A group of maybe 25 Panamanians was standing in the center of the road just down from where we'd turned on to it, shoulder-to-shoulder, from one side to the other, making sure no vehicle could get by. Ordinarily, this time of day, this road would be bumper-to-bumper, but, early Friday morning, we were one of maybe a half-dozen cars we could see in either direction. Human road blocks like the one we faced had been set up at regular intervals. Nobody was going anywhere on Calle 50.
Including us. We turned down a side street and traveled not two more blocks before encountering another bunch of Panamanians standing shoulder-to-shoulder in the middle of the street. We turned again and again and again, down side streets and alleyways, traveling as far as we could until another group of protestors blocked our progress. Finally, we made it back to our street and pulled back into our driveway.
Now what? We wanted to get in to the office, but we could work from home as easily. I went inside, booted up my laptop, and sent an e-mail to our staff. If you can't make it into the office, don't worry, I told them. Lief and I can't either. Work from home. We'll be online all day. Contact us via Skype or our cell phones if you need anything.
Then we decided to go for a walk, to see for ourselves what was what. We walked the few blocks from our house to avenida Balboa and the Cinta Costera, where we climbed to the top of the pedestrian flyover. From that vantage point, you can see all up and down the city, as far as Casco Viejo. Balboa, the city's major thoroughfare along the bay, was a parking lot. Hundreds of vehicles were idling in both directions. They'd proceeded as far as the protestors would allow them, then they'd had no choice but to halt. We saw a taxi driver taking a nap. A woman painting her finger nails. A couple of dozen drivers had gotten out of their cars and were sitting on the curbs or wandering up and down the side of the road. Beside us on the flyover was a member of the Presidential Guard in full riot gear. He was sitting up straight and alert on his black ATV, watching. His fellows were spread throughout the scene below us. All watching. I took a picture from where we stood. This was the scene.
As Alberto had promised, the city was shut down. No one was going anywhere. But there didn't seem to be any cause for worry. We lived in Paris for four years. Manifestations are a part of day-to-day life in that city. Roads get blocked. The Metro is shut down. Cars are set on fire. (For some reason I've never understood, the French like to burn cars whenever they decide they've got some point they want to make publicly.) But life goes on. We watched the scene on Balboa along with the police guards for a little while, and then we started home.
Alberto called. "Mr. Lief, you and Miss Kathleen, you'd better stay inside. Don't come out for nothing or nobody. It's going to be bad today. You call me if you have any trouble."
"But we've been out, Alberto," Lief explained. "We took a walk along the Cinta Costera. Lots of people stuck in their cars. You're right about one thing. We're not getting to the office today. We'll work from home."
At home, Lief turned on the television and found the local news. The protestors were on the move. They were walking from Balboa and Calle 50, where we'd watched them, to the National Assembly building a few miles away. I went downstairs to my desk and my laptop. Lief said he'd work in front of the television.
An hour later, Lief called to me to come back upstairs. On the television now we saw protestors throwing rocks at the Assembly building and at the policemen guarding it. The police responded with tear gas. And then the scene deteriorated quickly. Protestors and police battled, and it wasn't long before looters were breaking into nearby shops and wreaking general mayhem.
Lief and I stood in front of the television for 15 minutes. We couldn't take our eyes off the screen. The scenes we were watching were taking place just a few miles from where we were standing. Maybe Alberto had been right all along. Maybe we should have been more concerned. What should we do now?
"Let's have lunch," Lief suggested. "Then, after, I'll take a walk back up to the Cinta Costera to see what's going on."
We ate and then I accompanied Lief on his reconnaissance stroll. Around our house now, traffic was moving normally, and on Balboa, too. Lighter-than-usual traffic, but it was flowing in both directions alongside the Cinta Costera. No signs of the protestors and their road blocks of a few hours earlier.
We'd been planning for a couple of weeks to go to the beach this weekend, leaving Friday afternoon. "What do you think? Should we still go?" I asked Lief.
Alberto called again. "Mr. Lief, you and Miss Kathleen, you'd better not go out to the beach. You'd better stay home. Stay in your house all weekend."
"But, Alberto, we're out waking around right now. And we're not the only ones. There are lots of people on the streets, walking and driving. People are moving around as normal. I think we're going to pack up and head out to the beach as we've planned."
"OK, Mr. Lief, but you call me if you need anything. I'll race out there. You just call me."
We packed, loaded ourselves, the kids, and all our beach gear into the car, and started out for the beach. To get from where we were to the Pan-American Highway leading to the beach where we were headed, we had to drive near where all the trouble had been all morning. I admit it. I was nervous. Lief didn't admit it, but I think he was, too. Maybe we were being foolish. No weekend at the beach was worth whatever trouble we might encounter along the way. Alberto seemed pretty sure in his warnings, and he wasn't the only one issuing them. Others were e-mailing photos of horrific scenes. Giving us play-by-play of horrific-sounding events. Maybe loading up the car with our children and driving in the direction of where all this was reported to be taking place was about as stupid a thing as we could possibly do at that moment.
