Help for Buyers and Sellers Takes a Big Step Forward

Imagine this: you are interested in buying a piece of property in Costa Rica’s southern zone, so you walk in to one of the real estate offices in say – Uvita. You consult for awhile with an agent there. (For the sake of this article, lets call him “Ben” :o) and off you go looking at properties that fit your interest. After looking at all that Ben has to show you, nothing strikes you as the right piece (hard to imagine, but it has happened a time or two).

So far not a lot of imagination has been required. Here’s where it gets a little more difficult.

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Ben says: “how ‘bout we pop on down to this other agency, some competitors of mine down by Ojochal, and see what they’ve got” or “Let’s go on up to an office of my peers in Dominical that’s been around for years. They’ve probably got a few listings that I don’t that may be a perfect fit”.

I know – hard to imagine, but stay with me here.

Last Saturday marked the 2nd meeting of… well frankly I’m not sure what.  I’m not being evasive – we actually don’t know what to call it: Costa Ballena Realty Board? Association of Real Estate Professionals?  There were a few other names tossed about: Think Tank, Master Mind Group, Coffee Talk… whatever it ends up being, it holds the key to making the real estate buying and selling experience in our zone 10 times better than what it currently is.  (I like “Unified Realty Professionals”.  This could have the distinguished acronym URP which would be said something like – well, like ‘urp’ which would bring to mind the satisfied feeling one has having just enjoyed a good meal.)

Ojochal, Uvita, Dominical, Hatillo Platanillo and San Isidro are the towns that make up “The Zone”.  There are numerous real estate agencies in these towns. Some with recognizable names from other parts of the globe such as Coldwell Banker, Century 21 etc…  Then there are the “no namers” such as yours truly with Dominical Dot Biz Select Properties, and there are many such private label real estate companies.

The objective of the meeting was to improve our ability, as a unified and cooperative group, to serve people who want to either buy, or to sell property in our zone.  This is a beautiful, and much needed thing.

The meeting was attended by the owners of Osa Tropical Estates (Ojochal), two of the Coldwell Banker partners in the Dominical office, The Land Company (Dominical) principal and myself (Uvita).  We all have knowledge of all areas of The Zone, but have greater expertise in some areas over others.

Problems Identified:
It was agreed that the non-MLS (Multiple Listing Service) business model in Costa Rica makes it difficult for sellers and buyers.  The core problem is the lack of REPRESENTATION available to our buyers and sellers.

Buyer’s Problems:
When a buyer spends a day or two with a single realtor looking at property, they are only seeing what that particular real estate agency has for listings.  To really know that they have seen everything, a buyer would have to

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Who is Buying Land In Costa Rica?

I think that this question is probably the second most asked question of a real estate agent in Costa Rica. Second after: “what’s going on in real estate in Costa Rica”? Actually, the two run hand in hand.  In my recent post where I stuck my neck out and made some specific predictions regarding the coming season, I basically said that I felt that there was compelling reason for 1) relocators and 2) land bankers, to buy land in Costa Rica in the present financial climate, and specifically, the southern zone.

I’ll profile my two most recent showings below.

Profile #1:
I’ll call them the Boydsons, were the ones that inspired the post: “Do You Have to be Rich to Buy Land in Costa Rica?”.  We spent a couple days together here, and I think that they represent a large percentage of buyers that we’ll be seeing here this season.

Mr. Boydson had mentioned that he had a little money, $50,000 to $75,000 to put down on a property, and that he would like to have an existing house. His budget was around $150,000.  So seller financing would be required.  An ocean view wasn’t required, but privacy and acreage were. Mr. Boydson is an avid gardener.

The Boydsons and I met in the office and spent our first couple hours discussing their objectives and arranged to go out the next day and put our feet on some available Costa Rican soil.

In our conversation, I mentioned that a lot of folks come to Costa Rica looking for a finished house so that they can avoid the hassle of building, but after looking around some they more often than not, end up buying a piece of land and building.  This has been due to the fact that we are early in the real estate cycle and the bulk of our inventory is still raw land.  The available houses enjoy somewhat of an inflated value due to their scarcity, and the fact that many folks don’t want to build.  After looking at land and houses, the calculations generally make it clear that the best financial decision is to build.

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Uproar Over Project Shut Downs

Yesterday started off as a typical, glorious Costa Rica morning. Rod and I got an early start with San Buenas Golf Resort Project Manager Larry Breau, walking the golf course project. This involved a drive from our Uvita Costa Rica office towards the south about 20 minutes. There was a slight delay in travelling south due to to ICE (pronounced ee-say), which is the monopolistic agency here in Costa Rica in charge of telecommunications. They are running a new grid of lines to accommodate the rapid growth in the zone. No problem, just a 5 minute wait.

We had a full morning of rubber boots, machetes, broad rimmed hats and a liter of water reviewing the project.

In driving back to the office we encountered a line of cars backed up. Thinking it was ICE we sat patiently waiting. A number of people had turned off their cars and were milling about in the road, talking, some with exaggerated arm gestures. One gal walked by and upon seeing the lighter shade of our skin (assuming that meant English is spoken) she approached us and asked what the hold up was. We very authoritatively informed her what was going on with ICE. Turns out we were dead wrong. This was a road block caused by angry protesters out in front of Crystal Ballena, a local hotel and restaurant where a high level meeting was in its second day.

