May 172018
 
Understanding Costa Rica Real Estate part 4

Understanding Costa Rica Real Estate part 4This article can serve as a stand-alone read, but if you’d like to read the preceding, sequential articles in this series, please click for: Part 1, Part 2 and Part 3. The scope of these articles starts roughly in the 1970’s up to the present.

The idea here is that we are living in, working in, visiting or whatever – a foreign land. In this context, the word “foreign” can be understood to be synonymour with the words “learning curve” to the prospective buyer. Your chosen real estate agent can be a tremendous help with the curve (key-phrase “can be”).

This blogger is a real estate agent. I am writing this series for the above stated purpose. There is no satisfaction in selling a property to a buyer who’s eyes are not wide open. Costa Rica is a delightful and enamoring place. But is it right for you? Maybe. Let’s see.

Up till now we have considered some of the early conditions of real estate in Costa Rica’s southern Pacific zone. This is from a time when property here in Costa Rica essentially didn’t have a dollar value. It was a given that a family would have property. They would have either inherited a large piece of land, or they would take advantage of a land-grant program with the Costa Rica government, or they would arrange to buy a property at, what by today’s standards, would be considered a pittance.

We have arrived at the year 2007. The market is at an irrationally high
level. There are no more under-$100k ocean view lots. We did the count-down of those and now have to say that ocean views start at $125k. Then this went on to $150k. The demand for properties was high.

Despite being pre-Facebook times, word seems to have gotten out to the world’s investors about the hot market in Costa Rica’s southern Pacific zone. Investors were showing up with $1 million in their pocket, wanting to buy a finca (large parcel). Our answer? “There are none”. At least, none in the area around Dominical, the then center of commerce & society. There were no more properties of the caliber of Escaleras and Lagunas.

The next mini-frontier was Uvita. And Uvita held a lot of promise. At that time, Uvita was comprised mainly of an excellent soda called El Viajero, and La Naranjita, a pulperia. If you are not familiar with these terms – a soda was and is a typical Costa Rican restaurant, although it wasn’t a “restaurant” in the legal sense. There was a distinction made between the two, and I suspect, still is. Restaurants charge tax and sodas don’t. Sodas all had/have a similar menu. Restaurants vary.

A pulpería is/was the neighborhood store. These were frequently just a person’s home where they had dedicated the front, street side of their home to stocking general wares for sale to the public. You could acquire rice, beans, toilet paper, rubber boots, aspirin, a hammer etc…

Nearly every block in Costa Rica at that time had at least one. Someone would simply hang out a shingle and stock these things and they would then become the local source for life’s necessities. They would also become like a switchboard operator of all the local gossip. There were usually chairs out front, where you could sit and shoot the breeze.

My thought on this is that the ubiquity of the pulpería was due to people not having cars. They had to be able to walk to where they bought their staples. As the number of cars has increased over the years, the demise of the pulpería has resulted. The town centers now feature the Costa Rica equivalent to Big Box stores. Pulperías are now rare.

Anyway, Uvita had one of these and it was all there was for miles around for acquiring such things, so it was a good one.

Due to the influx of investors chomping at the bit to buy large parcels, their inquiry had a repeating response – go south. You could stand on the corner of the one intersection of Uvita on any day, and watch the realtor’s cars, with investors, first driving down the coast, and then later on in the day, back up the coast. There were lots of large parcels south of Uvita, down past Ojochal and on down to Palmar.

I surmise that there were roughly 18 months of the “finca grab” period. A time when the large parcels on the southern edge of the zone were snapped up, and rather high figure sales were taking place. The prices were cheap for what you got, but the properties were large. The investors were determined. The crazy gains on investment that happened in The Zone were sure to continue, even if they bought on the fringes, or extremities, of The Zone. There were some rather questionable buying decisions made during this time.

So what we’ve got now, just as the recession is becoming a reality is a market of some houses, some lots, and lots of fincas in the southern regions. Oh, and it should be mentioned that the area north of Dominical, between Dominical and Quepos had some appealing parcels as well, but they were on what we called “the road from hell”, as that stretch was unpaved. I used to joke that there should be a car mechanic, a dentist and a psychiatrist on both ends of that stretch. Your car would be in tatters, your teeth loose, and you needed therapy. It was those conditions that pushed us to use the PanAmerican route over the Cerro de la Muerte as the primary path to San Jose.

