Costa Rica provides many exciting opportunities to investors, both local and foreign. This beautiful country not only boasts natural beauty. It also offers many options for anyone looking to buy a dream property.
You might be here for your interest as an investor or for your personal dream. So, we are here to share our local knowledge that investors or expats alike, can use to make the right decision.
First, we start with helping you make up your mind if Costa Rica is really the right place for you. We will also give you a simple and clear overview of the Costa Rican real estate market today. Find out what types of properties are available out there for you. Finally, we’ll guide you on the steps to acquiring your dream property investment in Costa Rica. Century 21 Pura Vida is here to guide you every step of the way.
I. Is Costa Rica for you?
Some property investors aren’t just interested in investing in a property. Sometimes there is a personal reason involved. There is a fairly personal urge to buy a home in a gorgeous tropical paradise like Costa Rica. That’s in addition to the logic and practicality.
Isn’t it wonderful to own a piece of paradise? Or to share the Pura Vida atmosphere with the locals? Costa Rica is not only an idyllic place. It can also be a lucrative venture to spend your investment money where your heart is.
It may not take much convincing to some that Costa Rica is a foreign investment destination. It is one of the best choices among the most beautiful tropical countries in Central America. Let’s find out the reasons why Costa Rica is the favorite choice for international real estate investors.
Top 5 reasons why foreign investors choose Costa Rica
1. Investment and leisure in one. Who doesn’t like hitting two birds with one stone? It is always a smart move for investors and for those who want to spend their hard-earned money wisely. You didn’t have to buy a vacation house and finance a lucrative business separately. Costa Rica is an excellent location for property rental investments.
Costa Rica is a fantastic destination for tourists. You and your family can enjoy it as much as the tourists do. You or your family can use it any time of the year. The remainder of the time, you may not be using it. So, during this period, business may generate enough revenue to cover all of its costs for the whole year.
It’s easy to rent out a property with a great location. Choose wisely because location predicts profitability. It would be an easy choice to choose Costa Rica. But it is more important to find the perfect location. Consider its proximity to amenities. This makes or breaks your vacation rental investment. So, get knowledgeable recommendations from someone who knows the local market very well. The location should be popularly preferred by tourists.
Ask experts’ opinions. Study the local real estate market. This will help you find the perfect location and property. Search for properties suitable to what you intend to do with it. Also, consider the help of a property management specialist. Hiring a property manager can help you avoid common headaches of maintaining properties. This is particularly recommended especially if you can’t frequently oversee it yourself.
2. Affordability and diverse options. Costa Rica isn’t always the cheapest place to buy property, but it can cater to all types of real estate needs for every budget. There is a lot of value that can be found depending on where you are looking and what you are looking for.
For example, investor A is looking for a property that he wants turned into a retreat house. He was offered two options, a beachfront bungalow and an estate with an ocean view. The cheaper option is the estate with an adjoining farm. It has an ocean view and an off the beaten path access to the beach.
The more expensive option is the beach bungalow. It has access to the beach and many other amenities. It is a more popular location for tourists. The investor has enough money to buy either of the two, but he goes to see more value from the less expensive option. This is a great deal for him.
The beach bungalow appears to be an excellent choice for both a holiday house and a vacation rental. The investor is interested in houses near the shore. However, he’s not seeking for the beach vibe appeal, but rather for a soothing vista. Furthermore, the ocean view home has greater space. The investor can construct more buildings, provide more shade, and reduce distractions.
Meanwhile, Costa Rica is so diverse that beachfront properties aren’t all the same. Different communities offer different vibes. We can’t tell you enough about how diverse this country is. You’ll never run out of choices. So, it is important to define clear requirements that must be met when looking for a property.
Of course, it is important to know your budget. For how much can you stretch it paying for the things that are most valuable to you? Know what you can alter or concede to compromise for the sake of obtaining your perfect house.
Great communities closest to all the bests in Costa Rica are high value and cost as much. Popularity and proximity to amenities are big. But they aren’t the only measure of the best property for you. Search according to your budget, preferences, and study future profitability. A local real estate company can get you insider information on great deals in the market.
