Buying property in another country can be an exciting process, even a turning point in your life. For some, it's time to leave the busy city life and live a slower pace lifestyle on the beach. For others, it's a nice vacation destination and chance to make rental income. The one thing in common with these, Costa Rica is a popular destination to buy real estate. But where do you start and should you do it?
Costa Rica Real Estate - Where to Start
Is it right for you?
First things first, take a breath and slow down if you haven't already. You would be surprised how many people absolutely fall in love with Costa Rica and buy property on their first vacation there, especially raw land. Six months later, after being back at home, they realize that dream can't be a reality. By that time, the money is tied up and the headache starts.
We will get into the headache part later, but let's go over some realistic recommendations first. One of the top recommendations, rent before you buy. Unless you are familiar with the country, you should get to know the ins and outs of it before you buy. If you plan on renting it out, we will go over that, but there are still a lot of things to know first.
Spending a lot of time there goes a long way. Try to pick the area you desire to live in and find a rental. While living there you will most definitely meet a lot of people, especially expats. The locals there are so full of truthful information about the lifestyle changes. They know the common problems, cultural differences, the real estate market and can even share the mistakes they made. After spending a good year there, you will know if it's right for you.
What to Expect
If Costa Rica is new to you, or you have only had a hand full of vacations there, then here is a glimpse of what to expect from someone who has lived there. I typically don't add myself into articles, but this is what I saw, so it's only fair. I have lived there a few times off and on. But the groups I were around were heavily involved in real estate investing and development. I learned a life time of knowledge in a very short time because of this.
This won't go over the culture so as much in this article, I will try and stay focused on Real Estate. However, understanding the culture is an important part the impacts real estate. It's an important thing to discuss before you plan to if you plan to live there. The people in my experience (Tico's & Tica's) are extremely inviting, friendly and love to laugh. If you plan on getting immersed in the locals ways, you have to take on the Spanish language. It really goes a long way for you to stand out, even though most know english because they cater to tourism. While the ways a life seem normal to them, it might not to be for someone used to United State standards.
The Costa Rican people take things a bit slower, this is nice at times but I have seen expats have issues with this. Things like needing work done on a home, getting government paperwork, road service and police help can be very slow. While some work very hard, some like the more "Tranquilo" lifestyle and might not even show for work. There are also often complaints about "milking people", in other words, woking slowly to keep the job longer or extending out a project that requires more money.
Keep in mind, there are a good amount of expats that just stick to each other. They pick gated communities, go into town to get things they need, travel the country or go out for restaurant dinning. But aside from that, they just stick to their expat groups for company. This is fine, some prefer it, but it goes a long way to have support from locals should you need them for help or the need to feel as a part of the community.
The Real Estate Headaches in Costa Rica
In short, there can be a lot of headaches if you don't know what you are doing. Here are some of the bigger ones I have seen.
- Easy to buy, hard to sell - You're buying in a limited market, vacation destination. It's very easy to buy something, but when you want out, you could have to fire sale or wait a year or more to sell it.
- Water rights issues - Know your water rights before buying, sometimes the well is owned by someone else or the country denies adding water to your lot. You could buy a home or land, then the owner of the well shuts you off, even extorts you to turn it back on. Now your home greatly loses value and becomes unlivable. Good luck selling that.
- Lack of true ownership after buying - There are stories of people buying homes, land or businesses. When it comes time to move in, they find out they own nothing but junk paperwork. Yep, someone else owns, you own nothing and all your money is gone. There are seriously tragic stories about these cases. Use a reputable company and agent, always cross closing documents with your own lawyer. Also get title insurance from First American or similar, don't buy without it.
- Pre-development tract abandoned - Companies will show you designs with 3D layouts of a beautiful gated community with a golf course, luxury pool and 24/7 security. They sell the land with promises of building this out in phases. After all the land sells, they vanish, often times with a gated entrance for show. Selling land is probably the worst after such an event, very few people want land, also you can't sell it with the dreams of all the amenities so its value tanks.
- Utilities disasters - Depending on the grid and area, utilities like power can cause issues. In some areas, the power gird isn't the best, storms will cut off your power for a day or more. Worst case, a surge completely blows every appliance in your home, rendering them useless. Get someone to inspect the power, it may be best to pay someone on your side to inspect power, water and sewer.
- Petty theft - Unfortunately, a huge majority of people who don't live full time in their home have been impacted by petty theft. You're going to be considered rich just because you are an expat, so stealing goods isn't a big deal. If you are not at the home for months, you could come back to a robbed home. Either rent it out, have a neighbor watch it, get a property management company or a gated community home.
- Squatters - Strange part about Costa Rica is that squatters have rights. If your home or land isn't looked after, someone could move in and live on your land, even build on it. Also take over your home, although this is more rare it happens. You may have to fight them in court, but you could also lose it to them in a court battle.
- Renter Issues - Someone could potentially quit paying rent and not move out. This happens worldwide after all, you don't want to find yourself in court to get them out. Also cops are few and far between to help you. Use a property management company or maintain the renting while you are onsite.
- Medical Needs - Medical care is actually extremely good in Costa Rica. Most expats go into San Jose for the most advanced hospital called Cima. If you are not part of the country medical system, which you can get into with the right qualifications, then you probably will pay cash. But, it's quite cheap compared to some countries like the United States. The issues you can run into are things like extremely specialized tests or treatments, your medication isn't available or if you have an emergency the ambulances are a bit slow.
Where to Start
To do things right, the general process is not that hard, some just get some enamored with the country they skips steps. Here are some steps to take.