Then came the crash. It seemed to have a delay on it here in Costa Rica. We heard about the abrupt effect of the fall of the U. S., and then by extension, the world’s economy, but we were still doing business. In looking back on it all, it seems that this same lag applied to the “recovery”, later on. We heard about the recovery but didn’t see it for about a year after hearing reports of it.

The recession days were the time of the “there is no market here” statement. My then partner Rod and I would dutifully go to our office in Uvita and be open for business. If anyone walked in during the day it would be a seller. The seller would inexplicably be unaware of the fact that there was no real estate market here in The Zone, and so they would list their property with us.

How to price a property in a no-market market was the hot topic of the day. The general technique employed by the sellers was to take what they paid for the property, consider the expenses of selling, add a little bit for negotiations and voila! you’ve got your price.

This is where we observed the cycle-of-grief in practice. Absolute DENIAL of the fact that their property was worth considerably less then what they paid for it. This simply could not be. Many of our sellers had bought during the irrational spike just pre-recession. The crash was well named as the actual value of their property had declined, almost overnight by 40% – 60%. IMPOSSIBLE!

Well, our task was to enlighten these sellers – or not. After denial comes anger. The anger part of the cycle was no fun, so we would prevaricate, and position ourselves in whatever way possible to avoid it, even at times simply accepting a listing at the irrational value established by the seller.

For the more insightful sellers we would at times get backed into the corner of having to tell them the actual value of their property and then have to deal with the results of telling the truth.

The funny thing is, we look back on those days with fondness. Those were oddly some good times. There was a sense of community amongst the realtors as well as just the community at large. We would hear stories of the travails of various investors. Investor groups with their feet-on-the-ground guy here in The Zone putting the pressure on him/her to make it right. Working together in the various situations that presented themselves with what we now know the outcome to be: we survived, but I wonder sometimes at how we did it.

I was funding the running of my office from my own personal means. The landlord of our office was sympathetic as he too was experiencing the brunt force of the recession. So we could negotiate and bargain for various arrangements to keep the doors open and the lights on for one more month.

There were a few times when I would enter the office and say to the crew – yes, there were several of us meeting there and working whatever diverse angle on anything we could find to do – I would say “if nothing happens this month, it will be our last”. Then, something would happen. An anomalous sale, or some other thing that would result in funding for yet another month.

In the next installment, I will outline some of what I did to get through the recession and then continue up to modern times.

Apr 132018
 

Part 3 of the series helping to understand real estateAfter venturing through the early days of real estate in Costa Rica, this is to say, the beginnings of what led up to the current market conditions in parts 1 & 2, we now embark on the boom before the crash.

Let’s say that a couple acquires their home by the usual means; scraping for the down payment and then struggling to make the payments. One day, they find themselves able to refinance their home and lower the interest rate. Along with the lower interest rate, they were able to pocket a considerable sum from the equity value of their home. (Sorry for the over-simplification of this matter, but it’s close). This resulted in the couple having an unexpected windfall of cash. “Honey, let’s take this $100k and go to Costa Rica and see if we can get us an ocean view property”. Hence, the high demand on the somewhat limited supply resulted in the spike of property values in the pre-recession Costa Rica.

I think at that time there were about 4 or 5 real estate offices in Dominical and none in Uvita. Discussions among us real estate agents were about the amazing press of buyers. Buyers were discussing the difficulty in finding an available real estate agent. Agents were discussing if there was any available inventory to show the buyers. We would joke about installing a Baskin Robbins style “take a number” system in our offices.

Over time the fincas got sub-divided, services installed and roads improved. The lots and houses got snapped up and prices continued to rise.

The majority of buyers would enter the office asking for an existing house to buy. Due to the newness of the market, there really weren’t many houses on the market. And of the few houses that there were, they were difficult to sell, at best.

The Zone was on the edge of the known universe. For those who felt compelled to venture down to Costa Rica’s southern Pacific zone, and who

Man in hat in a waterfall

Oh-so independent and individual

left their homeland behind, well… this was for the robust adventurer. “Individuality” and “non-conventional” are a couple of descriptors that come to mind and that I feel, well describe them (us?). It’s funny to write these words because I was here at the time, but don’t see myself in the same school as these guys. But the evidence to the contrary may be compelling.

