Paraguay is firing on all cylinders:
- Healthy GDP growth
- Net exporter of agricultural goods and sits on endless water sources
- Net exporter of electricity
- Small government
- Low taxes
- Easy immigration attracting talent from all over the West, Brazil, and Argentina
- Positive demographics
- Booming urbanization
And compared to my last voyage two years ago, real estate prices actually went down. Why? Because there is now much more construction. At the same time, demand for housing has increased due to recent immigrants and digital nomads choosing to make Paraguay a home-base.
The rental yields have therefore increased.
To be fair, I see a lot of supply coming online so I don’t think these rental yields will keep increasing. But when you consider that pre-construction deals go for less than $2,000 per m2 (or 185 per ft2) for relatively luxurious developments with rooftop pools in the best neighborhoods of Asuncion, it’s hard to go wrong.
In this video with Matt, we explain the real estate market in Asuncion and do two case studies of apartments for both the long-term and short-term rental markets.
Make sure to read the full Asuncion Real Estate Investor Guide. You won’t find a better resource elsewhere.
Feel free to get in touch with Matt, my real estate agent in Asuncion who focuses on investment properties.
His team can also help you obtain residency in Paraguay, a process I successfully went through myself.
Immediate PR – will share all the details in two weeks
There is an immigration program in Paraguay called the SUACE program, which grants applicants immediate Permanent Residency, as opposed to the usual route of getting Temporary Residency first.
The great thing about this is that it takes only a single trip to Paraguay, and then you are set for life as things stand. You’ll just need to set foot in the country once every three years to keep it active.
The law states that one must invest at least $70,000 and create local jobs.
However the Paraguayan National Institute for Audiovisual received a special derogation for a lower minimum. If you invest $40,000 in a local film, you can get immediate Permanent Residency in a single trip.
Obviously, I’m not saying it’s a great investment; I’d almost consider it a donation with maybe some surprise distribution later on.
Who is immediate PR good for?
- Busy Westerners who want a plan B but don’t want to go through Temporary Residency first and deal with flying to Paraguay multiple times until they get Permanent Residency
- People from Africa, the Middle East and Asia who typically need a visa to get to Paraguay. The team will ensure you get a visa from a Paraguayan embassy, which will let you travel to Paraguay to get your Permanent Residency
- People who fear the laws may change sooner rather than later in Paraguay. Let’s face it; it’s just too easy right now and Paraguay is booming. They absolutely WILL make it harder in the future, but nobody knows when. This is a way to get it quickly and easily.
The Permanent Residency is valid for one person only. But the family can get visas and get temporary residency once in Paraguay, with a clear path to permanent residency. The team can also facilitate this.
I’ll publish more information on this in two weeks time. But if you want to find out more about this, reply to this email with your name, and WhatsApp number. My usual agent Matt does not offer this particular service, but another immigration agent we are partnered with can help you.
To a World of Opportunities,
The Wandering Investor.
Services in Paraguay:
- My Real Estate Buyer’s Agent in Asuncion, Paraguay
- How to obtain Residency in Paraguay
- How to obtain residency in Paraguay through investment in film production
Articles on Paraguay:
If you want to read more such articles on other real estate markets in the world, go to the bottom of my International Real Estate Services page.
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If you want to discuss your internationalization and diversification plans, book a consulting session or send me an email.
Transcript of “Asuncion, Paraguay real estate – full Airbnb and long-term rental yield calculations”
LADISLAS MAURICE: Hello, everyone. Ladislas Maurice of The Wandering Investor. Today, we are in Asunción, in Paraguay, and we’ll be doing an analysis of a few apartments, so all of the numbers in terms of long-term rentals, long-term furnished rentals, and Airbnb as well, return on investment figures in detail. And I already came here two years ago to do a full analysis of the market here. Back then, I wasn’t too interested, but things have changed. We’ll be discussing this together with Matt, who’s been helping people move to Paraguay, and who also started a real estate agency, together with a few of his collaborators, helping people invest here in Asunción.