Costa Rica government officials met with developers and the local Osa government departments to discuss some of the project closures that were the result of an inspection sweep

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Do You Have to be Rich to Buy Land In Costa Rica?

I received the below e-mail last week and have been working with “Jim” (name is changed to protect…).  His situation is one that I think a lot of folks will be able to relate to.

Reading through your blog it appears that purchasing a home or property in the southern zone is now just for the wealthy. Those who have 5 or 6 other houses and for which one more is just another investment. There are those of us who would like to make Costa Rica our new home and leave the corporate hassles behind. We just may not have the $300K – $1M in cash for such a move. What do you recommend for those of us who are a little ahead in the US real estate game and are looking for a quiet, secluded, place to raise some fruit, veggies, etc. and settle down?

Money in Hand

Nicely put, and meaty. I wrote back:

I hate to do this to you, but I’m going to answer your question with some questions. Nearly all of our deals here are cash deals. What amount of cash

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Ben’s Predictions

Wouldn’t it be nice to have a crystal ball that you could rely on to foretell what was going to happen? In the present “down” condition of the world’s economy, everyone is guessing what is going to happen. If one were to guess correctly, there is no doubt some opportunity out there. It is interesting to hear Nobel laureates in the media using the now well worn phrase “we’ll see”, ad nauseum.

I am having daily discussions on the current state of the market with regards to Costa Rica real estate. I suppose that my position in the Costa Rica land marketplace makes my opinion of value to some. But really, nobody knows what it is that is going to happen. There are just so many factors at play now. But, having said that, I’m going to stick my neck out and make some concrete predictions about what we’re going to see here in Costa Rica’s southern zone.  But my prediction disclaimer remains in force… we’ll see.

I think that this coming season, which is starting now, we’re going to see some land banking (see below) sales, some of which will likely be higher end, and I think that we’re going to see some determined relocation buyers here. Here’s why.

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Development Inspections Underway

A well publicized, and controversial, sweep through a number of developments in Costa Rica’s southern pacific zone has resulted in the closure of a number of projects, and the question of whether the closures were legitimate, and if the closing government agency was competent in its exercise of its authority.

Curious and Unexplainable Building Practices of Costa Rica

So we wanted to remodel. Full scale, plumbing, electrical, tile, roof and so on. One of the big motivations for the remodel was the bat problem we had. We had lots of bats living up in the attic. I know, as you read this you are thinking of at least one solution that you know would work. Well, we’ve tried it, whatever it may be. I have put garlic all around, hung sharp blades of jungle grass up, lights, noise, moth balls, plug in devices for this purpose that didn’t work, etc…

So now we were going to try and rebuild the house in such a way that the little blighters wouldn’t call our home “home” anymore. We had heard that they hate fiberglass insulation, so we were going to put on a new roof and insulate it with fiberglass. I’ll go ahead and tell you how it ended up since this isn’t really the point of this article. It didn’t work. We now have a guy enshrouding the whole house with screen. I’m not sure how we’re going to get in and out of the house, but it might just work with respect to finally getting the bats to go away.

Remodeling is an interesting endeavor no matter where you live. But I have become convinced that it is super complex here, due to what I wrote in my previous article. Click here to view.

Europeans, North Americans, Icelanders, even other Latin American countries such as Mexico and Guatemala, all have a certain sense of style. Costa Rica doesn’t. Well it does in that the lack of style is universal. There is little to no attention given to the aesthetic of the living space. Look below the surface of the unimaginative décor and design of most Tico homes, offices, stores, whatever and you will find a poorly put together mechanical structure.
For instance:

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Is Costa Rica Real Estate a Good Investment?

The Costa Rica real estate market is an immature market place. What I mean is that we are WAY early in the cycle. If you think back to Boston 200 years ago, I suspect that you’d find that there were large parcels of land for sale there. These were bought and subdivided, and little by little it became what we have now, which in some of the “nice” areas of Boston, the houses go right to the property line and all real estate transactions are sales of property with a building on it.

In my years of selling real estate here, I have sold very few built homes. Most of my deals have been raw land, either large parcels that could be developed in any number of ways: subdividing and selling lots, farming, reforestation, commercial ventures such as a golf course or a restaurant, yoga retreat etc…

The large parcels are rare now, and a lot of the subdividing has been done. We are now strongly, into the re-sale of lots phase of the cycle. We are also seeing more houses on the market.

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Costa Rica Corporation Clarity

I think that in every real estate transaction that I have been involved in here in Costa Rica, the buyer has opted to use a Costa Rica corporation to purchase the property. I have explained the pros and cons various ways when asked, but I don’t think that I have ever put it as well as an e-mail that I was just copied on from one of the San Buenas Golf Resort partners. I include it here for the benefit of readers of this blog.

The bottom line is you should always conduct business in CR via a corporation. There are definite tax and liability implications. Canadian residents are lucky…any income earned outside of Canada is not taxed by Canada. The US is different, all income, regardless of where it is earned, is taxed. CR and the US do not have a tax treaty, so you will pay the CR government 30% and the US government 35% if the shares are in your name.

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