3. Stable long-term potential. Costa Rica has a stable political environment. It is a welcoming and tranquil nation. Without any political adversaries or turmoil.
Ecotourism is essential to this environmentally aware country’s economic growth and long-term sustainability. It not only draws tourists but also contributes to the growth of the economy. It also ensures that there is no detrimental impact on the environment.
Costa Rica’s greatest will be around for a long time. Eco-friendliness, sustainability, peaceful politics, and a strong economy are all important indicators. All these show that your investment will be safe for many years to come.
4. Various tourism options. Costa Rica is the most popular tropical destination for a variety of reasons. There are several more reasons why this country is a favorite of tourists from all over the world.
The country’s gorgeous beaches are also well-known. Costa Rica has beautiful beaches on both the Pacific and Caribbean coasts. Costa Rica also boasts world-class medical facilities. It is a popular destination for medical tourism.
Wellness tourism is another important reason to visit Costa Rica. It’s an ideal spot to unwind and get away from the stresses of daily life. The Pura Vida lifestyle is highly sought after. It attracts many visitors who often return.
Purchasing real estate in Costa Rica is like purchasing your own piece of paradise. Real estate in this area will always be valuable. Many people are being persuaded to stay here year after year. Real estate will always be in high demand. Tourism contributes to the economy’s stability and growth in many ways.
5. Warm weather and microclimates. This charming little country has different microclimates to choose from. Warm weather is expected all year round in tropical countries. But Costa Rica is different.
Varied elevations and regions indicate different weather. There’s a perfect one for everyone. Costa Rica real estate is available in a number of ideal settings. This comprises coastal homes on the Caribbean and Pacific coasts, as well as valleys, mountains, and rainforest nearby. All year, different sorts of weather may be found in different regions.
The temperature and amount of rainfall fluctuate as you climb higher in elevation. For the most part, the Highlands are shrouded in chilly mist and fog for the majority of the year. Property near the Pacific beaches, on the other hand, is hot and dry virtually all year. Properties in the Caribbean side have their own microclimate. It is hot and moist all year round.
People seeking a sanctuary in Costa Rica may just come there to enjoy the tropics. However, for some, weather is such a vital ingredient in their enjoyment of life. Some folks want to get away from the cold and enjoy the great weather on the beaches. Meanwhile, others want to appreciate the cool mist and fog near the rainforests. Costa Rica has it all.
Costa Rica appeals to individuals of various backgrounds. It became a popular destination for visitors, expats, and retirees as a result. It is also one of the safest areas in the world for a foreigner to buy a home. The Costa Rican government also encourages foreign investors to choose the country.
You probably have heard enough reasons to choose Costa Rica. It would seem that this country is for everybody. But what could be the chances that it might not be for you?
Costa Rica is not for you if …
1. You have unrealistic expectations about the cost of living in Costa Rica. First of all, “cheaper” is relative. Costa Rica is one of the most costly countries in Latin America. This is when compared to other Latin American countries. It is, nevertheless, less expensive than most cities in the United States, Europe, and other famous tourist sites across the world.
There is undoubtedly a lot of information on the internet about the less costly living in Costa Rica. This was true in the past and is still feasible now, but only if you understand the ins and outs of living like a native. Know what your priorities are and how much your desired lifestyle will cost you.
Real estate property values in Costa Rica have off-seasons and peak seasons. It is preferable to purchase during the off-season. It is when buyers have greater negotiating power. Getting a lower-priced home is easier during the slow season than it is during the high season. Property owners make the most of their investments during peak season. They are certain that they will be able to command greater pricing.
Not knowing how things work in Costa Rica may cost you a lot of money. In the same way going through the wrong process and going to the wrong people does. Someone who can point you to the right direction right away can save you a lot of time and money. The basic rule is that the more you live like a local Tico, the less your lifestyle will cost you.
2. You are unwilling to adapt to the culture. It’s a widespread misperception that purchasing a home in Costa Rica buys you a long vacation. To get the most out of living in Costa Rica, you must learn to blend in.
