How to Buy Real Estate in Costa Rica
27 August 2006Free the Drones has been doing an in-depth series of posts that serves as a rough guide to retiring abroad to Costa Rica, a popular destination for people approaching retirement who find that they don’t really have enough money to live comfortably in their home country. The earlier posts:
1) Some general reasons why people retire to Costa Rica.
2) A list of books on retiring to Costa Rica.
3) Information on legitimate seminars you can attend on Costa Rican retirement.
4) Information on retirement tours of Costa Rica offered by current expatriates.
5) The basics of how to learn Costa Rican Spanish.
6) The requirements to travel into Costa Rica.
Today we’re looking at the big plunge you’ll be making to retire there: buying your house. One of the benefits of moving abroad is that your house will be a lot cheaper. If you already own a home in the U.S., you will probably be able to get one of comparable size for a lot less - giving you a bunch of extra money to spend in retirement. Costa Rica used to be one of the cheaper countries to find real estate in, but the prices have risen a bit in recent years and it’s no longer as cheap as it was. However, I browsed through listings on several web sites and the houses are definitely still much cheaper than in the U.S. There were many 3-5 bedroom houses on the beach for $100,000 to $200,000 - nowhere near what you’d pay for prime real estate here. There were lots of 2-3 bedroom houses in the $20,000 to $50,000 range - some of them looked a little junky at the low end of that price range, though. So even though these prices aren’t an absolute steal, they’ll still make it so that anyone with some home equity built up will have a nice little windfall. How do you actually buy properties there? Well, there’s a couple of parts:
Are there any restrictions on what foreigners can own in Costa Rica?
Yes, but they apply to everyone, even Costa Rican citizens. Many countries have special rules for foreigners that make it hard to invest or own property there. Costa Rica isn’t one of them - their property system gives foreigners the same rights as citizens. So you do have to abide by restrictions - but generally they’re no different than what you’d have to do in the United States (i.e., you have to register your title, pay property taxes, etc.). You aren’t going to have a problem owning a house there just because you’re an expatriate.
How do I find a house in Costa Rica?
This is your first step - finding the property. There are a couple of things you can do. First, there are web sites that will let you search through property listings. Check out Ticovista.com, which is a big real estate site - it’s got a real estate directory you can view here that has listings for all kinds of properties. There’s Properties in Costa Rica, which is another pretty large real estate listing site. A smaller site not dedicated to Costa Rica is Viviun, but it’s still got a few hundred listings you can look through. There’s also a Remax Realtor named Andres Zamora who has a site with a bunch of listings, and also a bunch of useful information on the process of buying a home there. I’d recommend reading through the materials he links to if you’re planning on doing it. Finally, there’s a site called Escape Artist that has a set of links to various real estate directories and brokers of Costa Rican properties. It’s more detailed than I want to get into in this post and has some lower quality sites in with the good ones, but you should be able to find anything you need there.
Because this is a foreign country, you need a reputable agent. It’s not a good idea to try to buy any property on your own without any help. How do you find one? My best advice is to call up the Association of Residents of Costa Rica. It’s an expatriate group that we looked at earlier for their seminars. Membership in the organization is cheap, and they offer a number of services to members, including recommendations of real estate agents, lawyers, and other people you might need to assist you in buying property. You can also look at the Costa Rica Real Estate Brokers Board, which is a big referral site for specific agents. However, I’d still run anyone I was thinking about using past the ARCR - the benefit of that is that they don’t stand to make any money off you, so they’ll tell it like it is.
Should I buy or should I build?
If you have your own dream house planned up , you should know that it can be cheaper to get land and put something up. For a few thousand bucks you can get undeveloped acreage on the coastline. The only problem is you will likely end up in a more isolated area, and you also have to plan it longer in advance and probably make more trips out there to supervise construction. Buying can get you housing in an established area with other expatriates around you - but you may not like the architecture or design, and some of the standard materials are things you don’t see in America much, like concrete houses - so the lower-end housing may not be to your tastes. Building is going to be more complicated and you’ll need to be very careful that the land is zoned for what you want to do.
What should I watch out for?
First, have the property checked out for zoning issues. Your agent should be on top of this, but you should watch out - like many American cities, Costa Rica has a lot of zoning restrictions that affect what you can do with the property, especially in coastal areas.
Second, look out for liens and other problems with title. If the person who owns the property owes taxes on it or has a loan out on it, you could be in trouble. So it’s important that you run any property through Costa Rica’s online property registry which you can get to here. It’s only in Spanish, but hopefully by the time you’re actually buying you’ve learned some rudimentary language skills. The registry lets you know the title status and any liens that might be on the property. You also might think about going with a title guarantee company to make sure that your investment is safe.
