FAQs: Investing in Real Estate in Nicaragua

Where is Nicaragua located exactly?

Nicaragua is located in Central America and is bordered by Honduras to the north and Costa Rica to the south. The country has a coastline along both the Pacific Ocean and the Caribbean Sea. It is the largest country in Central America, with an area of 130,373 km².

How do I choose between ownership under personal name or corporation?

The decision to choose between personal ownership or corporation ownership depends on your investment objectives and intended use of the property. Seeking advice from a lawyer is advisable to determine the best course of action for your property plans. In recent years, Nicaraguan corporations have become more complex, rigid, and costly to operate, so it’s usually recommended to purchase property in your own name unless you intend to conduct business on the property or have multiple partners.

What is the process for transferring funds and escrow?

Using an escrow account that follows the agreement terms created by both your lawyer and the seller’s lawyer is the best way to transfer and protect your funds during the purchase process. Your lawyer can assist in opening the account and creating an “Escrow Agreement” that specifies how funds will be dispersed during closing. Funds can be sent through a local or international wire transfer to any of our three partner Escrow Services in Nicaragua, St. Lucia, or the USA.

Is it safe to buy property in Nicaragua?

The safety of purchasing property in Nicaragua depends on factors such as the property’s location, legal status, and the buyer’s due diligence. Nicaragua is among the safest countries in Central America, but safety concerns and criminal activities still exist. It is important to work with reputable real estate agents and lawyers to ensure legal compliance and legitimate ownership. Conducting thorough research on the property, its history, and the surrounding community can also help avoid safety risks.

What is the safest city in Nicaragua?

Nicaragua is recognized as one of the safest countries in Central America, with Chinandega considered one of the safest cities in the world thanks to a strong police presence. However, it is still important to exercise caution, such as avoiding dangerous areas at night and being aware of your surroundings. While some beach towns in neighboring Costa Rica experience high crime rates of up to 3 robberies per day, our town in Nicaragua experiences less than 2 robberies per year. The locals have no tolerance for crime, and law enforcement officers respond promptly to incidents.

Are there Beach Homes for Sale in Nicaragua?

Yes, there are many beach homes for sale in Nicaragua. Nicaragua’s coastline on the Pacific Ocean and the Caribbean Sea offers a variety of options for beachfront properties. From cozy beachfront bungalows to luxurious villas, there is something for every taste and budget. The Surfing Nahua team can help you find the perfect beach home in Nicaragua that meets your requirements and preferences. We can find homes nearest to your favorite local surf breaks; The Island, The Boom, Margaritas, Punta Aposentillo, Mini-Boom, Santa Maria, Coco Loco, Nahualapa Bay, Rocky Point, Los Clavos and Rock Piles.

Are there Luxury Homes for Sale in Nicaragua?

Yes, there are luxury homes for sale in Nicaragua, particularly in popular surf destinations like The Boom, Aposentillo, Manzanillo and Nahualapa Bay. These homes range from modern villas with infinity pools and ocean views to colonial estates with lush gardens and classic architecture. The Surfing Nahua team can help you find the perfect luxury home in Nicaragua to suit your taste and preferences.

Are there New Homes for Sale in Nicaragua?

Yes, there are new homes for sale in Nicaragua. Local developers and builders are constructing new homes, particularly in popular areas such as Aserradores, The Boom and Nahualapa Bay. These homes often come with modern amenities, local exotic hardwoods, updated finishes, and energy-efficient features. However, it’s important to work with a reputable real estate agent or lawyer to navigate the buying process and ensure a smooth transaction.

Can I Buy a House for Sale in Nicaragua Caribbean Coast?

Yes, there are many houses for sale in Nicaragua’s Caribbean Coast. The region offers a unique and stunning environment, with pristine beaches, lush tropical forests, and a rich cultural heritage. Many properties are available in areas such as Bluefields, Pearl Lagoon, and Corn Islands. Whether you’re looking for a beachfront house, a jungle retreat, or a historic property in a traditional town, there are options available. The Surfing Nahua team can refer you to a trusted agent in the region.

