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Thoughts on buying a house in Costa Rica

Hi there. I have about a million questions but I'll try to be brief. My husband and I, along with another couple are interested in buying a home in Costa Rica as a vacation home and possibly to rent out when we're not there. I realize that searching for properties online limits me to English-speaking sites which seem to be much pricier than if I were to come to Costa Rica and search for a home while there. Is that right? We have never been but plan on going this summer. In theory, I'd like to own a home near the ocean but I'm curious as to what the climate is like year round.

As for technicalities, how much do realtors typically expect as a down payment for a home? We don't need anything luxurious, 2 bedrooms, 2 bath and we would require financing. Any help is much appreciated. Also, if anyone knows a real estate agent I could speak with that WOULDN'T give me "you're American therefore you must be rich" prices, I would appreciate that, too.

Thanks!

Hello fakeplasticvero and welcome to Expat.com!

Do not hesitate to browse through the forum, it may help.;)

I also invite you to post an advert in Costa Rica classifieds > accommodation section.

Harmonie.

I would suggest that you spend some time looking around.  We purchased property in November of 2010 and the climate was a HUGE factor for us.  Finding the right climate was high on our list and it took some time.  Just a couple of examples:
Monteverde - yearly mean temperature is a low of 61 and a high of 64 degrees Fahrenheit (16-18 Celsius)
Samara - January mean temperature is a low of 65 and a high of 83 degrees Fahrenheit (18-28) Celsius.  These are two extremes but it gives you an idea considering there are twelve micro climates in Costa Rica.

Realty is not regulated in Costa Rica, for example I know of one piece of property that a realtor sold.  The property sold for $80,000 and the seller received his asking price of $40,000, that's a GOOD commission!  ALWAYS ask to speak directly with the owner before making an offer.

Financing is also VERY hard to accomplish within Costa Rica.  You would be far better off to secure your financing in your current country.

We looked at numerous properties and unfortunately one of the two best realtors has since moved to the United States.  One realtor that I would HIGHLY recommend is Casey Stamps.  Here is a link to a web page, there is a brief bio of Casey on the bottom.

Good luck in your endeavor!

Thanks for the input. We definitely require financing and we don't know a thing about buy a home, especially not abroad. I was told by a real estate agent that I spoke to that we would be able to get financing at 8% interest, and he didn't seem to think it would be a hassle. I'll definitely contact the agent you recommended. Thank you!

Hi,

I just attended a conference hosted by Interational Living in Cancun.  Costa Rica is high on the radar, and it is a recommended location by Pathfinder, an organization that researches areas where real estate meet their criteria.  There is a lot to consider.

The last post was absolutely right.  Take time to go there and visit.  If you are purchasing a property as an investment and you plan to rent it out, know that the property managers will garnish anywhere from 35 to 50% of the rent.  (I was shocked, too.)  But when you consider that your investment is in a foreign country you need to know the risks and those property managers "are a must!"  I met several folks at the conference who had initially invested in coastal properties, however chose to move to the higher elevations because they found that the heat and humidity was uncomfortable on a day to day basis, and the beach is simply an hour and a half drive away.  I am inclined to do my personal search higher elevations, as well.

I, like you, am just beginning to learn about pursuing the path of an expat, so feel free to share your questions and concerns about anything, and I will do the same.  It will help us to refine our questions.  I have purchased, and just received, a book entitled Expat Taxes Made Easy.  It cost $185.  But, the author is amazing, I heard him at the conference and he spoke of big mistakes made in filing U.S. income taxes, and he is instructive about the forms to file that are often overlooked. So I can share this information with you as I learn more.  Again, feel free to contact me with your questions.

Bruce Miller, CT

(Moderated: Please post in the section housing in Costa Rica)

fakeplasticvero :

Hi there. I have about a million questions but I'll try to be brief. My husband and I, along with another couple are interested in buying a home in Costa Rica as a vacation home and possibly to rent out when we're not there. I realize that searching for properties online limits me to English-speaking sites which seem to be much pricier than if I were to come to Costa Rica and search for a home while there. Is that right? We have never been but plan on going this summer. In theory, I'd like to own a home near the ocean but I'm curious as to what the climate is like year round.

