Building a Home in Nicaragua
By Joel Stott-jess
*Edited April 12, 2022: Building prices are now in the $130 per square foot range and up given then inflation in materials costs.
Thinking about property in Nicaragua? Considering buying an existing home versus building one? This article covers the essentials about constructing a home in Nica.
The topic of building in Nicaragua is coming up more often right now. Part of that is related to high levels of demand for certain types of properties. Single-family homes, in the San Juan Del Sur area specifically, are in high demand. In particular those with more sizable lots, swimming pool and an ocean view.
There ae multiple sources of that demand. Lots of people looking to get out of Canada and the United States at the moment. People that can work remotely, families, retirees, and people disaffected with the current socio-political climate are looking for a tropical getaway. Nicaragua is extremely attractive for all of those groups.
Existing Construction Versus Building
This property is for sale. See it here.
Coronavirus travel restrictions have really cut into the rental market, even though normal flights are coming in again now and that should pick back up somewhat this winter. As a result prices are on existing homes are great at the moment. Due to increasing motivation from sellers, as a result of the lower return on investment if they used their property strictly as a rental. Conversely buyer-side demand is also high - from the groups mentioned above and for the aforementioned type of property.
What this means is plenty of homes desirable to foreigners are selling. Some are going for less than they would cost to build today. And the quality homes at, if priced well, are doing so quickly.
Something to note is that older homes here may feel more dated than a similar home, built in the same year, in Canada or the US. Design in Nicaragua has improved dramatically in the last five to ten years. Meaning some ten year old homes may feel twenty from a design standpoint. Even if they are well maintained and in good condition. For example stylistic choices that finished in the early 90’s in the US might have have been in fashion here will into the 2000’s.
So - what this means there are only so many options if you want to buy an existing home with modern design. That is especially true if you are looking for larger lots, or to be close to the beaches outside of San Juan Del Sur.
If have a particular dream home in mind, want an acreage, or want to be closer to one of the out-of-town beaches, then building might be the best fit for you.
Building on Your Own Versus Hiring a Builder
If I could give one piece of advice about building on your own (unless you do it professionally in your home country) it would be one word. Don’t. Building here seems like it would be easy given the low cost of labor.
But the trade off for that low labor cost is that the skill and consistency of tradesmen and workers varies dramatically. There is no common apprenticeship program for electricians, plumbers, and carpenters. The best builders here will have sifted through the available talent pool and retained the best workers and project managers. You can put those talented craftsmen to work more easily by working with a builder.
Even if you have experience building in your home country I would recommend, at a minimum, consulting with a professional here and / or hiring a general contractor. There are more variables in play building a home in Nicaragua than in Canada or the United States.
What do you need to think about when choosing a builder?
Selecting a great builder is the essential component to the success of your project. Excellent builders will deliver on their promises, prices, timeline and your dream. A bad builder can turn it into a nightmare. Most often the “cheaper” builders will cost you more in the long run.
I work with the premier builders in the country. If you are looking a real estate client of mine I help out with those connections as part of my services. Contact me if you want help finding a property and hooking up with a builder.
If you already have your property, are looking for a builder in another part of the country, or just want to chat and see what is right for you, I offer Consulting Services to help you successfully get involved in Nicaragua. Check that out for more.
Location Choice and Planning
Where do you want to build your new home? As mentioned the southern Pacific Coast is the most popular with foreigners, followed by Granada. They are the most desirable for a number of good reasons - amenities, resources, expat community, beauty, beaches etc.
This lot is for sale. Check it out here.
The region you close makes a difference when it comes to cost and build quality for your project . The Pacific coastal region is a little more expensive than other parts of the country. Land values are higher as demand is greater from both foreigners and wealthy Nicaraguans. Also materials need to travel further to San Juan Del Sur from Managua than somewhere like Granada. That transport distance adds a little to the cost.
As mentioned, choosing to build your own home will give you a wider range of potential locations. For example I love Playa Remanso, the closest surfing beach to San Juan Del Sur. But there aren’t many great existing homes there for sale. The same goes for the areas around Playa Maderas, Playa Yankee and Escamequita.
All are great beaches - but there aren’t many great existing homes there yet. And when they do pop up for sale, at good prices, they tend to sell quickly. So if you see one you like there, at a great price, you better jump on it.