Asuncion real estate market performance
LADISLAS MAURICE: Matt, tell us, what has changed in the market in the past two years?
MATT: The last time you came two years ago, it was a bit different, because the price were a bit higher, talking about apartments, and now there was a price correction in the market. There is a bit more competition in the developers. And also, if we talk about renting apartments, the price also went up a little bit because more and more people are coming to Paraguay, to Asunción, to do the residency, but also to live here and to do business.
LADISLAS MAURICE: Yeah, so the original thesis for investing in Paraguay is that the economy is healthy, it’s seeing 4% to 5% economic growth per year, it’s far away from conflict and drama, it’s independent from an energy point of view, from a food point of view, from a water point of view. There’s really a lot going for it, especially as Paraguay’s two big neighbors, Argentina and Brazil, have issues of their own, so there’s a constant flow of capital and people moving here. This thesis is really materializing.
We’re seeing so much immigration here. I mean, you’re seeing it with your business, it’s absolutely booming in terms of people moving here. I can barely recognize the place in two years. There are so many foreigners that have moved here to Paraguay. They’re not just getting Plan B residencies, they’re actually moving here and living here as well.
MATT: Exactly. We saw the numbers. We started our company almost two years ago, and at the beginning was pretty empty, to be honest, when you came for the first time. And right now, as you said, so many people are moving in, so many people also want to invest in Paraguay, because for the stability, for the low prices. And we will see with the numbers, but you can get, honest return, I would say it may not be the best yield percentage, but at the same time, it’s a safe place to invest.
LADISLAS MAURICE: Yeah, so the yields have gotten a little better, especially here in the center. It’s easier to find tenants as well than before, and there’s a bit more liquidity in the market. Compared to two years ago, it’s definitely an improvement. We’ll look at that in detail. And you said that prices went down a little bit, but that’s not in the whole city.
MATT: No, that’s not in the whole city because the problem right now is the executive center, they are building a lot of apartments, and it begins to be a bit crowded. So, they start also expanding to the neighborhoods, especially Luque, which is the city where is the airport. Luque is really also growing. But you don’t find the same kind of apartment there. In the executive center, it’s more nice apartment with pools, gyms, and everything, the best place for foreigners, certainly. And in Luque, it’s still growing, and it doesn’t necessarily have pools. It’s more for local people, but the price have been really up recently.
Buying real estate in Asuncion as a foreigner
LADISLAS MAURICE: Essentially, when you’re a foreigner, you probably just want to invest in the central neighborhoods, and it’s become more interesting. There’s more rental demand, more people moving here. There’s more to choose from when you’re buying, there are more developments, and prices are down. Compared to two years ago, it’s definitely a lot more interesting. We’ll look at that in detail. I’ve noticed that just when I’m booking for Airbnbs, two years ago, there was so much on the market and great apartments for super cheap. This time around, I booked about two months in advance, and I struggled to find a half decent place, actually.
MATT: Yeah. Basically, the demand is growing a lot, so it becomes really interesting to make good returns here. And the best thing you should look into the market, if you want to invest, is to be close to a shopping center, because here in Paraguay, it’s where the activity is, where you can find nice restaurants, you can find clothing stores, everything. And you don’t want to be in the historic center. It’s still a bit growing, and it would need more time to be interesting.
LADISLAS MAURICE: Yeah. I mean, Paraguay is mall culture. You want to be close to the nice malls, that’s what it comes down to. And you see, like, funny houses like this. I mean, this one’s quite fun to look at.
Where to buy property in Asuncion, Paraguay?
LADISLAS MAURICE: What’s important to understand is, I’d be very wary of going into the cheaper areas just to try to make a bit more capital gains, or just to try to squeeze things, because there are very few zoning regulations here in Paraguay. If you’re in an area that’s too cheap, developers are very capable of buying over the homes around because they’re affordable, and then just building these massive structures. In some areas of Asunción, there’s just absolute oversupply. I think that area is Las Lomas.