Adapting and blending are critical. Some people may be able to blend in easily. These kinds of people are likely to thrive in any situation. Understanding the culture of the people with whom you interact may help you succeed. That’s not just in your daily life but also in any business transactions. Furthermore, it may assist you in avoiding a variety of issues.
Begin by studying the language. You communicate and acquire information more effectively by doing so. You will also have a competitive advantage in negotiations. It may take some time to master the language and culture. But it will be worthwhile if you are serious about investing and living here.
We at Century21 Pura Vida, believe in the power of bridging communication barriers. When there is clear communication, you come the closest to getting exactly what you want to buy.
Costa Rica is an amazing country with amazing people. You probably won’t find everything you are used to, but you will surely find more to appreciate. Most of all, it is important to know yourself better. Are you capable of embracing the pura vida?
3. You can’t slow down. As previously mentioned, pura vida is a major part of Costa Rican culture. But this deserves a spot of its own. Pura vida means pure life and it means more than just a phrase to Costa Ricans. It means everything to them. It’s a pure reminder to take it easy. So if you can’t chill and wait, this definitely is not the place for you to wait for the country to change for you. Pura vida is a way of life here. And if you can’t find the beauty in that, this isn’t the place for you.
With all that said, these are just the major reasons why Costa Rica may not be the best investment for you. Overall, the things mentioned above are important. You need them to navigate the Costa Rican properties landscape and lifestyle. Create a connection to the country’s fundamental elements. It is the key to building a successful investment portfolio in Costa Rica.
While some later realize that Costa Rica isn’t for them. That’s often because little things get magnified when you are in a new environment. So, it is important to make up your mind if Costa Rica is really for you. Do whatever it takes to be a successful real estate investor in Costa Rica.
Essential tips for people who wants to move to Costa Rica
There are many people who are not only looking for a property to invest in but a second home. They may have more to learn about Costa Rica than the numbers. Always look deeper into your personal reasons for owning a property in Costa Rica.
#1 Find out what it’s like living in Costa Rica.
Discover the different lifestyles in Costa Rica. You have plenty of options. Your property selection should be based on your lifestyle preferences.
#2 Get to know what others find captivating about Costa Rica.
What are the reasons enough to make them make the big decision? You can look into the popular reasons why people choose Costa Rica. You might find some clarity with your own reasons by going over what others love the most about Costa Rica.
You may also do the reverse and look for problems others are having in forums and on social media. You will find a lot. But consider why the individuals who are complaining are still living there. What are the most compelling reasons for them to stay despite their complaints?
#3 Spend enough time to experience Costa Rica.
You might want to consider renting first. Find out these important things.
- Where do you want to live in Costa Rica?
- Do you like the beach, the city, the suburb, or the countryside?
- Which temperature suits you best?
Costa Rica is a small, yet diverse, country. It is a frequent misconception to assume that the weather here is the same as the others in the tropics. Costa Rica is divided into 12 climate zones. Simply going from point to point by bus allows you to experience the microclimates here.
It might be hot and humid where you come from and chilly and crisp where you go. The various areas each have something special to offer, and not only in terms of weather. Each town has its own identity. Unique communities and lifestyles are created around it
#4 Find a reputable local expert
Always remember to be vigilant. Conduct your own research when conducting business anywhere in the world. It is usually a good idea to deal with reputable local specialists. They can give you local expertise and a wealth of information that others cannot. Only once you’ve become acquainted with all of this local knowledge, you’ll become more confident. You’ll be able to determine whether Costa Rica is right for you.
Purchasing a home is a significant investment. It may provide both personal and financial benefits if done correctly. It’s not something you make on the spur of the moment. However, when the moment comes, you must act quickly. You can save time, effort, and money by not having to learn everything from scratch. You can always rely on the specialists’ knowledge and skills to guide you in the right direction.
II. Investing in Costa Rica Real Estate 101
Why Costa Rica is a top real estate investment market
- Costa Rica is reinforcing friendly foreign investment laws. The Costa Rican government signed a law recently. This law incentivizes the residency of foreign investors and retirees. The law significantly decreased the required investment capital for foreign investors and retirees. To be able to opt for temporary residence you will need $200,000 before. It is now down to $150,000 which is a 25% decrease. Additionally, they will allow a duty-free importation of two vehicles. They will also allow as well as tax-free importation of important household items. This includes appliances, furniture, home furnishings, and others. There will also be a tax exemption for any income created from outside the territory.
