Housing, Rentals, And
Costa Rica Real Estate Investments
Costa Rican Housing, Real Estate Investments &
Rental Property
Rental Housing is affordable and plentiful in Costa Rica. With the exception of downtown San José, rents for houses or apartments are reasonable—half or less the cost in the United States. Depending on location and personal taste, a small house or large apartment usually rents for a few hundred dollars per month. A luxurious house or apartment
may go for $800 to $1500 per month or more. Most of these upper-end houses and apartments have all the amenities of home: large bedrooms, a spectacular view, pools, gardens with fruit trees, bathrooms with hot water, kitchens, dining rooms, a laundry room and even maid’s quarters, since help is so inexpensive in Costa Rica.
In the lower range— from $300 to $700—you can expect to find a two to three bedroom house or apartment in a middle class neighborhood. Since the majority of Costa Ricans pay less than $150 monthly for rent, a few hundred dollars should rent a nice place to live. Most affordable houses and apartments are unfurnished. However, you can usually buy a complete household of furniture from someone who is leaving the country. This way you can save money. Most of these cheaper places will not have hot water. In the shower there will probably be an electric device that heats the water. If there is not one of these devices, you can buy one for about $30 and have it installed for a few dollars.
When looking for a place, remember to check the phone, the shower, the closet size, kitchen cabinets, electrical outlets, light fixtures, the toilet, faucets and water pressure, locks, general security of building, windows and the condition of the stove, refrigerator and furniture, if furnished. Look at ceilings for telltale leaks and stains.
Also, check for traffic noise, signs of insects and rodents and what the neighbors are like. Ask about the proximity of buses and availability of taxis. Have anything you sign translated into English before you sign it. Don’t sign anything you don’t understand based on the landlord’s word of honor. You should be aware that by law landlords could raise rents where the contract is in colones a maximum of 15% annually. On the other hand, contracts in dollars may only be raised once every three years. There is a publication that you can purchase which explains in detail how the country’s rental laws work (La Ley de Inquilinato).
Rooms in homes usually rent for around $100 monthly. We know of several foreigners who live this way to save money.
As we mention later on, before deciding to live in Costa Rica permanently, it is a good idea to rent a place first or find a real estate agent who can show you around and guide you through the buying process. As you have just seen there are a variety of rental options and price ranges to match almost any taste or budget. However, for gringos, the prices are generally much higher.
You will need a map of San José and the suburbs. The Tico Times and Central America Weekly, are two places to start looking. La Nación is the Spanish language newspaper with ads. However, relying solely on classified ads in newspapers is a mistake and can prove to be misleading. Some places are outright disappointing when compared to the way they are described in ads.
Other sources for finding an apartment are supermarket bulletin boards and word of mouth. Tell everyone you know you’re hunting, and ask them to tell every one they know, and so on. The Blue Marlin Bar, in the Hotel Del Rey, MacDonald’s in San José, around the Central Park in Heredia and other gringo hangouts are other places to inquire about rentals.
When hunting for an apartment or house to rent contact the Association of Residents of Costa Rica ARCR, Tel: (506) 233-8068/ 221-2053, Fax: (506) 255-0061, arcr@casacanada.net. They will help you look in those areas that suite your personal needs and take the headaches out of finding a place to live.
When reading the ads in the Spanish newspapers you should be familiar with the following words: Se Alquila-for rent, agua caliente-hot water, alfombrado-carpeted, amueblado-furnished, sin muebles-unfurnished, baño-bathroom, cocina-kitchen, cochera or garaje-garage, contrato-contract, depósito-deposit, dormitorio-bedroom, guarda-guard, jardín-garden, seguro-safe, patio-patio, parqueo-parking, verjas-bars, zona verde-grassy area, ¢ = colones (Costa Rican money).
Finding a Temporary Place to Stay
While exploring Costa Rica or looking for an apartment, house or another type of residence in the San José area, you may choose to stay at one of the many accommodations listed below.
If staying in downtown San José we recommend the Dunn Inn (222-3232). It is run by North Americans and are very popular gringo hangouts. The service is excellent and you can make some good contacts. The Hotel Presidente (222-2034) has reasonable rates, good service and a free breakfast included. We book many of the participants on our tour groups there because of its convenient downtown location. The Hotel Grano de Oro (255-3322) is another gem you should check out. Their excellent restaurant serves mouth-watering cuisine including great desserts.
