Contributed by Bret Gregory, founder of costaricawellness.com
Discover the 12 steps to find, purchase and live in your paradise Costa Rica property. How to find the perfect Costa Rica Real Estate for you and your family!
Exhausted with the crazy pace of your days?
Are years passing you by at lightening speed?
Life is short – why not live in paradise? at least part of the time?
Costa Rica is your answer, and your dream destination.
For decades, Costa Rica has been the choice of North American and European private investors, because they learned the secret early. Costa Rica, with its’ diverse and stunning nature, geography and wildlife, offers assets that not only increase in value, but provide you with your own slice of heaven – complete with dynamic real estate opportunities, including: beach villas and mountain chalets.
Over the last 25 years, real estate values in Costa Rica have steadily increased, at an average rate of 8% – 13% annually.1&2 Not only does Costa Rica real estate offer a long-term appreciating asset, it provides a wonderful escape haven to a tranquil, humble and easygoing place. Costa Rica Land For Sale presents real estate and land available now, to purchase and/or design and build your own Shangri-La, for half the price of anything comparable elsewhere in the world.
As with any foreign investment, we find twists and turns in the opportunities, transactions and regulations. Let us help you sort these out!
12 Steps To Find The Costa Rica Property That’s Right For You
1) Buying Costa Rica Real Estate as a Foreign Citizen
Foreign citizens CAN buy real estate in Costa Rica. (As an added benefit, your Costa Rican Real Estate purchase can also serve as your entry into the Residency process. There are different categories of Residency status – “Pensionado (Retired)”/”Rentista” status showing proof of monthly independent income, and “Inversionista” status, with the purchase of Costa Rican Real Estate.)3 You will need to be sure your lawyer is familiar with these Residency processes, and if not, then find a lawyer specializing in Costa Rican Residency. If you plan to stay long-term in Costa Rica, you will eventually need Residency in the country.
2) How Real Estate Transactions Work In Costa Rica
When buying land in Costa Rica you buy as “Fee Simple Title”, which is the same as in the U.S. Most real estate transactions are done by putting the land in a corporation, and then purchasing that corporation. These transactions are all managed by lawyers – you will need a good Real Estate/Promesa de Venta & Contract lawyer – and you should never use the same lawyer as the seller, no matter what they tell you.
3) Costa Rica Property Listings
Costa Rica does NOT have a Multiple Listing Service M.L.S. like in the US and many other countries.This can make finding comparable listings or “comps” difficult or impossible. Additionally, Costa Rica does not require a Real Estate License for someone to legally sell Costa Rican Properties. It can seem like everyone in Costa Rica is a broker, and is trying to sell you property. There are some very legitimate “brokers” of Costa Rican Real Estate, that are not Licensed U.S. brokers, however, as with any big purchase/decision due diligence and thorough investigations are advised.
4) Financing Costa Rica Real Estate Purchases
Most homes and land transactions in Costa Rica are done with cash or are seller financed. The reason is that it’s very difficult to get a bank loan for a Costa Rican property as a foreigner. The lending market is not as sophisticated or developed as it is in other countries. (In the case of Americans with IRA’s, for example, they can buy investment property with their retirement plans.) Additionally, you CAN open a bank account in Costa Rica without formal Residency. There are several banks that do business with or have branches in the U.S.: Citibank, Banco Lafise/Bancentro and BAC of San Jose, to mention a few.
5) Finding the Perfect Real Estate Location
When deciding on a location/type of property, spend plenty of time looking around. Take a “Location Scouting” trip to Costa Rica first – a few weeks – check out the different parts of the country, the beaches, the towns, the mountain pueblos, etc. Get a feel for the culture and the people. Different regions have different styles and customs. Don’t get roped in to a seller trying to convince you that if you don’t act now you’ll be missing out. Costa Rica has LOTS of property for sale, and it will most likely be around when you are ready to purchase.
6) Rent Before You Buy a Costa Rica Property
Rent in the area you think you want to purchase for 3 to 6 months, to make sure you like the climate, neighborhood, weather, security status and lifestyle. If you want to design your own “Paradise Palace”, don’t just assume you can build whatever you like. There are some restrictions due to environmental development, construction and costs. If you want to design your own haven, get to know your area while renting – talk with the neighbors, interview contractors, find out the regulations and restrictions in your local Alcaldia, (County Permit Office). Your lawyer should be able to help with some of these details.
