Coronado and "flipping" options to buy

While looking on the internet, I came across a place north of Panama City referred to as Coronado. It showed a modern community on the pacific side. Gated, golf course, hotels, high rise condos and high end homes. Looked interesting. About one hour drive from Panama City.

There were several reasons going to Coronado. See what was outside of Panama City. See if we could get there and back by taxi with limited Spanish. Wife wanted to go swimming in the ocean, since this seemed to be one of the closer swim beaches. See what Coronado offers that Panama City does not. Getting the taxi. We hailed down 5 or 6 cabs asking each if
they could speak English? One said a little. So we negotiated his fee. $100 round trip and 3 hours in Coronado. Ok, seemed high but what the heck? Off we go along Balboa Ave at 10am. Over the bridge of America on the Pan American highway. The area around the canal on the north side is lush with tropical vegetation. As we left the old canal zone the vegetation became thinner and mixed pasture. The terrain was low rolling foothills all the way out. The Pan American highway is about the same condition as 101 north from Los Angeles to San Francisco. Smooth in some places, rough in others. We did pass several road work areas. Big surprise, all the workers were working on the road! Unlike caltrans where each worker has 10 supervisors just watching. The road was 2 lanes each directions with cross traffic. We managed about 50mph. Along the way were some small and larger villages. There did not seem to be any large scale agricultural operations. We passed by relatively modest housing. In some areas it was poorer. The most interesting thing was that most if not all the yards around the homes were clean. No broken down rusted cars, piles of discarded furniture, garbage piled up. I have a belief that people can be poor but do not have to live like pigs.

Back home, in Mexico, Egypt and other countries I have seen people living in unbelievable self made squaller and fifth. This was missing. The locals seemed well dressed, busy walking about. We did not see the ghettos where healthy people stand around with nothing to do. I had to wonder what type of assistance Panama poor get? Do they get low cost or no cost subsidized housing, no cost health care, food stamps? Or like in Russia, they are on their own with no safety net? There is no disgrace in being poor. There is disgrace is living like a pig. Looked like most of the homes had a small tropical orchard with tropical fruits. They most likely had chickens. Did not see sheep, pigs or goats? The typical homes were one story and looked to be concrete block with a sightly pitched metal roof to shed the rain. No real attic. Must be very hot in these small homes? Most if not all were painted and looked maintained. Some buildings were deserted with only walls standing. Along the way were billboards showing new small cottage homes for sale. Looked about 500sf with prices starting at $45,000 and up.

After a while we passed several of these new developments. Chain link fence around the entire project property with barbed wire topper. Row after row of small little cottages. Packed in tighter than an old trailer park. Must be 20 to the acre. Not at all inviting. I hope this is not the future for Panama's low cost housing needs? I wondered is this the type of house $40m to $50m will purchase outside the city?

It was a working day. Far less traffic on the road than in the city. Long haul buses, large and small trucks and cars. Vehicles
seemed to all be going about the same speed. Along would come a superzoomer. Our driver would get over and let them pass. Do not know if the superzoomer flashed his lights or our driver was just courteous? The entire drive was just like back home, normal traffic once you get out of the big cities. Nothing serious to worry about. First stop was the beach. Took us about 1 ½ hours to get to the Coronado region. Our driver had to stop into a local gas station and get directions to the closest beach. We turned off the main road down a nearly over grown paved road. There were small houses on both sides of the road. About ½ mile down the road it turned into a rutted dirt road. There were several huge tropical banyan trees. Around was a park like setting. Primitive bath room and dressing area. A man charged us $5.00 to use the improved park and beach
area. It was clean. There were a dozen roof covered picnic tables. Bluff and the beautiful pacific at low tide. It is here you see the coastal tidal change. The ocean had receded about 600 feet. Exposed rock, sand and mud. There was a small stream that fed into the ocean. I stayed on the bluff with the driver in the shade. Wife walked way out to the waters edge, where there were several other locals. Some were swimming. Some seemed to be looking for something in the exposed rocks. I guessed they were looking for clams? Wife loved the swim. Water was warm and clear. She was a little concerned
that there was hardly any one on the beach. On the bluff over looking the ocean, on each side of the little river were 2 homes. The ones that we all dream about. Not high end, but very nice just the same. Well positioned over looking the ocean
and setting sun. Palm trees, green lawn and in a very tropical setting. It was the chain link fence and barbed wire that circled
each property that spoiled the setting. Looked like there was no one home at either house. No car in the compounds. I wondered if some retired gringos purchased the land. Spent a couple of years building the homes. Lived in them for a year or so. Got bored with the spectacular view with nothing to do and moved back to the city? Or perhaps the homeowners were just off shopping. I guess paradise can get boring, too? Out in the country one needs a sturdy fence to protect the property, as well?

