuming and stressful for you.

Cons:

• Potential Bias: Real estate agents typically work for the seller, so there may be a conflict of interest. They may prioritize the seller's needs and push for a quick sale, which might not be in your best interest as a buyer.
• Limited Options: When showing properties, agents may focus on their own listings first or only show you properties where they can get a commission. This may limit your options and prevent you from finding the best property for your needs.
• Additional Costs: Hiring a real estate agent means paying their fees, which are typically a percentage of the property's sale price. This can add to the overall cost of your investment.
• Varying Levels of Service: Not all real estate agents are equally dedicated or experienced. Some may be more motivated by their commission than by finding you the perfect property. It is important to research and choose an agent with a good reputation and extensive local knowledge.

How to negotiate the best price for your condo

Negotiating a good price for your condo in Panama City will be key to making your dream purchase a reality. Here are some tips to help you secure the best deal:

Study the Market

Firstly, arm yourself with knowledge. Study the condo association rules and other documentation, and research average prices for condos in the area. How long has the property been on the market? What is the level of interest from other buyers? How quickly does the seller want to sell? All of this information will help you understand what your opening offer should be.

Understand the Seller's Position

Find out why the seller is selling. If they need a quick sale, you may be able to negotiate a lower price. Also, be aware of other potential buyers. If there is more than one interested party, you may need to enter a bidding war, so be prepared to stick to your budget and avoid getting carried away.

Make an Informed Offer

When you are confident the condo meets your requirements, prepare your offer. It is standard practice to go between 5-7% below the asking price, and you should always leave room for negotiation. Your offer should be supported by evidence and explain why you are offering a lower price, perhaps by including comparisons of similar properties in the area.

Be Prepared to Negotiate

It is rare for a seller to accept the first offer, so be ready to negotiate. Consult your agent and analyze any counter-offer you receive. If you think there is room for further negotiation, come back with a new offer.

Enlist Professional Help

Rely on the specialized knowledge of experienced agents and realtors. They can help you draft the offer, handle negotiations on your behalf, and give you the best chance of achieving your goals.

Other Ways to Negotiate

Remember, it's not just the price that can be negotiated. You can also negotiate other aspects of the transaction, such as closing costs, the timeline for closing, and what furniture or appliances are included in the sale.

Good luck with your condo purchase in Panama City!

The legal process of buying a condo in Panama City

• Research and define your objectives: Start by conducting thorough research on the real estate market in Panama City. Explore different neighbourhoods, property types, and decide whether the condo will be for personal use, investment, or a mix of both. Understanding your goals will guide your search.
• Engage legal experts: Before diving into property listings, it is highly recommended to consult with legal professionals specialising in real estate law. They can provide invaluable guidance on legal considerations, perform due diligence, and ensure a smooth transaction.
• Financing options: Determine your budget and explore financing options. Panamanian banks and international lenders offer various solutions. If you plan to obtain a mortgage, be aware that the process and requirements may differ from your home country. Most banks in Panama will typically loan 60-70% of the property value, but foreigners without local banking history may only receive 50%.
• Find a broker: A good broker will assist you in finding properties that match your criteria and budget. They can also help you navigate the complexities of the local market and set up appointments for viewing properties.
• View properties: Start viewing properties that align with your criteria. It is advisable to go through your broker when making appointments, as they can save you time and ensure the listings are accurate and up-to-date.
• Ask the right questions: When viewing properties, ask questions to assess the wisdom of the investment. Inquire about how long the property has been on the market, the seller's situation, any previous offers, rental history, and any known construction deficiencies.
• Get a great lawyer: Engaging the services of a competent lawyer is crucial, even if you are buying directly from the seller without an agent. A good lawyer will reduce the risks and complexities of the transaction. Look for a lawyer who is responsive, communicates effectively, and comes recommended by a trusted source.
• Offer and negotiations: Once you've found a condo you're interested in, make an offer and negotiate the terms, including price, closing date, and any contingencies. Ensure that all costs, including taxes, are included in the negotiation to avoid surprises later.
• Due diligence: Conduct due diligence on the property, including obtaining a title search, survey, and any necessary inspections. Consult a real estate attorney to review contracts and ensure the legality of the purchase.
• Closing: Once due diligence is complete, you'll sign a purchase contract and pay a deposit. The final payment will be made when the seller transfers the property title to you.
• Taxes and fees: Be prepared for various taxes and fees associated with the purchase, such as transfer taxes, registration fees, and legal fees.
• Post-purchase registration: After completing the purchase, register the property with the local authorities and obtain any necessary permits or licenses.

Remember, it is essential to work with professionals who are knowledgeable about local laws and regulations to ensure a smooth and legally sound transaction. Don't hesitate to consult with a real estate agent, attorney, and accountant throughout the process.

The costs and taxes involved in buying a condo

When considering buying a condo in Panama City, it is important to be aware of the various costs and taxes involved in the process. Here is a detailed overview:

Monthly Condominium Fee:

Each owner of a condo unit is required to pay a monthly fee, which is calculated based on the amount of space they own. This includes the number of bedrooms and square footage of the unit, as well as the unit's floor and view. The fee is used to maintain common areas, insure the building's exterior and common areas, and cover other shared utilities.

Utilities:

Condo owners are responsible for their electricity bills, which can vary depending on the unit's location within the building. End units, for example, may have higher electricity costs due to a lack of shared or insulated walls. Seasonal variations in electricity usage should also be considered, with higher costs during the summer months.

Insurance:

While the condominium association typically has a master insurance policy for the common areas and the main building, individual condo owners are responsible for insuring the interiors of their units. The cost of insurance depends on the year the condo was built, with older condos generally having higher quotes. Additionally, owners may need to purchase a contents policy to cover their personal belongings.

Property Tax:

Property tax is calculated as a percentage of the entire value of the condo and is the responsibility of the owner. In Panama, property taxes are levied on properties with a registered value of $30,000 or more, and the maximum annual property tax is 2.1% for real estate valued above $75,000.

Transfer Taxes and Closing Costs:

When purchasing a condo, buyers should be prepared for transfer taxes and closing costs. The Panamanian government charges a 2% property title transfer tax, which is based on the registered value of the property. There is also a 3% advance of capital gains tax, and additional fees charged by the Public Notary and the Public Registry, typically ranging from $200 to $300. Closing costs can vary but generally exclude taxes and are approximately 1-2% of the sale value.

Legal and Administrative Fees:

It is advisable to seek the services of a qualified attorney to handle the due diligence, title search, and contract preparation. Legal fees can be estimated at around 1-2% of the transaction value, including notary and public registry costs. Additionally, there may be fees associated with setting up a Panamanian corporation to hold the property, which offers certain tax advantages and asset protection.

Down Payment:

When signing the Promise to Buy/Sell Contract, sellers typically require a down payment of around 10% of the total purchase price as a show of good faith. This amount can vary depending on the specific transaction and negotiation between the buyer and seller.

Maintenance and Repairs:

As an owner of a condo, you may also need to contribute to the maintenance and repair of the building. This includes costs for repainting, landscaping, and general upkeep of common areas such as swimming pools, gyms, and social spaces. These fees can vary depending on the age and condition of the building.

It is important to carefully consider all these costs and taxes when planning to purchase a condo in Panama City. By understanding the financial responsibilities involved, you can make a more informed decision about your investment.

Frequently asked questions