Financial Preparation

• Determine your total investment budget (property + transaction costs + reserves)
• Establish a currency exchange strategy (lump-sum vs. staged transfers)
• Research historical PEN/USD or PEN/CAD exchange rates to identify favorable timing
• Set up international wire transfer capabilities with your home bank
• Consider meeting with a financial advisor familiar with cross-border investment
• Evaluate tax implications in both Peru and your home country

Market Research

• Identify target cities based on investment goals (appreciation vs. cash flow)
• Research neighborhood-specific price trends and rental yields
• Join online forums for foreign investors in Peru (Facebook groups, Expat.com)
• Subscribe to local real estate market reports (Urbania, Asociación de Empresas Inmobiliarias del Perú)
• Plan a preliminary market visit to evaluate areas firsthand

Professional Network Development

• Connect with bilingual real estate attorneys specializing in foreign clients
• Identify real estate agents with international client experience
• Research property management companies in your target market
• Establish contact with currency exchange specialists
• Connect with other foreign investors (networking events, expat communities)

Expert Tip: Peru has distinct regional characteristics that significantly impact property values and rental potential. Lima’s microclimate varies dramatically by district, with perpetual fog in some areas and sunny conditions in others just kilometers away. Cusco has a pronounced rainy season (November-March) that affects tourism, while the northern beaches have year-round warm weather. Visit your target area during different seasons before investing, especially for tourism-dependent properties.

Required Documents for SAC Formation: Passport copies, company bylaws, power of attorney, proof of capital deposit, and tax registration. The process typically takes 2-3 weeks with professional assistance and requires a local legal representative. Minimum capital is technically only 1,000 PEN (~$270 USD), but higher capitalization is recommended to demonstrate legitimate business purpose.

Banking Setup

• Opening a Peruvian Bank Account: Possible but increasingly complex for non-residents. Requirements typically include:
  • Passport and valid visa or residency card
  • Peruvian tax ID (RUC)
  • Proof of income and source of funds
  • Local address in Peru
  • Reference letters (sometimes required)
• Recommended Banks: Banco de Crédito del Perú (BCP), BBVA Perú, and Interbank have the most experience with foreign clients and offer some English-language services.
• Alternative: Many investors use currency exchange services and international transfers directly to notary escrow accounts for transactions, avoiding the need for a local bank account.

Financing Options

While most foreign investors use cash purchases, financing options include:

1. Peruvian Mortgage Financing: Available but challenging for non-residents with requirements including:
   • Peruvian residency (typically required)
   • Local banking history
   • Maximum 70-80% LTV (loan-to-value) for residents, significantly lower for non-residents
   • Interest rates of 7-12% depending on term and currency
   • Comprehensive income documentation and credit history
2. Developer Financing: Common for new construction and pre-sales with terms including:
   • 20-30% down payment
   • 2-3 year financing terms
   • Interest rates of 8-12%
   • More accessible for foreign buyers than traditional bank financing
3. Home Country Financing: Many North American investors leverage equity or obtain loans in their home countries:
   • Lower interest rates
   • Established banking relationships
   • No cross-border financing complexities
   • Potential tax advantages

Currency Management

The Peruvian Sol (PEN) has been relatively stable compared to other Latin American currencies, but still presents considerations:

• Exchange Rate Considerations: Monitor PEN/USD trends to identify favorable exchange windows
• Currency Services: Specialized services like Wise, OFX, or XE typically offer better rates than banks
• Documentation: Maintain clear records of all international transfers for tax compliance
• Dual Currency Options: Peruvian banks allow accounts in both PEN and USD, providing flexibility

Peru has a free foreign exchange market with minimal restrictions on moving money in or out of the country. Transactions over $10,000 USD equivalent must be reported through the formal banking system with proper documentation of source of funds.