Also if you are looking for homes on larger lots or acreages your options for existing homes may also be limited. The majority of building lots in planned communities in the San Juan Del Sur area are on the small to medium end of the spectrum. Typically a 1/4 acre, 1100 square meters, or less. So if you’re looking for an acre or more you may need to build.
For acreages like I really like Big Sky Ranch. It’s a phenomenal spot if you want from half an acre to two or more in more of an acreage / semi rural type community.
Just like home prices, building lots are inexpensive right now too. Many of these lots are currently selling for less than original purchase price. You can choose the site you want and then build a home to your specifications. It’s the best way to get the dream home that you want - if you can’t find what you are looking for existing on the market.
How much does it cost to build in Nicaragua?
Most of my clients are looking for high quality homes. In this region of Nicaragua building costs for something “North American” standard, built by the builders I recommend, start around $130 per square foot. For that price you’ll get granite counter tops, tile floors, recessed lighting, aluminum windows, metal railings on balconies, and high quality (but not top-shelf) finishings and fixtures.
For $120 per square foot you’ll get more luxury. That extra 20% would move you up to vinyl windows, high end quartz counter tops, glass railings on balconies, arched window & doors, more choices on imported tile, and top end fixtures, fittings and cabinetry.
One caveat is that the accessibility of the chosen location and slope of the land have a big factor in that cost. That $130 per square foot starting point would be on a flat or gently slopping building lot. Cutting into land and building retaining walls can add 10% to 30% to the overall cost, so bear that in mind. A “cheap” lot that drops straight off a cliff is going to cost you more in the end than a flat or gently sloping lot.
The same goes for lots with challenging access. If you buy a hilltop property where trucks have trouble getting up, and workers need to manually move more materials, it would add to the cost. Any additional preparation involved in getting your building pad ready will correspondingly add to the price.
If a local builder tells you they can build for $60 or $80 a square foot, they may be able to do it. But it will likely be a “local” style build. And that connotation is not a positive one. There’s a reason why I don’t like to recommend builders like that. My clients prefer homes built to North American standards and for that you are looking at $100 per square foot and up.
Water and power access are also important considerations not necessarily included in your build price. If you need to drill a well, add a septic system and run power lines (or install a solar system) this will need to be factored in. These are things many people don’t think about when choosing a lot to build on.
Most gated communities in the San Juan Del Sur area have water and power directly to the property line. They also take care of road maintenance inside the community. Those things minimize your up-front building expense. Plus they have a guard at the front gate for an added level of home security. The $50-100 in home owners association fees for those communities is worth it in the long run for most people.
Properties in town and close to it may be connected to the city septic system. Gated & planned communities and country properties will likely not be connected to the sewer network and will require a septic system. That can be $3000-$5000 depending on the size of the home and how many bathrooms you plan on having.
Using a Corporation
A side note but useful information if you plan on building. If you do choose to build you likely should place the lot into a Nicaraguan corporation on the date of purchase. The closing costs I talk about in the article about Buying Property in Nicaragua apply on your original purchase. So if you purchase a building lot for say $50,000 the closing costs would be around 5%, or $2500 total. Not bad.
But switching it to a corporation later, even if you are the owner of the corp, means transferring ownership. That would entail double payment of those closing costs and now at a higher rate - including the value of the house. So if you are going to use a corporation use it from the date of purchase.
Putting your property in a corporation makes it more attractive to potential buyers down the road if & when you want to sell. The buyer would purchase the shares, and thus the property, and only pay 1% to 1.5% in legal costs. It also makes it a lot easier for you to get residency in the future, and own and register a vehicle.
The only caveat to this is to make sure that the use of a corporation fits your tax strategy at home. For most people the use of a foreign holding corporation is advantageous. If you have questions chat with your accountant or consider a Consulting session to see how to minimize your tax exposure.
What does the process look like if you decide to build?
Ok great, we’ve found your lot, set it up in a corporation, connected you with a builder and are ready to construct your home in Nicaragua! The great builders I work with have architects on staff who can help design your home. We can also recommend incredible third party architects if you have very unique different in mind.
The builder and architect would work together and with you to plan the design for your home on the property you purchased. When that design is complete a plan for construction its prepared and you are ready to make the first payment to the builder.
The builder handles all permits. Those are more straightforward than the US or Canada. As long as it meets code and the rules of the HOA, if applicable, its easy for your builder to secure permits.
