Your Money – Where to Keep it – Part 2

How about a well balanced portfolio of income producing real estate properties where you are in control and can determine your risk tolerance levels and control your return on investment.  Say between 4 and 7% annual return plus a modest annual appreciation factor.

I found a great deal of interest in last week’s post on “Where to keep your money, banks and non-banks”.  A number of people that I know have bought CDs at credit unions here in Panama and are very happy with their 8.5% annual returns.  Many question why anyone would think that this is a risky proposition and state “no credit union has ever failed in Panama”.  I come from the commercial side of the real estate market with over 30 years in the industry and I have seen the boom of the Real Estate Investment Trust (REIT) era and the Savings and Loan industry, both of which were touted as being fail safe.  Then we had the Commercial Mortgage Backed Securities (CMBS) boom and bust and more coming down the pike where the promoters  of these securities at the same time often hedged against  them.  Hmmm, do I hear Goldman Sachs calling?

I would prefer to control my investment to the best of my ability.  Whether it is real estate or cattle, I know what my portfolio looks like and where it is going  and if I do not get greedy and take on too much risk, I will be rewarded over time.  I have individual investments from $165,000 to $311,000 where you can earn up to a 7% annual return after FF&E investment, rental commission, property management fees and maintenance expenses. You can diversify a portfolio further by selecting property in high demand areas of Panama, not just vacation rentals which tend to be more management intensive and volatile but basic housing in markets where the rental demand is good.  I also do not believe in expensive luxury property rentals and try to keep each investment under $400,000.

Here is an example of a unit in Trump Tower that will stay rented and is well priced.  You are investing in an iconic tower that is in one of the best markets of the City.  It is the tallest building in Panama and all of the Americas.  It is unlikely that you will see this building duplicated anytime soon.

Trump Ocean Club

One Bedroom Option

96 square meter 1 bedroom, 1.5 bathroom apartment

$290,000 – Apartment Purchase Price

$21,000 — Full Turnkey Furniture Package

$311,000 – Total Investment

This apartment rents for $2,600 per month

$31,200 annual income ($2,600 X 12)

– $2,600 (1 month commission for placing tenant)

– $2,860 (1 year property management fees, 10% of monthly income X 11 months)

– $3,271.68 (Annual HOA fees)

$22,468.32  Total Annual Net Income

7.22% return

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Valle Escondido

I have another option here in the gated golf course community Valle Escondido where I have a 2 bedroom 2 bath luxury condominium for sale.  It is currently rented for 6 months at $1,720 per month. I believe that you could push the rent for another 6 months if not an annual rental to $1,900 per month.    It is fully furnished right down to the $600 bedspread and other designer furnishings that the owner has recently purchased.

2,168 square feet 2 bedroom, 2 bath on the golf course and stream

$349,000 – Total Investment, Fully furnished

$10,320 income for 6 months in place

$11,400 income for another six months

$20,640 income for the year

-$860 (commission for placing tenant for 6 additional months)

-$1,720 (management fee)

-$3,060 (Annual Maintenance and HOA fees)

$16,080 Total Annual Net Income

4.6% return

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El Cangrego

This cute condo is in El Canregjo just around the corner from Via Argentina, Panama’s best walking neighborhood with some of the best restaurants, bars, cafes, and shopping in all of Panama!  This condo for sale includes all of the furniture and appliances.  This unit will rent out for approximately $1,100 per month.

910 Square feet, 2 bedroom, 2 bath  with real estate tax exoneration for 15 more years.

$165,000 -Total Investment, Fully furnished

$13,200 annual income

-$1,100 (commission)

-$1,100 (management fee)

-$1,620 (annual maintenance fee)

$9,380 Total Annual Net Income

5.7% return

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Balboa Avenue

Top of the line furniture and a great floor plan make this a comfortable and convenient condo for sale on Panama’s famous oceanfront boulevard, Balboa Avenue.  This one bedroom condo has fantastic ocean and city views, a great open layout, and an extra large bedroom that includes walk in closet and large bathroom with enclosed glass shower.  This unit will rent out for approximately $1,450 per month.

1,100 square feet, one bedroom, one and a half bath

$215,000 – Total Investment, Fully furnished

$17,400 annual income

-$1,450 (commission)

-$1,450 (management fee)

-$1,920 (annual maintenance fee)

$12,580 Total Annual Net Income

5.9% return

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Portfolio Investment

$1,040,000 – Total Investment

$60,508 Total Annual Net Income

5.8% return plus Annual appreciation