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

Feb 212018
Buy a property in Costa Rica for a vacation rental

Below is a copy and paste from an e-mail inquiry regarding buying a property for the purpose of investment initially. It needs to be an existing rental property that the buyers intend to move to and live in at a future time. They need for the property to, at the very least, cover its expenses during the time they own it prior to moving to Costa Rica. This is a good example of a rather typical scenario here for a buyer’s criteria.

Thanks for writing. I’ve interspersed my comments below.

Hi Ben, my name is Meltown Bradwinkle (name changed). I found your blog and have really enjoyed the articles I have read so far, thank you!

​Thank you for the encouraging comments.​

The reason for my email is to ask you for your opinion of the purchase of a home in the Dominical to Uvita area, whether or not the right home can show a good enough ROI to carry the debt against it.

Short answer: yes.​

My wife, Melvania, and her family are from Costa Rica. My wife and I currently live in [US State] with our 3 kids, but plan on retiring to Costa Rica in 10-15 years. In the meantime we come down once or twice a year to visit family and vacation in your area. We have visited most parts of the country, but keep coming back to the southern pacific coast, where the jungle/mountains meet the sea! The blog post of yours I just read talks about the “low” season, and I agree completely with the theme of your piece. We were just there this past September and spent a wonderful couple of hours in the middle of the day having lunch, beers, and watching the downpour, beautiful!

Meltown, you sound well suited to your intention. There is a learning curve to investing in Costa Rica. Your comments indicate that you have already traversed a good bit of the curve and have a rational basis for your interest in this area of Costa Rica. 10-15 years allows for a lot of possible movement, up or down, from the conditions that you buy in now. The indicators right now are that we are heading into a time of property values increasing. I know that you’re asking about rental ROI and I’ll get to that in a minute. Initially I’ll address…

Property values:
Having endured the toilet flush of values in 2008 we have seen how dramatically the market can move. We are currently in a time of stasis. There hasn’t been much movement price-wise since the recession, but I would characterize the conditions as follows.

During the recession there was essentially no market for real estate in our area of Costa Rica, and perhaps in the whole country. There were a few anomalous sales that happened, but they stood in stark contrast with the reality of the the sleeping market.

Then, we passed through a time of buyers showing up and us realtors were in a bewildered state of “a buyer???” Our inventory had been languishing for several years and now we had buyers. The sellers were wondering if they would ever be able to sell their Costa Rica property(ies). We passed through the “fire sale” phase where these dejected sellers would take 40 – 60 cents on their dollars to move their property.

The fire sales are now gone. But the asking prices have not gone up. Well, maybe a little now and if so, more so with houses than raw land. Houses in the $300k – $500k range are the bread basket of our market and if they are reasonably designed and have an ocean view, they sell rather quickly. When I say “quickly” I mean by Costa Rican standards.

I just had a couple of clients that came to Costa Rica, bought a small hotel and a riverside residential piece for the future. They put these properties under contract knowing that they had to sell their home in San Francisco prior to closing. The market in SF is such that an immediate sale was expected. When they didn’t get an offer on the first day of the listing going public they panicked. It took 3 days to sell and they were a little disappointed that they only got $100k over asking price.

Costa Rica is not this way. The norm here is that the property will sit on the market for a few months at least, and then there are negotiations of roughly (and this varies) 10%.

As for raw land – lots that have ocean views and services & access in place, there was a glut. This is slowly changing to where we realtors are now having the occasional request that challenges our ability to come up with some options. But overall there are still a good selection of lots available.

The message of all this is that the prices are good for buying but they are firmer than they were as the market establishes it’s equilibrium.

Sorry rambling on a bit. I have equity in assets of my business, and am contemplating using that equity to purchase the “right” home in the area. But it will be borrowed money, so I don’t want to jeopardize my business related assets, hence the need for the property to carry itself. Is this realistic or just a dream? I have researched the property rental business in the area, but it has been impossible for me to come up with good hard numbers, occupancy rates being the most critical, and what is the right price point for a specific property to rent for weekly.

