10 Questions To Ask Before Investing In Property Overseas
How many engineers and architects does it take to plan a private residential community on the west Pacific coast of Panama’s Azuero Peninsula? I counted 17 around the table this morning.
Lief is in land and design planning meetings all this week, and he invited me to sit in on this morning’s session. Listening to the electrical, environmental, water, transportation, and oceanographic engineers, the surveyors, and the land, planning, landscape, and design architects discuss and debate, question and theorize, I realized that the issues they are addressing as they prepare to build, market, and sell are the same issues you want to address before you ever sign on the dotted line and buy.
That is to say, when sizing up a development, you should consider and ask about:
1. Electricity. Have lines been run? If not, when will they be? Underground…or above?
2. Water. Is the developer providing a central water-supply system…or will you be required to dig your own well? If the developer is providing water for you, where is it coming from…and how much of it does he have? How many gallons per minute per occupant per unit in the master plan?
3. Which leads you to… the master plan. Is there one? Listening to these guys this morning, I was impressed by their thorough, complete, far-thinking, and forward-looking approach. They’re considering everything at once, from all angles, from the start. Believe me…this is not the case for all development projects in this part of the world. Ask to see a copy of the master plan…and question its details.
4. Sanitary and sewage. What’s the plan for dealing with runoff, sludge, waste water, and solid waste? Again, will you be required to dig your own septic tank, for example?
5. Drainage. Where is it flowing? Important question with big implications that few people think to ask.
7. Environmental impact. Check independently what environmental permissions would be necessary for a development of the kind where you’re considering investing in the country where you’re shopping. Then verify with the developer that he has obtained them all. I learned this morning that the environmental approvals agency here in Panama, for example, cares about the direct and indirect impact of building in, near, or around mangroves, wetlands, steep slopes, areas with known archeological significance, and established fishing areas.
8. Access. Does the developer own it himself…or is he leasing it?
9. Roads to the property. How often are they repaired, how well maintained?
10. Roads within the property. What’s the developer’s plan for repairing and maintaining?
My general recommendation always is: Buy what you see. The trouble is, everything you’re buying isn’t always visible.
You can’t tell by looking, for example, whether or not the developer in question owns the access road you travel before entering his property. Maybe he made a handshake deal with his neighbor to allow for his and his owners use of it.
Would that kind of arrangement make you nervous? I’d say it should.
You also can’t necessarily tell by looking if the developer obtained all the required environmental permits…if he yanked out a stretch of mangrove two years earlier (something anybody this day and age knows is a no-no and likely to lead to trouble)…if the septic tanks he’s installed have enough capacity to support the development once it’s fully built out…
Here’s what you can do, though:
Engage your own, independent attorney (separate from the developer’s attorney and separate from your real estate agent’s attorney) to research everything on the checklist I provide above. A good attorney will know the questions to ask.
And a good developer won’t mind answering them.
P.S. Now and then, I point out that you could fund your international travel or your new life abroad by taking up the travel writer’s trade.
Great idea…great opportunity.