12/23/10 Los Perros, Nicaragua – When we arrived in Nicaragua, a group of Dear Readers was already at the house. They were having a dinner party on the lawn. Tables had been set up…looking out over the ocean. By 6 PM it was dark. A full moon arose in the East. It had been windy earlier in the day, but now the wind had eased into a gentle breeze.
Joselito brought out his guitar.
“Besame. Besame mucho…”
“You must love it here,” said a young woman. “This is about the most beautiful place in the world, isn’t it?”
The next day, we took a tour of the development here in Nicaragua.
Housing is in a slump in the US. Developments in Latin America and the Caribbean have fallen on hard times too. Especially here in Nicaragua, where president Daniel Ortega has driven off foreign investment.
“I think he’s becoming paranoid,” reported our local contact. “He doesn’t want to go anywhere. And when he goes out, he has a whole team of bodyguards. He’s afraid someone is going to kill him.”
But Ortega or no Ortega…real estate bust or no real estate bust…Rancho Santana is booming. There is a new pool at the clubhouse and a new clubhouse under construction. New condos. A huge new woodshop. New heavy equipment. A team of 250 workers…some of them working day and night.
What’s going on?
“This is the only project in Nicaragua that is still doing well,” explained a sales agent. “It’s practically the only project in Latin America that is still solvent. Down the coast, several of them have gone bust. In one, the owner just left. The homeowners tried to call. But he just packed up and left the country, leaving them without roads or water.
“And that’s not that uncommon. These guys sold lots during the boom years. Then, when the bust came they didn’t have the money to complete the projects. Lot owners were left holding the bag.
“Developing is a tough business, even in the best of times. And developers are generally a stupid bunch. If not actually criminal. Either they are dreamers who keep investing in their own projects. Or they are schemers who take the money out. The dreamers go bust in hard times. The schemers high tail it out of the country.
“You need a serious developer. One who’s been through a couple of complete cycles. One with enough money to survive. And one with enough integrity to do what he’s promised. Unfortunately, there aren’t many like that. Not down here.
“You can buy very cheap property here now. But you have to be careful.”
Regards,
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Hi,
I’ve been reading Agora, as well as your friend Stansberry, for 3 or 4 years. You are both now essential, daily reading. As an ex-pat for over 30 years, I very much appreciate your views hard assets, and diversifying across currencies.
I have been surprised however by your love of investing in Latin American real estate. Encouraging your average American to jump into a major investment in a developing (read ex-3rd world) country is I find a bit reckless.
While there are some places in the developing world where I have lived and would consider living again, one can only do so if you accept the fact that the nominal leader of the country could die at any moment, and the whole political culture change completely in 90 days. Having a business, or a large investment in property is a huge risk in these situations. Abidjan was a wonderful place for a long time. But, since the last “President for Life” died, they are looking at their second civil war in four years. And the French are again evacuating. And the French know a lot more about living abroad that Americans.
Sand, a few palm trees, guitar music, and some blue water don’t necessarily a paradise make. Nor a safe investment.
All the best for 2011,
Glen Bishop
I would have thought that a more positive imnpression of Nicaragua would have been portrayed in this article. It could only be negetive for Nicaragua and in the long run negetive for Rancho Santana.
Isn’t Bill Bonner the owner of Rancho Santana. I thought he would have painted a better picture for us interested in investing in Nicaragua
Roatan Man..you are 100% right. The guy was so focused in bad-mouthing competition that he actually makes the reader think that the whole Nicaragua/Rancho Santa idea is a bad one, that the country is full “stupid and dishonest developers”. Hello!! go to Miami at take a look…a bunch of developments in bankrupcy and buyers stranded!