Property Search Resources

• Online Platforms:
  • Urbania.pe – Peru’s largest real estate portal
  • AdondeVivir.com – Comprehensive listings across the country
  • Lamudi.pe – Property listings with international standards
  • Properati.com.pe – User-friendly platform with map-based search
• Real Estate Agencies:
  • Local agencies with experience serving foreign clients
  • International brokerages with Peruvian offices (RE/MAX, Coldwell Banker)
  • Specialized expat-focused agencies in popular areas
• Developer Direct: For new construction and pre-construction opportunities
• Real Estate Events: Expo Inmobiliaria (Lima), real estate fairs in major cities

Property Viewing Trip Planning

Organize an effective property viewing trip:

1. Pre-Trip Research: Identify 10-15 potential properties before arrival
2. Trip Duration: Plan at least 7-10 days per city being considered
3. Local Agent: Work with a bilingual agent experienced with foreign buyers
4. Neighborhood Exploration: Allocate time to explore areas at different times of day/week
5. Property Shortlisting: Visit 8-10 properties to develop market understanding
6. Second Viewings: Return to top choices for more detailed inspection
7. Local Amenities: Visit grocery stores, restaurants, and other facilities nearby
8. Transportation Test: Try public transit options and evaluate commute times

Property Evaluation Criteria

Assess potential investments using these key criteria:

• Location Factors:
  • Proximity to business districts, universities, or tourist attractions
  • Transportation infrastructure (Metropolitano in Lima, major roads, bus routes)
  • Neighborhood safety and security services
  • Development plans and infrastructure projects
  • Walking-distance amenities
• Building Quality:
  • Seismic construction standards (crucial in Peru’s earthquake zones)
  • Age and condition of property
  • Water pressure and reliability (varies significantly by area)
  • Building systems and maintenance
  • Security features (24-hour doorman, access control)
• Rental Potential:
  • Historical occupancy rates in the area
  • Rental restrictions in building regulations
  • Target tenant profile availability
  • Competitive rental inventory
  • Furnished vs. unfurnished market conditions
• Financial Considerations:
  • Price per square meter compared to area averages
  • Monthly maintenance fees (cuota de mantenimiento)
  • Property tax assessment (impuesto predial)
  • Renovation requirements and costs
  • Appreciation potential based on local development

Expert Tip: In Lima, property values can vary dramatically based on district microclimate. Oceanfront properties in Miraflores and Barranco can see up to 9 months of grey skies annually (garúa season), while districts like La Molina or Surco receive significantly more sunshine. In Cusco, altitude differences between the historic center (3,400m) and lower-lying areas of the Sacred Valley (2,800-3,000m) affect both livability and rental demand. These factors have substantial impact on property valuation and rental potential.

Legal Due Diligence

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  Title Verification: Obtain property registration certificate (Partida Registral) from SUNARP
• ✓
  Encumbrance Check: Verify no liens, mortgages, or easements (Certificado de Gravámenes)
• ✓
  Property Tax Status: Confirm property tax payments are current (HR and PU forms from municipality)
• ✓
  Utility Verification: Ensure no unpaid utility bills (water, electricity, gas)
• ✓
  Building Administration: Verify no outstanding maintenance fees (cuota de mantenimiento)
• ✓
  Zoning Compliance: Check municipal zoning and land use regulations (Certificado de Parámetros Urbanísticos)
• ✓
  Building Regulations: Review building bylaws (Reglamento Interno) for rental restrictions
• ✓
  Municipal Permits: Verify all construction has proper permits and final inspection approval

Physical Due Diligence

• ✓
  Professional Inspection: Hire licensed inspector to evaluate construction quality, systems, and potential issues
• ✓
  Seismic Standards: Verify compliance with Peruvian seismic building codes (especially for older structures)
• ✓
  Property Measurements: Confirm actual square meters match documentation
• ✓
  System Functionality: Test electrical, plumbing, water pressure, heating, and appliances
• ✓
  Moisture/Mold: Check for water damage, particularly in coastal areas and during rainy season
• ✓
  Building Common Areas: Inspect elevators, hallways, parking, and other common facilities
• ✓
  Renovation Assessment: Obtain estimates for any planned improvements

