Nestled on the northwest part of South America with Columbia and Peru as border neighbors, Ecuador is about the size of Nevada, and has an extremely diversified landscape, climate and educated population.
On September 11, 2000, while on the verge of economic collapse, the U.S. dollar became the official currency for Ecuadoreans. This marked the period of some political stabilization, resurgence of foreign investment, growth in service sectors, real estate and other industries. Over the last 12 years, the road to political and economic stability has seen ups and downs as the global financial crisis contributed to a decrease in oil prices and remittances from abroad. Ecuador’s economy is based on oil production, primarily carried out by the government, and agricultural production of bananas, shrimp and flowers.
Since its currency “dollarization,” Ecuador has seen a surge of American retirees due to immigration policy that allows people over the age of 65 with pensions above $800/month to establish residency. According to Bureau of Western Hemisphere Affairs data, there are more than 50,000 U.S. citizens living in Ecuador and more than 100 U.S. companies doing business there.
One can easily understand why so many have chosen Ecuador as a place to establish residency. Many published articles describe Ecuador as one of the best places to retire. They cite affordable costs of living, health care and transportation, as well as gorgeous landscapes and climate variety, which combine to create a retirement paradise.
Travel by bus and airplane is relatively cheap, with flights ranging from $50-$150 to neighboring parts. The climate is varied. One could easily wear a sweater or coat while in Quito in the morning, and be sitting on a beach wearing a swimsuit in the afternoon. The small town of Banos is favorite among, hikers, climbers, rafters and other outdoorsmen. It has thermal springs and waterfalls. Atacames is a beach where you can relax by the calm water during the day and enjoy the nightlife into the wee hours of the night. It is a party town. Quito, the capital of Ecuador, is located in a valley in the Andes and is known for the cultural and huge selection of museums, festivals and historic sites. It is the perfect city to use as a connecting point to reach other destinations.
In Quito, a two-bedroom furnished apartment can rent from $250- $600/month plus utilities at $20/month. If you prefer to purchase, a two-bedroom condo in Cuenca, Quito or by a beach can be found for under $35,000. Bus rides are 25 cents or $1.00 for a taxi. Doctor’s visits, with some physicians making house calls, typically cost around $30. Insurance can range from $70- $100/month. Local food is inexpensive, entertainment is abundant, and one can enjoy free concerts and plays on the weekends. You will find shopping centers resembling the ones in the U.S. with American or European franchises, but the prices for these goods and services will also reflect U.S. prices or more.
Many Europeans and Americans are investing in real estate and purchasing second homes. Others are establishing new businesses. Real estate can be purchased by foreigners and the process can be simple with the assistance of a professional real estate agent (CIPS designee, preferably), and reputable real estate attorney. Most of the properties are sold by owner types and there is no formal Multiple Listing Service. Real estate is not regulated like in the U.S. and contracts are usually prepared by attorneys based on the agreement of the parties to the transaction. The buyer’s attorney is responsible for researching the title of the property and making tax payments on behalf of the buyer. Attorneys register the contracts of “Compra Venta” at the Land Registry. Closing costs should be estimated by your attorney prior to closing. Property taxes are assessed on municipal property value and tend to be very low. For example, on a home sold for $200,000, the taxes would be around $300 per year.
Scams are rampant and many people have lost money without recourse. Before you sign a “contrato,” do your homework and make sure the contract is translated to your language. Brush up on your Spanish and be ready to enjoy a slow-paced life.
Now that you know about some of the country’s economy, cost of living, places to visit and real estate procedures, consider taking a trip to Ecuador and enjoy a care-free life.
By Rachel Gonzalez-Dunham
2012 HAR International Advisory Group member
Broker, CIPS, GRI, SRES
Dee Rae Investments & Consulting, Inc.