Most builders here work on a payment schedule based on the progress of the build. Once you’ve approved the building plan and are ready to go the first 50% of funds are deposited with the builder. That’s because at this stage the builder will begin site preparation, earth movement, and purchase all the major materials.
Normally when the roof is on the next payment of 30% is made. This gives the builder the resources to move on to windows, doors, kitchen and bathrooms. When lights and fixtures are ready to go in another 10% is paid to the builder. And the final 10% is paid when you get the keys the property is handed over to you. Welcome to your new home!
A great builder can finish an 1800 square foot three bedroom home in six months. A lesser builder might take a year, come in over budget, and have more deficiencies to fix in the future. Better to do things right the first time.
Building Materials
Poured concrete foundations are the norm, and basements are almost non existent. Concrete block walls, with concrete and rebar reinforced framing, is the most common building technique. Builders and construction worker are generally more competent with it.
Steel framing is another option. Usually combines with Durock exterior cement panels covered with mesh and stucco. It’s a faster, lighter building method than concrete and thus is less expensive. It’s light weight also means less robust, less expensive foundations can be use. If done right it can be good choice, although less durable than cement block for obvious reasons, and care has to be take with excess moisture in the air spaces within the walls. Nicaragua is a tropical country after all.
Another option using steel framing is to combine it with structural foam panels, also covered with mesh and stucco. Like Durcock it provides the same appearance as concrete. This system has its own few benefits and drawbacks. It has better insulating properties and is also light-weight, so foundations must bear less. It take slightly less time to build than concrete, and thus provides a slight savings on the labor cost portion of construction.
The downside of steel frame with structural foam panels and stucco is it needs to be built properly. There is more variability and risk of future problems if not done so. Like Durock it’s not as durable as concrete. Walls can be dinged up more easily - think of nicking up drywall versus block, make sense?
Wood in the non-exposed structure is less common. A good builder will never us timber framing inside the walls. The climatic conditions and insects would make it a bad choice.
Exposed hardwood accents, however, can be beautiful and structurally sound. For example exposed hardwood pillars and roofing can be both beautiful and extremely durable.
A number of the local hardwoods are extremely insect resistant. The only note (positive from an environmental standpoint) is that the harvesting of those hardwoods in now much more regulated. So you can get those beautiful hardwood accents, they just cost more than they did before.
Metal roofing is used here almost exclusively. Spanish tiles are often used on top of the metal roofing for style and insulation. That metal roofing provides the waterproof barrier while the tile absorbs the suns rays without radiating them to the interior of the home.
Tile or polished concrete is the way to go for flooring. Carpet is a bad idea given the climate and humidity. And even hardwood floors aren’t as desirable, in my opinion. For durability and ease of cleaning the choices are tile or concrete.
Furniture and Fixtures
For locally crafted hardwood furniture Simplamente Madera and Masaya and Company are amazing. They offer stunning hand made tropical hardwood furniture. And the prices on those are a fraction of the US.
In terms of fixtures, other furnishings and generally outfitting in your house there are tons of stores in the Managua. Siman, Pricesmart (Cosco subsidiary), and Sinsa are the big-box options. However those stores can be somewhat expensive. Between the shipping (most items go to the US from China first, then down here) and the import taxes, it’s not like you can just pop into Lowes or the Home Depot and grab everything on the cheap.
However one of the builders I work with most often has an amazing solution for this. He has a side business to ship products down from the US. You order products directly off of Amazon, send to his warehouse in Miami, and they arrive here a few weeks later. He charges a moderate fee for the service, and it’s much cheaper than buying many goods here. Things like kitchen and bath fixtures, fans, electronics and the like. I can connect you with that if you are a real estate or consulting client of mine.
Thanks for reading!
Looking for more information on building, investing or living in Nicaragua?
Contact me any of the ways below!
Joel Stott-Jess
Cell / WhatsApp: (+505) 8176 8624
Skype: joelstottjess
Joel Stott-Jess is a New York Times featured agent / broker in San Juan Del Sur.
Originally from Alberta, Canada he has been doing business in Nicaragua since 2014.
An investment consultant, serial entrepreneur, surfer, and outdoor enthusiast he is an expert on the real estate and business markets in Nicaragua. He also operates The Central Investor, a real estate and investment blog focused on the entire Central American region.
Thanks to his lovely Nicaraguan wife, a medical doctor, he is also well informed on health care services in the country.
Oceanfront one third acre lot at Playa Remanso