Real Estate in Nicaragua is good but how good?

International real estate investors in search of the next big thing need to look towards Nicaragua. Its western coast is on the edge of a property boom and the region dubbed as the safest place in South America is ripe for investors.

A little known fact is that Nicaragua has one of the strongest economies in Central America and has made significant progress away from the turbulent 1980s. There are virtually no barriers to foreign ownership of property and there are many great deals to be had. Having said that, a buyer should proceed with caution because practices are still underdeveloped.

A buyer may use an agent, who can help negotiate the price and will have a better understanding of the area. Agents fees are negotiable, but typically range from 5-10% of the selling price and are usually paid by the buyer. Also, a local lawyer is a necessity when researching the title.

Property prices are increasing international real estate investors have seen returns upwards of 60% on purchases in key ‘hotspots' since 2000. Property prices have been rising by an average of 20% per year for the past four years and developments are springing up along the Pacific coast, in historical Granada and the Great Lakes.

Most properties in Nicaragua have reasonably clear titles, but there are some that should be avoided. Properties that were confiscated in the 1980s do not always have a clear title, and those that have agrarian reform titles or supplemental court ordered titles should probably be avoided. Once the buyer has found a property, then the buyer or agent negotiates with the seller. After a price is determined, the buyer places a non-refundable deposit on the property from 5-15% of the selling price. The buyer's lawyer will then check the title and it is a good idea to have a property inspection and survey done as well. The lawyer will request a Free of Lien document from the Public Registry Office, which will show any impediment to sale as well as the name of the real owner.

If the lawyer verifies the property title, then you can proceed to closing on the property. A new title, or Escritura, will be drawn up with the owner as the new title holder. The seller signs the deed and the final payment is made, often in cash. After this, the buyer's lawyer will register the property in the new owner's name. Upon registering the property there is a .5% registration fee and 4% transfer tax due. Once the property is registered then the new owner is the official title holder.

Foreign investment Law 344 assures that foreign and domestic investment receives the same treatment. The law eliminates restrictions on the way in which foreign capital can enter the country and recognizes the investor's right to own property and establish business enterprises as they wish. 100% foreign ownership is allowed – there is no requirement to have a local partner.

The mix of healthy economy, low house prices and a government bending over backwards to help you invest makes the region a very good place for overseas buyers.