MATT: Yeah, it’s building everywhere.
LADISLAS MAURICE: They’re building everywhere, and you don’t want to be buying there. But if you go into prime areas where prices have gone down, because the houses are generally quite nice, you see things like that, they’re never going to sell to a developer to build a building here. And a lot of the homes are quite expensive themselves. I mean, here there’s a cap. The house there is quite big. They also won’t sell this for land. There’s a natural cap on, generally speaking, on how much they’ll be able to build. And areas like this. This neighborhood is called?
MATT: Villa Morra and Recoleta, it’s between those two.
LADISLAS MAURICE: Right here, we’re in Recoleta, and this area will remain nice and green for a long time.
MATT: And at the same time, it gives a nice feel in the neighborhood, because you have really nice building, really recent, and beautiful houses. And you can walk around. As you can see, it’s really green. It’s a different feel from the place where you have only buildings or the poor area closest to the historic center.
Asuncion 1-bedroom apartment tour
LADISLAS MAURICE: Yeah, so very important. Cool, fantastic. Let’s go to the first apartment, and we’ll do all of the numbers in detail.
MATT: Okay, so here is a typical one-bedroom apartment that you can find in Asunción. You have here the bathroom, really separate bedroom. You can also find pool on the rooftop and with a really nice view that people really enjoy here.
LADISLAS MAURICE: And gym, and parking, and all that, right?
MATT: Yes, exactly, so all the amenities needed. And this is amazing. The view is great.
LADISLAS MAURICE: Nice city.
MATT: Yeah, it’s a really nice area. This is one of the most expensive neighborhoods, of course, because, as you can see, it’s really green, a lot of nice houses with pools. But at the same time, some building everywhere, a little bit, not too much. It’s a really nice zone to invest here.
LADISLAS MAURICE: Look, I mean, expensive is very relative. You’re looking at $1,500 to $2,000 a square meter, so, roughly, $130 to $180 per square foot for apartments like this. Look, there’s a fair amount of construction here. Construction here, here, down there. Will rental yields remain the same? Will they go down a little bit? I don’t know. I don’t think rental yields will go up much more with all the construction going on. But then again, a lot of people are moving here, and the country is getting wealthier, so it’s hard to say. But I wouldn’t come here expecting to make crazy yields. We’ll be doing the numbers in detail.
Who is buying real estate in Asuncion?
You have, increasingly, your clients who have been coming here for residency, before, they weren’t buying, but now they are?
MATT: Yes, of course. Yeah, basically, there are three kinds of people buying here from our clients. First kind is the people who want to live here. Basically, they usually buy two-bedrooms or one-bedroom, depending on the size of family. Some people, they also spend three, four months per year here. They usually buy one-bedroom apartment, and they rent it when they’re not here. And the other kind of people, they just see Paraguay as a really good opportunity for diversification. That’s why they buy flats and they directly put it here on Airbnb.
LADISLAS MAURICE: Cool. All right, fantastic. Let’s do the numbers.
MATT: Okay.
LADISLAS MAURICE: Great. Before jumping into the numbers, I wrote a whole article on the Asunción real estate market, the neighborhoods to look into, the neighborhoods to avoid, etc. There’s a link below. And you guys created an FAQ sheet as well?
MATT: Yes, exactly. We, basically, answer everything you need to know about real estate in Asunción, whether if you want to invest, or if you’re just interested to explore the market.
Asuncion apartment rental yield calculation
LADISLAS MAURICE: Cool, okay. There’s a link below as well. All right, so this apartment, how much would it cost off plan?
MATT: Off plan, it would be around $79,000 to buy it.
LADISLAS MAURICE: And what are the payment terms?
MATT: Usually, you can pay during construction. It’s like between 30 and 36 months.
