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Image of Kent Davis

What to Watch out for When Buying Real Estate in Panama

Author

Kent Davis (PJ-0752-09)

Published on

August 5, 2024

Updated on

February 24, 2025

If you’re diving into the real estate scene in Panama, you’re in for an adventure. With its unique market dynamics and vibrant property landscape, it can be both exciting and challenging. That’s why it’s crucial to understand what to watch out for when buying real estate in Panama. Luckily, Kent Davis has some top-notch advice to help you make smart choices, whether you’re eyeing pre-construction deals or existing properties. From navigating the intricacies of contract terms to understanding the local market nuances, Kent’s insights will give you a solid foundation. Whether you’re a first-time buyer or an experienced investor, knowing the ropes can make a big difference. So, buckle up and get ready to make the most of Panama’s real estate opportunities. Here’s what you need to know.

If you would prefer to watch the video click here!

General image of construction workers looking at a project

Pre-Construction Deals: What to Watch Out For

Buying pre-construction can be a great way to build equity, but it’s not without its twists and turns. Kent breaks down the essentials:

1. Timing Your Payments: Make sure your payments match up with the actual progress of the construction, not just the date you sign the lease. This way, you’re paying as the project moves forward, not just on a set timeline.

2. Watch for Hidden Costs: Developers sometimes sneak in extra charges. For instance, a construction escalation clause could hike up costs for labor or materials. Aim to cap this at 2-5%. If a developer pushes for more, it’s time to get cautious.

3. Extra Expenses: Developers often don’t include things like lighting, AC, or appliances in the final deal. This could mean spending an extra $20-$30K you weren’t planning on. Make sure to factor these costs into your budget.

4. Deed Delays: Don’t be surprised if you get the keys before the deed is sorted out. To protect yourself, use an irrevocable letter of payment to ensure the developer doesn’t get the balance until you officially own the property. If you’ve paid in full but don’t have the deed yet, it usually means the developer is using your deposit for construction.

Existing Properties: Key Points

General Image of a recent property purchase and the exchange of keys

When it comes to existing properties in Panama, here’s what Kent suggests:

1. Check the Property Age: The age of a property affects taxes and any potential tax breaks. If an agent isn’t sure, you can verify it yourself. Knowing the age helps with tax planning and maintenance.

2. Lease Pricing: Rental prices can be tricky. It’s smart to factor in a 30-40 day vacancy buffer when calculating your ROI. If an agent suggests a rental price of $2,000, listing it at around $1,800 might be more realistic to attract tenants faster.

3. Understand Commissions: Selling real estate in a slower market can take longer and cost more. Commissions usually average around 6%, but they can range from 4-10%. Also, be aware that taxes are part of the deal—don’t be fooled by anyone claiming you can avoid them.

4. Do Your Research: For accurate pricing, use multiple sources. MLS and the public registry are good starting points. Be cautious with pre-construction reports, though. Developers might report high sales percentages, but many units could still be held back. Cross-check data to get a clearer picture.

Image of the city skyline in Panama City

Jumping into the Panamanian real estate market can be tricky, but with Kent Davis’s tips, you’ll be better prepared. Whether you’re dealing with pre-construction contracts or figuring out pricing for existing properties, staying informed and proactive will help you make smarter decisions.

Remember, the more you know, the better equipped you’ll be to navigate the market. So, dive in with confidence and make those real estate moves with a little extra savvy!

Kent Davis (PJ-0752-09)

Kent Davis, founder of Panama Equity Real Estate, is a leading expert in Panama’s competitive real estate market. Originally from Honolulu, Hawaii, he holds a Marketing Information Systems degree from James Madison University. After a successful corporate career managing multimillion-dollar inventories at Hajoca Corporation, Kent pursued his dream of living abroad, moving to Panama in 2007.
Driven by an entrepreneurial spirit, he established Panama Equity to connect buyers, sellers, and investors with Panama’s top properties. Known for his transparency, expertise, and market insights, Kent has helped hundreds navigate Panama’s real estate landscape. Fluent in Spanish, he frequently publishes market reports to empower clients with informed decisions.
Beyond real estate, Kent is passionate about Panama’s culture, landscapes, and surf-friendly beaches. He lives in Panama with his wife and three sons, embracing the vibrant lifestyle the country offers.

 #panamacity, #realestate, Panama

2 Comments

  1. doug

    on August 23, 2024 at 1:08 pm said  

    From our experience we recommend that you do not even consider buying into any presale project in Panama. We lost all of our money in the Malibu project. IF you cannot physically put your hands on it do not buy it!. One cannot be too careful.

    Reply
    • Kent Davis

      on December 16, 2024 at 4:41 pm said  

      Shoooooot Doug, hate to hear that. We did not sell in that project.

      Reply

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