I’m inclined to respond to your inquiry about a financed property’s ability to cover its own costs in the positive – but of course, with caveats.

About Rentals:
Rentals in this area are strong. The area is growing in its prestige as a global vacation destination of choice. There are not a lot of hotels here and just the nature of tourism here leans towards the “destination” accommodation instead of the “bed” accommodation. By this I mean that visitors to the area seem to prefer having a multi-bedroom home, complete with kitchen and amenities that make the rental where they are staying a part of the stay. A pool is important. They may spend a day or days just hanging around the home.

Vacation rentals offer some enticing numbers. You’ve probably done a search on VRBO for the Dominical area. The homes here get a good penny for a weeks stay.

I think that long term rentals are the sleeper rental opportunity here. Most buyers are romanced by the high vacation rental numbers but fail to calculate the end-of-the-year numbers.

Comparison of short and long term renting:
Short term: your per-week price is considerably higher. Your maintenance and marketing costs are also higher, as is the hassle-factor. Your occupancy is lower.

Let’s say that you get $2,000 per week for your vacation rental home. To calculate a monthly on the same property, you’d end up somewhere close to the weekly. Let’s say $2,400 per month. Now calculate the costs associated with having the occupants change every week or 10 days – laundry, cleaning, re-stocking, administrative etc…

Occupancy rates vary depending on the property and the owners ability to market the property. I use the following and won’t argue with anyone that comes along with different numbers. This is just my take.

First year short term, shoot for 35%. The next couple of years your objective is 50%. Some reach 60% and higher with an exceptional property and exceptional marketing and probably years of history.

​Long term, you’re looking at 100% occupancy and the costs are very reduced when compared to the short term.

Take the above scenario as a loose guide only. Look at what your money costs you, your level of investment, and what you need in order to have the property cover itself.

There are times of the year when there aren’t enough beds in the area to accommodate the demand, and there are times of the year when there unoccupied beds.

Any input and guidance would be greatly appreciated!

Meltown Bradwinkle

Thanks for reaching out to me. I appreciate the confidence and I hope this helps.

I may post an edited version of this e-mail to my blog as I think that you address concerns that many others have as well.

Please keep me in the loop as I’d love to know what you decide to do and how it turns out. And of course, if I can be of assistance with your real estate concerns, I’m available.

The above e-mail was written in January of 2016. Many of the statements regarding current property values have proven to be accurate and what I like to call a rational market prevails. Also, my estimates on occupancy percentages remain as stated.

Sep 062014
Uvita Costa Rica Walk-to-the-Beach development Villa Del Sol

Video done by Chuck Chastain of Aerial Media

Typically the type of property that I have sold over my years in Costa Rica real estate have been multi-acre, ocean view properties. These have been sold to hardy individuals that have deemed themselves up to the task of taming these jungle laden acres to their will – and then keep them that way.

There is a new trend popping up in various areas around The Zone that the term “urbanization” aptly describes. These are boulevards & lanes lined with single family home lots. The developer provides the services: water, electric and the road. The lots are 200 to 1,000 meters in size (1 acre = 4,000 mtrs). These bring to mind a common suburban residential area in other areas of the world.

These new developments to the area have made the thought of, and the ability to, buy a property in Costa Rica and in particular The Zone, a reality for a new breed of property buyer, not to mention the investors whose left eyebrow goes up when the concept is presented.

I was approached a couple of years ago by an investor who had a question. He was looking to pick my all-knowing Costa Rica realtor brain (OK, he was going around talking with various realtors.) He had purchased a large property just south of Uvita. Uvita was growing faster than any other growth that I have seen in my one-half-century-plus life. At that time we had 3 banks, 3 pharmacies, 2 Internet cafes, doctors, a dentist and numerous auto mechanics in Uvita. This was all just a few short years from a time when just getting to Uvita was a dubious bet. The growth was truly explosive.