Where’s the best surf in Nicaragua?

Nicaragua is renowned worldwide for its exceptional surf spots on both the Pacific and Caribbean coasts. The Pacific side offers consistent waves year-round, with the best swells occurring from May to November. Some of the most popular surf spots in Nicaragua include beginner-friendly breaks such as Punta Aposentillo, Nahualapa Bay, Coco Loco 2nd Point, and Santa Maria, as well as more challenging breaks like The Island, Coco Loco 1st Point, MiniBoom, Margaritas, and Papa de Pure (Mashed Potatoes). Ripper surfers can charge The Boom, Outer Aposentillo Point, Rocky Point, 2nd Point at The Island, and Los Clavos. With a wide range of breaks within a 2.5-mile radius, we have more surf breaks than anywhere in the world, 13!!

What is the Due Diligence Process in Nicaragua?

The Due Diligence Process in Nicaragua involves the execution of a Private Sales Agreement and the submission of a 10% deposit into an escrow account. The buyer’s lawyer will then conduct a thorough investigation of the property’s title to ensure that there are no outstanding liens, taxes, or other issues that may affect the sale. In the event that any issues are identified during this process, the seller will have the opportunity to address them. If they cannot be resolved, the buyer can choose to cancel the contract and receive a refund of their deposit.

How do I find a good RE attorney in Nicaragua?

Edmund Hillary’s famous quote, “It’s not the mountain we conquer, but ourselves,” holds true when finding a competent attorney in Central America. The task can be daunting, and it’s even more challenging when many lawyers have connections to the property you’re interested in. Personal experiences have taught us this lesson, having lost several hundred thousand dollars. However, we’ve handpicked a few lawyers in Chinandega and Managua who are passionate about their work and dedicated to helping and protecting you. You can rest assured that we can assist you in this process and ensure a smooth property transaction.

How do I find a good Architect in Nicaragua?

As the famous proverb goes, “If you want to go fast, go alone. If you want to go far, go together.” When it comes to finding a skilled architect who can bring your dream home to life, it can be a daunting task, particularly when designing for extreme weather conditions in Central America. However, we have carefully selected a few architects in Chinandega and Managua who are not only passionate about their craft but also dedicated to realizing your dream home. You can rely on us to assist you in selecting a qualified architect, and by working together, we can make your vision for your dream home a reality.

How do I find a good builder in Nicaragua?

It can be a challenging task to find a skilled builder, especially in Central America, where extreme weather conditions can make construction even more difficult. Unfortunately, our personal experiences have taught us the hard way, as we have lost a significant amount of money due to incompetence in construction, builder abandonment, and inadequate subcontractor teams. Nevertheless, we have persisted through these difficulties and meticulously selected a few builders in Chinandega who are not only passionate about their craft but also committed to building your dream home on time and within budget. You can rely on us to help you choose a qualified builder, and by working together, we can turn your vision for your dream home into a reality.

Do I need to be physically present for the closing process in Nicaragua?

In Nicaragua, it’s possible for both the buyer and seller to be physically present and sign the closing documents. However, if the buyer cannot be present, they can assign someone with limited power of attorney to represent them. It’s advisable to obtain limited power of attorney for $50 before leaving Nicaragua to avoid any unexpected circumstances. A Power of Attorney can be obtained abroad via Zoom for around $300 within a week.

What happens after the closing process is completed?

After the closing process, the registration of the property title can commence, which typically takes three to six weeks. Your attorney will handle the process and necessary paperwork on your behalf.

What are the costs associated with closing a property deal?

