Investing in Panama Real Estate: Short-Term Rentals vs Long-Term Leases in 2025

Lauren Mitchell
Jul 24, 2025
3 min read

Updated: Aug 4, 2025

If you’re looking to invest in Panama real estate in 2025, the big question is: short-term rentals or long-term leases? Each strategy offers distinct benefits, risks, and returns. This guide will break down the legal landscape, expected ROI, and real-world case study data from Casco View Life’s rental pool to help you decide what fits your goals best.

Why Panama is a Top Investment Destination

Panama remains one of Latin America’s most attractive investment destinations. With a stable, dollarized economy, strategic location, and strong foreign interest (up 25% from the US alone), buyers are seeing deep discounts and rising rental demand.

Buyer’s Market: 10–25% off list prices in major Panama City developments.
High Rental Demand: Yields averaging 6.84%, with year-over-year rent increases of up to 15% in hot neighborhoods.
Legal Short-Term Rental Zones: Available in areas like Casco Viejo.

The Upside of Short-Term Rentals

Higher Income Potential: Expect net ROI in tourist areas ranging from 6% to over 10%.
Strong Demand: Tourists and digital nomads are consistently seeking accommodations.
Airbnb-Ready: Legal zones like Casco Viejo and parts of the beach corridor are ideal for short-term rentals.

The Challenges of Short-Term Rentals

Strict Regulations: Short-term rentals under 45 days are prohibited in Panama City, except in licensed tourist zones.
ATP License Required: Operating legally necessitates an ATP license, with fines up to $5,000 for violations.
Higher Management Costs: Expect around 15% plus a flat fee, along with frequent cleaning and guest care.
Seasonality: Peak months yield high returns, but income can dip during the off-season.

Ideal For: Investors who want to maximize short-term gains in tourist areas and are comfortable with licenses and active management (or hiring a local operator).

Long-Term Rentals in Panama

The Upside

Stable, Predictable Cash Flow: Long-term rentals provide consistent income.
Lower Ongoing Costs: Management fees typically range from 8% to 12%.
Dropping Vacancy Rates: Key areas are experiencing lower vacancy rates.
Higher Yields: Certain neighborhoods, like San Francisco and Bella Vista, can yield up to 12.41%!

The Considerations

Slower Lease Turnover: Less flexibility for personal use due to longer leases.
Tenant Protections: Eviction processes can be delayed (averaging over 120 days).
Lease Registration Required: Compliance with security deposit regulations is necessary.

Ideal For: Passive investors who prefer lower effort and stable, long-term returns with less exposure to regulatory changes.

The Casco View Life Rental Pool Model

Casco View Life in Santa Ana offers a rental pool model that blends both strategies—higher income potential with managed risk and minimal involvement.

How It Works

Unit Pooling: Units are pooled and marketed across platforms like Airbnb, Booking, Expedia, Marriott Homes & Villas, and direct site bookings (35–40% of volume).
Revenue Distribution: Revenue is distributed proportionally using a weighted rent formula based on unit size and value.

What You Get

Full-Service Management: A 20% fee covers booking, guest care, maintenance, concierge services, and reporting.
Lower Volatility: Income pooling helps reduce income fluctuations.
Flexibility: Options for long-term rental use or personal stays are available.

Final Verdict: Which Strategy Wins?

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Our Take

Go short-term if you’re in Casco Viejo, have a license, and want high returns.
Go long-term if you’re seeking steady income with minimal upkeep.
Go hybrid if you want a plug-and-play solution with optimized returns and flexibility.