Aside from the point above about leaving one’s homeland, once a person got to Costa Rica, they would have an arduous trip just to get to The Zone. There were 2 ways to get here: 1 by the coastal route and 1 by the PanAmerican that runs over the Cerro de la Muerte (pass of death) down the middle of the country.
Note: the name of the pass is not based on the danger of driving there but is reputed to be based on the former practice of farmers conveying their produce from the fertile San Isidro de el General valley to Cartago & San José. They would travel over the pass on horseback, necessitating an overnight stay in the elements. Some of these farmers were reputed to die from exposure. I can’t say for sure whether this tale is true but it is part of the local lore.

Whichever route one would choose, pot holes were a constant threat. On a highway, a well placed pot hole can break an axle, or at the very least, pinch-pop your tire. When you come from a developed land, the thought of not being able to auto-pilot your way down a highway was foreign – inconceivable actually. So it was always a concern as the rather smooth paved highway would lull one into an 80 km per hour rate of travel and then – WHAM! – a sharp edged pot hole would abruptly remind you that you are not, in fact, in Kansas anymore.

Map comparing coastal and central routes

The coastal route vss the centro Cerro de la Muerte route.

The coastal route was pretty good but was the lesser of the two choices at that time. This was primarily due to the stretch of “highway” between Quepos / Manuel Antonio and Dominical. It was un-paved. Depending on how recently it had been graded, you were in for a washboard bonanza of a drive. The roughly 25 mile stretch of road would take between 1 – 1 1/2 dusty hours. I always felt that some enterprising Ticos should open a plaza at either end of this stretch offering a car mechanic, a dentist and a therapist. After driving this stretch, your car would be beat to hell, your teeth would be loosened, and you would be in the preliminary stages of PTSD.

The PanAmerican route was my family’s preferred route to San José. It remains an extremely lovely drive, but a moderately dangerous one. It is 2 lane with essentially no shoulder. There are lots of blind curves. It was, at that time, the primary artery between Nicaragua to the north and Panama to the south, so there was a good bit of semi-truck traffic hauling products through Costa Rica. Some of the curves are tight enough that the semis have to swing wide into the oncoming lane to navigate the bend.

All of this in addition to the fact that we are in a 3rd world country. The people here, especially at that time, weren’t accustomed to cars, traffic and driving. Some would acquire their drivers license by paying off a government official. Many simply didn’t know how to drive. Passing on a blind curve, despite being contrary to conventional wisdom, was a common practice. To this day, I tell my clients who ask, that the Cerro de la Muerte route is something to see, but to do so cautiously. Always expect to see someone coming at you in your lane around a blind curve.

The point being that The Zone was not a place for the faint of heart. The difficult access to The Zone served as a small-pored filter, a fine screen. The “type” of persons that would find their way down to The Zone were hardy, adventurous and individualistic. 

And so, dear reader, you came here looking for a better understanding of Costa Rica real estate. And instead, you get a stroll down memory lane for this aging blogger. Well, from where I sit, the forgoing is helpful and indeed, integral to understanding real estate here. These elements and conditions we are considering here happened a long time ago in wherever you’re from.

Let’s take San Francisco California. How long ago was it that S.F. was all large parcel holdings? Heck, I don’t know. Let’s take the historical marker of the California gold rush starting on a specific date of January 24, 1848. San Francisco was a muddy-road port town with the surrounding areas providing the produce and animal products necessary for life. Fast forward to now. What we have is every square inch of usable land is used. The intervening 170 years saw the real estate progression from agricultural large parcels to smaller and smaller properties, to where now what we see are the ultra-high-end homes, with their eaves stretching out to the property line, nearly touching those of their neighbors.

Costa Rica’s southern Pacific zone is in the early stages of its real estate development. It isn’t ancient history here to recall when there wasn’t electricity to many of these areas. My family and I would come to the coast for a Dominical beach day every week. Occasionally we would consider seeing if we could get to Uvita to go to Playa Chaman or Ventanas or some other. It wasn’t guaranteed that we could get there due to having to drive through a river or two, and the road was not paved. This was in the early 2000’s.