But activity on the streets all around us was normal. And it continued to be the entire two-hour drive to Buenaventura, where we've spent the weekend.
As we approached Buenaventura Friday afternoon, Alberto called again. "Miss Kathleen, you can go out now. It's ok. Everything has been resolved. They've signed the first pass of the repeal of the law. They'll sign the second pass after midnight tonight. Then they'll sign the third pass on Sunday. Martinelli is due home Sunday. He'll sign the repeal on Monday. Everything will be ok. You go on out to the beach as you planned and have a good weekend."
"We're already there, Alberto," I explained. "We left the city about two hours ago. Thanks for the update. I'm very glad to hear that everything has been worked out finally."
The root of the trouble Panama has suffered the past couple of weeks and that reached its climax last Friday was the passing of a law by Panama's President Martinelli that would have allowed the state to sell off government land in the Colon free-trade zone. This land historically has been rented. The back story goes that the land in question is rented to foreign businesspeople who helped to finance Martinelli's presidential campaign. In return for their campaign support, Martinelli had promised them that he'd allow them to buy the land they'd been leasing for so long. Now, the story continues, he was following through on that promise.
Only the people of Colon were having none of it. You can't sell our land to those people, they decried. But the proceeds from the sales will be invested in Colon, Martinelli had promised, in infrastructure, schools, etc. The people of Colon didn't buy it. They have a long-standing mistrust of Panama City politics. They were adamant. You cannot sell any land in Colon, they told Martinelli. Repeal the law that says you can. Or else.
Martinelli didn't repeal. Colon followed through on its or else. At first, the trouble was centered in Colon, where the situation so deteriorated that three people were shot and killed, including a 9-year-old boy. That city has been shut down, out of business, for the better part of the past couple of weeks.
This past Thursday was the funeral for the little 9-year-old boy who'd been shot by police in the heat of one of the battles. The leaders of the Colon protestors called for a day of mourning and of peace. But, they promised, we'll be back with a vengeance on Friday if the law hasn't been repealed by that time.
President Martinelli, meantime, has been out of the country, on a tour of Asia. Very unfortunate timing for the man. Further complicating matters, it seems that, in Panama, a law can't simply be passed (or repealed). It must be voted on in three stages, over at least three days. Martinelli out of the country, the remaining government body unable to organize itself in time, the repeal process for the law in question wasn't begun by Friday. So the folks from Colon traveled down to Panama City, where they hooked up with the construction workers' union (this part of the story escapes me...what stake did the construction workers have in all this?), blocked the roads, and generally got up to no good until, finally, pass one of the repeal of the offending law was signed Friday afternoon.
Alberto called us again this morning. "Mr. Lief," he said, "all's quiet. All over Panama, all's quiet. The law is being repealed, and everyone has gone home. You come on back home to Panama City whenever you're ready." Kathleen Peddicord
P.S. What else this week?
Everyone you meet speaks English (it's the country's official language), but this belies the stories of their origins. The 350,000 people populating Belize today are descendants of migrants from Britain, yes, but also, more so, the surrounding Central American countries. You've got Mexicans, Guatemalans, Hondurans, and Nicaraguans mixing with current-day generations of the Maya who originally inhabited this land, the pirates who came later, the Mennonite farmers who began arriving on the scene in the 16th century, the British who ruled until 1981, and each other.
It's a country of freedom-seekers. The pirates came to ply their pirate trading out of view. The Mennonites came from Germany and the Netherlands so they could be Mennonites without anyone bothering them. The British came so they could bank in private. And the folks from the surrounding countries who've sought out Belize over the past few decades typically have made their way across this country's borders in search of safety.
Today, now, a new population of freedom-seekers is finding its way to these shores.
There I was met by the real estate agent who had promised to show me around. He wore shorts, a T-shirt, and no shoes. "Welcome to barefooted paradise," he greeted me. I was 24-years-old.
Ambergris Caye, likewise, was but a young girl. San Pedro town, the fishing village around which development was just beginning, consisted of three parallel roads, all unpaved. The hotel where I stayed that first visit and the several that followed over the next few years, the best on the island, could generously have been described as two-star. Amenities included towels in the bathroom (some days), a telephone at the front desk (that worked sometimes), and a front-line position on the Caribbean Sea...
Vicki and I helped her move.
In late 2004, a devastating tsunami hit the Phuket beaches here in Thailand and elsewhere. More than 5,000 people died in the Phuket area alone. For years after the tsunami, even after much reconstruction, Asian tourists stayed away. They feared ghosts. [Stories here and here.]
