Although Costa Rica has become one of the world’s emerging real estate locations, it’s still very much a developing market. Retirees should keep this in mind as they begin their hunt for a house, a condo, or a piece of property. The current lack of a multiple listing service may make it difficult for buyers to quickly find product. However, all this may change in the next couple of years. Several organizations are now in the process of organizing a multiple listing service for Costa Rica. In theory this looks very good.

Despite the present lack of a multiple listing service there are lots of nice properties out there at good prices in the current market – just that they’re harder to find in Costa Rica than in developed markets like Canada and the U.S., and locating the good deals requires searching newspapers and on the Internet. The Costa Rican market is indeed becoming more sophisticated, and there are a lot more places to shop for real estate and compare prices than there used to be. A few hours on the Internet will give you at least a basic idea of what’s available. Classified ads in local newspapers will probably give you a better idea of fair prices, and a few E-mails to brokers of properties that catch your eye will help you get started doing some basic due diligence. All this without leaving your desk at home.

If you’re pressed for time and you know where you want to buy, you can hook up with a broker, fly in, and search hard for a few weeks. If you don’t know the country or you want to check out places you haven’t been you could take an introductory retirement tour like the kind I offer (Live in Costa Rica Tours), which will show you around the different areas, give you a sampling of properties, show you the infrastructure, give you innumerable contacts at our two- day seminar and introduce you to a whole network of trustworthy brokers, developers, and real estate lawyers.

Another alternative are the lifestyle real estate tours offered by Costa Rica Retirement Vacation Properties. They streamline the whole process according to your specific needs by just concentrating on real estate and make it very easy to find a retirement property.

The whole process works better if you are not short on time and have a few months to search for property. In this case you’ll want to rent an apartment or house somewhere in a central location as a home-base, rent a car, and take short trips to view different properties. It’s a good idea to hook up with a broker and sometimes even to hire a Costa Rican intermediary who can go with you as a translator so you can stop at all the little farms with the se vende signs out front, if you are just looking for raw land.

In coming articles I’ll give you a step-by-step explanation about how to finding a property for your retirement dream home.

Guide to Real Estate in Costa Rica

About four months I published an article entitled “Demonizing Real Estate Agents.” You can read it on my blog at www.liveincostarica.com. In it I talk about the good and bad real estate brokers in Costa Rica and how to find one who is a buyer’s agent and who will look out for a client’s interest more than just making a sale. More on this subject is contained in my 544- page book, “Guide to Real Estate in Costa Rica.”

Recently I have become miffed by a few characters in the field of relocation who play the self-righteous card by distancing themselves from real estate as part of a sales pitch to sell their services. These nascent retirement gurus are making a habit of bashing the local real estate industry and the idea of buying a home here. What this probably boils down to is that these types don’t have enough knowledge of the real estate to give out advise or they don’t have the resources or guts to invest here. Thus, they are playing god and trying to dissuade others from purchasing the home or property of their dreams.

I do agree that your should do your due diligence, not buy impulsively, spend some time here to see if the country it is suitable for your retirement goals and have an exit strategy in case you do buy but decide to go home later. Remember that despite the current economic crisis a property purchased in an area in the path of progress and at the right price, will appreciate in coming years because of Costa Rica’s popularity, unblemished international reputation and fame as a warm-weather destination like Hawaii. The Baby Boomer influx and tourism will also continue to fuel the real estate market now and in the future. Furthermore, the local market is good because more and more professional Costa Rica’s can get financing and have the purchasing power to by better homes. I have a gringo broker friend whose most recent re-sales have been to Costa Ricans who paid over $200,000 for their properties.
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On my award-winning relocation/retirement tours I make it a point to show a sampling of properties so that prospective retirees will have an idea of what homes are like here. Let’s face it, you have to live somewhere whether you rent or buy. I am aware that not everyone is a buyer and renters abound here, so I am not trying to convince everyone to becoming property owners. When I started my tours almost 15 years ago I didn’t include visits to properties. However, my clients repeatedly expressed the desire to see what homes and different living situations were like here. Consequently, I began to include a sample of living situations as part of my retirement lifestyle tours. NO retirement tour of this type would be complete without including this service. Over the years I have had a full range of clients ranging from serious investors who have come here to buy something to renters who have no desire to ever purchasing anything. I strive to address all of my clients different needs on my tours in order to provide the best possible service so that anyone who decides to move here will do it successfully.

Notice that I mention lifestyle tours in the last paragraph. My emphasis is on different areas where expats live, infrastructure, shopping, medical care, lifestyle and a whole lot more including a highly-informative seminar sponsored by the Association of Residents of Costa Rica (ARCR). We are blessed to have an organization like this to help people move here. As far as I know a similar entity for foreign retirees and residents doesn’t exist in any other country. I have been a featured speaker at the seminar for almost ten years. It is the least I can do to pay the ARCR back for the excellent service they have provided for my clients and for helping enhance the quality of my tours.