1. Chose the place you like - Do you like beaches, mountains, cooler or warmer climate, being close to main city or more remote? These are important questions to ask yourself, different places carry higher costs, some lack modern needs. Visit a few places to get an idea of the life there, you should also rent first if possible.
2. Find a reputable Agent and Company - It's safer to stay with brand names like Remax, Century 21 or Coldwell. There are some non brand name companies with many years in business, just do your research. Make sure you can get title insurance with them and escrow. Some agents barely work, they might not even care to respond to you, after all the beaches are nice. Find someone eager and good at their job. Get someone on your side willing to put in offers that benefit you. Don't fall in love with one place right away, at least look at a few.
3. Find an experienced inspector - You can probably ask around the expat community for this. But get someone who can inspect water, power, sewer and quality of the build before you buy. It will cost a little for their help, but it's better than finding out your place is junk after the fact.
4. Get your own lawyer to review paperwork - It's a bit of a tip people rarely do, but the experts who know the deal always have one. An agent will have their own lawyer to draw up the closing documents, they will also be in Spanish. Find a lawyer outside of town, like someone in San Jose, someone who doesn't know the closing companies lawyer. Have them review the documents on your behalf and explain the situation. Know all your easements, rights and verify ownership.
5. If you do Pre Development - If you decide to go pre development, make sure the developers plan to finish what they started. Always check their tract history of completion and size of their business. There are some major developers in Costa Rica, something like foreign companies with a massive amount of developments. These are pretty safe and more dependable to complete the project to the finishing phase. Be wary of companies without a history, sometimes a couple guys get together with the idea but due to finances can't complete it.
6. Property Management - Unless you plan on living at the home full time, find a property management ahead of time. Check the size of their business, the amount they manage and services they offer. There are some really good ones around as many people use them.
7. Importing furniture and cars - Importing by cargo ship is common, but understand your costs first. Furniture is pretty straight forward, but importing cars takes into account the value of the car. They usually charge you half the cars current value. So a $30k car could end up with taxes of around $15k. Cars are expensive in Costa Rica, chances are you could sell it for pretty close to the total cost of all that.
8. Know the Re-sale - You may need to sell the home at some point, this process is much slower than buying. For homes expats buy, your audience is more limited, it could be a slow process. With land this is even worse, land can be hard to sell. Location helps, but know your ability to be financially well off if it doesn't sell for a year or more.
9. Getting an S.A. - Typically people hold property in an S.A., the equivalent of a legal business company or LLC. It most likely will even be required, so look into it first.
Renting out your home
Renting you home is very lucrative in Costa Rica. Often the AirBnb prices are very high during peak season and sold out, you could make some serious cash depending on the area. If you offer services like food, tour connections and more. You might even be able to get a hotel type status. At the time of this article the Costa Rica government has really cracked down on AirBnb's. Laws that are almost in affect might already be in place by the time you read this. It was at one point very open and profitable. But now a major taxation on Airbnb profits came into the picture, so figure the cost of these out. They also made it harder to quality, things like handicap access and certain required structure needs will be key. If you don't have these you won't be able to register for the AIrBnb status. Like said above, also get a property management company and check the status of the items above in this article.
Don't be Fearful & Enjoy
This can be the change in life that brings you great happiness. Costa Rica is such an amazing place with opportunities for all sorts of businesses. None of these items in the article should scare you one bit, they are just simply due diligence. If you just take care of these items, the process won't be a big deal. If you bypass them, the process may leave a sour taste in your mouth.
We hope this article helped, we currently don't list property Costa Rica but if you are looking for Cheap Land in the United States click the link.
Is Costa Rica a good place to buy real estate?
Costa Rica is a great place to buy real estate as long as you follow some guidelines and understand the process. Costa Rica has good property values, high rental rates, international buyers, calm political issues and stable economy.
Can forigners by in Costa Rica?
Costa Rica has the same property rights for the international buyers as the local community does. You can hold property in the name of your own corporation for protection or name. There are several good property management companies to manage your property while away from the country.
How much is it to rent in Costa Rica?
The location and how fancy the home is will effect the price greatly in Costa Rica. Ranges are wide, $200 a month to $10,000 a month are normal. You can get discounts to rent long term vs. just renting a month. Luxury rentals can be found though agents, while the lowest ranges can be found by Airbnb, Facebook and asking locals while there.
Can you get property managment in Costa Rica?
Costa Rica actually has some very good property management companies all over. This is because of the amount of international buyers that need someone to look after their property. Property management companies can take care of things like managing rentals, maintaining the property and handling the properties finances and bills.
Is buying in a pre development a good idea?
Buying in a pre development can be a way to get a discount on the land or home that is soon to be built. While this sounds good, there have been many issues with pre developments such as the developer not putting in any of the amenities they promised. It is always best to check a tract succession rate of the developer first.
Is there theft in Costa Rica?
The most common crime expected in Costa Rica is petty theft, violent encounters are rare. Taking measures to avoid petty theft are not leaving any valuables in your car and making sure your property is looked after at all times. Physical theft can be avoided by staying in safe places at night, avoid drinking too much and staying away from groups that deal drugs.
Is land cheap in Costa Rica?
Raw land in Costa Rica is affordable depending on the area. Beach towns in the Guanacaste region will be more expensive than inland farm land. You can find land as cheap as around $9,000 to $25,000 for more remote small lots. For large acreage or quality view lots, you could expect around the $100,000 range to buy the land.
Can you get title insurance in Costa Rica?
Title insurance is not required in Costa Rica and therefore overlooked. For Costa Rica the idea of title insurance is a fairly new concept but brings lots of confidence to the buyer as issues do happen. There are a handful of title companies that can be found and your real estate agent can help you with this.