- Economic stability. The second reason why this country is such a great option for investing is its stable economy. According to World Bank data, Costa Rica had one of the lowest inflation rates in Latin America. That’s between 2014 and 2018. The inflation rate is only at 1%. Furthermore, according to the IMF, Costa Rica’s GDP growth rate over the past decade averaged 4%. This is higher than Mexico’s 2.7% and Panama’s 3.4%. Costa Rica is one of the most preferred countries to think of long-term investments. This is because of the security and its stable economy.
- Vast income opportunities. Costa Rica ranked third globally in job creation between 2015 and 2020. Between January and September 2018 alone, the economy created nearly 10,000 jobs. Costa Rica also ranks among the best places to work abroad.
Vacation rental is a highly lucrative business in Costa Rica. Tourism in this country is always booming. Costa Rica’s tourism industry contributes significantly to the country’s economy. Tourism directly employed 157 000 people in 2018. This accounts for 6.6% of total employment. Tourism is the country’s most important source of foreign cash. It brings trillions of revenue to vacation rental owners and employment to many.
- Costa Rica is a safe country.
Crime rates are low due to strict gun control policies. This is one of the main reasons why it was ranked as one of the safest countries. The country‘s judicial system is efficient. Citizens can file complaints against any alleged wrongdoing without fear or reprisal. Moreover, citizens have access to free legal services through public defenders. The country is also free from political conflicts.
- The flourishing international tourism industry.
Since 1990, the average annual number of overseas visitors has risen. Costa Rica is not just a year-round tourist destination. It is also a country where visitors stay for extended periods of time. The average duration of stay is 11 nights, with the length of stay increasing with time.
Tourism and real estate industries in Costa Rica will continue to grow. Thanks to growing interest in the nation. It continues to get more worldwide exposure to travelers and investors.
Overall, Costa Rica is a great destination for your real estate investment. It is a lovely country that welcomes both visitors and investors with warmth. There are no limitations on foreign ownership of property in Costa Rica. Foreigners can acquire land outright or lease it.
III. Different Property Types You Can Buy in Costa Rica
A condominium or condo unit combines residential living space with commercial office spaces. These properties are usually owned as individual units but may be managed under one roof. They can also include amenities such as swimming pools, gyms, and others. There are two main types of condos available in Costa Rica. Those built from scratch and pre-built ones. Pre-built condos come fully furnished and ready to move into. The downside to this option is the lack of customization options for buyers. On the other hand, building your own home gives you more control over what goes where and how it’s designed. It also allows you to customize everything about your new house. This includes its layout, design, features, appliances, furniture, landscaping, etc.
Condominiums are the top preference among foreign buyers who are after convenience. There are plenty of locations to choose from. Mostly are great locations near scenic spots and amenities. Most importantly, condominiums are easier to manage. They are cared for by the homeowners association daily.
Another common option for expats who wish to reside on their own land is this. Most villa owners will have some kind of rental income, so they will not need to work full time. Villas are generally found outside of large metropolitan areas. With plenty of room, it is simple to live a quiet, laid-back lifestyle.
3. Vacation Homes
If you plan on spending part of each year abroad then buying a vacation home might make sense for you. Many times when foreigners buy real estate here they use it as an investment rather than a place to call home.
Some people choose to purchase land instead of a home. While owning land isn’t easy, many people find it rewarding since they get to build whatever they want on it. Plus, having your very own piece of paradise can be less expensive than other types of property.
5. Commercial Properties
Another great way to invest in Costa Rica is by purchasing commercial buildings. Commercial properties include income-generating spaces. Properties like this include retail shops, office buildings, and mixed-use buildings.
For anyone looking to start farming in Costa Rica, farmland is probably the best bet. It provides steady cash flow and requires little maintenance. Unfortunately, finding good quality farmland is not always easy. But if you’re persistent, you’ll eventually succeed.