When he bought, it seemed that there was no end in site. Uvita was a robust real estate market and the concept was blue-chip through and through. There would be a residential community behind a commercial center that fronted the coastal highway and – here’s the biggie – you can walk to the beach. It is located on the ocean side of the highway which made the blue of the blue-chip concept quite royal.

Then, 2008 happened. Someone turned off the lights on the world economy. The recession shut down the market so completely here that sellers who had repeatedly lowered their pricing were told: “you can lower your price to $5.00. It won’t matter. There simply are no buyers”.

This resourceful developer asked me what I thought about an urbanization idea. A walk to the beach neighborhood, complete with sidewalks and nice landscaping. The utilities are all underground and the lots themselves will be in the 500ish meter size range.

My response to him was “Michael, this has never been done here before, so we have to guess. My guess is that it will work, but it is just a guess.” To me the concept was akin to the early investors that bought land here in the area – I like to refer to them as The Mavericks – they bought land here in Costa Rica’s southern Pacific zone at a time when there was no rational reason to do so. It was so rustic and jungly that it required genuine “visionary” status to make a buying decision.

The Mavericks saw some insane returns on their decision. Turn a dollar into $120 and you’ll get an idea of the early days in the Costa Rica real estate market around these parts.

The spread for this 2nd tier investor is nothing like that. He is setting out to get his initial investment back and so with the bar set low, he has set out with an untried concept and voila! We have a neighborhood project just on the south side of Uvita where you can buy a lot for $40,000 and by the time all is said and done, you’ve got $200,000 into a beautiful home in a nice area with that oh-so-desirable walk to the beach component that so many are looking for.

Villa del Sol: 5 have sold so far. There is a lovely model home done and 1 house broke ground yesterday. I understand that one of the other sold lots is going to start construction soon.

Funny thing about this concept – others have had it as well. I am currently aware of at least 3 other such projects in the Uvita area. Two of which are being developed by Ticos (Costa Ricans) and one other by a US developer who has previously had some success with luxury homes. It appears that it is an idea whose time has come.

I can’t speak much about the other projects yet. I ran into one of the Tico developers the other day and asked him how his project is going. He has sold 15 lots in the $12,500 range. They are half the size of Villa Del Sol lots and the electrical wires are above ground, which is an important point. The net result, to my way of thinking, is that these won’t appeal to foreign tastes and will mostly sell to locals but… we’ll see. I assume that the US developer will go underground with his. I’ll post more as I get the data.


May 162012

Has the Costa Rica real estate market hit the bottom? As realtors in Costa Rica we frequently get asked this question, so we decided to share our thoughts on why there are signs pointing toward a positive answer. Regardless of what we think, more and more people are retiring, relocating, and investing in Costa Rica real estate. Thanks for watching and if you have a minute, please comment in the section below and “Like” this video on YouTube. The “Like” helps us reach more people interested in buying and selling Costa Rica real estate.


May 152012

The U.S. Census Bureau defines the Baby Boomers as those born between January 1st, 1946 and December 31st, 1964. As of January 1st, 2011 more than 10,000 baby boomers will turn 65 per day, a pattern that will continue for the next 19 years. The question isn’t if there will be a lot of people retiring. The question is… where are they going to go? With escalating government debt and rising taxes, many retirees are looking outside of the U.S. for a retirement location.

What is a Pensionado?

Retiring In Costa Rica

A morning walk and talk.

Retired or semi-retired people from the United States, Canada and Europe have always been a strong contingent in Costa Rica. I have read that there are approximately 100,000 foreign residents in Costa Rica. I would bet that number is much higher given there are still many expats living a perpetual tourists (e.g., leaving the country every 90 days) or their residency is “in process” which allows them to forgo the inconvenience of leaving.