Third, you want to check out the area the property is in. This is another good reason to call up the ARCR - they’ll have people there who know about the areas, the crime rates, whether there are other expatriates there, etc. You are probably better off if you’re living in an area with other expatriates, just as a rule - it’s a good sign that the neighborhood is safe and you’ll also have people you can go to if you have problems of some kind. If you went to a seminar, as recommended in an earlier post, you should already have met some people who are living there today. Call them up - ask them what neighborhoods they and their friends live in. Start your house search there, and if you find one elsewhere, see if they are familiar with the neighborhood or know anyone who is.
Fourth, make sure to check the house out personally. You don’t want to buy without actually viewing them. This may take a few trips into the country - which is a good reason to begin thinking about this a couple of years before you actually retire, so you can buy at a leisurely pace. It may seem expensive to fly down there several times to both do a seminar, tours, and then house-hunt - but it’s much more expensive to buy a house and find out there’s some major problem with it.
Fifth, watch out for scams. Costa Rica does have a lot of people who target foreigners for bad investments or other scam ideas - and the elderly have a big bullseye painted on them as easy targets. If anything seems fishy, or if it sounds too good to be true, don’t put your money in it. This is retirement, not gambling - so don’t invest in any property touted as having insane returns or housing that you haven’t thoroughly checked out.
Discuss this in the Free the Drones Real Estate Forums.
9 Responses to “How to Buy Real Estate in Costa Rica”
August 28th, 2006 at 1:12 pm
[...] Kevin Kneupper presents How to Buy Real Estate in Costa Rica posted at Free the Drones Personal Finance Blog. His information and links to other sources are so complete, this is why I’m voting this post my #1 pick for this week’s carnival! This is the kind of information people pay money for, and it’s all neatly laid out for us here in the blogosphere. Thanks Kevin! [...]
November 8th, 2006 at 9:18 am
[...] Next, I found this post on Free the Drones about buying property in Costa Rica. There are a lot of opportunities here because the economy is in development mode. The tourism industry has also not hit its peak yet, so with a little luck there’s a fantastic chance that the value of your home will appreciate quickly. [...]
November 12th, 2006 at 10:35 pm
Great article and clear cut information. Very informative and easy to follow suggestions!
Great job! Keep it up!
December 8th, 2006 at 5:30 am
Buying Costa Rica real estate is not really a big issue for propects. It’s where to buy in Costa Rica is the next big question. Prices have gone higher the past 11 months.
April 4th, 2007 at 12:51 pm
I agree with Nephi, the prices have gone up so drastically on the Pacific Coast, its ridiculous. Not only are the prices high, but the levels of congestion are just unbearable. Who wants to deal with Jaco traffic on vacation? I think the next big place to buy in Costa Rica is on the Caribbean. Puerto Viejo is just amazing and from what I hear Limon has a big resort development in the works. With the expansion of the Port and the IslaMoin project, Caribbean property is going to take off! Definately an area to look into..
April 30th, 2007 at 11:58 pm
I’ve had a vacation house in Acapulco for many years now and am looking for a new spot. I’ve looked at the Mexican resort towns on the Gulf and haven’t been very impressed.
Any thoughts on where to look in Costa Rica?
I’ve used this property guide to help, but am looking for other people’s opinions. Thanks, Rick
http://www.businesssourceconnect.com/costa-rica-free-report.html
December 10th, 2007 at 8:37 pm
It’s true that prices have gone up in Costa Rica, but they aren’t near what they are in the U.S. Jaco should get much better when the highway from San Jose is completed in a couple of years. Actually that presents a nice buying opportunity for people who want to live there for a little while, then sell at a profit down the road. For some other nice to buy low traffic areas, Manuel Antonio down to Golfito has plenty to offer on the Pacific side, and there seems to be plenty of people interested in the Arenal area these days as well (cooler climate, nice lake, closer to the rain forest).
April 24th, 2008 at 3:02 pm
I am being hit up to invest in a bungalo through a group called Hermosa Highlands. Has anyone heard of this outfit?
May 11th, 2008 at 8:13 pm
Hermosa Highlands is new to me. I was actually looking for references for http://www.buysafecostarica.com which is based in Costa Rica. I talked to the owner of the company and he was able to give me the names of several customers but I just thought I would also try to do some research on my own. I would definitely ask this Hermosa Highlands company for the names and numbers of their past clients. If they have a good reputation it shouldn’t be an issue.