The advent of improved access to The Zone has had tremendous repercussions on life here. The filter now has larger pores. The Zone has become much more accessible to a much broader type of person. However, the Zone’s real estate market is still very much in its… hmmm… what to call it. I can’t say “infancy” but perhaps “toddler-ship” would be apt. The Zone is perhaps the last frontier of early buy-in opportunity in Costa Rica. This stuff can be hard to see when it’s happening. It is usually in hind-sight we get the 20:20 vision on where we’re at. Consider the real estate cycle of progression in any area, and we now have our crystal ball. We can see the future.

However, some of The Zone’s appeal are conditions that continue to require that one be somewhat robust. There are some incontrovertible conditions here that will now and forever affect growth. These conditions are things like topography and conservation. For making an investment in a property, it will help to see the big picture. The large parcels have been sub-divided. The initial sub-divisions have been further sub-divided. As always, with the ways of our money-loving world, there is concern about over-development and its impact on Costa Rica’s diverse and glorious nature.  Where is this all going?

Let’s return to our pre-recession time and we’ll discuss some of these conditions.

Photo credits:
Photo by Artem Bali and Ramdan Authentic on Unsplash

Dec 132017
 

Part 2 of a series of articles explaining the real estate market in Costa RicaIn Part 1 we considered the early foreign investors in real estate here in Costa Rica’s southern Pacific zone.  The idea being that in so doing, we’ll have have a better understanding of the real estate market here. We continue now with Bob (early visionary investor) as he proceeds to segregate and sell his large parcel (finca).

Bob’s vision for what is to come is so clear (to him) that he recognizes that he essentially stole the gorgeous ocean view property that he now possesses. The plan is to sub-divide the large property (finca) into smaller parcels and sell them at a considerable profit.

He takes his 60 hectare (150 acre) finca and segregates off 5 hectares and puts this on the market at $60,000, the price that he paid originally for the entire finca, leaving 55 hectares as a pure profit proposal.

Now granted, I’m fabricating the name and the transaction. But this I do as a composite of various such transactions that I was aware of at that time. What I experienced when I got into the real estate business here in 2004 were the ripple effects of not just one deal like Bob’s, but the after-effects of many such deals.

There is some historical precedent to the investor phenomenon that transpired at that time. Well known examples are: the dissension regarding Alexander Graham Bell being the actual originator of the telephone. Elisha Gray applied for the patent on similar voice technology, essentially on the same day as Bell. Alfred Wallace and Charles Darwin both – independent from each other – came up with the theory of evolution at the same time. It was essentially the luck of the draw that Darwin is credited as the author. And to look at the advent of American Contemporary art in the New York art scene with Jasper Johns, Andy Warhol, Rauschenberg, Roy Lichtenstein and on, is to see one of the strangest examples of unrelated, converging visionaries.

I wonder at this “phenomenon”. It is recurring in human history. Unrelated individuals and groups, all at roughly the same time, turn their attention to something. It’s almost like some cosmic force directing select ones to go and do a thing. Ok, not to belabor this point, but I find it fascinating. I mean, I could understand one guy. And then maybe that guy talks to someone else about what he’s doing and they think it sounds good and so they do it also. But unrelated, concurrent action??  Por favor! 

Well, barring an un-quantifiable cosmic event from our understanding, I can only suggest that this is simply the way of the world. “Progress” of civilizations. The time had come for this gorgeous country to be discovered and exploited for what it had to offer – its riches. And, as it turns out, there were plenty of buyers.

There were several Bob-like visionary investors who converged at roughly the same time in the early days of real estate here in Costa Rica’s southern Pacific zone. These all went on to see enormous returns (turning $1.00 USD into $120.00+-) on their relatively paltry investments. A couple of the best known Dominical-centric examples of these investments are the areas of Lagunas and Escaleras and to a lesser degree, Hatillo. 

We are now getting to the time when I began work in Costa Rica real estate. These were the conditions of the market at that time. The majority of real estate sales at that time were of raw land, and this was despite the majority of buyer’s initial request was for an existing home. There simply weren’t many to pick from. The inventory was primarily raw land. After looking at the available options for existing houses they would go to the default position of buying land and either building, or holding the land for a future purpose. 

