I have had my eyes on a sweet piece of land lately, and as you may know, I have a bit of cash that I want to invest. About $100K already went into buying my share of the beach access on the 90 acres land development in the North, and doing some works on the roads and digging a well over there, so I have $100K left. And it just happens to be the price of this parcel:
In Guatemala City, the best neighborhoods are in private condominiums, and this is the case for this one. It is on a green hill with lots of nice houses, 6 miles away from the historical center, and about 2 miles from busier parts of town with malls, supermarkets, bars and restaurants. You never walk in Guatemala City, it is like the US, so 2 miles is a reasonable distance to be away from the supermarket, although when I lived in the epicentre before, I enjoyed having the supermarket one block away. As a European, I am not used to having to drive to buy bread and other necessities.
But now that I live in the jungle, I have a car, and the supermarket is 20 miles away, so it is not that much of a problem.
Anyway, the land is 18 meters by 45 deep, meaning you could do 5 parking spaces, then the maid and handyman quarters, then the house in the back, with a gorgeous view over the volcanoes and a nice garden.
At night, you also see the whole city at your feet, with little lights glittering, which is something I love.
My next door neighbor to the left, whose tile roof you can see built a 12,000 sqft house that he wants to sell for $1,500,000. I don’t think he will get it but the property could be worth $1M.
For being on top of a hill, the land is still pretty flat, meaning limited earth movements, that can be very expensive when you have to bring caterpillar to move big volumes on steep lands.
Another advantage is it is already built on three sides, so you won’t have a bad surprise that your neighbors in front block the view with a sky high building. And it also means free perimeter wall!
I really like it, and my plan would be to build a 300/400 sqm house (3,000/4,000 sqft), maybe to use myself as a city pied-a-terre, or rent, then sell for a profit. Construction costs are around $400/sqm so that’s $160,000 to build the house, say $200,000 because life is always more complicated than you think, and $100,000 for the land, total $300,000. If it is well done in a neutral taste (with a practical architect, not a crazy one), it can sell for $450-$500,000, a $150-200K profit. Older houses in the same residence with 350sqm but half the land size are selling for $400,000.
One year to get the permit, one year to build, that would be $75K profit per year.
The PROS are
– It is pretty cheap. Guatemala is a weird market where luxury means really high end with high prices, and in the nearby developments they ask for $125-150 per vara (roughly 70cmx70cm) and this one is at $90. In the town center two miles away, they ask for $350-500. Four times more! I was surprised because my mother is less than two miles from the Paris city limits and her property is maybe 20% cheaper than if it were in Paris. Here there is a fourfold gap, that I think is going to narrow in my favor.
– It is a safe neighborhood with a gate and security guards, so no one will invade the land if it sits empty for a couple of years.
– The view is impressive and you feel like you are in the countryside while being in the town center.
– The city is expanding and this is a very convenient location between three dynamic zones (zona viva, where all the nightlife, bars and hotels are, Vista Hermosa and Pradera Concepción, where you find supermarkets and malls).
– The space is limited and people have to go live further away from the center for lack of affordable housing options.
– This is known as an exclusive area and people want to live there.
– Lots of big new houses like the neighbor to the left’s have been built in the last couple of years. More than a dozen of them. The area is picking up.
– I could even do two units, or one unit on half the land, and keep the other half.
The CONS are:
– The road to get there has a lot of traffic at office time, where people living further away get down to the city to work. It is already a 2×2 but it is not enough and expanding it is complicated because of the hilly ground. I don’t care as I don’t have a 9-5 job but for people working it is pretty bad. Although the place it at km9 and some people live at km20 and still commute to the center.
– Since is it so high up, it is almost at the same level as the development’s water tank, meaning low water pressure. You need to install a cistern and a pump to get pressure in the shower.
– Real estate is weird in Guatemala and people prefer to buy new houses rather than fix an old one, so the house may not resell if I use it or rent it.
– Guatemala is a seismic zone. There hasn’t been a big earthquake since the late 70s so they are probably due for one. Construction is quake-proof now but the house could be swallowed by the earth if the quake happened right there. Pretty dramatic but it can happen! The answer is taking a very expensive insurance policy or taking the risk to see your savings disappear in the lava!
– No shops around, it is purely residential.
– You have to climb quite a bit, so your car takes a toll, and you use a lot of gas to get back home.
– I would lock up most of my available cash. Meaning having to pass on investing opportunities, and putting a lot of eggs into that Guatemalan basket. I would have to wait a few months before being able to build a house, if not a year, so in the meanwhile the cash is not producing anything. It is a long term deal that is not liquid.