“What Happened To The Good Deals You Talked About?”
“Boy, that real estate agent sure made a liar out of you, Kathleen,” joked one of the attendees at our Live & Invest in Panama Conference last month.
“Yes, I know what you mean,” I replied. “Though, in fact, I guess she made my point.”
That morning’s sessions had featured two presentations on renting in Panama City–one by me, then a second by a local real estate agent.
My talk was, “What The Real Estate Agents Don’t Want You To Know About Getting A Good Deal On A Rental.”
I explained that the rentals market in Panama City has fallen off dramatically in the past 18 months and that rents are lower than they’ve been in years.
However, I continued to explain, you aren’t going to find the best deals working through an agent. The real deals–the US$500-a-month finds, for example–are gotten direct.
Then the real estate agent followed me with a presentation showing US$1,500- and US$2,000-a-month rentals.
What happened to the US$500 places I’d referred to, attendees rightly wondered.
They’re out there. But, again, you aren’t going to find them working through an agent. This is the reality not only in Panama City, but in most of the markets we tell you about, as well.
For a couple of reasons.
First, agents work on commission. Here in Panama City, the commission is equal to one month’s rent, meaning agents draw a line. Most don’t like to bother with rentals priced less than US$1,000 or US$1,200. The work involved with putting a client into a US$500-a-month place is the same as the work involved with putting him into a US$1,000-a-month place, but the payoff for the agent is twice as big.
Second, sticking with Panama City as our case study, it’s the landlord who pays the agent’s commission. Imagine you’re a Panamanian with a little apartment you’d like to rent out. You’re looking for US$500 or US$600 per month. Are you going to try to list this apartment with an agent, knowing that, if he finds you a renter, you’ll have to pay him US$500 or US$600 in commission?
Or are you going to tell your friends, people at your church, parents of your children’s classmates, etc., about your rental and maybe run an ad in the local paper?
Probably you’re going to pursue the latter strategy, meaning your renter is going to find you by word-of-mouth or via the classified ads. And he’s going to have to speak Spanish.
In other words, to find the real deals in any market, you’re going to have to connect locally. If you’re operating in a market where the language isn’t English, this means you’ll have to read and speak the local language or have a contact on the ground you trust who reads and speaks the local language.
Realistically, you’re going to have to get on a plane and invest some shoe leather. You can start your search long distance with the help of google and yahoo. Search in the local language to penetrate the gringo market.
This long-distance Internet-search strategy, though, will take you only so far, because, well, you can’t believe everything you read on the Internet.
A Panama Circle member, Elizabeth, has been in town this month shopping for an apartment to rent in Panama City. Panama Circle Members Liaison Marion de Mena has been helping her find and vet options and accompanied Elizabeth on a viewing yesterday afternoon.
“Well, the person who put together the Internet ad for that apartment should win some kind of a prize,” exclaimed Marion when she returned to the office following the viewing.
“His photos made the place look big, bright, and beautiful. In fact, it was small, dark, and dingy.
“Plus, the photos with the ad included one showing a swimming pool. So I asked the agent showing us the apartment if we could see the pool.
“‘Oh, there’s no pool in this building,’ she replied.
“‘But the ad online shows a swimming pool,’ I said.
“‘That pool isn’t here, in the building. It’s nearby, at the Marriott Hotel down the street…'”
In other words, again, you can’t go by what you see on the Internet. Use an Internet search as a starting point, both to find agents and to get a vague idea of neighborhoods and building types.
But don’t commit to anything. Certainly don’t sign a lease long distance for an apartment you’ve never seen.
Get an idea of where you think you might like to be located. Start conversations with two or three real estate agents (remember, you should work with more than one, as listings are not shared). Then buy a plane ticket.
On the ground, your ideas about where you want to be and what kind of property you want to rent could change dramatically.