Real estate in Ecuador is one way to protect from the loss of the US dollar’s purchasing power that is bound to come from the current sub prime mortgage bail out.
A note from one of my readers started me thinking about Ecuador real estate’s potential by comparing Ecuador real estate and Ecuador prices with cost of living and real estate prices in India . She wrote:
“Hi Gary ! I just returned from India for 3 weeks and though I’d been there twice before, was totally shocked at how expensive everything was now. My first visit was in 1980, the next in 1993. I remembered being able to eat at restaurants, take taxis, stay at western style hotels and thinking things were pretty cheap compared to America .
“This time, we got to really learn first-hand how expensive things have become. India seems to have a small but emerging middle class. It’s expecting to have over 550 million in the coming years. At the moment though, it appears that either you have money or you don’t and the money resides in the big cities, not spreading elsewhere. Most villages are just struggling to have a single clean water source to gather water from.
“I’m guessing that the middle class is still in its early stages, both in the demand for comfort and convenience products and the ability to produce for that demand, thus, costs are still quite high. I went into several grocery stores (not that many there) and a 20 oz can of tomato puree was 140 rupees which translates out to $3.50. Ramon noodles — our poor man’s food — ran 301 rupees for a 4-pk. That’s $7.50. In fact, the only inexpensive items there were the fresh vegetables. Anything with an American brand name was at least a dollar higher than here though when you tasted it, it didn’t taste anything like the brand you’re familiar with.
“ India for sure is moving rapidly toward more western attitudes, behaviors, and demand for our products. Until their middle class clearly emerges (and spends), expect when traveling there to either do so as a 3rd world person (cheaply) or pay like a prince.
“The last thing I wanted to mention was I left this country feeling seriously angry about it, about the government, and looking at India as a potential place to relocate to. A mere 3 weeks later, my appreciation for America couldn’t have been deeper or more profound! This is the ONLY place on earth to live comfortably at a reasonable price. From gas to organic produce in Wal Mart to memory foam mattresses, it might be made elsewhere but only here can it be found easily, cheaply, and in abundance!”
This reader has a point….but not for long. Already the US dollar has fallen dramatically and has been falling badly over the last year. Yet as they say, “You ain’t seen nothing yet!”
A reader also just sent this note.
“Hi Gary , It’s likely that the U.S. Dollar Index will rise in the near-term to around ‘85’ (its now 81.36).
This is from some Elliott Wave type sources. I consider them rather accurate because they predicted this current rally long before it actually started. But they also say that when the rally to 85 is over, that it starts to get ugly. And if it drops below ‘80’ they said it gets REALLY ugly with the possibility that it will drop down into the 40s.”
The U.S. Dollar Index gives a general indication of the value of the U.S. Dollar’s purchasing power around the world. This started at 100 in 1973 and has gradually drifted down to 81. This index is formed by averaging the exchange rates between the U.S. Dollar and six major world currencies of 17 countries (12 countries of the Euro zone plus the five others that do the bulk of international trade with the US .
In 2005 the index was 92! In other words the purchasing power of the green back has dropped but has the potential to drop much, much more. When it does the inexpensive Wal Mart stuff will be gone!
Real estate anywhere offers some protection against the inflationary problem, but Ecuador is special because it is so close the US and because real estate prices and the cost of living are so low, yet the standard of living so high.
Of course, like anywhere, the most important part of finding good real estate value in Ecuador is finding good location, location, location.
Here are five factors to consider when looking at Ecuadorian property.
Factor #1: Good roads are a key to good property value in Ecuador .
Factor #2: In Ecuador communities where there are a large number of tourists help stabilize real estate value.
Factor #3: Ecuador land and buildings in the radius of an international airport have extra appreciation potential.
Factor #4: Local government can have more impact on Ecuador real estate than the national government so when looking at property in Ecuador look at the mayor and check out the history of the provincial government.
Factor #5: A unified and diversified population is a contributing factor to the value of Ecuador real estate.
Another great benefit of Ecuador real estate is that it offers so many solutions. Many of our readers have purchased Ecuadorian real estate for different reasons:
• Karl and Nancy Showalter, a Canadian couple, for example bought this delightful Ecuadorian home in Cotacachi to retire.
Nancy and Karl live in their little Ecuadorian retirement cottage they just bought a few months ago. They really got a bargain when they bought it and have absolutely transformed so it’s a wonderful home. First and foremost they had a wall built around their half acre Ecuadorian land plot. Then they had an Ecuadorian builder knock through a wall and replace it with an arch, a fireplace was also put in to take the edge off the occasional chilly evening and make for some cozy evenings in together. Nancy is due to retire soon and she can’t wait – seems as it she may even bring it forward. Here they are below outside their new Ecuadorian home, sitting at the dining table.
They also improved their Ecuadorian bungalow with an all new kitchen cabinets built by a local carpenter, the same one we use at our hotel in Ecuador El Meson de las Flores.
The whole kitchen was done for less than a thousand dollars, you can see the quality below.
• Bob Levasseur and Donna Fox are using their condo Ecuador differently. They originally planned to use this condo as a sunny second Ecuadorian home. Donna wrote:
“Four months ago, my husband, Bob and I, attended your International Business and Investing course in Cotacachi , Ecuador . We stayed for the Ecuador real estate extension to look at potential Ecuadorian investment property. What we found is our second home in Ecuador at the Primavera Condos in Cotacachi! Almost like magic! Today, I am returning to the US after a quick visit to see the CONDO’S progress and bring down some supplies. I want to report that our Ecuadorian condo is finished beautifully, comfortably and economically furnished and ready for our next, much longer, visit. This lovely, 3BR, 2.5 Bath , 1200 square foot condo with views of the Ecuadorian Andes from every room came together like magic.
“We look forward to living in our new second home in Cotacachi for much of the year. The smallest bedroom is set up as an office for Bob (Robert E. Levasseur) who will be able to continue his work as a full time Ph.D. professor of Management with an accredited on-line university, and as President of MindFire Press, an Internet-based self-publishing business focused on lifelong learning. Gary and Merri, never in all my life did I imagine it would be possible to live in Ecuador outside the US where I am only beginning to learn the language, much less find, furnish and establish a turn-key second home within a few months! Our first Ecuador real estate investment! Much affection and gratitude! Donna Fox.”
Later Donna wrote and told they enjoyed living in their Ecuador home so much that they were selling their home in Virginia and moving to live in their Ecuador property full time even though they are both still active in their businesses in the US . Broadband makes this possible.
Here are some pictures Donna sent of their Ecuador home:
Ecuador Real Estate Snapshot #10
Here are some more shots of the same condo units where Bob and Donna live. This unit is owned by Glenn and Carol who use it as a second home.
Clayton Black, from Texas and his wife, Elena, on the other hand, have lived in their Ecuador home for twenty years, and raised their three sons there.
Now they are developing an Ecuadorian gated community here. A 1,500 square foot Ecuadorian house like this one which is at the development can cost as little as $79,000 to build. With low Ecuador land prices you won’t spend much over $100,000. What can you get for this price in Canada , Europe or the US ? The views here are exceptional, both of Mt. Cotacachi and Mt. Imbabura which each rise majestically over 16,000 feet.
Ecuador Real Estate Snapshot #17 is a view from the Ecuador land Clayton is developing.
The reason however why Merri and I are here is that Ecuador is more than just great real estate value. Ecuador is perpetual sun, cool mountains, Amazon jungle, hundreds of miles of great coastline and Ecuador has some of the friendliest people in the world.
We hope to see you in Ecuador !
Here is our schedule for the rest of 2007.