In a couple of previous articles I talked about renting versus buying in Costa Rica. The is another alternative to these two options.

Many foreigners who move to or retire in Costa Rica end up building a home. There are several advantages to advantages of owning a home: (1) The money you put into your property stays there, if you own it long enough the value will increase. (2) When you own a home you can do what you like with it, within the bounds of local rules and regulation.

Here are more reasons why you might want to build your own home: It’s cheaper, you’ll get exactly what you want, and, in some places, it’s the only way to own a decent house, as there is literally nothing on the market. But building a home does have its disadvantages. If you don’t find the right people to work for you, building can be a pain in the butt. Also, your idea of a dream home is probably unique. Perhaps you want a Jacuzzi in the living room – most people don’t. This isn’t a problem if you live in your dream home for the rest of your life, but if for whatever reason you have to sell, it can be more difficult.

Here are a few things to consider before you build a home in Costa Rica.

Building your own home is more expensive, in the short-term, than renting. But, like buying a home, you can think of it as an investment if you plan to live in it for long enough. In addition, usually building a home is even a better investment than buying a home that is already built because it costs less: When you purchase in a development, between 15% and 25% of the sales price is profit for the developer. The lower overall cost of building versus buying means your investment will gain market value more quickly, and is therefore a bit safer in the medium term. However, building can be hard to finance , because you’ll need more cash to begin with, so this may prove to be an obstacle for many people.

Some retirees build their own home in Costa Rica simply because there aren’t any homes they like for sale in the area of their choice. Despite the building boom, many popular areas still don’t have enough product from which to chose. Building a house is a huge job something for which most people have neither the time nor desire. Many things can go wrong and you can end up having a miserable time. Or, on the other side of the coin, you could end up in the home of your dreams. Building your own home gives you complete control over design, which may be just what you want. Nevertheless, your taste may not be what other people are looking for, thus making it hard to sell.

If time is important for you, building will not be the best option. In addition to looking for land, you have to obtain the correct permits, find a contractor, supervise the building of the home, and then get all of the utilities connected. To do it right all of this often takes up to two years. It is tough to predict the completion date as well, making planning difficult. Obviously you can rent during this time, but that means additional expenses to what you’ll spend on the construction. However, if you’re getting a good deal on the construction, all of the aforementioned might just be worth you while.

If you choose to build your own home, you take on significantly more risk: The risk of the cost of materials rising during the project, the risk that you’ll get involved with a legal dispute, the possibility that your home will not come out the way you want it to. However, the money you save from building instead of buying may make this option more attractive to some retirees.

Briefly here are the advantages and disadvantages to building the retirement home of your dreams in Costa Rica.

Advantages:

You choose the design of your home: Unlike buying or renting an existing home, building your own place allows you to truly live in the home of your dreams, since you’ll design it.

Savings: Building a home generally costs less than buying an existing one because the cost doesn’t include a money for the developer. This will make building your home a much better investment.

Location: By building your own home, you will have the freedom to live virtually any place where turn-key houses and rental properties may not be available.

Disadvantages:

Risk: You run the risk of an increase in the cost of building materials in addition to the typical investment risk that goes with buying real estate in a developing country.

Time: Building takes time, and the process is unpredictable. If you’re in a hurry to get settle in, the turn-key properties and rentals will be better bet.

Peace of mind: Building anywhere in the world can be a pain in the rear end and Costa Rica is no exception.

When considering purchasing the retirement home of your dreams, the first thing you should ask yourself is how long you will stay in Costa Rica. Five years? Ten? Twenty? Maybe just a month out of the year? Or the rest of your life? The answer to these questions will make a big difference in buying property in Costa Rica. If you are planning to retire or live full time in Costa Rica, buying will be the logical choice. Rather than wasting your money on rent, you’ll be paying a mortgage (or better yet, own the property outright). Because it’s your own home, and will be for years, and you’ll have little to worry about as far as the real estate market, tourism industry, or health of the local economy.

Another reason for buying property in Costa Rica may be as a second home or vacation home. If this is your situation, your life plans won’t matter so much, but be sure you can afford it. Many developers sell beach condos as vacation homes to North Americans with the promise that they will be able to rent out the condo while not using it and pay the mortgage with the rental payments. Beware careful here. While this is possible in some cases, it’s almost impossible to keep a property rented twelve months a year. Occupancy can be sporadic at times and only good during the high season. Homes should be bought with extra cash, and not with mortgages whose payment is tied to the tourism market.

Finally, there’s the possibility that you are buying simply as an investment. In that case, ask yourself how much experience you have in real estate investment. Though getting rich quickly in real estate is certainly possible, real estate investment is complicated, long-term, and can be risky. Add to that a foreign culture and language, and Costa Rica is probably not a good place to learn. The market has gotten a lot leaner and tougher over the last 15 years, things aren’t generally cheap anymore, and investors have to be quite a bit more daring (and rich) than used to be the case. That said, real estate investment in Costa Rica is perfectly doable if you have some experience or some extra money to play with. Surround yourself with the right people and go in with your eyes open and you can make out just fine. Keep in mind that there is always the possibility you’ll lose on your speculation if you don’t invest wisely.