Rental properties are becoming increasingly common in Costa Rica. There are several reasons why renting may be better suited for many people. First off, rentals allow tenants to avoid paying property taxes. Second, renters usually receive free utilities unlike with homeowner loans. Third, landlords generally take care of repairs and maintenance themselves. Finally, rents are flexible allowing tenants to move around. All that without worrying about selling first. So, there is a good market for this type of property in case you plan to own one
For a wide directory of properties in Costa Rica, visit our website. Navigate property listings of titled properties. Consult our real estate agents for safe and secured transactions.
IV. Buying a Property in Costa Rica
Preliminaries: Things you need to know before the buying process begins
1. Ways to purchase a property
Direct Transfer – Individuals can acquire property in their own name through direct transfer.
Acquisition through a corporation – This is a prevalent practice in Costa Rica. Acquiring a property is feasible through both a new and existing corporation. The procedure necessitates the services of a lawyer, but it offers numerous advantages. There is no change in ownership if you purchase a property through the same corporation that owns it. Thus, there is no need to pay transfer and stamp taxes. You might also choose to form a new corporation with the assistance of a lawyer.
2. How to find a property to buy
Online Search – Don’t underestimate the power of the internet while looking for a home to buy. Searching through thousands of listings on the internet has never been easier. This helps buyers to filter down their options until they find the perfect property for them.
Create a listing search strategy. These questions are all important in selecting your ideal list of potential properties. Answer the following questions:
- How much money do you have to spend?
- What kinds of properties are you looking for?
- Are there any specific neighborhoods in your budget range that you’d want to invest in?
List potential sites and start from there. Buyers may obtain detailed information from one of Costa Rica’s largest property listings. See all our active property listings.
Contact Local Agents
You can’t judge a neighborhood just based on its online presence. It’s worthwhile to conduct more research by contacting local agents. If you email a local expert, you could obtain more information than you can get by looking online.
You can also work with them if you’re on a tight timeline. Contact them for an arrangement if you just have a few days or weeks to travel to Costa Rica and conduct an exhaustive search. Local agents can assist you with a variety of issues, particularly if you are unfamiliar with Costa Rica and are unsure where to go.
Explore Costa Rica
The ideal circumstance would be to remain in Costa Rica for a few months and get to know the country firsthand. There are several benefits to doing so. There are numerous things you can do to ensure you are making the right choice.
Increase the amount of time you spend investigating the entire area. It will be much easy to tell whether it is exactly what you want. Consider how far you’d have to drive to work, school, and other conveniences. What size of home do you think you’d require?
When the search becomes tedious, it may be tempting to pick any location at random. When you’re under pressure, never rush into anything. Take your time to research different locations to determine exactly what you want.
To do this you will need to consider renting in a strategic location. Rent a car and take short trips. Scout areas of interest. Once you have picked out the best locations, you can start contacting brokers. Contact people who can help you find the best deals in the area.
3. Basic Initial Checks
Preliminary research and inspections should be completed before moving forward in the process. This is to avoid deal breakers. The initial stage would entail negotiations and financial considerations. You don’t want to waste time just to find out that the deal can’t be completed. This quick check is also done to help you avoid unwanted problems and fraud. Before you buy, there are a few things you can do.
- Meet with the owner or make contact in any other manner to ensure that the owner is indeed selling the property.
Unless you’re dealing with a reputable real estate firm, you’ll need to do this first.
- You can request the property number from the owner so that you can search it up on the National Registry’s website.
Check for any liens or encumbrances on the property. If you discover any, see a lawyer or have someone interpret all of the material for you.
Find out who owns the property, whether it’s the individual owner or a corporation.
- If it’s owned by a corporation, find out who has the power of attorney to dispose of the company’s assets. Is it the person with whom you’re communicating?
Is there anything else the company has? Do they owe any money? Is it a brand-new, clean corporation, or an established one with a track record?
- Once you’re well into the buying process, hire a lawyer to do a full background check.
The Process of Property Purchase in Costa Rica
Following the preliminary steps, below are the fundamental stages of the property acquisition in Costa Rica. This will walk you through a simple procedure. It will also show you a few points to remember during real estate transactions.