As for technicalities, how much do realtors typically expect as a down payment for a home? We don't need anything luxurious, 2 bedrooms, 2 bath and we would require financing. Any help is much appreciated. Also, if anyone knows a real estate agent I could speak with that WOULDN'T give me "you're American therefore you must be rich" prices, I would appreciate that, too.

Thanks!

I recommend you read the report I just wrote about this subject on this very site:
http://www.expat.com/en/guide/central-a … -rica.html

It is getting easier to buy property or a home and get financing but it's far from easy; not like buying in the USA. Generally speaking if you get financing in  Costa Rica it will be through the buyer himself, set up through a trusted attorney. I myself am offering this but not for a home just land to build on. And the interest will depend on your credit rate and the owner/financer, but 8% sounds about right.

It depends on where you want to buy of course, as to which realtor would be recommended to you. One I can recommend in the San Ramon area is Frank Gillespie of Paradise Management. He's in the San Ramon/ Central Valley area. You can find him via google or pm me. As to prices, I think the days of finding a better deal through a Tico are disappearing as Ticos if anything now want to charge MORE than Americans do for property. The Ticos tend to over-value their property and also once you show interest and think seriously about buying at the price they have told you, they are liable to then raise it! I've seen this happen time and again - it has  happened to me.

You MIGHT get a better deal by finding a Tico who wants to sell, but a) it will be a Tico built home in all likelihood which means it may not have the plumbing and electricity etc that you would expect; and b) it will take you a lot of time and talking to a lot of Ticos and ending up on a lot of wild goose chases before you find that great deal. Here's what I mean:

You tell a Tico "I want to buy a very quiet property off the main road, with no close by neighbors". He says "Yes! I have a property just like that! Let me show you!" You make an  appointment to see it, and when you get there, you see that it is right on the road, has tons of neighbors with dogs and kids and goats and what not and so it's not at all what you were looking for and you just wasted 3 hours and gas to look at something that bears no resemblance to what you told him you wanted. This happened to me many times before I found a good deal. And the good deal I found was through an American.

Your best bet in getting a good price is to do a lot of research online and in person, know what property is being sold for in  the area you are looking at, and the type of property it is (ocean view, large acreage, 2br home, raw land, land with utilities or whatever...). So once you know what prices are for the type of property you're looking for, you can negotiate downward just like in the USA.

The one negative situation that exists for anyone considering buying a home in Costa Rica is that almost all homes suitable for Gringos to inhabit are grossly overpriced, which is why retirees are now giving consideration to buying in other Central American countries.  Some people who are employed as construction workers in Costa Rica earn as little as $3. per hour, so how in hell can the high prices of homes be justified? "They can't".  You also must beware of the Gringo developers who come into Costa Rica and buy large farms "which they quickly call future gated communities".  They divide up these farms into building lots, while pretending to be legally registered Condominium operations, and then the poor suckers who buy these lots often never see deeds to the lot and can never build a home on them.  Costa Rica is infamous for it's land scams, so be very careful when you buy a building lot.  Be sitting in a lawyers office with the registered deeds in your hands before you pay even one dollar, and never use the sellers lawyer.  Also, don't get tricked into paying another $500. for a Corporation if you don't need it.
Finally, make sure your development has an authorization number from the government before you start paying them monthly HOA fees (if you are in a gated community).  If you make an offer on a home, make sure it's at least 30% less than the asking price, and walk away if they want more.

I can tell you for a fact that almost all homes being sold to Gringos - Canadians and Europeans are grossly over priced.  Offer 66% of the asking price, and walk away if it's refused.  Don't use the sellers lawyer, and don't pay a single cent until you are sitting in the lawyers office and looking at the legal deeds to the property.  If you are buying with anothre couple open a Corporation for about $500.  Do not buy a building lot in a development unless you see the deeds first, and the authorization from the municipality that you can build a home on it.  There are more land scams in Costa Rica than anywhere else on earth "so be careful".  Real estate agents down here do not even need a license, so they will sell you a home or property without legally having to reveal any problems that exist.  I suggest you rent for a year or two first, and learn more about what's happening down here.