With good and experienced legal help, it is not difficult to get permanent residence in Costa Rica. In order to qualify for retired (pensionado) status, the applicant must show proof of $1,000 in monthly income from a qualified pension plan. A married couple needs to show proof of only one pension of $1,000 per month. Pensionados agree to live in Costa Rica for a minimum of 121 days (approx. 4 months) per year and there is no maximum. Since most people looking to retire qualify for pensionado status and want to live in Costa Rica more than 4 months out of the year, the requirements for being a resident are more than manageable.

It’s An Adventure Every Day

Over the past 10 years, Costa Rica has risen to the top of retirement destinations. Warm weather, spectacular property, abundant wildlife, nice people, less stress… these are just a few reasons why millions of people visit Costa Rica every year, and why many fall in love with the country. One expat who retired to Uvita in 2008 summed it up recently by saying, “It’s an adventure every day.” It may sound cliché, but it is indeed true.

As I write this, my son is taking video of the white-faced monkeys in the trees by our house. Yesterday, we admired the howler monkeys while planting banana trees in the yard. I just returned from surfing with three dolphins. It is indeed “an adventure every day.”

Finding Your Costa Rican Property

Ok, so you are interested in retiring in Costa Rica, specifically the area in and around Uvita. Now you will want to find a place that resonates with you. Here are two key factors we have identified over the years—

Climate. Take advantage of the consistent ocean breeze by finding a property in the mountains. You won’t need air conditioning, thus you’ll save significantly on your monthly electricity bill. You’ll also be able to spend more time outside, which is what Costa Rica is all about. For those who don’t like the bumpy dirt roads, there are nice ocean view options offering quick 2WD access from the main highway.

House or Land. Most people come looking to buy a house, yet many end up buying a piece of land and building. This is because we are still early in the building cycle, especially in and around Uvita. Clearly, it is easier buying an existing house, but I do not discourage people from building in Costa Rica. We know many retired folks who have had good experiences with their builders. They also end up with a house that fits a longheld dream, and it’s tough to put a price on that.

My uncle, a baby boomer, lives down here in a lovely area above the small town of San Buenaventura. He likes the solitude, the wildlife, and his neighbors. Retiring in Costa Rica made sense for him, especially considering he purchased the land his current villa sits on at pre-boom prices. The good news for anyone looking to relocate or invest in land now is the real estate market has declined back to pre-boom prices. In fact, our inventory is loaded with ocean view lots under $100,000.

How To Navigate Our Non-MLS Market

There is no MLS (Multiple Listing Service) in the southern Pacific zone of Costa Rica. All of the real estate companies have their own database of listings that they have built up. The big misconception is that you need to work with all of them in order to find your property. Like Ben and I said in our last Talk Show #20, we have many of the same listings. Let us save you time and money, by contacting them on your behalf. That way, when you come down, we have already previewed the property that fits your criteria and narrowed down the list for you. The savings in time means you will have more time to enjoy the warm ocean, take a nature tour, meet new people, and relax into the pura vida.

So, please browse our listings and contact us if you would like to get more details on real estate and retiring in Costa Rica. Saludos!

Apr 242012

We had an inquiry recently that concluded in a remarkable way. This gentleman said, “I will accept defective land due to lack of funds. (I was ripped off 5 times!).” I had to ask myself, how does one experience being “ripped off 5 times” in a country where the process of buying land it quite simple?

Sky's the limit... but buy smart.

The answer I came up with is… he didn’t have a good realtor.  I understand that there is this idea that you don’t need a realtor in Costa Rica.  It’s not a regulated industry.  The CCBR certification, which both Ben and I obtained in 2009, only means the agent is a resident and sat through four 8-hour days of Costa Rica real estate 101.  I understand the allure to buying direct– from a Tico, or from Craig’s List, or direct from a developer—as a way to save money.   In some cases that strategy works.  In other cases, like the original example above, it ends up costing you much more than the 6-8% a realtor earns in commission.

Your Purpose For Buying

You’d be surprised how many people don’t have a clear idea why they are investing in Costa Rica real estate.

The prospective buyer says, “We’re looking for a house.”