Financial Due Diligence

• ✓
  Comparative Market Analysis: Verify price aligns with comparable recent sales
• ✓
  Rental Market Research: Confirm realistic rental expectations for the property
• ✓
  Expense Verification: Detailed assessment of all ownership costs
• ✓
  ROI Calculation: Develop detailed cash flow projections and return analysis
• ✓
  Tax Assessment: Understand property tax valuation and potential increases
• ✓
  Future Expenses: Research upcoming building maintenance or special assessments

Expert Tip: Peru has a significant informal construction sector, so be especially vigilant about ensuring all aspects of the property are properly permitted and registered. Unpermitted additions or modifications can create complications during resale and potentially lead to fines or mandatory alterations. In historic areas like Cusco’s center, additional layers of approval from cultural heritage authorities may apply. Verify that any renovations to historic properties have proper documentation.

Purchase Agreement (Contrato de Arras)

This legally binding document outlines the terms and conditions of the sale:

• Key Components:
  • Property details and legal description
  • Purchase price (typically expressed in USD for larger transactions)
  • Deposit amount (typically 5-20%)
  • Closing timeframe
  • Contingencies and conditions
  • Penalties for non-compliance
• Deposit Handling: Usually held in notary escrow account or designated bank account
• Timeline: Signed after initial due diligence, typically 1-2 weeks after verbal offer acceptance
• Legal Review: Essential to have bilingual attorney review before signing

The preliminary agreement provides legal protection during the remaining due diligence period. It’s a crucial document that should include all conditions and contingencies important to you as a buyer.

Closing Process (Escritura Pública)

The formal property transfer occurs at a Peruvian notary office:

1. Documentation Preparation:
   • Final purchase deed (Escritura Pública)
   • Property registration certificate
   • Encumbrance and lien certificate
   • Property tax certificate
   • Building administration certificate (no outstanding expenses)
   • Identification documents
2. Notary Appointment: Both parties (or representatives with power of attorney) must appear in person
3. Final Payment: Balance of purchase price transferred at or immediately before closing
4. Document Review and Signing: Notary reviews document content before signatures
5. Payment of Taxes and Fees: Transfer taxes and notary fees paid at closing
6. Registration: Deed must be registered with SUNARP (Public Registry)

Registration typically takes 2-4 weeks, after which you’ll receive the registered deed confirming your ownership. The notary typically handles the registration process on your behalf.

Transaction Costs

Budget for these typical transaction expenses:

• Alcabala (Transfer Tax): 3% of property value exceeding 10 UIT (tax reference unit)
• Notary Fees: 0.2% to 0.5% of property value
• Registration Fee: 0.5% to 1.0% of property value
• Legal Fees: 1% to 2% for comprehensive representation
• Real Estate Agent Commission: 3% to 5% (typically paid by seller but may affect negotiated price)
• Bank/Wire Transfer Fees: Varies by institution and amount

Total buyer-side transaction costs typically range from 4% to 6.5% of the purchase price. For non-resident buyers, budget for higher legal fees to ensure proper representation throughout the process.

Expert Tip: The Peruvian tax authority (SUNAT) may use its reference valuation of the property (valor arancelario) rather than the actual purchase price when calculating the Alcabala tax if they determine the sale price is significantly below market value. This is rare for arm’s length transactions at market prices but can affect properties sold at discounted rates. Ensure your purchase agreement reflects fair market value to avoid complications.