Fakeplasticvero,

About buying property in Costa Rica:

First, keep in mind that property law in Costa Rica is very similar to the laws in the US. Whatever you would do in the US for buying property, do so here. I noticed that when expats arrive to Costa Rica, they decide to ignore all of the rules they would use back home. These are some of the rules you will need to keep in mind here:

1.    If you want to buy real estate, then buy real estate. Do not buy a corporation.
2.    If you want to buy with a number of friends, you can purchase in co tenancy.
3.    Get your own attorney. Never, never, never use the same attorney that the seller is using.
4.    Do not use an attorney recommended by the real estate agent.
5.    The real estate agent gets about 5% commission. But they get it from the seller, not from you.
6.    Do a title search. Make sure that the chain of title is clear, and that it is free from liens and encumbrances.
7.    Try not to buy property that has been affected by IDA.
8.    Do not attempt to buy property in the maritime zone (ZMT). Foreigners are not legally allowed to buy into the ZMT. If you try to buy into the ZMT, you will get into trouble.
9.    Get an escrow agent.
10.    Your purchase agreement should have all of the property information and it should include a clause for the escrow agreement.
11.    Get title insurance.
12.    If you are planning on only living in CR for a few months out of the year and are planning on renting the place, then try to buy your property within a project that already provides that service, it will be easy for you. If you buy a standing alone property and hire a property manager, it can be chaos. There is a lot of people who do it that way and it works for them. But if you want to minimize your the aggravation and reduce your risks, buy into a project. If you buy into a project, get to talk to the other owners to see how they feel about the place.
I hope this helps.

Outlier Legal Services :

Fakeplasticvero,

About buying property in Costa Rica:

First, keep in mind that property law in Costa Rica is very similar to the laws in the US. Whatever you would do in the US for buying property, do so here. I noticed that when expats arrive to Costa Rica, they decide to ignore all of the rules they would use back home. These are some of the rules you will need to keep in mind here:

1.    If you want to buy real estate, then buy real estate. Do not buy a corporation.
2.    If you want to buy with a number of friends, you can purchase in co tenancy.
3.    Get your own attorney. Never, never, never use the same attorney that the seller is using.
4.    Do not use an attorney recommended by the real estate agent.
5.    The real estate agent gets about 5% commission. But they get it from the seller, not from you.
6.    Do a title search. Make sure that the chain of title is clear, and that it is free from liens and encumbrances.
7.    Try not to buy property that has been affected by IDA.
8.    Do not attempt to buy property in the maritime zone (ZMT). Foreigners are not legally allowed to buy into the ZMT. If you try to buy into the ZMT, you will get into trouble.
9.    Get an escrow agent.
10.    Your purchase agreement should have all of the property information and it should include a clause for the escrow agreement.
11.    Get title insurance.
12.    If you are planning on only living in CR for a few months out of the year and are planning on renting the place, then try to buy your property within a project that already provides that service, it will be easy for you. If you buy a standing alone property and hire a property manager, it can be chaos. There is a lot of people who do it that way and it works for them. But if you want to minimize your the aggravation and reduce your risks, buy into a project. If you buy into a project, get to talk to the other owners to see how they feel about the place.
I hope this helps.

I thought I knew most everything about this subject,  but I am not sure what you mean by #7. What is "IDA"?

Also, there seems to be controversy re #11 - "Get Title Insurance". I have been told more than once that Title Insurance is not necessary in  Costa Rica because by law the notario has to do all that stuff that Title Insurance does, anyway.
What does Title Insurance do that makes it a good idea in Costa Rica and is there a company you recommend for it?