While the seller pays the real estate commission, the buyer is responsible for the closing costs. These costs vary depending on the property’s value and the deal’s terms. Typically, these costs include fixed fees of approximately 3.5% of the final property price, comprising a 1% Municipal Income Tax, a 1% Registration Fee, and a 1.5% Legal Fee. Additionally, there’s a Transfer Tax, which is either based on the assessed property value or the final price mentioned in the sales document, whichever is higher. Surfing Nahua, along with your attorney’s help, can help you calculate your estimated closing costs before submitting an offer. Although the Transfer Tax is the seller’s legal responsibility, it’s often split 50/50 between the buyer and seller.

It’s essential to note that the Legal Fee only covers the preparation and execution of the closing documents and their recording. Miscellaneous expenses like the escrow account, title due diligence, optional expedited registration fees, and wire fees are not included in the legal fee. To cover these additional expenses, it’s advisable to budget for approximately $1,500.

Transfer Tax Range

$0 – 50K–1%, $50 – 100K–2%, $1 – 200K – 3%, $2 – 300K – 4%, $3 – 400K – 5%, $4 – 500K – 6%, $500K & up – 7%

For example and estimate of the total investment required for a $150K property in Nicaragua, one can expect to pay approximately 6.5% in closing costs (3.5% in fixed fees $5,250 and 3% for Transfer Tax $4,500, which is usually paid by the seller), plus an additional $1,500 on top of the sales price. Surfing Nahua can assist in calculating an estimated closing cost before submitting an offer, with the help of a lawyer.

Can You Secure Financing for Property in Nicaragua?

While financing is available for property purchases in Nicaragua through local banks, it is typically only granted for brand new homes and involves a strict approval process. Foreigners may find it even more difficult to obtain financing, with bank loan rates ranging from 10% to 20% depending on the bank, down payment, and borrower’s financial situation. Alternatively, owner financing may be available on a case-by-case basis with a minimum of 25% down payment and varying interest rates based on the deposit and final price agreed upon.

What are Property Taxes Like in Nicaragua?

Compared to the United States, property taxes in Nicaragua are relatively low. Property taxes are paid in arrears, with discounts available if paid early. The amount of property taxes vary by location, with some $500K beachfront homes paying as little as $150 per year.

What about Rental and Property Management in Nicaragua?

Surfing Nahua collaborates with Sunset Property Management (SPM) to offer full property and rental management services, including marketing, check-ins/outs, communication, employee payment, bill payment, repairs, and maintenance. Property management services typically cost $150 per month, while rental management services usually amount to 25% of the generated income. SPM has achieved above 85% occupancy rates for many of their homes, making the rental process a breeze and profitable for property owners.

What is leasehold/concession land?

Leasehold or concession land in Nicaragua entails acquiring the privilege to rent or lease government-owned land, often with an annual fee below $200. Around 60% of Nicaragua’s coastal areas fall under leasehold status, a consequence of a 1917 law categorizing previously untitled land within 2km of the ocean as national land.

What is the process of leasing concession property?

Securing leasehold rights involves varying procedures in different municipalities, necessitating monthly municipal meetings for assessment and approval. Your legal counsel will handle this procedural aspect.

What are the risks of leasing concession land?

While holding leasehold land poses minimal risk, constructing structures on it strengthens ownership and facilitates proper registration in your or your corporation’s name. Having tangible real property on the land enhances the security of your leasehold. The primary but uncommon risk involves the government leasing land without structures for improvement. This has been infrequent, with no such instances observed since our involvement in real estate since 2003. Leasehold may not be the ideal land investment due to the lack of outright ownership. However, developing structures, whether existing or new, enhances the land’s value and security. Despite this, leasehold land might limit future sales marketability, as some buyers prefer titled land over leasehold options.

Investing in Nicaragua with Surfing Nahua promises a smooth buying experience.

Northern Nicaragua boasts stunning properties, picturesque views, and world-class surf breaks, along with welcoming locals. With a broad selection of properties and an expert team, Surfing Nahua can assist you in finding your dream property near your favorite surf break. Get in touch with us for more information on purchasing property in Northern Nicaragua.

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