On a recent trip to China, Vicki and I wound up in a small-town temple during ghost day. Spirits living in the realms of Heaven and Hell visited the living. Locals welcomed them with virtual gifts. They sent clothes and money via smoke, using a temple incinerator and small bonfires behind the temple. The living also dined with the ghosts, setting them places at the tables piled high with food.
The cooks offered Vicki and me a place at the table, too. I wonder if with our white skin we might have looked ghostly to them. The folks at the temple set off firecrackers, monks performed rituals, and everyone did what was necessary to pacify visiting ghosts.
I got the impression that ghost day mattered a great deal. Forget to pay attention on ghost day--forget to pay your respects to ancestors and all other deceased--and you could be in for a tough year.
I confess I know very little about ghosts. To me it's as if the ghosts aren't there. But if you're going to buy real estate in Asia you need to know how ghosts can affect you..
By 2006, every available piece of land, including plots that barely clung to the hillside, was being built on. There were more building cranes on the skyline than TV aerials, construction trucks raced about everywhere, and the sound of building crashed around us. Another house in our complex came on the market mid-2007. It sold for 540,000 euro. By now the town was heaving with real estate offices with multi-lingual expat real estate agents selling to every European market. Se vende signs were everywhere, on both new and secondhand homes (of owners trying to make a killing on long-held family properties). By the beginning of 2008, things were looking worrying; there were so many empty new-builds, some abandoned. Builders were simply running out of money. The cranes had stopped swinging, and the mood had darkened...
PLUS: From resident global real estate investing expert Lief Simon:
Ambergris Caye, Belize, is a sun-seekers' paradise whose white sandy beaches, topaz waters, and swaying palm trees have been attracting both tourists and retirees for the better part of two decades. Thanks to this, San Pedro, formerly a simple fishing village, has grown to a full-fledged town with paved roads (well, three of them anyway), hotels, restaurants, boutiques, and even a wine shop. The tourist traffic has also helped create a short-term rental market on this small island.
Many hotels have been built over the years to supply it, as have many condo complexes. Short-term rentals on the island generate cash flow for both investors and part-time residents and offer an opportunity for future retirees to purchase a condo today and rent it out to general cash flow to help pay for their eventual retirement home.
Grand Baymen is one such condo community in San Pedro that we've told you about in the past. The developer here has contacted me to alert me to the launch of a new phase of one-bedroom apartments specifically intended for the rental market. He has put together a program that is attractive for both investors and future retirees. The big attraction is the guaranteed rent for the first three years.
Normally, I avoid guaranteed return investments. You have to question how a developer is going to be able to afford paying out the guaranteed yield. Maybe by overpricing the units? In truth, that's often the case.
In this case, however, I know the developer well. The pricing for these new units is in line with prices for condos of similar quality, and the developer owns an operating resort, meaning he has the ability to fill the units with renters to generate the income to cover the guarantee. In addition, he also has the financial stability to make up any shortfall should he not meet the occupancy rates needed to generate the required cash flow.
You don't have to take the guaranteed yield offer. You could simply buy a unit and put it into the rental pool yourself. You'd have to expect, though, that the units in the program would be filled first.
The real benefit of the offer the developer has packaged for these one-bedroom rental units (other apartments are available for those looking for something larger, but those don't come with the yield guarantee) is that he is also offering financing. The terms tie into the three-year guarantee. You make a down payment of 20% (US$23,980) and furnish the apartment (the developer has put together an US$8,000 furniture package). You finance the balance with the developer over the three-year guaranteed-yield period and then can refinance at the end of those three years through a local bank if you'd like.
The developer financing is at 10% interest with a 30-year amortization. This translates to a monthly payment of US$842. The monthly guaranteed rental income from the developer is US$1,250. Out of that US$1,250 per month, you pay the mortgage, the HOA fees (US$82 per month), and the property taxes (US$25 per month). That leaves you with a positive cash flow of US$301 per month. That's an 11% cash-on-cash return on your down payment and furniture cost.
After the guarantee period, you can refinance with the bank and keep your unit in the rental pool, pay off the loan and move in, rent out the place yourself, or any combination of those you like.
If you're an investor, this is a great opportunity to invest with a relatively small capital requirement (US$31,980 in total). You don't have to qualify for the initial developer financing, and you know that your first three years of mortgage payments are covered going in.
If you're a future retiree, you could buy today and lock in a good price on your apartment, enjoy some extra cash flow over the next three years, then move in when you eventually retire in three or more years.
The apartments are to be built in a development where the amenities are already in place, and the developer has a track record both in development and resort management. Both renters and owners at Grand Baymen have access to the beach through the sister resort Exotic Caye.
For the price, you'll be hard pressed to find a better offer from a developer on Ambergris Caye or anywhere in the Caribbean. For more details, inquire here.
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Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter.
Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.
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