LADISLAS MAURICE: Okay, so almost three years of payment.
MATT: Exactly, without any additional fee.
LADISLAS MAURICE: Okay, cool. What about the closing costs?
MATT: The closing cost is between 3% and 4%, so, let’s say 4%, to be more conservative.
LADISLAS MAURICE: Let’s say, I buy this apartment, I don’t try to furnish it, I just want to rent it out on the local long-term market. How much rent could I get from it in dollar equivalent?
MATT: This kind of apartment, you can rent it for $500.
LADISLAS MAURICE: What would be the occupancy rate, roughly?
MATT: About 90%.
LADISLAS MAURICE: What would be your fees for the management?
MATT: For the management fee, it’s roughly 10%.
LADISLAS MAURICE: What about HOA?
MATT: In Paraguay, it’s about $1.20 to $1.30 per square meter, so for this apartment, it should be around $60.
LADISLAS MAURICE: What about the property tax and the maintenance?
MATT: Property tax would be around $500 per year, and the maintenance, knowing that we don’t have any furniture, should be around $400.
LADISLAS MAURICE: This gives us a net yield of a bit below 4% on the local long-term market. Is this typical of the market?
MATT: Yeah, it’s pretty typical of what you usually can get. That’s why we always recommend the people to furnish the apartment to rent it furnished or even in Airbnb.
LADISLAS MAURICE: Cool. Let’s do long-term furnished rentals first. Let’s say, I want this sort of furniture. How much would it cost me?
MATT: The full furniture package should be around $4,000 to have nice stuff to be competitive in the market.
LADISLAS MAURICE: How much would the rent be then?
MATT: The rents then should move from $500 to $650.
LADISLAS MAURICE: Okay. And the occupancy remains the same, or?
MATT: It should be around the same, 80% to 90%.
LADISLAS MAURICE: Okay, so we just drop it a little bit on this one, to be conservative?
MATT: Exactly.
LADISLAS MAURICE: Okay. I mean, when you do furnished rentals, the reality is that people don’t tend to stay as long.
MATT: But at the same time, on the Asunción market right now, there are really few furnished apartments, and more and more people are willing to stay three, four months. I would say it’s a pretty good idea. When you have a furnished apartment, you just raise, a little bit, maintenance costs. Should be around $500 per year. And doing with these numbers, you are almost at 5% yield income.
Airbnb yields in Asuncion, Paraguay
LADISLAS MAURICE: Okay, so 5% net yield furnished. Let’s do Airbnb now. An apartment like this on Airbnb, what would be the nightly rates, the occupancy rate, because you guys manage a bunch of Airbnbs.
MATT: Exactly. For this kind of apartment, should be around $35 per night. It could be more, but let’s stay conservative about the numbers. Usually, it’s about 70% for the occupancy rate, but you can reach 80%, 90% without any problem if you make a good listing.
LADISLAS MAURICE: Yeah, and the quality of listings here in Asunción is absolutely appalling. There’s very little competition in the market. If you have someone half competent preparing your listing, putting good pictures and actual description, not pictures with the random mop in the middle, you’ll be doing well. People here are just really bad with the listings.
MATT: Yes. And at the same time, they just buy to put their money here, and they don’t want to bother or make a nice listing, so you really have an edge if you make a little bit more work.
LADISLAS MAURICE: Cool. What about your management fee for short-term rentals?
MATT: For Airbnb style, it’s about 20% for the management fee, because it’s a little bit more work of turnover.
LADISLAS MAURICE: I mean, it’s a lot more work. [laughs]
MATT: [laughs]
LADISLAS MAURICE: Dealing with people’s crap is invariably a lot of work. And then what about the utility, so internet, electricity, water? How much should one budget per month?
MATT: For the electricity bill and internet, it’s around $65.
LADISLAS MAURICE: Essentially, we end up with a net yield of about 5.5%, so better than just long-term rentals. You have clients that are doing more, right, 7%, 8% net?