Re #8. I know plenty of Americans who have bought property on the beach and have not had any major problems. I thought it was fine as long as the title was well researched.
I only know one person who had a problem and that's because he built a home too close to the high tide mark. In that case he was having difficulty getting a building permit, but he did get it some how. As far as I know the home still stands but I'm not 100% sure. There were quite a few homes and cabins built at close to the same distance from high tide on that beach, all owned by extrañeros,  and I'm betting they're still there.

I do agree however that it's best not to buy along the beach and if you do, get everything TRIPLE checked by 2-3 attorneys or "notarios".

Ram Ramon,

Regarding your questions:

IDA
This is a farming institute in charge of giving farmland to poor souls, so that they can make a living. In a lot of rural areas, people were given land for free by the government. In turn, people were required to work the land. These farms were encumbered; they could not be transferred within the first 10 years of possession. Some times, people holding IDA properties try to sell it, regardless of the fact that they have a restriction. Unsuspecting expats bite the bait. They may be able to obtain title (eventually) but it will be a painstakingly process.

Title insurance and attorneys doing due diligence.
I would concede this point to  you if you can really trust a notary public. I know you deal in real estate, so you must interact with one or a few notary public. I am sure, that more often that not, that notary public that you use, acts also as the attorney for both the seller and the buyer, which obviously creates a conflict of interest and the results in the inability to responsibly represent either. Case and point, notary publics here are not reliable professionals. Get title insurance. The purpose to get title insurance is to protect your self from  third parties claiming better title, which happens more often than it should. And, as insurance that it is, hopefully you will never need it, just like fire insurance in your home. Hopefully, you will not need it, but it will be good to have it just in case.

Regarding ZMT
If you are a foreigner, you are  to buy into the ZMT if you have been in the country at least  five years and are required to have residency.  Just like you, I also know a number of expats (non residents) who have ZMT, but the fact that they have ZMT does not mean that it is legal. The fact that you can do something, does not make it legal. Right? Having a dubbie in your pocket does not make pot legal. Same thing with the ZMT.
Foreigners who have residency, are allowed to buy ZMT. Otherwise, it is not possible. Foreigners who are not resident, are only allowed to have ownership to up to 50% of a corporation that owns ZMT. What most attorneys do in this situations is to: create  a shell corporation, give the expat 50% of the corporation, and have a straw person (tico of course, and most likely a person from the law firm) own the other 50%. They create all of this fallacy in order to somehow allow the expat to have access to the ZMT. There is a significant number of things wrong with this proposition, which I am not going to get into, but bottom line, it is illegal and wrong.
Furthermore, most of the ZMT in Costa Rica is tainted. The municipalities have created a mess out of the ZMT processes, and it is a pain in the neck to deal with them. I am in the business of making things easy for people, buying into the ZMT is not in my repertoire of easy things. The ICT and the counties are trying to correct the issues they currently have, in the meantime, I would stay away from it.
Finally, I used the phrase "buying into ZMT" very openly. I would like to clarify that you cannot buy into ZMT. ZMT is a concession, you can only get a contract with the county for 20 years, which you can renew for additional  years period.
Concession is not freely transferable, and it is not transferable for a price, which means that if someone is trying to sell you a ZMT concession, it is then illegal, big no no. What you can do is request the county and the ICT to transfer the contract to you. However, what most people do is a transfer of shares of a corporation, which is also not allowed without permission of the ICT and the county. We can go on and on and on.
I bet you that a lot of the people that you know who have ZMT are not compliant. If you take a look at the files, you will find something wrong with it. They have it, but as I said, the fact that they have it does not mean that it is done right. A small fraction of ZMT properties are done the way that they are supposed to.
Once again, my suggestion is for people to stay away from it, but who can resist those beautiful sunsets on the beach. Right?

Sorry for the choppy response.

So if I sell 50% ownership of my home to my brother "we should not do that through a Corporation"?

You do not need to do the corporation. You can just sale 50% of your property. This type of ownership is called Tenancy in Common.

Outlier, thanks for the long and detailed explanation. I didn't know any of that.

