Panama Real Estate Rentals
Introduction to Panama Rental Property – Some of you may feel like it is a good idea to rent before you buy in Panama. You may not know where in Panama you want to live. So we will discuss the basics of rental agreements and rentals in Panama.
Why Rent? – Panama is currently undergoing a real estate boom. Florida had such a boom a few years ago and now the prices are down 25% to 40%. Panama may experience the same price drop in the near future, or it may continue to rise. A lot of the Panama condos under construction are now selling for $1600 to $3000 a sq. meter (10.75 sq. feet in a sq. meter). Just one and a half years ago prime condos were selling for $900 to $1000 a sq. meter. What changed is the real estate speculators are investing in Panama trying to get quick profits by flipping real estate. So if a real estate bust comes to Panama like Florida the prices will go down so those who bought at the high side will not be happy and those who waited and rented may get a chance to guy in at relatively low prices. Unfortunately no one knows how the market will move, one can only guess. For these reasons we think the use of the lease option is a good move and we cover this in another sections.
Panama Rental Prices – What is being done today is the property owner takes the asking price and multiplies it by 1% for the monthly rent. So they ask $3500 for a condo with a $350,000 asking price. This is wishful thinking on their part. The real estate speculator is trying to make money on the property and will invest to make a profit. The renter is not going to make a profit (the exception is the lease option renter) so they rarely go for the big rents. After a few months on the market with no takers the rents come down. The property owners don’t get the differences in the mentality of the Panama renter versus the Panama real estate speculator. There is no linear progressive market for rentals with asking prices of $500,000 and up. Panama has few renters that would consider paying $5000 a month. True there are a few embassies that rent nice homes for their top people but there are not that many of these and most of the embassies already own homes. The embassy tenant is the dream of the property owner, not a reality. The properties that are being sold with asking prices of $500,000 to $900,000 are renting for about $3500 a month give or take a few hundred dollars no matter what the asking price is. A property with an asking price of $350,000 will probably rent for $2500 to $3000. I am talking unfurnished by the way. The top heavy condos and houses are offering a poor return on the investment in the rental market compared to the mid-level homes. Homes with asking prices in excess of $1,000,000 will rarely rent for anything even close to the rental asking prices these people try to get. It often takes a few months on the market for the owner to realize that the hi-end renter market in Panama is just not there. Maybe once in a great while someone has a 1,000 sq. meter duplex penthouse in a new building that they might get $7500 a month for but usually these are short term rentals or possibly they are rented to a person of means who is waiting for their condo or home to finish construction and they have no problems paying this kind of money for rent in the near term. This sort of situation is most rare and unusual. The property owner with a condo or home worth $1,500,000 will usually not turn it into a rental because of the low rents they will get. They prefer to just keep it on the market empty. The Panamanian does not really understand that a lived in property with nice furniture will sell better than a vacant empty one. A point in the favor of the Panamanian is that much of this real estate boom is due to speculators buying who never even see the units in person.
Real Estate Rental Case Histories – We actually assist our clients in their purchase or rental of property in Panama so we have some experiences. One recent situation involved a large 500+ sq. meter condo on a very high floor (it was a make believe penthouse that they called a penthouse) located on Balboa Ave. across the street from Panama Bay with sweeping water views. To understand Panama Penthouses view this page.
The unit had four bedrooms and was beautiful. The floors were highly polished marble. The ceilings were high and had murals painted on them. The unit had pillars, wet bar, bidet, solid wood closets, etc. It was the only apartment on the floor. The asking price was in the $800,000 range. When we saw the unit they were asking $5000 but we were told it might go for as low as $3800. The main problem with this unit was it was near Punta Patilla and at low tide around 4 PM it stinks of sewage so the windows would need to be kept closed and the air conditioning run and this will be costly due to the size of the unit. The other deficiency of this unit was that it had no balcony and the windows barely opened so the unit was built to keep the bad smells out. There was also a building going up next door which is fairly normal for Panama City. It actually rented for $3500 a month.
Another unit we negotiated on was in Punta Patilla on the good side in a great building a few years old. It was $350 sq. meters, they were asking $500,000 for the unit and wanted $3500 for the rent. It has a nice wet bar, beautiful floors, some rooms had water views. It was on a low floor and thus was one of the cheapest units in a 50 story building. We declined to make an offer but $2500 was suggested. If you are going to rent may as well not rent one of the cheapest units in the building.
