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Speculating buying Costa Rica Real Estate?

If you are interested in purchasing real estate for investment purposes, you will be pleased to know that the government welcomes your investment. If you choose to speculate in real estate, there are some prime areas to choose from in the Central Valley. This area offers a lot more potential due to its proximity to San José, the large number of services available and excellent infrastructure. The towns of Escazú, San Rafael de Heredia, Santa Ana/Ciudad Colón, Alajuela (Costa Rica’s second city) and San José’s suburbs of Rohrmoser, Los Yoses and San Pedro are all hot spots.

Homes range from about $30,000 in some tico neighborhoods to a couple of hundred thousand dollars in high-scale areas like Rohrmoser and Escazú. It is best to speculate in middle and lower-end properties since they are more affordable for the average Costa Rican and financing is available. A standard rule of thumb is the farther away from town you go, the lower the price.

The current housing shortage, the popularity of Costa Rica and Central Valley’s weather assure excellent investment opportunities. Whether you are buying a home or an investment property, you are bound to make money if you hang on to your property. Real estate values are expected to double over the next decade or two. During the last ten years some property values have risen ten times. There is limited land in some urban areas, so the resale value goes up as population grows. Beach property will be a good investment because of the demand.

Presently there is a building and investment boom in Costa Rica’s Central Pacific and Guanacaste beach areas. Infrastructure continues to improve in these once inaccessible areas. The Central Pacific area is like Hawaii or California, but only a fraction of the price. If you cannot afford to live in a prime costal area in the States, you may be able to find the property of your dreams in Costa Rica in a much more spectacular setting.

Another excellent investment is Costa Rica’s nascent Real Estate Investment Trust Market. Briefly a Real Estate Investment Fund (fondo inmobilario) or REIT is a type of public investment fund that buys and rents out real estate and distributes the profits among investors. Depending on the fund, dividends are paid on a monthly, quarterly or yearly basis. Revenues for these types of funds depend mainly on the price at which the property was bought and the price at which it rents.

Banks offer properties which were collateral for a mortage loan and were legally repossessed by the bank after the client defaulted on the loan. Properties are awarded to the highest bidder. Most banks require a 5% security deposit when making a bid. Some good deals may be found by checking with a local bank.

Property management companies are available to take the hassles out of home ownership. Most property management companies charge a monthly fee to cover general maintenance, security and upkeep costs. The fee ranges from $50 to $150 monthly. If you have a rental in the Central Pacific or Guanacaste beach areas, one of these companies is essential. A list of property management companies can be found in the local Yellow pages under “Administración de Condominios.” In addition, many real estate companies have partnerships with property management companies. We have friends who own a rental property in an exclusive gated community in the Central Pacific area who use a local realtor to manage their condo. They are very pleased with this service.

Before buying a home or making any other real estate investment, we suggest you educate yourself by studying the Costa Rican real estate market. Fortunately, there are two excellent guidebooks available to assist you and answer most of your questions.

Bill Baker’s, The Rules of the Game: Buying Real Estate In Costa Rica, is a good source of information. Anyone considering purchasing real estate in Costa Rica will find this book extremely valuable. It is full of useful information and contains samples of standard real estate forms used to make most transactions. You should not consider making any real estate investment without reading this great book.

An excellent source of information is Explore Costa Rica's official Website. There you will find articles and advice. Reading this information will keep you up on the local real estate scene.