Just to clarify I do not buy and sell real estate nor have sold any at all. I do have 4 lots for sale due to the subdividing of the land I myself plan to build on, but am not a developer per se. I subdivided my land as an "after thought" and only out of economic necessity.

i wanto to Sell my property in Costa Rica but Realtor tell me I have to raise prices to sell to foreigners and do not consider it right, as I can sell my property directly, I searched pages and pages and do not get as power , thank you can help me not get to do this. my property is with mountain climate, batch 26942ft² and 1076.4ft² home. thanks for the tips and help.

Unfortunately, this is what unscrupulous real estate agents do, so they in turn, receive a larger commission.
Try advertising your property on craiglist

I really appreciate the information kohlerias I'm gonna do that I want  to sell in the right price not raise it  like  $40000 more than the original price

You can also list on viviun.com or welovecostarica.com though the first is $129/year (or $20/month) to run an ad and the other is more, can't remember how much. Building yourself a web site may help as well - there are free sites available at webs.com - or you can make one at wordpress.com or blogger.com - the advantage being you can put up more info, more photos, your phone number, and other info you may not be able to get into an ad - though viviun allows quite a bit of info and photos.

The one thing you must know is that most homes being offered for sale to foreigners are over priced, although some good deals do pop up now and then.  It's really better to rent, and search for a home to buy while you are actually here.  Never use the sellers lawyer "never".  Never buy into a development where all the lots are covered by one HOA deed, make sure you have an individually deeded lot on a municipal owned road.  Example:  If a home owner inside our development had a conflict with a builder and owed him money, the builder would file suit against the development and you'd be part of that law suit.  Not only that, you'd be forced to pay monthly HOA fees, even if your development management was negligent and not maintaining the pool or common grounds etc.  Rent for a year and educate yourself, that is my advice.  There is also a Maritime Law you must learn about.  I was burned in my first lot purchase in Costa Rica, so I'm speaking from experience.  Many so called gated community developments are still classified by government as fincas (farms), which some guy has divided into lots and sold off to foreigners who thought they were buying a lot they could build on.  I am nothing more than a retired Canadian "and not a real estate agent", but I know of a building lot in a gated community which is is for sale "and has separate deeds", as I live in that development.  It's near the beach and the guy might sell it for about $25,000  - I live in that same development.

Edward1958 :

The one thing you must know is that most homes being offered for sale to foreigners are over priced, although some good deals do pop up now and then.  It's really better to rent, and search for a home to buy while you are actually here.  Never use the sellers lawyer "never".  Never buy into a development where all the lots are covered by one HOA deed, make sure you have an individually deeded lot on a municipal owned road.  Example:  If a home owner inside our development had a conflict with a builder and owed him money, the builder would file suit against the development and you'd be part of that law suit.  Not only that, you'd be forced to pay monthly HOA fees, even if your development management was negligent and not maintaining the pool or common grounds etc.  Rent for a year and educate yourself, that is my advice.  There is also a Maritime Law you must learn about.  I was burned in my first lot purchase in Costa Rica, so I'm speaking from experience.  Many so called gated community developments are still classified by government as fincas (farms), which some guy has divided into lots and sold off to foreigners who thought they were buying a lot they could build on.  I am nothing more than a retired Canadian "and not a real estate agent", but I know of a building lot in a gated community which is is for sale "and has separate deeds", as I live in that development.  It's near the beach and the guy might sell it for about $25,000  - I live in that same development.

I agree totally: NEVER use the seller's lawyer.
I did, only because I had heard many good things about the seller's lawyer from independent sources; he was/ is well known in the gringo community because he speaks good English.

What I did not consider was that he had a close business relationship with the realtor and so... when there was a problem with the title and the realtor insisted he could fix it, I relied on the attorney to make sure it could really be fixed and would be fixed.

Guess what? The well respected attorney cared only about his relationship with his bread-and-butter client, the realtor, not about me, the buyer of the lot with title problems.

