Cost of Vacation Home in Nicaragua

By Fred Cressman

Quite a number of preretirement or retired people from Northern USA and Canada look for a break from cold weather and consider a place to go for 3 or 4 months where it is warm.  For the purpose of discussion we are looking at a home purchase of US$160,000 to US$250,000 which will get you a nice to awesome place with pool just about anywhere in Nicaragua. Since Nicaragua is not as ‘in demand’ as other warm locations expect bang for your buck as well.

*To be totally fair one likely should add in a cost of loss income which would otherwise be earned on purchase money invested elsewhere but then income taxes come into play and makes it all rather difficult.

Some of the reasons people do purchase a vacation home are:

Possibility of capital gain on resale.  Vacation properties retain their value over longer term and appreciate if located in popular areas with a geographically limited supply. *Nicaragua has a ways to go to get on most peoples ‘radar’.

Returning to the same place time and after time can be comforting as you become familiar and comfortable with the location. It allows you the freedom to be yourself and the opportunity to expand long-term friendships.

The ability to conveniently store items that are used exclusively at the second home simplifies travel and packing.

Getting a home you are truly comfortable in and furnished to your taste ‘Pride of Ownership’.

The intangible benefit of owning and passing property from generation to generation – especially a home that has been and will continue to be the site of many happy gatherings.

Many second homes are located in areas that people like to visit. Owners in one location may arrange to trade time in their house for time in a home located somewhere else.

Some idea of costs to consider

Maintenance, maid service, plumbing, electrical, security, insurance

Cost of food, dining out, and entertainment.  These are location dependant however it’s considerably lower in Nicaragua than other ‘warm’ destinations.

Assuming that one uses the second home for 3 months of year during prime/high season it leaves little time to rent 2nd home out and some would not desire to do so except perhaps to share with friends and family.  Even so a property management company or trusted local has to be paid to ensure the home is kept clean, secure and maintained during the rest of the year.  This can be arranged just about everywhere but costs will be considerable higher where wages and taxes are higher.

Here is my rough take on costs.

Nicaragua $75 a month for property management (+commission on rentals made) plus $160 monthly for maid/cleaner and bi weekly pool services, plus $400 for water/electricity , misc supplies (doesn’t cover 3 months when occupied as running those air conditioners will be expensive).  Property Tax $300 for Yearly $3520 plus internet of $480.

*Homes in Nicaragua are mostly courtyard centric and more open to elements therefore requiring constant dusting and cleaning.

All properties will require yearly maintenance even if this is just painting.  Given the heat, sunshine and humidity as well as courtyard centric living count on anywhere from $500 to $800 year just for general maintenance.

Not included: Depending upon location and construction you may wish to have security patrol looking in on home on regular basis.  Property Management Company should help with this but figure on extra cost of between $50 and $100 a month.  Insurance: * Given concrete construction, clay tile roof and location I self insure my Granada home.  **Insurance coverage here gives less comprehensive coverage than common in USA & Canada .

Purchase vs Rental for 3 Months

In most ‘warm’ locations it’s cheaper to rent however Nicaragua with lower costs makes it a much closer race. That’s without considering potential capital gain which in turn is offset by loss in not having purchase price elsewhere invested. You can also assume that rental rates will rise along with inflation but then so will operating costs.

What do you think is best option?

Fred Cressman