Property investment in Costa Rica is becoming increasingly popular with North Americans and Europeans. Buying a beach house in Costa Rica is comparable to buying a nice home in Florida, a lot of land by the beach may go for as little as $80,000 while a 3 bedroom detached beach house with jungle on either side may go for $250,000. So for those looking to buy a second home, an investment property, or a retirement villa, Costa Rica is an excellent choice. Only a couple of hours from the US by plane, in a much more exotic setting, with all the comforts of home, and a lower cost of living.
As a second home or investment property, a Costa Rican location can be used by family and friends and rented out to generate profit when it’s not in use. As a retirement property it can save on the cost of living when there is no income, and provide a luxurious life in the sun for the golden years.
Costa Rica makes it easy for foreigners to buy property, their legal rights are the same as a local’s. You can own property outright in your own name or you can register it in the name of a corporation. Anyone can set up a corporation in Costa Rica and many people do this and then buy the property in the name of the corporation. This way any profits from rentals or capital gain are taxed as a Costa Rican company rather than a personal income, although this may depend on where you are from.
It is commonly agreed that the real estate market in Costa Rica is more stable than in North America. The economy is based on tourism, agriculture and the export of electronics, so it is not reliant on the real estate market which allows it to remain stable and not be artificially talked up.
As a property investor it is possible to borrow in the local market, but it is not advised as the cost is high. This is hardly an issue however, as most US brokers can easily arrange financing for purchasing properties in Costa Rica based on its accepted stability.
Costa Rica is somewhat unregulated in that Real Estate agents do not need a license to sell properties. There is however a governing body called the Cámera Costarricense de Corredores de Bienes Raíces or the Costa Rica Real Estate Brokers Board. The more professional agents are registered with the board, and you can ask them if they are licensed or not, although this does not necessarily guarantee better service.
Properties, on the other hand, are strictly registered with the National Land Registry, which allows you to verify that there is clear title to your property. The computerized system is considered the most advanced in Central America. There is not, however, a centralized MLS of properties on the market, which is why CostaRicaRealEstatePages.com has become such a well known resource for property listings.
Condos have become very popular as they tend to include modern amenities such as hot water tanks, and a higher standard of construction and materials, although this will depend on the condo itself. However condos are an easy investment because they come with a management company who takes care of the property and can also help to rent it out when needed. But even for those who prefer a private home there are many property management agencies who will rent out your property for you, and oversee maid service and general management for a fair commission.
The most popular area for foreign property investment is the Pacific Coast, and in particular the Guanacaste area. This is where the nicest beaches are, along with the best roads and most airports which provide the best accessibility to the city, both for traveling and for transporting goods to your new location. For a small town yet posh city feel, Tamarindo is great, and boasts a large casino coming soon. For more of a recluse feeling, Mal Pais is more remote but has a spectacular white sand beach and beautiful ocean view. For a more commercial atmosphere, Jaco is the party town with a lot of weekend business from the city as it is only 2 hours away by car and one of the closest beaches to San Jose. Moving further south, Dominical is rich with vegetation and more rain than the north, but puts you more in touch with the greenery and nature that Costa Rica is famous for.
For anyone looking to make a property investment abroad, Costa Rica is a real gem. A stable real estate market in a tropical paradise, with all the amenities of North America – what more can you ask for!
Jennifer Cross, February 2008