Ben and Rod ask, “Great.  Are you going to use it as a vacation rental?”

The prospective buyer responds, “Oh…. we didn’t consider that.”

The same clarity is required when looking for a raw land, be it residential or commercial.  I’m not going to talk specifically about commercial in this article, as most buyers are looking for a home or a lot to build a home. If you’re going to build a house, you should really have an idea of when you are going to build, and what the area and neighborhood will look like in 5-10 years.  And once again, are you planning on retiring in this new house or probably going to use it as a second home/vacation rental?  Are you going to have a caretaker/gardener/security guard?  Where is that valuable employee going to live?

Usually, these questions are asked and answered before our prospective buyer arrives in Costa Rica. Once they are here, we take them out to view property. I’m going to make a long story short and simply say, when buyers stand on the right property… it resonates with them.  Most of the time, they feel it even before they get out of the car.  This phenomenon is the product of clarity prior to driving around.

The Zone is small, and by that I mean it has a small town feel. News travels fast.  Like a few realtors in this area, we have accumulated a vast database of fact and fiction over our 20 years, collectively.  This is one of the biggest benefits to using an experienced realtor.  We know the history of X or Y development or property, and we disclose it. In fact, there are some developments that we simply do not represent and for good reasons. Also, we don’t over-hype things like the International Airport to get you to buy.

Contracts and Lawyers?

Ok, so you find your dream property. The next step is to write up an Offer to Purchase or a Letter of Intent.  These documents signify the buyer’s desire to purchase the property and outlines the price, deposit, due diligence period, escrow, and contingencies.  A contingency is the fulfillment of specific condition (e.g.- clear title, legal access to water, stable soil determined by a soil test, etc.). If a contingency cannot be satisfied or resolved, the buyer can get their deposit back.  The seller reviews the Offer Letter and often makes a Counter Offer.  Eventually you agree on a price, and we present the Offer Letter to your lawyer. Only problem is… you don’t have a lawyer yet.

This is one of the ways your realtor can save you money.  We recommend experienced, bilingual lawyers that actually return your email and/or phone call in a timely many. I sleep well at night knowing my clients are taken care of by one of these local legal professionals, because I have years of positive experience supporting this recommendation.

The lawyer then turns the Offer into a Purchase and Sale Agreement.  It is usually written in English, and then translated to Spanish to be submitted into the National Registry. All of the details are included in the document and it is reviewed by Ben and I, the seller’s lawyer, and seller.  Once the contract is signed, an escrow account is established.  I will be writing a separate article on escrow in the near future, but this is now required for all property transactions especially for those transferring monies from outside of Costa Rica.

Finally, the lawyer starts on the “due diligence” or discovery phase of the process.  If there is a problem with the title or an easement registered against the property, this is the point in which the lawyer will uncover it. Most of the time these discoveries are either acceptable or can be resolved by the seller.  (In the event that the problem is a deal-breaker, the buyer receives their deposit back.) Once everyone is clear and desirous to move forward, the final deposit (usually a wire transfer to the escrow account) is made. It usually takes 3-5 business days for monies to arrive in the escrow account.

A final closing statement is generated by the closing lawyer.  For more information on closing costs, click here.


There is one intermediary step involved in the Costa Rica real estate process that is missing in a U.S.-Canadian-European real estate transaction– setting up a corporation. Virtually everyone owns their property (and automobile) in a corporation in Costa Rica. It’s a legal entity, recognized by the government, that stands on its own. There are two main types of corporations used for real estate in Costa Rica— the Sociedad Anonima (S.A.) and the Sociedad de Responsibilidad Limitada (SRL).  They are similar in function, but here are the main differences–

The S.A. has multiple uses and is a bit more flexible. It must have a Treasurer, Secretary, and President, who are separate people. It must have three registered directors and a controller, who is often the attorney who set the S.A. up and manages the associated protocol books.