There are other accommodations for all tastes and budgets located in the metropolitan area. The price range is from a few hundred dollars at the top end to less than twenty dollars at the lower end of the scale. We don’t have the space to list every hotel, motel, pensión, aparthotel or bed and breakfast in the section below. If you want a more extensive list we suggest you purchase Christopher Baker’s Cost Rica Handbook or any of the guides listed in the last chapter of this book.
Aparthotels
Aparthotels, a cross between an apartment and a hotel, are a good first option because they are furnished, completely equipped and have phone access as well as bilingual management. From there you can comfortably survey the market. If you are living in Costa Rica only on a seasonal basis, one of these aparthotels is probably your best bet. Most have a kitchenette or other cooking facilities. Usually they are less expensive than hotels with similar amenities, but more expensive than apartments. The Don Carlos and Los Yoses are also centrally located and have nice accommodations. Aparthotel Castilla (222-2113), Aparthotel La Sabana (220-2422), Aparthotel El Sesteo (296-1805) round out the list.
Bed & Breakfasts
Bed and Breakfasts, or B&B’s as they are sometimes called, have sprouted-up all over Costa Rica in recent years. Most of these establishments are smaller and in many cases, less expensive than hotels. What sets them apart from other lodging is their home-like, quaint ambience. Many have a live-in host or owner on the premises and some are downtown. Most B&B’s advertise in the local English newspapers, but there is now a service to help you find the “right” B&B for you. Call or fax the Bed and Breakfast Association at 011-(506) 228-9200. To make a reservation call, 011-(506) 223-4168.
Homestays
Homestays provide a great introduction to the Costa Rican way of life and provide the opportunity for you to improve your Spanish. We highly recommend Bell’s Home Hospitality, 011-(506) 225-4752, Fax: 011-(506) 224-5884, e-mail: home-stay@racsa.co.cr.
Apartments
Here are three apartments that cater to foreigners, arelocated in or near downtown San José and offer kitchens, a telephone, cable TV and are furnished. Apartments Scotland 011-(506) 223-0833 Fax: 011-(506) 2575317, Apartments Sudamer Tel: 011-(506) 221-0247 Fax: 011-506-222-2195 and Apartments Van Fossen Tel: 011-(506) 253-9586.
Buying Real Estate in Costa Rica
If you can’t afford to buy a house in the U.S. or Canada, prices of decent homes in Costa Rica begin at around $50,000 with financing available for new homes if you become a resident. In 1999 we purchased a new $65,000 home in Heredia with 80% financing. Our payments are $452 monthly on a 15-year, 9.0% loan—$150 less than we used to pay for rent in Rohrmoser. The monthly payment includes a life insurance policy that pays off the loan in full in the event of death of the owner.You don’t have to be a resident of Costa Rica to own property and you’re entitled to the same ownership rights as citizens of Costa Rica. Ownership of real estate in Costa Rica is fully guaranteed by the constitution to all including foreigners. This means your purchase here can be fully secured and safe.
The value of beach property has skyrocketed over the last decade due to the country’s increased popularity. Many people want to realize their dream of owning a beachfront lot in a tropical paradise.
For most foreigners the main beach development areas that are worth considering for retirement and/or vacation homes can be found in Guanacaste areas such as Flamingo, Junquillal, and Tamarindo. The Central Pacific beach areas around the towns of Jacó Beach, Quepos and Manuel Anotonio are also attractive. This Central pacific area has great potential, as it is much closer to the Central Valley and San José. The new Villa Colón-Orotina highway will have a huge effect on real estate values in this area, as it will cut driving time in half to this area from the capital. Unlike Mexico, some beachfront property may be purchased. However, the 200-meter strip of land along the seacoasts is owned by the government and for public use. It is prohibited to build anything within the first 50 meters of the high tide line. This zone is for the public and cannot be turned into a private beach. Also, you can no longer build within the next 50 to 200 meters of the high tide line—this is called The Maritime Zone, or Zona Marítima,— unless there is existing housing or a new tourism project involved. If this is the case, you can lease the land from the municipality, which is overseen by the Costa Rican Tourism Institute.
In theory, foreigners cannot lease this land but there are loopholes in this law. One of the ways to circumvent this regulation is by obtaining a lease through a corporation that is owned mainly by a Costa Rican. Check with a lawyer to find out how this works.
For your information, beachfront property is being bought-up fast, and the price of this and other prime real estate is soaring.