The houses at that time were difficult to sell, despite the common preference of the buyers to purchase a house. Those early arrivers to the area were somewhat unique. I like to say that we were all a bit “out of round”. We had decided to move from our homeland to an area of the earth that was certainly not the most accommodating of environs. What houses there were, were frequently expressions of that individuality that brought them here in the first place. These were not homes for the general market. Some were lovely in their uniqueness while other were, quite frankly, atrocious. 

What I came to call the “Costa Rica Formula” for buying land had a couple of iterations. The visionaries were the big winners of the formula, but those that bought from them were also beneficiaries of having been early arrivers on the scene. The formula was to buy one of the available segregations from a Visionary. Despite having been segregated from the mother farm, these properties were generally still quite large by today’s standards, commonly consisting of multiple hectares (1 ha = 2.48 acres). To then cut off a marketable piece of that parcel and sell it, effectively reducing or eliminating the initial investment principal. Buyers at that time could almost all count on this being an option.

In 2004, some of the Visionary’s pieces  were available, as well as the lots being made available from those that they had sold to.  And there was quite a lot of work being done to bring more to market. These were the days prior to the big crash of 2007/8. The reason for the crash fed the formula, and the market spiked. We were in a boom.  The sub-prime market made for an unreal and absolutely illogical availability of money to homeowners in the U.S. This was the market I started working in at that time.

My thought is that the spike in demand, and the subsequent prices, is one of the many ripple effects from the sub-prime lending mortgages thing that resulted in the demise of the global economy in 2007.  Not to belabor the point, but I think that it’s important to understand this as, here we are some 10 years later, and the effects of the “spike / crash” on the market are still very present. I’ll get to this more in a following article on present day conditions.

 

Oct 152017
 
Costa Rica History in knife metaphor

I’d say that about 1/10th of my time spent with people looking to buy property in Costa Rica’s Southern Pacific zone is spent in the actual buying/selling of property. The other 9/10ths is a mix of conversations regarding what’s involved with living here, as well as discussing the business of real estate in Costa Rica.Understanding Costa Rica real estate

At its core, the lack of an actual MLS (Multiple Listing Service) colors all aspects of the business here, and I’ll go into that later on in this series. To really understand the business of real estate here, I have found it helpful to go back in time and see the progression of events up to the present. This helps to not only understand the current market but also, to project what is to come.

Early days:
I got into real estate in Dominical in 2004. It felt like the day I got into real estate was the day that someone threw the on-off switch to “on” in the market. Since then I’ve heard some tales indicating that the market was already simmering and poised to boil.

I made a sale on my first day in the business. A $60,000 gorgeous ocean view property sized at around 2 acres.  The property featured Uvita’s Whales Tail front and center. That property has gone on to have a lovely home, guest house and pool built on it. It has been re-sold and enjoys a stellar vacation rental history (link to rental page on HomeAway)

Quick overview of The Zone:
The Zone is made up of a string of 3 towns with Dominical at its northern end. The northern boundary is not a hard line but is decidedly fuzzy, easily extending up to Hatillo and at times, up to Portalon. (link to Hills of Portalon Development).

From Dominical heading south on the coastal highway you get to Uvita and then further south, to Ojochal. The area between Dominical and Uvita has a nicely laid out mountain range that runs parallel to the ocean. Hence the handle “coastal mountain range”. This means that you can travel inland from the beach just a short way and get to elevation where it is breezy and cool and offers expansive views of the ocean and coastline, attributes which make this area extremely desirable to investors, relocators and migrators (part-of-the-year residents).

More History:
Before the incoming press of foreign interest in The Zone, the Ticos (Costa Ricans) owned all the land, and their land holdings were always in the multi-hectares (1 hectare = 2.48 acres. Think 2.5 to make it easy).

There was a time in the not too distant past when land in Costa Rica was nearly value-less. There were land-grant programs whereby a man simply had to be willing to take responsibility for a property and the government would “grant” him the land, with conditions.

At that time it was not known that “nature” had a lucrative aspect to it. Instead nature was largely viewed as “in the way” and needed to be tamed, subdued, or eliminated. So, one of the conditions to receiving a land grant was to cut the trees down and raise cattle.

I suspect that this era may have coincided with the “McDonalds” explosion. This is an arguable point, so let’s just say it coincided with an extreme demand in the U. S. (and world) for beef.