The next unit was in a landmark building on Balboa Ave. It was mid way up in the building with sweeping water and city views. The unit had 375 sq. meters. It was two apartments to a floor. The building was beautiful even had valet parking and a concierge desk. Lobby had sweeping water views and waterfalls. The apartment was associated with a hotel so there was room service available. It had a full health club, massive swimming pool, tennis and a beauty salon. They started out at $5000. They were willing to move walls and insert doors in other words build out to suit for $3750, we declined and eventually broke off negotiations due to another property offer but it was felt that they would have taken the $3500 offer in a day or two.
On the lower side of things we worked on a nice older building 200 sq. meter apartment in El Cangrejo a desirable neighborhood walking distance to restaurants, bars, shops etc. We got them down to $800 a month for a three bedroom, no swimming pool but it did have security.
The point is the property owners can not get the rents they wish they could get. After the situation ripens with the property going unrented you can move in and make an offer that is somewhat lower that will be accepted because it beats a vacant apartment with money going out and nothing coming in.
Panama Real Estate Broker for Rentals – Do not expect to get a good rental from a Panama Real Estate Broker that is heavily involved in selling the new projects. These people have inflating real estate prices in their sales presentations and probably believe it. They will tell you how high the rental market is. They want to drive rentals up as high as they can so more people will be inclined to buy. They make very little on rentals compared to sales so they are a poor choice for a rental since they prefer sales. Go to a smaller broker who is probably not involved with the new projects under construction. They will value a rental commission which is typically one month rent on a minimum one year rental contract.
Panama Rental Agreement Contracts – Do have a competent attorney review or even write your rental agreement. If you break the rental agreement you generally are liable for loss of your security agreement which is one month rent and that is it. Be careful that the agreement is not otherwise written. It is wise to take pictures or movies of the apartment or house when you move in to document the condition of the property. Feel free to change the locks on the door and not provide them to the landlord unless there are other provisions. In some condos the keys are required to be on file with the building manager in case of a flood but many do not keep current with the keys on file.
Introduction to Panama Rental Property – Some of you may feel like it is a good idea to rent before you buy in Panama. You may not know where in Panama you want to live. So we will discuss the basics of rental agreements and rentals in Panama.
Why Rent? – Panama is currently undergoing a real estate boom. Florida had such a boom a few years ago and now the prices are down 25% to 40%. Panama may experience the same price drop in the near future, or it may continue to rise. A lot of the Panama condos under construction are now selling for $1600 to $3000 a sq. meter (10.75 sq. feet in a sq. meter). Just one and a half years ago prime condos were selling for $900 to $1000 a sq. meter. What changed is the real estate speculators are investing in Panama trying to get quick profits by flipping real estate. So if a real estate bust comes to Panama like Florida the prices will go down so those who bought at the high side will not be happy and those who waited and rented may get a chance to guy in at relatively low prices. Unfortunately no one knows how the market will move, one can only guess. For these reasons we think the use of the lease option is a good move and we cover this in another sections.
Panama Rental Prices – What is being done today is the property owner takes the asking price and multiplies it by 1% for the monthly rent. So they ask $3500 for a condo with a $350,000 asking price. This is wishful thinking on their part. The real estate speculator is trying to make money on the property and will invest to make a profit. The renter is not going to make a profit (the exception is the lease option renter) so they rarely go for the big rents. After a few months on the market with no takers the rents come down. The property owners don’t get the differences in the mentality of the Panama renter versus the Panama real estate speculator. There is no linear progressive market for rentals with asking prices of $500,000 and up. Panama has few renters that would consider paying $5000 a month. True there are a few embassies that rent nice homes for their top people but there are not that many of these and most of the embassies already own homes. The embassy tenant is the dream of the property owner, not a reality. The properties that are being sold with asking prices of $500,000 to $900,000 are renting for about $3500 a month give or take a few hundred dollars no matter what the asking price is. A property with an asking price of $350,000 will probably rent for $2500 to $3000. I am talking unfurnished by the way. The top heavy condos and houses are offering a poor return on the investment in the rental market compared to the mid-level homes. Homes with asking prices in excess of $1,000,000 will rarely rent for anything even close to the rental asking prices these people try to get. It often takes a few months on the market for the owner to realize that the hi-end renter market in Panama is just not there. Maybe once in a great while someone has a 1,000 sq. meter duplex penthouse in a new building that they might get $7500 a month for but usually these are short term rentals or possibly they are rented to a person of means who is waiting for their condo or home to finish construction and they have no problems paying this kind of money for rent in the near term. This sort of situation is most rare and unusual. The property owner with a condo or home worth $1,500,000 will usually not turn it into a rental because of the low rents they will get. They prefer to just keep it on the market empty. The Panamanian does not really understand that a lived in property with nice furniture will sell better than a vacant empty one. A point in the favor of the Panamanian is that much of this real estate boom is due to speculators buying who never even see the units in person.
