Story highlights Otto is the latest-in-season Atlantic hurricane since 2005

Storm is expected to make landfall Thursday near the Nicaragua/Costa Rica border

Atlanta (CNN) Three people in Panama have died and four are missing as Hurricane Otto approaches Central America, Panamanian President Juan Carlos Varela told reporters Tuesday.

The center of the Category 1 storm is more than 100 miles north of Panama City but outer bands of rain are expected to bring 4 to 8 inches to Panama and southern Costa Rica through Wednesday.

Additional strengthening is expected, and Otto could become a Category 2 storm before making landfall near the Nicaragua-Costa Rica border on Thursday.

Peak of hurricane season in the Atlantic

While the Caribbean is one of the few areas with warm enough water to support a hurricane this late in the season, a storm making landfall this far south is extremely rare

This portion of Central America is unaccustomed to hurricane landfalls. It also has steep terrain, which makes the area prone to flooding and landslides from a slow-moving storm like Otto.

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