This blog post will discuss sensible considerations before buying real estate in Costa Rica as a foreigner. Owning real estate poses a great opportunity. However, as with anything else, there are noteworthy
caveats that must be considered within the context of your personal circumstances.
Foreigners can own property in Costa Rica and enjoy the same legal rights as Costa Rican citizens. This is a very attractive reason from an investment perspective in the current global financial climate. Knowledgeable investors who hold financial investments recognize that as inflation increases beyond the rate of return, such investments lose money, irrespective of higher dollar amounts on an investment’s maturity date. Conversely, real estate prices generally rise. This is especially true for an increasingly popular Costa Rican real estate market. Costa Rica has become attractive to not only nature lovers but most recently to an ever growing population of preppers from around the world.
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--Foreigners can own property in Costa Rica and enjoy the same legal rights as Costa Rican citizens. This is a very attractive reason from an investment perspective in the current global financial climate. Knowledgeable investors who hold financial investments recognize that as inflation increases beyond the rate of return, such investments lose money, irrespective of higher dollar amounts on an investment’s maturity date. Conversely, real estate prices generally rise. This is especially true for an increasingly popular Costa Rican real estate market. Costa Rica has become attractive to not only nature lovers but most recently to an ever growing population of preppers from around the world.
It only takes a few days of travelling within the country to
notice that ‘everything’ has a ‘Se Vende’ or ‘Vendo’ (For Sale) sign. Although
most of these properties look ready for sale, the apparent undesirability of a
property has occasionally left me wondering whether some cases are pranks. For
instance, it is possible to drive by a small flooded lot a few feet from a
major river that has a falling over rotten hut with that familiar red sign (for
unduly large sums of money). The point here is that, despite the interest in
Costa Rica real estate, it is still currently a buyer’s market. Be that as it
may, I strongly suggest that you seek reputable real estate agents, especially if
you are new to the country. You also need to be sure that real estate agent is
fluent in your language. The point regarding real estate agents is particularly
noteworthy because Costa Rican real estate law is likely to have many unique and
complicated facets to the average foreigner, particularly one who is new to
buying real estate. For instance, there are many protected zones that you may
buy without ever being able to get legal title. Examples include any land that
is within a refuge, reserve or 200 meters of any sea coast line. Furthermore,
when you get land that is titled, building restrictions might apply. For
instance, you are not allowed to build within 15 meters of creeks or as many as
25 meters of rivers. Unfortunately, the complexity of buying property in Costa
Rica also means that there are many horror stories and legal cases against
developers and lawyers. Sometimes, these cases are the result of outright
scams.
Also recognize that, being the buyer’s market that it is, your
property investment in Costa Rica is likely to be long term. After all, many
property listings that you see are likely to be a few years old despite having
motivated sellers that reduce their price several times. In other words, do not
expect to be able to flip properties for quick returns. Furthermore, as a
prospective buyer, I grew weary of properties that could suit my needs only if
I ignored regulations. Specifically, I worried that engaging in such
indiscretions could compromise the property’s saleability if I needed to sell it
in the future.
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Another plus for buying real estate in Costa Rica is that the country is renowned for having the most stable government within Central America. In fact, the government is happy for the jobs and money that foreigners bring and is therefore unlikely to implement new policies that hurt law abiding foreign owners. However, Costa Rican policies appear to be now showing more preference to larger and more commerce-oriented investors. One simple example is that it is now nearly impossible for foreigners who do not have legal resident status (or proof of being in the process of getting it) to open a bank account. Years ago, it was straight forward. Essentially, foreigners needed little more than to present their passports and fill out a form in order to successfully open a bank account in Costa Rica. Unfortunately, legal resident status is unaffordable for the average Joe who does not have large sums of funds for investment. For instance, most people who are not retired can only qualify for legal resident status if they have $60,000 (ie American dollars). The bank in Costa Rica will be required by law to freeze these funds as prior proof of financial support over two years. It is no wonder that many foreigners who live there do so as perpetual tourists. Perpetual tourists refer to a large population of foreigners who live permanently in Costa Rica, but on tourist visas. They do this by leaving the country when each current tourist visa expires after 90 days. Time in Costa Rica will expose you to numerous people who have lived in Costa Rica as perpetual tourists over the last 20 plus years. They are often 50, 60 or 70 somethings who have bought property and have built cabins for rental revenue and or other similarly creative forms of earning money without being employed illegally.
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--Another plus for buying real estate in Costa Rica is that the country is renowned for having the most stable government within Central America. In fact, the government is happy for the jobs and money that foreigners bring and is therefore unlikely to implement new policies that hurt law abiding foreign owners. However, Costa Rican policies appear to be now showing more preference to larger and more commerce-oriented investors. One simple example is that it is now nearly impossible for foreigners who do not have legal resident status (or proof of being in the process of getting it) to open a bank account. Years ago, it was straight forward. Essentially, foreigners needed little more than to present their passports and fill out a form in order to successfully open a bank account in Costa Rica. Unfortunately, legal resident status is unaffordable for the average Joe who does not have large sums of funds for investment. For instance, most people who are not retired can only qualify for legal resident status if they have $60,000 (ie American dollars). The bank in Costa Rica will be required by law to freeze these funds as prior proof of financial support over two years. It is no wonder that many foreigners who live there do so as perpetual tourists. Perpetual tourists refer to a large population of foreigners who live permanently in Costa Rica, but on tourist visas. They do this by leaving the country when each current tourist visa expires after 90 days. Time in Costa Rica will expose you to numerous people who have lived in Costa Rica as perpetual tourists over the last 20 plus years. They are often 50, 60 or 70 somethings who have bought property and have built cabins for rental revenue and or other similarly creative forms of earning money without being employed illegally.
By the way, although foreigners consider the government lax
in checking up on many matters (like whether you are building according to
permits and so on), do not think that you can get away with not travelling every
90 days to renew your tourist visa. I have heard stories of foreigners being
caught, imprisoned and deported while their unattended property investment is
looted to nothingness. It is my humble opinion that, once you leave your property
in the morning, it is easy to get caught. Policemen often patrol in 2-man teams
along streets where they perform random checks. For instance, my bus from
Puerto Viejo to San Jose was stopped and every person’s passport was checked. I
learned that lesson well. I was one of those who had left my passports in my
luggage. The 2 policemen waited patiently while the angry bus driver, the other
mistaken passenger and I unpacked all the bags in the hold until we could find
my bag all the way in the farthest corner. The government is even becoming
similarly weary of bribery at the borders and has recently arrested its
employees at the Costa Rica - Panama border.
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Furthermore, if you are considering just buying the
property and leaving it unattended for several years until you are ready to
live there, beware! Absentee owners often need a caretaker who lives on or near
the property or who inspects it frequently. This additional expense of time,
cost and effort is sometimes necessary since it only takes 30 days for
squatters to start posing a threat to your title. You must therefore know the
characteristics of the area in which you are buying.
In short, property ownership in Costa Rica can constitute a
great investment opportunity, but with due diligence.
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