Real Estate Rental Case Histories – We actually assist our clients in their purchase or rental of property in Panama so we have some experiences. One recent situation involved a large 500+ sq. meter condo on a very high floor (it was a make believe penthouse that they called a penthouse) located on Balboa Ave. across the street from Panama Bay with sweeping water views. To understand Panama Penthouses view this page.
The unit had four bedrooms and was beautiful. The floors were highly polished marble. The ceilings were high and had murals painted on them. The unit had pillars, wet bar, bidet, solid wood closets, etc. It was the only apartment on the floor. The asking price was in the $800,000 range. When we saw the unit they were asking $5000 but we were told it might go for as low as $3800. The main problem with this unit was it was near Punta Patilla and at low tide around 4 PM it stinks of sewage so the windows would need to be kept closed and the air conditioning run and this will be costly due to the size of the unit. The other deficiency of this unit was that it had no balcony and the windows barely opened so the unit was built to keep the bad smells out. There was also a building going up next door which is fairly normal for Panama City. It actually rented for $3500 a month.
Another unit we negotiated on was in Punta Patilla on the good side in a great building a few years old. It was $350 sq. meters, they were asking $500,000 for the unit and wanted $3500 for the rent. It has a nice wet bar, beautiful floors, some rooms had water views. It was on a low floor and thus was one of the cheapest units in a 50 story building. We declined to make an offer but $2500 was suggested. If you are going to rent may as well not rent one of the cheapest units in the building.
The next unit was in a landmark building on Balboa Ave. It was mid way up in the building with sweeping water and city views. The unit had 375 sq. meters. It was two apartments to a floor. The building was beautiful even had valet parking and a concierge desk. Lobby had sweeping water views and waterfalls. The apartment was associated with a hotel so there was room service available. It had a full health club, massive swimming pool, tennis and a beauty salon. They started out at $5000. They were willing to move walls and insert doors in other words build out to suit for $3750, we declined and eventually broke off negotiations due to another property offer but it was felt that they would have taken the $3500 offer in a day or two.
On the lower side of things we worked on a nice older building 200 sq. meter apartment in El Cangrejo a desirable neighborhood walking distance to restaurants, bars, shops etc. We got them down to $800 a month for a three bedroom, no swimming pool but it did have security.
The point is the property owners can not get the rents they wish they could get. After the situation ripens with the property going unrented you can move in and make an offer that is somewhat lower that will be accepted because it beats a vacant apartment with money going out and nothing coming in.
Panama Real Estate Broker for Rentals – Do not expect to get a good rental from a Panama Real Estate Broker that is heavily involved in selling the new projects. These people have inflating real estate prices in their sales presentations and probably believe it. They will tell you how high the rental market is. They want to drive rentals up as high as they can so more people will be inclined to buy. They make very little on rentals compared to sales so they are a poor choice for a rental since they prefer sales. Go to a smaller broker who is probably not involved with the new projects under construction. They will value a rental commission which is typically one month rent on a minimum one year rental contract.
Panama Rental Agreement Contracts – Do have a competent attorney review or even write your rental agreement. If you break the rental agreement you generally are liable for loss of your security agreement which is one month rent and that is it. Be careful that the agreement is not otherwise written. It is wise to take pictures or movies of the apartment or house when you move in to document the condition of the property. Feel free to change the locks on the door and not provide them to the landlord unless there are other provisions. In some condos the keys are required to be on file with the building manager in case of a flood but many do not keep current with the keys on file.
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