Before you move to the beach, you should know that the novelty of living at the beach wears off fast. Visiting the beach for a few days or weeks is very different from living there full-time. The humidity, boredom, bugs, lack of emergency medical facilities except for Flamingo and Quepos and the general inconveniences of living in an often out-of-the-way area, are factors to consider before moving to any beach area.
Besides homes and beach property there are also condominiums, farms, lots and ranches for sale at reasonable prices, depending on their location. See the section titled, “Where to Live” in Chapter 1 for a description of the areas where many foreigners reside.
You will be pleased to know that no capital gains taxes on real estate exist in Costa Rica, so it is an excellent investment. You do have to pay yearly taxes, but they are low by U.S. standards. Yearly property taxes are on a sliding scale up to .25 percent of the stated value of a particular property.
Purchasing property in Costa Rica is very different than making a similar purchase in your home country. The laws of Costa Rica and property registration process can be somewhat confusing to a foreigner. Your best bet is to work with a licensed broker when looking for property. When you find a property your broker can help you negotiate the price and explain your financing options.
If you decide to buy real estate, an attorney is absolutely necessary to do the legal work for purchasing property. We strongly recommend that your lawyer do a thorough search of all records before you make your purchase and make sure there are no encumbrances (gravámenes) on it. One of the biggest errors made by foreigners buying real estate is not properly researching the title for liens. You can obtain information about property at the Registro de Propiedades (like our land title office) in the suburb of Zapote, about five minutes from downtown San José by car or taxi. You can also find the status and ownership of a piece of property and get any title documents and surveys you may need at this office. If the property is registered in the name of a corporation, the legal representatives must be verified, since they have power of attorney to make the sale. Information may also be obtained from the registry’s website at: www.registronacional.go.cr.
If the property appears free and clear of encumbrances the lawyer can then proceed. Your lawyer should then draft a transfer deed or escritura to move the ownership from seller to buyer. In Costa Rica the buyer and the seller usually share the closing costs that normally run about 4-5% of the total purchase. A a small real estate transfer tax or 1.5% of the actual value is included, a registration fee, stamps, notary fees, which vary and depend on the price of the sale. Title insurance is optional but advisable. It is common practice with many lawyers in Costa Rica to lower the actual amount paid on a sale to a much lower sum on paper to reduce land transfer tax. This can be risky and problems may arise later on.
Buying and registering a property in a corporation has many advantages, mainly, asset protection in the event of a divorce or a lawsuit, which could result in you losing the property. When a corporation owns the property, the sale or purchase of the company can be negotiated, so you don’t have to pay property taxes or stamp fees. All you have to do is change the Board of Directors, the legal representatives of the corporation and transfer the shares. The final advice is, do not hire the same lawyer used by the seller of the property. Also, don’t forget to check that you are buying the land from its rightful owner. Some owners have sold their land to several buyers. You can protect your real estate investment further if you talk with neighbors about water shortages, safety and burglaries in the area.
Remember, always see the property in person and never buy sight unseen. Don’t forget to see if you need special permits to build. Be sure to check the comparative land values in your area to see if you are getting a good deal. If you are thinking of living in a remote area, check to be sure that roads, electricity and telephone service are available.
If you can’t live on your property year-round, then you will have to hire a guard, caretaker or a reliable housesitter to watch it for you. Make sure boundary fences and limit signs are well maintained and visible. Visit the land periodically to check for squatters. They can be a real problem. Undeveloped land is a prime target for squatter invasions. Once they establish themselves on your land it is difficult to get rid of them. If they occupy the land for a number of years they can claim it as their own. The sooner you get them off the land the fewer problems you will have. If you have to be an absentee owner, you can also have a friend or attorney stop by to check your property periodically. There is a trustworthy professional housesitting agency in San José which will watch your home while you are away. They are bonded and will provide references upon request. You may contact them at 256-7890.
However, whether to rent or buy first really depends on your comfort level. Make sure to buy where it’s easy to rent or sell your home or condominium in case you change your plans or in the event of a personal emergency.
To find a house or land to purchase look for a well-recommended realtor who can identify true market value like the real estate agencies we list in this section. You may also want to see the listings in the back of the Tico Times. If you want to save money, look in the local Spanish newspapers La Nación or La República because prices are more realistic. Also, look around; go door-to-door in areas you like; and talk to other expats. Keep in mind that housing costs are much higher in gringo enclaves like Escazú and Rohrmoser. Be sure to remember that the farther away you live from San José and other cities the more you get for your money.