Administrative Tasks

• ✓
  Property Tax Registration: Update ownership information with the municipal tax office
• ✓
  Utility Transfers: Register utilities in your name (water, electricity, gas, internet)
• ✓
  Building Administration: Register with building management and set up monthly fee payments
• ✓
  Insurance: Obtain property and earthquake insurance (strongly recommended)
• ✓
  Banking Setup: Establish payment mechanisms for ongoing expenses

Property Management Setup

If planning to rent your property:

• Management Structure: Determine whether to self-manage or hire professional property management
• Rental Readiness: Prepare property with appropriate furnishings based on target market
• Marketing Strategy: Develop listing approach for long-term or vacation rentals
• Legal Documentation: Prepare standardized lease agreements compliant with Peruvian law
• Tenant Screening: Establish protocols for evaluating potential tenants
• Maintenance Network: Identify reliable contractors for various property needs

For vacation rentals, registration with regional tourism authorities may be required depending on the area. Professional property managers can typically assist with this process.

Record Keeping

Maintain comprehensive records for tax and legal purposes:

• Purchase Documentation: Keep all closing documents, property deed, and transaction records
• Expense Tracking: Maintain detailed records of all property-related expenditures
• Income Documentation: Record all rental income with formal invoicing
• Improvement Investments: Document all property improvements with receipts and contracts
• Tax Filings: Archive all property-related tax filings in Peru and your home country
• Correspondence: Save important communications with property management, tenants, and authorities

Digital storage with secure backups is recommended for all documentation, with key documents also maintained in physical form.

Expert Tip: Peru requires formal electronic invoicing (factura electrónica) for most business transactions, including rental income. If you plan to rent your property, setting up a formal invoicing system is essential for tax compliance. Many property management companies will handle this process for you, but self-managers should engage a local accountant to establish proper procedures. The system is increasingly digital, allowing remote owners to manage tax obligations with greater ease.

Peruvian Tax Obligations

• Property Tax (Impuesto Predial):
  • Paid annually to the local municipality
  • Progressive rates from 0.2% to 1.0% based on property value
  • Due in February with options for quarterly payments
  • Based on municipal autovalúo (official assessment)
• Municipal Services Tax (Arbitrios):
  • Covers garbage collection, street cleaning, parks maintenance
  • Varies by district and property characteristics
  • Typically paid quarterly
• Income Tax on Rental Income:
  • Non-residents pay a flat 30% tax on gross rental income
  • Residents pay 5% on gross rental income up to 7 UIT, progressive rates beyond
  • Monthly or annual filing depending on rental volume
  • Limited deductions available for non-residents
• Capital Gains Tax:
  • Residents pay 5% on capital gains
  • Non-residents pay 30% on capital gains
  • Primary residence exemption available under certain conditions
  • Special treatment for properties acquired before 2004

Home Country Tax Obligations

Consult with tax professionals specializing in cross-border taxation to ensure compliance with both Peruvian and home country requirements. Peruvian tax laws undergo periodic reforms, making professional guidance particularly valuable.

Tax Planning Strategies

• Entity Structures: Evaluate whether holding property through a legal entity provides tax advantages
• Expense Documentation: Maintain thorough records of all deductible expenses
• Depreciation: Utilize available depreciation allowances in both jurisdictions
• Timing Strategies: Consider timing of income recognition and expense payments
• Tax Treaty Benefits: Utilize provisions of tax treaties where applicable
• Capital Improvements: Properly document improvements to increase cost basis for eventual sale

Peru has tax treaties with several countries including Canada, though not currently with the United States. Treaty benefits can help prevent double taxation for investors from treaty countries.

Expert Tip: Peru’s tax administration (SUNAT) has become increasingly sophisticated in tracking property ownership and rental income. The government has implemented electronic invoicing systems and digital tax platforms that make compliance essential. Consider engaging a Peruvian accountant familiar with foreign investor requirements, as the annual cost is reasonable (typically $600-1,200 USD) and can prevent costly compliance issues.

