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.
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.
In today’s world, you would want to calculate the cost of building at around $100 per foot. This number will vary depending on who you talk with, but that’s my number. The cost of building materials is presently going down.
So when we got together the next day, the Boydsons had had the opportunity to talk about our consultation of the day prior, and they had definitely decided to only look at available houses, but that their budget had increased to $250,000. Whew! Good thing. That helped quite a bit.
We may have hit pay dirt with an existing guest house on 4+ acres of land in Ojochal. Asking price $265,000, seller financing of 20% down and the rest carried over a 3 year term at 6%. The property is perfect with room to garden, the main building site yet to be built on, and a beautiful ocean view.
The outcome of this deal remains to be seen. The profile of the Boydsons is interesting. Both work in corporate type jobs, and are READY to get out. I’d say that they are in their mid-40s. They are familiar with Costa Rica, having visited it over the last 15 years. They are not looking for investment value since they intend to end up living here, but not for a couple years yet. In the meantime, they would like it if the property is rentable, thus helping offset the land payments.
The “Smithenbergs” approached me in the middle of the weekly Uvita softball game. When I came in off the field, my secretary Lindsay called me over. They had shown up at the office and Lindsay had brought them over to meet me. So, there I was shirtless and sweaty, doing business Costa Rica style.
The Smithenbergs currently have a gorgeous home in the States. A large parcel on a lake. They are looking to sell out and get out. Costa Rica is where they intend to make their new home. I’d guess the Smithenbergs to be in their 50s. They are successful, and financially comfortable, but were hurt to the tune of mulitple $100ks in the market downturn. They pulled some of their resources out of the market and have converted it from dollars to another medium. They are quite sure that the US economy is essentially a thing of the past. They are not looking for an investment, rather, a place to live.
I was at a disadvantage in that Mrs. Smithenberg knew more about me than I did. She had been reading my Dominical website for years, as well as my Costa Rica real estate listings website, and this blog. Its almost creepy to have just met someone, and they make casual reference to some personal detail from years past. Mrs. Smithenberg has an amazing memory.
Their budget: raw land in the $400k range, or an existing house in the $1,000,000 range. Privacy is important, ocean view a must, and an altitude that keeps the temperature comfortable even in the depth of dry season.
They wanted to see EVERYTHING. We spent a number of days looking at all that the zone had to offer.
The outcome of these showings is pending, but both are very much alive.
I suspect that we are going to be seeing more such buyers like the Boydsons and Smithenbergs. These are “Life-stylers”. Even though they are not concerned with the investment quality of a piece of property, they will want to get a good deal on the property they buy. The most important quality of the properties that these two clients are looking for is that it be in Costa Rica, and that it be the type of property that they can live on.
I recently heard how 0% bonds are being offered, and bought, in the States. Wow, now I find that amazing. People are more concerned now about not losing money instead of how much interest they can make on their money.
I have recently done a purely land banked deal – $485,000, 14 acres in Uvita. The buyer had no interest in developing, building, nor living on the property. He simply purchased it as a vehicle to house his money, and he was incented to buy based on losses in the US stock market.
For the first time that I know of, prices are coming down, and there are good deals to be made in the acquisition of property in Costa Rica. I suspect that when the world financial scene sorts itself out, owners of such land are going to be holding something that will be desirable, and hence sellable. Or, it may simply be that such property owners will be enjoying the life of living on a gorgeous piece of property in Costa Rica.