MATT: Yeah, it’s totally doable. As we commented, you just need to make a nice listing, also to have someone take care of the apartment, and answer to the customers, basically. Because it’s not always the case when you book something here.
LADISLAS MAURICE: Yeah. I wasn’t comfortable showing 7% to 8%, because I’m seeing a fair amount of construction, and I think a lot of people will be putting their stuff on Airbnb, and then gradually, other agencies will start to become a bit more competent with Airbnb. That’s why I just wanted to put conservative numbers. But if you come now, and buy now an existing apartment, negotiate a good price, put it on Airbnb, 7% to 8% in the current environment is doable. Just midterm, I think yields are just going to go down a little bit.
Great. Now we’re going to go check out a little studio, right?
MATT: Exactly. Let’s see the numbers.
LADISLAS MAURICE: All right, let’s go.
MATT: You can get a Bolt. It’s like an Uber here. For $1.50, you can have a 10-minute ride. It’s just really cheap.
Studio apartment in Asuncion tour
MATT: Here we are in a $60,000 studio. It’s pretty little, but just enough. Here you have the TV space. Here, the bedroom part separated. And, of course, the best view of Asunción. And the barbecue, there is.
LADISLAS MAURICE: Wow. A barbecue for a studio, that’s wild.
MATT: Yeah. Most of the building, they keep doing it because it’s really popular here in Paraguay to make barbecues in apartments. [laughs]
LADISLAS MAURICE: Interesting.
Asuncion studio apartment rental yield
MATT: Yeah. What’s important to understand here in Asunción is the lifestyle. This building is a bit different than the other. The pool is larger, is nicer, better view. And of course, the studio we visited is a little bit smaller, but it doesn’t really matter. In the end, people coming here, they want to stay one month and they want to have good amenities.
LADISLAS MAURICE: Cool. It’s $60,000 for the studio. What are we looking at in terms of rentals?
MATT: Return of the rental for long term, it’s around $400. If you rent furnished, $500. And if you look into Airbnb, it’s about $30 per night, let’s say, at 70% occupancy. Even if, in reality, we manage the apartment we saw, and we reach more than 90% of this.
LADISLAS MAURICE: We put 70% to be conservative in the numbers. And using these conservative numbers, we’re looking at net yield of between a bit above 4% and 6.2%, roughly. But yeah, you’re doing better than that.
MATT: Yeah, we’re almost at 8% right now.
Airbnb rules in Asuncion
LADISLAS MAURICE: Which is not bad. Are there any Airbnb restrictions in Asunción?
MATT: Right now, there is absolutely no restriction about Airbnb. And we believe that in the future it should be all right, because the government is not restricting the people here. And the kind of people coming to Paraguay are not people doing too much party. I mean, it’s still people coming for the residency, people working remote, so it’s pretty quiet option.
LADISLAS MAURICE: The type of people going to Colombia, [laughs] that can cause problems with neighbors, not the same type of crowd here. Here, you’re looking at just, like you said, people working online, digital nomads, families. They come here for a few months. They don’t come for a rowdy week of just debauchery, they come here for other purposes. Generally speaking, the neighbors don’t get angry at the fact that there are Airbnb operation in a building. No guarantees, obviously, but the dynamics are very different here.
How to contact Matt to buy real estate in Asuncion
LADISLAS MAURICE: I wrote a whole article on the Asunción real estate market, the interesting neighborhoods, the neighborhoods you should avoid. And then you also have your free download, an FAQ with a bunch of facts on the Asunción real estate market. There’s a link below. And then feel free to get in touch with Matt. He can help you with all your real estate needs, as well as residency here in Asunción.
MATT: Whether you want to buy or you want to put on Airbnb, yeah, we can take care of it.
LADISLAS MAURICE: All right, fantastic. Matt, thank you very much.
MATT: Thanks.