After some time of cutting down enormous canopy trees and attempting to raise cattle in former rain-forest environs, there was a shift in our world’s appetites; nature became (and is) an important commodity. Granted, beef has continued to be an active commodity, but it was also learned that former rain forest land doesn’t necessarily make for the best pasture land.

Raising cattle in Costa Rica was a daunting struggle. The farmers found themselves up against nature. Having to maintain former rain forest jungle land in “pasture” condition presented its trials, as well as the fact that the beef business (exporting meat, bureaucratic inefficiencies, and 3rd world infrastructure or lack thereof) made a guy scratch his head and wonder if having all this land was such a good idea.

The Tico culture was/is multi-generational. These large, granted tracts of land, would end up being populated by the man who acquired the land, his now grown sons & daughters and their families, and the grand kids (soon to also have families.)

So despite having lots of land, a condition that in first-world countries equates to being wealthy, these farmers were “subsistence”. They lived off of what their land produced. As a child would grow to adulthood, Abuelo (abuelo = grandfather) would simply build them a house and apportion off some land (or not) and they would continue on contributing to the sustenance of the family. The land itself was not thought of in lucrative terms. It was a simple fact of life.

Abuelo just happened to acquire a land grant on, let’s say, 60 hectares of land that reaches from the inland side of the maritime zone on the coast up to the highest point of the coastal mountain ridge. He’s not thinking “oh boy! I’ve got some ocean view land here.” No, he’s thinking: “man I hope this land is fertile.”

Enter foreigner:
One day Bob, a tourist, is exploring the area and decides that he’d like to buy Abuelo’s property. Bob offers Abuelo $60,000 for the land. Abuelo has never even considered the remote possibility of maybe someday having such a sum. In fact, he’s never even seen that much money. He talks it over with his family and they (very understandably) feel that this would be a wonderful thing for them to do. So, they sell their land.

Bob is a visionary. He sees what is likely coming and so he stakes his early claim. Now, keep in mind that there is no electricity to this property, the access is horseback and the water is from an onsite or nearby spring that is bubbling out of the ground. Abuelo has run a pipe from the spring to an elevated storage tank near the family homes. Bob qualifies for the handle “visionary” in that – what foreigner in their right mind would possibly want such a remote and forbidding piece of land?

To understand this is to understand the element that is credited with making the world go round. We all have different likes and dislikes. I wonder at the likes of Steve Jobs, Bill Gates and Paul Allen’s and their focus on the personal home computing idea at the time that they had that focus. I’m not of this ilk and so my hat is off to such ones. I view the early investors here in The Zone as being made of the same stuff.

In looking back over the history of the first wave of investors here, I marvel at their foresight. My then wife and I looked at some Whales Tail view property in Uvita around 2002 and, despite its being gorgeous and nicely priced, I felt that it was simply too remote. This was in the same area where 2 years later I sold my first property.

Ok, so I said that to understand the real estate market here in Costa Rica, it helps one to know a bit of the history. Granted, we’ve gone back to what I appropriately call the first-wave of intrepid and visionary investors – The Visionaries. We’ll continue on in the next article with Bob’s next steps and incredible gains on his visionary act.

May 272005
 

Well, near as I can tell, we’ve all made the mistake. “We” being the various real estate agents around the Dominical area. The mistake being… well, it is oftentimes made in response to the inevitable question: “why do you think that real estate is a good investment here in Dominical, or Costa Rica, or the Southern Zone?

Aside from numerous other points that we make here in response to this question, we talk about the ease of getting here in the future. We say: “the road between Quepos and Dominical will be paved AND, they are putting an international airport into Palmar Norte” – (I’ve also heard “Palmar Sur” from some very in-the-know sort of folks). There, that is the mistake. We have been saying that there is an airport going into Palmar somewhere, and it is going to re-shape the area’s economy, just like the one up in Liberia did.

I’d like to quote from the Tico Times of May 27, 2005: “While officials are zeroing in on the location of the airport, how the project will be financed and when it might be built remain up in the air.”

I find this comment interesting. We have been here touting the coming airport as though all of this stuff had already been decided. Notice that the where, how, and when are “up in the air”. Sheesh! Things take long enough in Costa Rica when the how, when, and where is known!  I, for my part, am probably going to stop talking about the airport that is scheduled to be built in Palmar Norte.