Thousands of foreigners have bought a house or condo in Costa Rica and have had an impressive return on their investment. However, investing in property always carries with it an element of risk anywhere in the world. Investing in real estate should be approached as at least a medium-term exercise. Costa Rica is a stable country, a prime tourism destination and a place where people buy vacation homes. These factors make it a good place to invest now and in the future.

The bottom line is that If retirees and others do their homework, buy at the right price and in a good location in the path of progress, they can buy they will do well investing in Costa Rica.

Advantages of buying a home in Costa Rica:

Return on investment: The money you pay into your property stays there, and if you own it long enough, it’s an asset that will increase in value. The same is true when you build, but not when you rent.

Ownership: Owning your own property means you can do what you like with it, within the bounds of local regulation. You can modify it, decorate it, and have pets. This isn’t the case when you rent.

Permanence: A nice, non-tangible effect of owning your own property is a sense of permanence or neighborhood. You can get to know your neighbors, because you’ll be seeing them for quite some time.

Simplicity: Buying an existing home, though complicated, is much simpler than building your own, and the headache factor is considerably lower.

Possible issues:

More responsibility: You can’t just get up and leave if something happens. Property ties you down and reduces your flexibility.

Higher risk: Investing in a developing country carries with it a certain amount of risk – exchange rates, government stability, immigration law changes – which is one reason why property is so much cheaper than in a developed country. Costa Rica has the most stable and enduring democracy in Latin America and is considered the most stable country in the region. So there should be no problem here.

Greater initial cost: You need a sizable chunk of money to purchase a piece of property or a house, even if you’re getting a mortgage. This can present difficulties for some people.

Design limitations: By buying a pre-built home, you’re accepting someone else’s design, which may not be acceptable to some looking for a dream home in Costa Rica. However, there are more and more homes being built to U.S. standards and design so this should be less of a problem in the future. I have personally seen the changes in this direction over the last 10 years.

When retirees move to Costa Rica they basically have two choices when it comes to living situations. They can rent or buy. On my monthly relocation retirement tours and when I lecture at conferences I always explain the pros and cons of both situations to help potential residents make the most practical and intelligent choice given their particular situation. Let’s face it. Some people are buyers while others are renters. Either way you will have plenty of housing choices in Costa Rica and areas from which to choose.

Advantages of renting
Short-term cost: In the short and even medium term, renting is obviously much cheaper than building or buying. Those other options require you to have either thousands of dollars in liquid assets, or a down payment and good enough credit to take out a mortgage. To rent, you only need a deposit worth one month’s rent and enough resources to keep up with the payments. With a furnished apartment, neither do you have to invest in furniture or anything else that might tie you down before you’re ready to stay.

Flexibility: With a rental property, you can leave any time, the only possible loss being your deposit, depending on the terms of the rental agreement. This is a real advantage when you consider that, for all it’s stability, Costa Rica is still a developing country, and you are not a citizen. Also, unforeseen things can go wrong on short notice – a death in the family, natural disasters, economic problems, a divorce and even political upheaval. If it does, you may want to leave, and the option to pull up stakes at a moment’s notice can provide quite a bit of peace of mind.

Simplicity: Since you’re not investing a large amount of money, renting is much simpler than buying or building. You find a place, sign a contract, and make monthly payments. There is no due diligence, no lawyers, and no messing around with architects, engineers, and the National Registry.

Disadvantages of renting
Furnishings: Usually poor, or at least in bad taste. This can be fixed somewhat with an unfurnished rental, but not completely if things like window frames and kitchen cabinets are taken into account. If your standards for comfort and interior decorating are adjustable, you should have no problem, but it really is difficult to find a nice rental home for a decent price.

Landlords: You will, of course, have to interact regularly with a landlord, which can be tolerable or hell on earth, depending on the landlord. Language barriers provide another layer of problems.

Ownership: You don’t own the property, which limits your use of it. Drilling holes to hang a picture? Ask the landlord. Want a dog? Ask the landlord. Thinking about painting the walls of the second bedroom your favorite shade of fuchsia? Better ask the landlord.

Most important, no investment potential: All that money you pay on rent is gone, paying someone else’s mortgage. If you stay for the long term (rule of thumb is 100 months), by buying you might even make money, as Costa Rican property has steadily risen in value over the last decade. If you buy a property in a good location and in the “path of progress” you are bound to make money on your property. Also, the better the location and the more desirable the area, the easy it will be to get rid of the property if you have an emergency and have to leave the country. You should always have an exit strategy whether you rent or buy. You never know what is going to happen.