So the bottom line is they could not fix the title, yet I had given them $5k down in cash (ANOTHER big no-no and dumb on my part; live and learn!), and I nearly didn't get my $5k back and wouldn't have if another attorney had not managed to intervene for me and more or less push the realtor to give me my deposit back.

As for subdivisions, yes the lots have to be legally subdivided and approved, and you should absolutely own the land you buy with its own title, registered with the National Registry (Registro Nacional) and checked for liens etc by YOUR attorney! I subdivided my land into 5 lots and each have their own title, and each can be found and checked via the registro. Otherwise what are you buying? Nothing.

GET YOUR OWN ATTORNEY WHO IS WELL VERSED IN REALTY PURCHASES and who does his due diligence for you in checking for liens etc - many do not go this extra step. Also make sure you can actually build on it and get utilities to it and have road access to it!

House located on the Pacific Northwest Goldcoast town of Playas del Coco (fly into Liberia CR - airport code LIR). Town is full service beach town lots of great amenities, restaurants and a gorgeous beach. The home is one of 22 on a gated street. 1500 sq ft, 3 bed 2 bath, with office or another bedroom, balcony off master bed, onsuite giant closets, custom furniture, 4 flat screen tv's AC in all rooms. Fully furnished and turn key. Send me an email if you are interested in this property!!! * will be a pleasure help you!!!

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Don't presume that since your 'realtor' has lived here for a long time, that they are a Permanant resident, who is legal to physically work here. Ask to see their cedula stating that they are 'libre condicion' (free to work).

What ever you decide to do, do not rush or be rushed into making a decision to purchase property, and make sure to take enough time to get to know the area that you are considering.

This is absolutely true on all counts. Well said. Never be pressured into a purchase. You'll need a "legal" realtor, a good attorney for escrow and for forming your corporation, and information on residency . . . even if you don't plan to reside in Costa Rica for more than a few weeks at a time. In a perfect world, your realtor can provide excellent resources for all of your needs. As I've said to many buyers, if you're not getting that warm, fuzzy feeling, go with your instincts and change realtors/attorneys. Everybody and their neighbor is a "realtor" in Costa Rica. Choose wisely.

On the website, it should state if the particular agent is a licensed real estate agent in Costa Rica, not in the the USA or Canada.

Hello. I just move with the family to Palmares in Alajuela and we love its climate, the town, living expenses, being near San Jose, etc. I am buying a   hectare or 2.5 acres of land up on the mountain overlooking Palmares and bordering the Madre Verde forest reservation. We are planning on building a wood cottage for starters. I will be glad to share part of the land for you to build your own which I think is cheaper than buying something already built.

Unfortunately, I'm sorry to say, that building anything on someone/anyone else's land, is asking for problems....unless it has been legally subdivided and recorded.

Kohlerias: Of course. why do you have to think that it would be otherwise (there is an adage or proverb in Spanish: "Ladron juzga por su condicion"). My offer is to ease the expense of having to buy a large piece of land to build a house or to purchase a small area for a lot of money. That is all. I have visited hundred, and I mean hundred of lots of all sizes here in Palmares, San ramon and Naranjo areas. The average price for a 350 m2 lot is around $30K There are 1000 m2 lots for around $50K, and there are lots for $80/m2 or more, as well , and I  have found lots over 5000 m2  averaging $30 / m2. I am able to purchase one of those large lots, and offer the person to purchase a small area for a reasonable price per m2. I welcome neighbors

Then a simple option would be to subdivide and sell the subdivision.  PLEASE beware MauroN's offer.  If he was to sell rather than "share" that is a big time difference.

What do you mean by "big time difference". The piece of land I offer will be taken and passed on from the bigger lot I am purchasing. I do not know of anyone fool enough to build a house on somebody else's property even if they are family. Of course the lot I sell/share whatever is called, will be on the buyer's name but at a much lower cost than if he/she were to buy a small lot, guaranteed

It is your "share" terminology that is causing the confusion.  Perhaps it should have said "sell".

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