One positive thing that comes from this is that apparently, there is some talk about an additional international airport going in down here in the southern zone, somewhere. I suspect this statement to be true.  Maybe I’ll mention this in my presentations on why I think that land is a good investment here in the Dominical area.

Apr 282005
 

There are a number of options for what type of land a person, couple, or family might like to buy with respect to Costa Rica real estate. In the case of myself and my family, we wanted to be immersed in the culture and language of Costa Rica. So we made our land choice accordingly.

We bought inland near an established city of Costa Rica, but also in the country, and yet kinda near the beach. Weird sounding I know. The point being that our objectives that drove our land acquisition dictated where we bought.

In our land office, we hear numerous objectives and goals for why the people are looking to buy land. Some are looking to get the land now while it is affordable, others are wanting to enhance their investment portfolio, while yet others are making a life-style change and are looking to quiet the internal dialogue.

Lately, we have had a rather large number of people coming into the office asking for large parcels: “fincas” as they are known here in Costa Rica. This may be to develop into several smaller lots, or to simply have a large buffer around their family. Buying a finca in Costa Rica can be a bit daunting for a number of reasons.

When you are buying a property that is still in a large contiguous piece, you may be stepping into what is known as “possession” property. There is still quite a bit of possession property around in Costa Rica. When buying in a development, this is generally not a concern. The “possession” status of a property indicates that the owner is known as the owner and has been such for a long time. He probably has some paper work on the land from the original transaction and he can produce witnesses to the fact that he is the owner. These witnesses are usually the neighbors of the property. So there are some extra considerations to buying such property. These concerns are not prohibitive, but require a certain amount of expertise from the buyer’s legal counsel and real estate agent.

Having said all that, this is the type of property that is right now enjoying a tremendous amount of popularity in the Dominical area. Consequently as you, dear prospective land buyer in Costa Rica, are searching the web, and looking at all those listings… and when you finally find the one that is just right for you, there is a good chance that the finca won’t be there waiting for you by the time you make your travel arrangements and get to Costa Rica.

This is where a truly interesting service offered by the folks over at Horizon Properties enters the scene. A customized service for the express purpose of helping prospective buyers to acquire farms. The service generally starts from the moment you walk in the door of the office, but it can be done from the internet as well.

Feb 032005
 

The Seattle Times: Nation & World: Study links half of bankruptcies to illness: “‘Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,’ said Dr. David Himmelstein, the study’s lead author and an associate professor of medicine.

I get asked by nearly everyone that I talk to in our office, ‘who is buying land in Costa Rica?’ Everytime that I am asked, I pause a minute and think over the last sales that we have made here and I consistently come up with the same list. Investors, people nearing retirement age, young bucks that have some money… somehow, and want to buy land. But no matter what category they fall into, nearly all want to, at some point, live in Costa Rica. Granted, the place is nice, really nice. Its like living in a big garden, with extremely nice people all around… but under the hood ain’t too bad either.

The article that I have referenced above details one of the several major factors behind why United States-ians, in particular, are looking to get the heck out: the cost of medical insurance. Now, I’m no great source for health insurance information in Costa Rica, but I can tell you that it is a whole lot less here than in the states. (for information regarding insurance and the ability to dialogue with others that live here, I use the CostaRicaLiving newsgroup at Yahoo.)

The significantly lower cost of living here is a big draw. United States-ians have enormous monthly overhead. Before you even buy anything, a family of 4 or 5 must make thousands of dollars a month. Even for those that are living well in the States, it is a constant pressure. I suspect that one of the reasons that we are doing so well here in Costa Rica real estate is when people visit here, and see all the expats living here, and they take a look around, they consider what that would be like. “Could we really get by on $2,000 a month?”

A lot depends on the “car” issue here (fodder for another post), but we can definitely live here for a whole lot less plata (money) than we could up there. Take a minute and read the enlightening article that is linked to above.

About All Those Signs

 Posted by on October 14, 2004  Costa Rica MLS  No Responses »
Oct 142004
 

There are two approaches to Dominical, well three actually if you count the approach from the south as though your trip originated in Panama. But most come in from the north, from San Jose. Coming down the coast is a lovely drive until you get just past Quepos where the road turns into what we like to call, “The Road From Hell”. It is still lovely mind you, but it is a car-breaking rough ride.