Stage 1 – The buyer secures an option to purchase the property
A real estate purchase option is a contract signed by the seller. It grants the buyer the exclusive right to buy the property when conditions are met.
This contract contains all details agreed upon by both parties. The document doesn’t have to be in Spanish, as long as both parties understand what it contains.
This document is legally binding. A notary public writes the agreement involving the earnest money.
The option to purchase document has the following content:
- All legal information about the buyer and the seller
- The legal description of the property and object of the promise
- Survey Map of the property
- The Reciprocal Promise
Make sure to consult your legal adviser before signing any other legal document. This is to ensure that everything is in order and nothing is out of the ordinary.
Stage 2 – Deposit money into escrow
Learn the basics on how an escrow account works in Costa Rica. It is still the safest way to conduct financial transactions. Escrow allows foreigners to pay for the earnest money safely. This is by enlisting the help of a third party to monitor the release or non-release of funds. Everything is based on the terms of the option to purchase agreement.
Here are the requirements to open an escrow account:
- Most recent bill from your home country (water, electricity, etc.)
- Copy of your passport
- A copy of any national ID
- Original signature
- Proof of income ( ITR)
- Bank statements (six months showing transactions and showing enough funds to cover the closing amount)
- Home bank’s referral letter of good standing
The point for the requirements of opening an escrow is to prove that you have enough funds to close the deal. Escrow works for both the buyer and the seller’s security this way. It makes the transaction safe and secured.
Stage 3 – Title Search
This crucial step will be carried out by the lawyer. The main goal of this stage is to ensure that the seller has the legal right to sell the property. The property should be free of legal entanglement. Costa Rican law, which is based on a Napoleonic system of law, functions differently. It varies from the sometimes complex legislation of the United States.
It is not complicated to obtain the information needed. But the lawyer should conduct a thorough analysis of the information available.
The following information about the property may be found by doing a simple search. You only need the Finca or property number. Again, you won’t have to do this, but it’s important knowing what your lawyer will be looking at.
- Naturaleza – Property description and use
- Linderos – Property borders and neighboring properties
- Mide – measurement in square meters
- Antecedentes de la finca – History of the property but only includes no later than the 90s
- Valor fiscal – The registered value of the property
- Propietario – The name of the property owner or the owner of the corporation with corporate ID number.
- Anotaciones – Annotations to ongoing procedures that are already in progress. We’d want to see a “NO HAY” category appear. This indicates that the property is in excellent state.
- Gravámenes – Liens. This would reveal any mortgages, tax liens, or embargos that have been put on the property while a legal fight is being resolved. This category should once again be labeled as “NO HAY”.
Stage 4 – Transfer
The most crucial aspect of closing is correctly executing the deed transfer. The actual transfer contract must be prepared in Spanish by the lawyer. It might be either the buyer’s or the seller’s lawyer. That is determined by who perceives the greatest risk. A notary public must be present at the closing. The notary will record the deed on his notary booklet and separate copies of the deed will be produced. It will then be taken to the National Registry to be registered. The process may take one to two weeks if there aren’t any issues.
Conclusion: Costa Rica is a perfect place for your next real estate investment
We’ve witnessed many people close the deal and own a new place they only once dreamed of. In fact, it is quite common in a beautiful country such as Costa Rica. Here, your dream is not just a luxury. It can be practical too and at best highly profitable.
Spend enough time and find out these important things:
- Is Costa Rica for you?
- Where do you want to live in Costa Rica?
- Do you want to live near the beach, in the city, or in the country? Which temperature is most comfortable for you?
- It is vital to write down your reasons for wanting to buy a home in Costa Rica. You also need to be aware of the factors that might prevent you from doing so.
- Pros and cons of buying a property in Costa Rica as a foreigner.
- Learn about the benefits and drawbacks of purchasing a certain type of property. This should help you choose what sort of property is ideal for you and what to search for.
Begin and conclude on the correct footing. Do your due diligence from the beginning and only work with experts. And, while someone else may be able to provide the services you require, you should also be fully knowledgeable.
Understanding the real estate landscape of the country is essential to succeed. To get excellent deals, know your alternatives, compare them, and seek expert assistance.