Panama Mortgage Investor Program
(impactarts.net) Introduction - Panama is a wonderful place for real estate investors. Panama is the number one retirement haven in the world. Panama is the number one tax haven in the world. Panama has the world’s second largest duty free-zone, Hong Kong being the world’s largest duty free zone. Panama is a city of about 9 square miles and has 135 real estate projects under construction in and around the city and another 50 or so projects not yet started. Now comes the Panama Canal expansion which will involve lots or workers and expenditures well into the billions of dollars. Panama real estate is in the early years of a boom cycle with steeply rising prices.
Why Mortgages? - Because it is a secure way to realize a generous return on your investment. With real estate appreciation going the way it has been in the last two years your investment outlook is encouraging to say the least.
How does it work? - We legally represent you the lender as your law firm in Panama. You use an offshore (outside of Panama) Corporation and bank account in a tax haven country to avoid any Panama taxation issues on the interest income generated from the loan payments as well as avoiding any taxation in the jurisdiction the corporation and bank are located. If the loan payments are sent to a bank offshore to Panama there would be no Panama taxation. A bearer share corporation in a tax haven out of Panama can be used to cover the transaction with anonymity or one could receive the funds into a personal bank account if they were not interested in anonymity. Only prime properties purchased at below market rates would be considered. The LTV would never exceed 75% and would be calculated against two appraisals from recognized appraisers. The borrower would be acquiring the real estate so these would be purchase money instruments, not refinancing, not construction, not land loans and not against commercial property, just residential property. The borrower would be using an anonymous Panama Bearer Share Corporation to acquire the real estate. The underwriting of the loan would be strictly against the property only. There would be no credit reports and no financial information on the borrowers to protect their privacy. The bearer share corporation that is buying the real estate would pledge the stock certificates of the corporation to the lender which essentially gives the lender the control over the real estate contractually in the event of a default. This would avoid normal foreclosure procedures. The contract between borrower and lender would stipulate that in the event three consecutive payments were not made, you the lender would have control of the property and would be able to sell it. The exact terms are negotiable. The borrower would not have a rental agreement. You can control how many consecutive payments would need to be missed but the borrower has to agree to the terms as well so they must be acceptable to both sides. We can arrange for a company to service the loan or you can do so yourself, there really isn’t very much to do. In the event of a missed payment or default we can represent you as your law firm and inquire of the borrower, proceed to recover your investment, etc. We could arrange for annual inspections, etc. We can use several strategies to effectively maintain your privacy and anonymity as a lender.
Details - Of course the rate of return is going to be an important consideration. You could figure on a rate of at least 1 ½ % over the 5 year CD rate in a substantial Panama Bank. The rate is generally going to be fixed but a variable could be negotiated, depends on the borrower. The term of the loan can be 5 to 15 years. A 5 year interest only loan is popular. There are sixty payments, 59 payments are interest only on the entire principal and the 60th payment is a balloon payment for the principal. This means at the end of the five years the borrower must pay off the note, refinance, sell or roll the mortgage over if you are willing. On the other hand you could do a 15 year fully amortized mortgage. Prepayment penalties can be negotiated. If the properties are owner occupied or not will vary on a case by case basis. Borrowers will provide adequate property insurance made out in favor of the corporation owning the property. The borrowers often live in several countries and move around throughout the year. Generally the borrowers will not be Panama citizens, thus the borrowers will not be appearing in any Panama credit reports. Panamanians can get 90% financing from conventional lenders with terms extending out to 25 years depending on how old they are. Non-Panamanians have a hard time financing real estate in Panama especially if they are older and retired. Lenders will often ask them to post life insurance and require very large down payments like up to 40%. Owner financing in Panama is something rarely ever encountered. Property values will be at least $200,000 so the loan amount would be $150,000 as a minimum. It is difficult to find prime properties for less than this amount. We have no maximum value. Penthouses in the newer projects run in excess of one million dollars and are often 7,000 sq. ft. in size occupying a whole floor. Many single family homes are over 7,000 sq. ft. If we are dealing with a loan amount in excess of one million dollars one could generally expect a slightly higher interest rate.
