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Ecuador is the oldest democracy in Latin America, and just slightly farther from Miami than is Los Angeles. Prices are ridiculously low, yet foreign-exchange restrictions have been abolished. You can hold dollar accounts outside the country (for security) as you look for opportunities here.

When I first arrived in 1996, the country was undergoing a shakedown. It had enjoyed enormous reform in the early ’90s. The Ecuadorian economy had begun to boom. Then, in 1995, an armed conflict with Peru and an unprecedented drought (which interrupted electricity supplies) depressed the economy and killed the boom.

Still undiscovered

This country, you see, has everything: vast natural beauty, a rich culture, and better law and order than much of the United States. It has a very low cost of living, and enjoys sleeping real estate and stock markets. Resident visas are easy to obtain.  The country has huge natural resources and an incredible variety of climates, ranging from miles of unspoiled beach to rain forests and rich Andean mountain ranges. Yet Ecuador had not yet caught on when I was first started looking at it. In fact, it still hasn’t.  Only 10 thousand foreigners lived there a few years ago. And tourism was still in its infancy. 

So I bought Ecuadorian shares and started looking for real estate. My wife and I visited several times. The more I saw, the more I liked, and I quietly began buying up land and alerting readers of this newsletter. This advance warning has already helped some of my readers cash in. 

We have been living in Ecuador for the past few months watching people make a profit. 
Beachfront property—$500 an acre For example, I just looked at a listing for an 8-year-old, 3,000-square-foot, beachfront house (fully furnished) in a charming Pacific fishing village. It listed at only US$30,000 (asking price)!  Brand-new, magnificently beautiful, two-bedroom Moroccan-style condos in Quito are selling for under $30,000. I heard that one of my readers bought 64 acres of beachfront  property at $500 per acre. Sounds cheap, doesn’t it? Believe it or not, there is a listing for a 1,600-square-foot, three-bedroom beachfront fixer-upper for just US$9,000! On top of all this, there are no foreign-exchange restrictions in Ecuador. All profits can be taken out of the country. Non residents can hold dollar accounts outside Ecuador (for banking safety) and then make real-estate investments just as if they were resident. 

One president after another may be wiped out by the current bad times, yet difficulties are the precursors to better times.  Despite the bad economic times, the country is still politically and socially stable.  At its worst, Ecuador still feels much safer than most U.S. cities in normal times. Another of my readers, who bought a condo in Quito, described this phenomenon to me when he wrote, “Quito is not a city whose social structure will break up, even in the worst of times.”  I agree. 

Easy residency requirements

The Ecuadorians are among the friendliest, most easy-going people I have met in 30 years of travel. This is not to say there won’t be demonstrations, crimes, or social problems, including strikes and occasional riots. But the problems won’t be big ones—at least as far as real-estate investments are concerned. And they won’t last long. They won’t involve death and destruction. 

You can even become a resident (and a citizen if you wish) with no investment, provided your income is as little as $1,500 a month. This is why I believe the turmoil (which may last for some time) offers such incredible opportunity now.  These problems allow you to buy land not too far from the United States at a fraction of U.S. prices. 

As the global economy grows, and as technology allows more and more people to live anywhere they choose (as Merri and I now can do) while they work somewhere else, more and more people will flock to the sun. When they reach Florida, they will find that prices are high and conditions are crowded. They will look for cheaper alternatives. Ecuador is one such alternative. This alone can push prices up. A modest beachfront house in Naples today may cost 2 million dollars or more. How many can afford that price? A similar house in Ecuador goes for $50,000.  Just think how much extra travel and other great things the extra $1,950,000 will buy.

Why Ecuador’s properties are so cheap

In 1996, as Ecuador was trying to recover from its battle with Peru (the two countries have now declared a settlement), the people made a terrible mistake. They elected Abdalah Bucaram (called El Loco—“the crazy man”—by many) as president of the country. He turned out to be an incredibly inept leader—so corrupt that he was soon impeached.  Regretfully, the interim president was not much better (and is currently under arrest for corruption as well). The nation endured three years of political backwardness at a time when strong leadership was needed most. 

Simultaneously five other events also hit the country’s economy hard. The first two, El Niño and La Niña, caused record rainfalls for two years in a row. Almost continual flooding wiped out roads, bridges, and crops, creating billions of dollars worth of damage. 

In addition to leaving bad crops, Latin America has been hurt by the fact that Europe has been unfairly limiting banana imports from the region. Ecuador is the largest banana exporter in the world.  These limitations have hurt the country’s economy. In addition to this list of black events, the emerging-market crisis reduced the inflow of investment, raised financing costs, and added to the nation’s woes. 

To top it all off, the price of oil crashed! Ecuador is the second-largest producer of oil in South America. The government receives 25 percent of its revenues from oil sales. These economic problems have led to a recession and a banking crisis which caused the sucre (Ecuador’s currency) to plunge.  The currency collapsed (53 percent at one point in just a few days) so fast that the president had to step in, declare a state of emergency, and close banks for a week. There was no gas, business ground to a halt, etc. 

Now there’s a new president, and the country has dollarized its currency. It may sound like disaster, but, believe me, this is an incredible opportunity.