I’ve been eyeing a lovely piece of land lately, and as you might know, I have some money I want to invest. I already spent $100,000 to secure my share of beach access on a 90-acre development up north, and I’ve done some roadwork and dug a well there. So, I have $100,000 left, which just so happens to be the price of this plot:
In Guatemala City, the best neighborhoods are in gated communities, and this one is no exception. It’s located on a green hill with beautiful houses, about 6 miles from the historical center and around 2 miles from busier areas with malls, supermarkets, bars, and restaurants. Much like in the US, you don’t really walk in Guatemala City, so being 2 miles from a supermarket isn’t too bad, although I preferred having one just a block away when I lived in the city center. Being from Europe, driving to get essentials isn’t something I’m accustomed to.
Now that I live in the jungle, I have a car, and the nearest supermarket is 20 miles away, so the distance isn’t a big issue anymore.
The land itself measures 18 meters by 45 meters. This would allow space for 5 parking spots, quarters for a maid and handyman, and a house at the back with a stunning view of the volcanoes and a nice garden. At night, the view of the city’s twinkling lights below is something I really enjoy.
The neighbor to my left has a 12,000-square-foot house he’s trying to sell for $1,500,000. I doubt he’ll get that price, but it shows the potential value of the area, which could be around $1 million.
Since this land is on top of a hill, it’s relatively flat, so you won’t need major earth-moving work, which can be very costly. Another perk is that the land is already built on three sides, so there’s no risk of neighbors obstructing the view with tall buildings. Plus, it means the perimeter wall is already in place.
I really like this plot, and my plan would be to build a 3,000 to 4,000 square foot house (300 to 400 square meters). I could use it as a city pied-à-terre, rent it out, or eventually sell it for a profit. Building costs are roughly $400 per square meter, which means constructing the house would cost around $160,000, but I’d budget $200,000 just to be safe. So, with the land costing $100,000, the total investment would be $300,000. If the house is well-designed in a neutral style with a practical architect, it could sell for $450,000 to $500,000, giving me a profit of $150,000 to $200,000. Older houses in the same area with half the land size are selling for $400,000.
It would take about a year to get the building permit and another year to construct. That would translate to a profit of around $75,000 per year.
The advantages are:
– It’s pretty affordable. In nearby developments, land is priced at $125 to $150 per vara (roughly 70cm x 70cm), but this one is going for $90. Closer to the town center, prices jump to $350 to $500. There’s a fourfold price difference that I believe will narrow in my favor.
– It’s a safe neighborhood with gated security, so no one will invade the land if it sits empty for a couple of years.
– The view is stunning, giving you the feel of living in the countryside while actually being in the city.
– The location is convenient, situated between three dynamic areas (Zona Viva with nightlife and hotels, Vista Hermosa, and Pradera Concepción with supermarkets and malls).
– Space is limited in the area, pushing people to live farther from the center due to a lack of affordable housing.
– It’s an exclusive area where people want to live.
– In the past few years, several large, new houses have been built, signaling that the area is developing well.
– I could potentially build two units or use half the land for one unit and keep the other half.
The disadvantages are:
– The road leading to the area is quite busy during rush hours, as those living further out commute to the city. Though I don’t have a 9-to-5 job, this might be a hassle for others.
– Being high up means it’s almost level with the development’s water tank, resulting in low water pressure. You’d need a cistern and a pump to get good shower pressure.
– Real estate here is tricky; people prefer new houses to older ones, which might impact resale value if I decide to use or rent the house.
– Guatemala is a seismic zone. While there hasn’t been a major earthquake since the late ‘70s, one could happen. Modern constructions are earthquake-proof, but a quake could still cause significant damage. Taking out expensive insurance or risking it are both options to consider.
– The area is purely residential, so there are no shops nearby.
– The steep climb to get home can be hard on the car and gas consumption.
– I would be tying up most of my available cash, which means missing out on other investment opportunities and putting a lot of faith in the Guatemalan market. I’d have to wait several months, possibly a year, before starting construction, during which time the cash wouldn’t be generating any returns. It’s a long-term, illiquid investment.
What do you think? Should I go ahead and buy this land, or look into other investment opportunities? If so, where?