Heating up in Honduras

Successful real estate portfolios are not built overnight. It can sometimes take years of research and deals before a portfolio produces the big numbers that investors seek.

It took Randy Jorgensen 16 years before he found the answers he had been looking for. A frequent visitor to Honduras, particularly the city of Trujillo, Jorgensen realized there was money to be made there. The area had a productive real estate market, and to Jorgensen, it seemed like a perfect match.

“After 16 years of vacationing and visiting, becoming familiar with the local regulations and developing relationships, the opportunity presented itself, as Honduras began to encourage foreign investment with a focus on tourism,” recounts the CEO of Life Vision Properties.

“I felt that if Honduras met all the criteria and Trujillo specifically met the ambience and location expectations I had, it would for others as well.”

In addition to being a great area for investing, the country’s economy is relatively strong. According to the IMF, the GDP is forecast to expand by 3.3 per cent in 2013 and three per cent the following year.

The first purchase

Originally from Moosomin, Saskatchewan, Jorgensen took the first step in 1992 and built a vacation home.

“My initial purchase was 42 acres with 1,000 feet of beachfront,” says Jorgensen. “The property was covered with extremely thick jungle that could only be walked across by blazing a trail with a machete.”

Although optimistic, Jorgensen knew that he faced an uphill battle with the undeveloped land.“The property was raw land with no services or infrastructure with a large swampy, low area,” he says. “The purchase price was $50,000 USD, and the original documentation stated 50 acres.”

He initially faced issues with the size of the land, a figure that saw numerous changes made to it due to conflicting results from surveys.  

“It is common in Honduras for land size to be significantly different from documents to actual survey,” he continues. “The final size should only be accepted if a recent survey by a qualified surveyor and reviewed by a qualified civil engineer.”

Once the land survey process was complete, the next step for Jorgensen was to perform an extensive cleanup of the area. “After purchasing the land, plans were made to clear the property so topography could be conducted and further plans for road access, power, water, drainage where required, and choosing a site for the home,” says Jorgensen.

Jorgensen generally prefers to focus on areas that have had some development, as it makes the entire process easier for both investors and developers. However, there was none available in Honduras when Jorgensen bought his land.

“Clearing and infrastructure costs initially cost about $60,000,” Jorgensen says. “The low cost was mainly due to the ability to perform most of the work myself without paying outside contractors, and the luxury of taking four years to complete.”

Hotspot: Trujillo

Since entering the market 21 years ago, Jorgensen has always focused his attention on the city of Trujillo, one of the largest markets in Honduras.

“I personally have begun developing property producing serviced acreages to enable ease of acquisition for foreign property owners, specifically Canadians,” Jorgensen says. “Currently, 1,500 acres are under development with 500 lots sold to date.”

Two key factors are responsible for Trujillo’s growth.

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