To get a good buy you should study the market. It is also a good idea to negotiate in colones since you will come out ahead in the long run as the colón continues to devaluate. This will make your home appreciate over time. Don’t depend so much on the newspaper. Talk to as many people as you can. Nothing works better than word of mouth for finding good deals. Practice your negotiating skills. Ticos love to haggle. You may be better off having a trustworthy, bilingual Costa Rican search for you and do your negotiating. Your realtor or lawyer should also be able to assist you.
Recently the Costa Rica Realtors’ Chamber opened the country’s first out-of-court conflict resolution center specializing in property disputes. They specialize in solving property disputes for both sellers and buyers with six months. The same process in the courts can often take up to 10 years or more to get to trial. Anyone in need of their services may contact them at Tel: 011-(506) 283-2891, Fax: 011-(506) 283-0347, or E-mail: caccbr@racsa.co.cr.
Building A Home in Costa Rica
In Costa Rica you can build your retirement dream house, if you so desire, since land, labor and materials are inexpensive. However, think twice about undertaking such a project because you could be flirting with disaster. Many foreigners who have built homes complain that it sounds easier than it really is. They would not do it again because of costly delays, unreliable labor, fussy building inspectors, different laws and building codes and many other unforeseen problems. Be sure to talk with foreigners who have built homes to see what obstacles they encountered. Costs depend on location, materials and the size of the home you want to build. You generally pay between $300 to $600 a square meter or $30 to $60 a square foot.One common mistake some newcomers make is to hurry to build their dream home while they are still on their “honeymoon” with the country. Many have been shocked by substantial cost overruns. Months or years later, they realize too much of their capital has been spent on their new home.
If you do decide to build a home on your land, there are several steps required. First, conduct a preliminary study, which should be completed before you buy the land. Also, be sure to see if your lot has access to water, drainage, electricity and telephone services.
The law says you have to hire an architect or civil engineer to file all of your construction permits. A building permit must be obtained from the municipality where you plan to build. An architect can usually handle building permits and work jointly with the contractor to supervise the construction. It may take a couple of months or longer to get all of the permits in order. A reliable contractor will also have to be hired. You should get several bids and ask for references. Expect to visit the construction site almost everyday to ensure things are getting done. If you can’t be there have a reliable person inspect the construction site for you on a daily basis.
Finding a Real Estate Broker
You are advised to use the services of a real estate broker to buy or sell property in Costa Rica. Real estate agents normally collect a 5% commission or higher. In order to find a competent, honest broker, it is wise to talk to other expatriates or contact the local Chamber of Real Estate Brokers or Cámara Costarricense de Bienes Raíces. But be careful because the real estate industry is not regulated as in the U.S. They have over 10 years experience in the local market and will help you find a property for sale. In addition, they have the best network of contacts in the country and will give you friendly service and free advice.
Commercial Real Estate
There is commercial real estate for anyone thinking of starting a retail business or looking for office space. Office space in and around San José can be leased from anywhere between $7 to $20 per square meter, depending on the location. Downtown San José has outgrown itself. The majority office space is now found west of the city. More and more tenants are moving into new buildings on the outskirts of town. The new Torre Mercedes and Centro Colón are huge office buildings west of downtown. Oficentro is a huge complex of 5 office bulidings to the south of the Sabana Park. About 5 minutes to the west is Plaza Roble located next to the Multiplaza Mall. In Santa Ana the newly constructed Plaza Forum Center houses has abundant office space.
Many large homes in the Rohrmoser area have been turned into business because of the lack of adequate space and office facilities in San José. All of the growth towards the west has happened because many Costa Rican landlords haven’t refurbished buildings in the downtown area.
Real Estate Speculating / Investing
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 property since they are more affordable to the average Costa Rican and there is financing 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.
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 gem. 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 shouldn’t consider making any real estate investment without reading this great book.
Purchasing Real Estate in Costa Rica, by Alvaro Carballo, a noted Costa Rican attorney and real estate specialist, is intended to reduce the anxiety of buying real estate in a foreign country. It is very informative and complete. An excellent source of information is the Tico Times annual”Real Estate and Investment Supplement.” It is packed with useful articles and advice. Reading this guide will keep you abreast of the local real estate scene. It is also filled with ads from local real estate brokers.
Costa Rica Real Estate Magazine is an informative publication which lists numerous properties for sale and brokers.
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