The structure of a SRL is similar to the S.A except the shares cannot be transferred to a third party without the consent of the other shareholders who can have first right to buy those shares. An SRL can only have one manager administrator which is very appealing if you don’t want your name to appear in the registry, as it will on the S.A. This is the popular choice for investors who do not have more than 3 partners.

Our favorite part... the closing!


The last step in the process is my favorite part; the closing.  You, the buyer, fly down to Costa Rica and arrive at the lawyer’s office and sign the final deed and protocol book that gets logged into the National Registry.

Congratulations!  With your solid team of professionals supporting your clear desire, you are the proud owner of property in Costa Rica.

We have great deals in every property category, so please feel free to browse our listings.  The Guys… are here to help.

Dec 302011

The inspiration for this post came from a recent article fed from LinkedIn. The title was “38% of Homes Purchased in 2011 Bought with Cash.” I thought to myself, 38%?! That number seemed high, so I did I little more research. According to another article in USA Today, that number was as low as 12% just three years ago thus confirming a significant jump in cash purchases. According to the article, investors in the U.S. are keenly tuned into yield or ROI. That return on investment is realized through improving and flipping properties or some variation of a rental/income strategy. The latter has become increasingly popular for those foreign retirees and families who are looking to relocate here.

Cash Is King

Got Financing?

All of that got me thinking about our Costa Rica real estate market.  Land purchases financed through a Costa Rican bank (at least in The Zone) was virtually unheard of when I started back in 2006. For a variety of reasons, most buyers had cash before the downturn.  Four+ years later, the picture is very clear.  Property values around the world decreased (dramatically in some areas), and buyers couldn’t use the equity in their homes, not to mention the banks tight grip in their purse strings.

Recently (think- the past two years), we’ve seen an increase in the number of buyers who only have a portion of the purchase price.  These new buyers, typically foreign investors, need the seller to carry paper.  For those new to real estate investing, carry paper means the seller is willing to finance part of the purchase price and receive payment (often with interest) over time.  This legal arrangement is completed by a lawyer in the form of a trust or a mortgage here in Costa Rica. If the buyer defaults on the terms of deal (e.g., misses payments), a legal process can be initiated by the seller… just like a bank in a foreclosure process, although quicker. For more information on this topic, check out our article on Seller Financing Opens The Door To Home Buyers.

I don’t have a number, but I’d bet the number of non-Tico bank-financed purchases in the area is less than 1%.  Interest rates on Costa Rican bank loans, when you can get them, are more than double what you currently find in the States.  There are various reasons for it, but I’ll leave that for another article.

The good news is… buyers need financing and some sellers need to sell, so seller financing continues to increase in The Zone.  Some deals don’t even include interest, simple an extended term to complete the sale.  When there is interest and an extended term involved, the number of years almost always tops out at 5 years.  There are real estate transactions taking place in The Zone primarily because (1) land values are now around half of peak values and (2) both parties are getting creative, as described above.

There are a select few (and I mean few) who are flipping houses here in The Zone, however, many investors are looking for income generating properties, both hotels and vacation rentals.  The yield varies greatly, but there is opportunity to make a nice living in the hospitality here in The Zone.

But, What Does All Cash Mean For Buyers?

It means you need to think of Costa Rica, at least for the time being, as a place to land bank or move your cash. There are economies and currency (think- Europe and the Euro) with a cloudy future.  The current wave of concern is so real, we have recently seen an uptick in European investors and relocators contact our office.  Without getting metaphysical, I also wonder how much 2012 is playing into people’s decisions. We call this group “End Of The World Buyers.”  Good and abundant water sources, good environments for growing crops, and pleasant temperatures throughout the year draw these type of buyers to Costa Rica and our area in particular.

Whether this trend continues or declines remains to be seen.  Simple put, Costa Rica, especially the Costa Ballena, is a wonderful place to relocate for both economic and lifestyle reasons.  There are many, happy foreigners living either full time or part time in Costa Rica.  If you are interested in why so many expats are buying and relocating to The Zone, this article Why Buy Property In The Zone offers a few of the top reasons.