The other approach comes in from the PanAmerican highway. This is the main artery that connects Nicaragua to the north with Panama to the south. You take it south out of San Jose until you get to Costa Rica’s southern zone commercial center of San Isidro de Perez Zeledon, or San Isidro de el General. Don’t ask me why places here have more than one name, they just do.

Anyway, you turn right at San Isidro and drive on down to Dominical. As one passes through the breathtakingly gorgeous mountains that ultimately drop down to the sea, one starts to notice the prevalence of real estate signs, and one starts to think, “is everything for sale here”?

In a sense the answer to that question is “yes” but then not. It has well been said that everything has a price. Everything is for sale in that sense. Little by little the real estate in Costa Rica is getting owners that are reluctant to sell at almost any price. So then the question is, what is the deal with all those signs?

In the USA, a realtor’s sign on a property means that realtor is the listing agent for the property. Here it does not mean that, except in very rare cases. What it does mean is that realtor asked that property owner for permission to put a sign on his property as advertisement. That is why some properties may actually have more than one sign.

Real estate in Costa Rica is sold in a very different way than what one has grown accustomed to in the US. Since there is no MLS (Multiple Listing Service) in Costa Rica, it is essentially, every realtor for himself. Everybody has the same inventory, provided they have gone out and beat the bushes, so to speak, to get the listings, and then all of the commission flows to the selling office, since there is no listing agent.

So what does this mean to prospectors coming to the Dominical area to purchase properties? If you see a property that you like, and it has a sign on it, you can call or visit that realtor. Or, you can visit any realtor you like and inquire about that property since it really doesn’t matter who you talk to about the property.

Everybody is equal in their ability to sell a given property in Costa Rica.

I suggest that the important thing for the prospective buyer is that they find a real estate agent that they feel comfortable with, and that indicates a clear adherence to good honest business practices.

So, as one approaches Dominical, there is abundant evidence of a “land rush” going on, real estate signs are everywhere. Granted, there are numerous signs announcing car rentals, lodgings, banks and more, the area is booming. Nonetheless, the realtors win the prize for being the most zealous of sign posters.

If indeed this were to indicate anything other than advertising, one would conclude when they finally arrive from their long journey, that Dominical itself belongs to a real estate company. As one drives into town, past the “Welcome To Dominical” sign that features an oh-so-discreet realtor’s logo along it’s bottom edge.

To Use A Realtor Or Not

 Posted by on April 15, 2004  For Buyers, Processes  No Responses »
Apr 152004
 

The following was a quote from an article on an AOL page that is no longer active.
“Living in Costa Rica” Web page:

“Do I need a realtor? Some of the nightmares that have happened, (and the government is taking steps to correct), are disputes over property titles and squatters. A previous owner has up to 10 years to make a claim on their property, if it had not been sold and recorded properly. (This is where a real estate company with a good team of research lawyers who know all of the peculiarities of local title searches, can save this headache from happening).”

Squatters are basically homeless people, who have to right to move onto someone’s land, build shacks, and can legally remain there IF they can prove that they have been in that place for over 3 months. This is why landowners in remote locations will hire caretakers to live on the property, or lawyers to periodically check, to keep squatters away while the owners are absent.

Other reasons for using a real estate professional include the advantage of having a third party to keep the transaction honest, (just in case one of the parties isn’t). If you give the deposit or ‘earnest money’ to the seller or seller’s attorney, it is possible that you may not get any of that money back, should the deal fall through for any reason.

Zoning restrictions are another thing that a good realtor will alert you about. Because of the two-tier tax system, your realtor or lawyer can advise you how you can legally save money on fees and taxes during the closing process.

A seller may not want to work with a realtor if they are trying to take advantage of a buyer, – not wanting to risk having a conscientious realtor ‘blow the whistle.’ “

Interested in Costa Rica real estate as an investment. They primarily live somewhere else, but they own property in Costa Rica for the asset appreciation potential as well as possible rental income. Some just buy and hold (land-bank). For developed properties, the investor has a vacation home to visit as desired.

Migrators spend a regular amount of time in Costa Rica during each year.

Re-locators are those that are looking to move to Costa Rica from wherever they are. They will live full-time in Costa Rica.