Coronado is a large developed area around a beautiful beach. Golf course. Mostly newer and nicer homes. A few older homes not so nice. Some high end ocean front homes that put the rich and famous Malibu homes to shame. Found the 30 story high rise project after driving on nasty in need of repair home owner maintained roads. Project manager said that this project was "sold out". But that in 6 months they would start another high rise next door, just the same. He took us up to the 4th floor. Showed us a typical 3 bedroom and 2 bath unit, about ½ completed. Over looking the largest pool in all Panama. Between the high rise and beach are 50 or so 2 story newly built beach homes. The ocean view from the condo was spectacular to say the least. Would be a short walk to the beach. The area is the weekend escape development for the cities elite. During the week it is very quiet. One would need a car here. It was a long drive into the project from the gate. Inside the complex is a small mini mart. If flying into Panama City, Tocumen International airport is on the other side of Panama City. To get a cab to Coronado would be very expensive and depending on time of day, could be a 2 to 3 hour shuttle. After driving around and considering the limited access to shopping, distance from Panama City and airport, wife says no village home and I agree. However, Coronado would be an outstanding second home area.

I came in contact with one local lady who wanted to sell her option on a high rise unit in the "sold out" Coronado project. The project manager had put her in touch with us. She called the next morning bright and early at our hotel. She had put a deposit on a unit in the project early on. Now that the unit was nearing completion, she wanted to sell her option. Fair price of $159m. The HOA fees were going to be $300 a month, seemed real high. I told her that we loved the unit and the area but it was too far out for us. She agreed that we would have to return to the city for serious shopping and entertainment. That it was very quiet during the week. Weekends it was busy. She had a good sales pitch. Thanks, but no thanks. Then it occurred to me how things work in the building boom in Panama. It is called "flipping". I have over the years done this several times myself. Speculator can put up a small deposit before the construction ever starts, maybe $1000. Knowing it will take several years to complete. Early buyer's get the "first in" price. Lower than the later at "completion" price. In this type of selling,
developers can show the bank that they have many buyers, even "sold out". Bank loans developer money, project goes forward. As the building gets closer to completion prices go up. New buyers pay more but have less time to wait to occupy. Speculator hopes that before the project completes, they can find a buyer and "flip" the condo and sell their option for a profit. If however the demand falls and speculator does not sell their option, they are only out a small deposit. If builder does not sell all the units and speculators do not find buyers, there is a glut of unsold units. Perhaps the project goes bankrupt? Supply and demand takes over. Too much supply, prices plummet. Not enough supply prices skyrocket. The buyer who intends to occupy the unit is at the mercy of "supply and demand". If demand goes up all is well. What happens if supply goes up and prices go down? It is a little better for the buyer who pays cash. They can sell at a loss and get out if need be. But what happens to the buyer who puts up 10% to 20% down and finances the balance, if prices plummet 30%? What would make the demand slow up?

Most common cause is "over building". In mid 80's the Sunbelt of USA was touted as the place to be. Florida to Arizona. Unregulated over building went on. Then supply was financed by the "savings and loans". Remember the near collapse of the USA real-estate banking industry? Learning from past mistakes, today most home track builders in USA put up a model and sell from this to pre qualified buyers. Build to order. Cutting out most of the speculators and potential of overbuilding unsold units. What is happening in Panama City? Is the building boom based on carefully studied research of world wide demand or is it rampant speculation in overbuilding? Getting a head of myself. I guess I get overly worried when things happen too fast. Great many units under construction. Great many speculators "flipping". Too many gringos panic buying
into "sold out" or nearly sold out projects after spending just a few days in Panama, afraid they will miss out on this "once in a life time opportunity". I worry when we walk into Abraham Angel's office and at first he would take nothing less than $100,000 down for a $150,000 unit yet to be built. By the time we leave his office he is asking for only a $25,000 deposit?

From our hotel room at night we could see many high rise condos. Odd that less than ½ had lights on, I guess they are saving on their eclectic bills? About 100 feet from our hotel was a 30 floor newer complex, maybe 2 or 3 years old. From our widow I could count 6 units on one side with no curtains and no furniture, the windows all closed and air conditioner fans never moved? Perhaps all the units were sold and the buyers have yet to move in? I guess none of this really matters
if one is only going to buy in, live there until they die, or just rent or lease?

Part 9, People in Panama City and conclusion

Installment One	Installment Two	Installment Three	Installment Four	Installment Five
Installment Six	Installment Seven	Installment Eight	Installment Nine

Service and Assistance for Retirees Who Want to Live in Panama