Nov 162011

A week ago, I was reading the Tico Times and the headline “Liberia Airport Renovation Nearly Finished” jumped out at me. It’s only been nine years since that airport opened, and now it’s getting $41 million dollars worth of renovations?? I had to figure out why, if only because it might offer a flash forward to what we can expect when (emphasis on “when”) the International Airport opens up in the The Zone, also known as, the southern Pacific zone of Costa Rica.

Air port in Costa Rica

Regional to International, the Osa Airport Dilemma

Long Lines

Whether it’s checking into a restaurant, hotel, or airport… people do not like to wait, especially when the line stretches out the door. Long lines and airports are synonymous, but the leaders at Liberia International (and the Guanacaste business owners) have figured out that a bad traveling experience doesn’t inspire repeat customers. The Liberia airport is scheduled to re-open any day now, and just in time for the tourist season.

The Profitable Impact

Did you know that 225,224 passengers arrived at Liberia’s airport last year*? That’s an average of 18,768 people per month and just over 625 per day. In January, foreign visitors in Guanacaste, increased by more than 28% over January of 2010. With the upgraded facilities (think mini-Juan Santamaria), services, and new carriers (JetBlue, Air Berlin), they are clearly anticipating an increase in arrivals in the near future.

The Liberia airport has done wonders for the development (read- boom) of Guanacaste. Not only does the airport employ hundreds of people from the community, it also stimulated new business opportunities in the immediate area, including— hotels, car rental companies, and commercial centers.

Conversely, there can be, and usually is, a relative downside to rapid development. Have you been to Tamarindo lately? I went two years ago, and the sleepy beach town I visited in 2002 was almost unrecognizable. The main strip looked like it had a SoCal facelift, the renown beach break was packed with surfers, and I found myself longing to be back in quiet and verdant Zone.

How It Relates To The Zone

The second most popular question we get is “When is the International Airport in Palmar going to open?” My answer: “I have no idea.” It’s not that I don’t read up on the subject, it’s just difficult to believe the words of Alberto Cole or the Minister of Tourism.

As I mentioned in an article a year ago, the construction of this airport goes hand in hand with the construction of new hotels. (At this point the area doesn’t have enough beds to accommodate an extra 400+ people/day in The Zone… especially in the high season.) Adding small to mid-sized boutique hotels isn’t an effective and complimentary plan. For the airport to be viable, large 100+ room resorts will need to be built and one need look no further than Guanacaste and its growing pains to be concerned.

To date, Ben and I have not heard anything concrete regarding new resorts in the area. Taking that one step further, there are only a handful of residents who want this airport to be built. Simply put, the majority of people who most desire this new International Airport… are people who don’t live here.

Air port in Costa Rica

Tiger Heron in the Osa Peninsula

The Ecological Impact

Some of our reader saw the recent article in the Environment section of the The New York Times. The article outlines the potential ecological impact on the Osa Peninsula, an area that boasts 3% of the World’s known biodiversity. The author writes, “Construction is planned in two phases from 2012 to 2016… (initially) designed for 50 passenger planes.” IF (notice the big IF) that timeline is accurate, there will be a global blast of articles and special features, then… an influx of investors. Real estate and development markets will surely be stimulated, and these investors and relocators will have a large raw land inventory to choose from when they do arrive.

As real estate experts, Ben and I are standing in the path of progress and we are experienced “tour guides” in Costa Rica real estate. However, like the majority of people who move to The Zone, we also love our small town community and the postcard paradise that surrounds us.


* Costa Rican Tourism Institute

Sep 192011

“Houses that produce rental income” has become an increasingly popular Costa Rica real estate strategy in The Zone. In this video, The Guys explain WHY this investment strategy is smart and how it can be achieved in a fertile rental market.  We moved out of the office and shot the video “on location” at such a property above Dominical, Costa Rica.

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.