7) Fees and Commissions on Costa Rica Real Estate Transactions
In Costa Rican Property transactions, it is standard that the seller will pay the broker commissions. If a seller tells you not to use a broker or a representative that could be a red flag. Use a local, established Broker, with a proven track record. They will likely have the best knowledge of the property and surrounding areas. You can easily Google and find an agent listed in the area you want to investigate.4 You can also check out a number resources for Costa Rican Real Estate Purchases.
8) How To Research Your Costa Rica Property Purchase
Ask your broker/lawyer to find the “Folio Real” Identification Number. Many Costa Rican Real Estate properties are listed in the Folio real system. The properties have a unique identification number, and you can opt for a title search before buying one. By conducting this search, you will get to know everything about the property, its’ area, location, exact size/boundaries, ownership history, tax status, liens and other details. These filings are usually kept at your local Alcaldia Property Permit and Tax offices.
9) Insuring Your Property Purchase
Purchase Title Insurance to insure the transaction. If the title company tells you they cannot provide insurance, this is a big red flag and you should not purchase the property. There are now some U.S. and Canadian Title Companies doing business in Costa Rica. Investigate thoroughly to find out which one can offer you coverage on the property you are considering. To emphasize again, whether you’re looking to purchase land or a finished condo or home, always hire your own attorney to help you with the transaction.
10) Protecting Yourself When You Purchase Costa Rica Real Estate
Use an escrow account to protect yourself and ensure you get what you are buying. Any money the seller would receive from you would only get released after certain conditions are met. You can have your lawyer write up the Promsa de Venta/Sales Contract with any conditions you dictate, and oftentimes they can set up the escrow account for you at the bank. Your Costa Rican Property contract may have to go through a few rounds of edits/counter offers, before the seller and their legal representation agree to sign, but it is well worth the process. Then, when they agree and sign, your lawyer will ensure that all transactions are handled appropriately and giving security to your purchase and your money.
11) Closing Your Property Purchase
You will have to be physically present in country for the “closing” and final transfer of title/registration and payment of funds. Your Promesa de Venta should include basic conditions like: They can prove they own the property they are selling; there are no outstanding taxes, liens/embargos on the property; and the title has indeed been transferred to you and is in process of being registered, before funds are released.
12) Purchasing Property With Partners
A way to reduce your risk is to buy a small property first and go in with partners. You can create your own category of a “Time Share” property. This works very well when you have a group of families that want to schedule alternative times to enjoy their “Piece of Paradise”. Share equally the initial investment, annual maintenance expenses and property taxes. Decide upon an annual calendar of visitation/vacation times, and any other group investments/improvements/expansions that need to be made going forward. This can also work if you are wanting to create an income-earning vacation rental property to be posted on rental sites such as: VRBO (Vacation Rental By Owner), or AirBnB, etc.
Courtesy of www.costaricawellness.com
Courtesy of www.costaricawellness.com
Buying Land in Costa Rica
These 12 steps pretty much cover any pitfalls that you might encounter while investigating Land for Sale in Costa Rica. Costa Rican people are very kind and friendly, but don’t mistake that for anyone looking out for your best interests. There are opportunists everywhere, and unwary buyers do get taken advantage of in Costa Rica, like anywhere else.
Most importantly, find a good Real Estate lawyer (preferably one who speaks English, there are lots of them), and a trustworthy translator, if you need one. The good lawyers in Costa Rica are not cheap, but well worth the expense. They can save you 10s of thousands of dollars in potential losses, if they are representing you well.
Finally, prepare to live the life you have always wanted. Costa Rica is treasure and a Perfect Jewel in Central America. There is much yet to be unveiled in Costa Rica – don’t wait until everyone else has discovered this amazing secret!
1Admin, “Costa Rica Real Estate Market Report – 2018”, CostaRicaRealEstate.com, https://www.costaricarealestate.com/2018-costa-rica-real-estate-market-report/, (Accessed 5.09.19).
2Isabelle Emond, “How Is the Real Estate Market in Costa Rica?”, ReMax-OceanSurf-CR.com, https://www.remax-oceansurf-cr.com/how-real-estate-market-costa-rica, (Accessed 5.09.19).
3Admin, “Residency Eligibility”, CostaRica.com, https://www.costarica.com/relocation/residency-eligibility/, (Accessed 5.09.19).
4Admin, “CRGAR Member/Sponsor Directory”, CRGAR.com, http://crgar.com/directory/#!directory/lbl=57c752ea178f4e2e55ac8c9d,57c752fc9865a10852c3f304, (Accessed 5.09.19).