A great example of how to go about buying a piece of land in Costa Rica
I thought that it might be interesting to catalogue the recent visit, well actually the current visit, of The Smiths. Their visit is very representative of what are perhaps the bulk of my presentations. From their upper budget limit of $200,000 for raw land, to their purpose for the purchase: they hope to relocate to Costa Rica in the coming years, a consideration of their experience will likely be a help to other who are looking to buy land in Costa Rica.
Using the Internet, Mr. Smith did the research on the Dominical and Uvita area real estate agencies and their listings. Mrs. Smith studied the geography of the area and what the various zones are called. They wrote to me asking for 3 references, which in fact isn’t so representative of what most prospective buyers do, but I think is a very smart idea.
To digress for a minute, all us real estate folks down here in Costa Rica are not licensed. There is no policed, nor enforced, procedure for buying land in Costa Rica. Consequently, a lot of how a land purchase is going to go revolves around your selection of a real estate agent. This practice of asking for references is a great idea. I am also available to give objective input regarding my peers in the business here. For the most part I have quite a bit of respect for the established agencies and their agents in our zone.
So, after receiving the references, The Smiths sent me links to some of the listings that they had found on the web. Most were from my site, and some were from the sites of my competitors. Again, this is a good practice. The lack of a Multiple Listing Service (MLS) makes finding a property, and seeing all that is available within your criteria a bit of a challenge. There is no sharing of listings amongst the agencies. A seller must visit all of the agencies and have distinct contracts to list their property with each one. Whoever sells that property receives the entire commission. There is no listing agent, nor seller’s agent.
It is likely that your chosen agent’s website may not display all of the properties in his/her inventory. So what Mr. Smith did here is a good idea, and it turns out, worked well since I did have inventoried all of the properties they found on various websites, even though all of them weren’t seen on my website. If there were some listings on a competitor’s website that I didn’t have, I can either contact that agent prior to the prospects coming visit and get the listing, (in which case I’ll share the commission with that agent’s agency) or I can suggest to the prospect that they work directly with the other agent (in which case I’ll still receive a portion of the commission).
Mr. Smith’s investigation serves as an example also in that he was candid with his concerns about me, and also about the issue of soil stability. His concern about me was that there were so many high price properties on my site that he felt I might not deal that much in their price range. I assured them that the $150,000 – $200,000 is my bread basket and that I am very comfortable working in that range, which I think they would now attest to. As for soil stability, I cannot speak with any sort of authority about this, but have seen a lot of properties bought and sold here in Costa Rica, where there are regular tremors, and feel that the concern can be lived with. If a prospect falls in love with a property that looks like it could have a concern of either having land slide down on top of it, or sliding out from under it, a professional soil analysis can be arranged, the results of which can be a contingency of sale.
So, along with the above information, they detailed to me the oh-so-important 2 main points that help me find what you are looking for
- the purpose for buying land in Costa Rica
- their upper budget limit
With respect to point number 2, I have found that nobody seems to mind if we find something that satisfies point #1 but comes in under their upper budget limit.
Here is the profile of The Smiths. They have obligations back home with 2 grown kids in school. They would like to re-locate to Costa Rica in the coming years, or will at that time set up a migration lifestyle where they spend a good portion of the year in Costa Rica, and the rest back in the States. They would like to secure their property now as prices will, presumably, continue to rise. It can be an existing house, or a lot that they can then build on. The upper budget limit is obviously higher for an existing house.
They would like for the property, once it is built out, to generate rental income. This can be in the short term Vacation Rental market, or it can be in the much needed long term (no less than 6 months) market. So their choice of property is shaped by which of these markets they hope to appeal to.
The Vacation Rental market is rich here in the Dominical / Uvita / Ojochal zone. One can realize $2,000 – $4,000 a week with a well chosen and well designed and built home. This is mightily compelling when deciding how to best utilize a property while the owners are not here.
The long term rental market is lacking here (read: there is a high demand for long term rentals).It is not nearly as lucrative as the vacation rental, but it also has some compelling aspects to it, one of which is you’d likely have close to 100% occupancy and wouldn’t need a property management company to handle the marketing and renting of the property. One page at Dominical.biz (cost $100 per year, one time set up fee of $150), and you’d likely have it rented all the time, and even that expense can likely become unnecessary after a couple years.
We met midday for lunch, but decided to not lunch. The Smiths were focused on finding their property and they wanted to get to it. After a brief consultation in my office (it was brief largely due to all of the e-mailing and phone calls that we had made in preparation for their visit), off we went. Their upper budget limit for raw land was $200,000. My favorite pick in this price range in Uvita is La Gordita – ($195,000). So we headed up there and took a look. It takes a little while to see La Gordita since the property itself is 3 acres and we can spend a little time there, but also, there is a 10 minute walk down to the Rio Cortezal which this lot has access to, and which constitutes a real value add to the property.
Well, I have passed my 1,000 word objective with this review. I’ll continue with part II of The Smiths’s visit shortly.