Selecting a Property Manager

Evaluate potential property managers using these criteria:

• Experience with Foreign Owners: Look for firms accustomed to working with international clients
• Language Capabilities: English proficiency and clear communication systems
• Digital Systems: Online portals, electronic reporting, and international payment options
• Market Knowledge: Deep understanding of your specific neighborhood
• Tenant Screening: Rigorous vetting procedures for potential tenants
• Maintenance Network: Established relationships with quality contractors
• Legal Expertise: Knowledge of Peruvian rental laws and regulations
• Financial Reporting: Transparent financial management and regular statements
• References: Verifiable testimonials from other foreign clients

Management Agreement Essentials

Ensure your property management contract includes these key elements:

• Scope of Services: Detailed description of exactly what is included and excluded
• Fee Structure: Clear explanation of all management fees, commissions, and additional charges
• Reporting Requirements: Frequency and format of financial and property condition reports
• Maintenance Authority: Spending limits for repairs without prior approval
• Tenant Selection Criteria: Parameters for approving potential tenants
• Lease Terms: Standard lease agreement terms and conditions
• Security Deposit Handling: Procedures for collecting, holding, and returning deposits
• Termination Provisions: Conditions and notice requirements for ending the management relationship
• Liability Limitations: Insurance requirements and liability boundaries

Have your attorney review any management agreement before signing to ensure it complies with Peruvian law and adequately protects your interests.

Expert Tip: In Peru’s tourism-driven markets like Cusco and Mancora, consider property managers who can implement a dual strategy of high-season vacation rentals and lower-season extended stays. High season in Cusco (May-September) can generate daily rates 3-4 times higher than long-term rental values, while shoulder and off-seasons might be better suited for medium-term rentals to language students, digital nomads, or researchers. This flexibility can maximize annual returns substantially.

Exit Options

Sale Process

When selling your Peruvian property:

1. Market Analysis: Evaluate current market conditions and property values
2. Agent Selection: Choose between:
   • Local agency with strong Peruvian buyer network
   • International agency targeting foreign investors
   • Multi-agency approach for broader exposure
3. Property Preparation: Complete any necessary repairs and enhancements
4. Documentation Preparation: Organize all property records, certificates, and legal documents
5. Marketing Strategy: Develop online and offline marketing plan
6. Tax Planning: Consult with tax advisors to optimize transaction structure
7. Closing Process: Similar to purchase process but in reverse:
   • Preliminary contract (Contrato de Arras)
   • Due diligence period for buyer
   • Public deed (Escritura Pública) at notary
   • Registration of ownership transfer
8. Fund Repatriation: Transfer proceeds through formal banking channels
9. Tax Compliance: File Peruvian capital gains tax returns and report transaction in home country
10. Currency Conversion: Consider timing of sol-to-dollar conversion to maximize returns

The sale process typically takes 2-4 months from listing to closing in major cities, potentially longer in less active markets or for high-value properties.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Market Cycle Position: Real estate markets typically follow multi-year cycles; selling during expansion phases usually optimizes returns
• Currency Exchange Rates: Monitor PEN/USD or PEN/CAD trends; strengthening sol can significantly enhance returns for foreign investors
• Political Stability: Consider the political climate and upcoming elections when planning exits
• Local Economic Indicators: GDP growth, unemployment rates, and interest rate trends can signal ideal selling windows
• Tourism Trends: For vacation properties, monitor changes in tourism patterns and infrastructure
• Infrastructure Developments: Completion of major transportation or urban projects often boosts nearby property values
• Tax Law Changes: Stay informed about potential changes to capital gains tax treatment
• Seasonal Factors: Tourist area properties may sell faster and at premium prices during peak seasons
• Personal Financial Goals: Alignment with broader investment objectives and liquidity needs

The most successful investors establish clear performance benchmarks and regularly evaluate their Peruvian property investments against these targets rather than making decisions based solely on market timing.

Expert Tip: Peru’s property market has historically followed more pronounced cycles than some neighboring countries, with periods of rapid appreciation followed by consolidation. This volatility can provide excellent exit windows if timed correctly. For properties in Lima’s prime districts and top tourist destinations, consider a minimum 5-7 year investment horizon to ride through potential market fluctuations. Properties in emerging areas typically require longer holding periods of 7-10 years to realize full appreciation potential as infrastructure and services develop.