Buying Real Estate And Moving To Costa Rica - Considerations

  • 104 views
Uploaded on

 

More in: Business , Real Estate
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
104
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
1
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Buying Real Estate And Moving To Costa Rica - ConsiderationsStrategy for Buying real estate in Costa RicaWhen wed settled on panama and nicaragua , the destination we planned to retire to the first thingwe did was arranged a strategy to find a piece of property that fulfilled our requirements when itcomes to size, location as well as budget. We were fairly savvy shoppers having bought and soldclose to a dozen properties in the states therefore we thought we knew what we used to do. We firstappeared for foreclosed home in Costa Rica. We quickly realized presently there wasnt much in theway of foreclosed homes within Costa Rica since most houses have no mortgage, with many beingpurchased in the past for cash. The actual mortgage market within Costa Rica is still within itsinfancy. Typically you cant get a home loan on land, just developer financing. In this type of financing,the actual developer holds the note. Mortgages for completed homes or construction mortgagestypically require large down obligations in Costa Rica. Banks in Costa Rica need a minimum of 20%from the value of the home loan as collateral. Luckily you can typically pledge land you own becausecollateral for a construction loan which is what many owners within our developments end up doing.Finding a realtorYou do not need to be licensed to sell real estate within Costa Rica. As a result, everybody willpretend to be a realtor if they believe they can participate in a sale and make a fee. There is also nonationwide MLS system within Costa Rica. Listing as well as commission agreements arentstandardized. Realtors arent acting as a "buyers " agent or a "retailers " agent. Most are merelyhoping to make a fee. Without a standard program of commissions as well as referral fees, real estateagents are reluctant to share their listings with other realtors. That means that many realtors will onlydemonstrate their own listings within Costa RicaFinding a ProjectMany real estate developers in Costa Rica are very new to the industry. What they soon learn is thefact that development in Costa Rica is highly regulated. Getting enables to subdivide, construct roads,install drinking water lines or electric is a challenge. Panama and nicaragua , boasts staunchpreservation. In recent years the government has created new hurdles to slow the growth throughforeign development companies with projects targeted at North Americans and europeans. Verify theexperience of any developer you are considering. See what they have accomplished, not what theysay they plan on doing. Go to their projects. Enquire about fees, CC&because , and deed limitations.Some developers require you build in a certain amount of time. Others require that you use theirconstruction services even though they may have little or no experience. Also discover the type ofdevelopment as well as titling they are doing. Are they selling agricultural parcels with limited makeuse of and value? are they selling "Parcel Minima" parcels with very limited infrastructure and coupleof requirements for the developer to bring electric, drinking water or roads to the lots. Is the projectgated? Gated projects often allow a developer to provide small in the way of infrastructure as well asservices inside the gate. There are no municipal standards applied once within the gate. Find outwhat services will be provided and when , before purchasing. Purchase what you see, not what they
  • 2. tell you is coming. Be skeptical of brochures full of artists renditions of what a development will looklike. Paragon properties is a prime instance.Determining Value -- AppraisalsIn the US, were used to having an evaluation done on home as part of the purchase process.Appraisals are uncommon in Costa Rica since mortgages on properties are less regular but arebecoming more common. Most appraisals tend to be ordered by the bank holding the home loan.Dont expect to have a good appraisal done or even find an appraiser in Costa Rica. Become yourown judge. Become knowledgeable. Kristina and I took a complete set of programs offered by theevaluation Institute costing thousands of dollars to learn how to do appraisals. Kristina worked for anappraiser to gain additional experience. Evaluations have three parts ; comps which are comparisonsto similar home in the vicinity with similar characteristics , income approach which is looking at theincome that the property would provide through rentals or lease agreements and price of constructionwhich discusses the cost of the uncooked land and any improvement on it depending on currentconstruction costs. All appraisals in the states consist of all three techniques unless specificallymentioned to the contrary.Property Values Past as well as PresentA few years back nearly every project within Costa Rica was selling like hot cakes. Prices werespiraling up with no end around the corner. In the central valley in places such as Escazu and santaclaus Ana, condo costs were approaching $1200 per square meter and some were topping $2000.Builders of quality single loved ones homes were in short supply and the waiting checklist forconstruction had been growing. Most main hotel chains and a slew of developers pounced onpanama and nicaragua , to build condos knowing that 78 million baby boomers were already taking alook at options. Guanacaste and particularly the area around the Liberia International Airport inpanama and nicaragua , boomed with high increase and low increase development. Areas such asJaco, once considered a lowly surfing city , sprouted up high increase projects overnight. 9 condoprojects were started in Jaco at the same time by builders such as Sonesta and Daystar. The "crane"become a common sight, and i am not talking about the bird. Even as far south because ManuelAntonio, higher rise projects were breaking ground.The Shake OutThen came the slow down since the world economy caught. Some projects happen to be abandonedwhile others have slowed way lower. Prices have fallen in these types of projects and also in bigdevelopments of solitary family homes that were built out of conjecture. Many of these builders shouldcontinue to sell some inventory to stave off bankruptcy. Banks once flush with money were nowpulling back load obligations.Many buyers were stuck with a project that was partially completed. Some developers proceeded togo bankrupt leaving the owners fully responsible to compete infrastructure. The market lost value inseveral areas, especially those within Guanacaste and the central Pacific area around Jaco. Thesouthern pacific area faired the best. The three story height restriction (from Dominical south tocompact country of panama ) has kept developers of high increase projects away. The actual limited
  • 3. accessibility held large projects out of the region and inventory of finished houses remained low.Costs have fallen a bit on raw land without ocean views but ocean look at parcels have continued tocreep up within price.Southern OptionsThere is a two tiered pricing system within Costa Rica, that of Tico style homes as well as NorthAmerican style houses in expat towns. Most North Americans avoid well in Tico style homes or in aTico community though some old hippies and such might do so. Housing targeted at Expats offers anumber of choices. High increase buildings with safe parking, upscale residential neighborhoods,large towns like Los Suenos golf residences (costly ) or small projects like the ones dotting the coastthrough Jaco to Quepos. Further south, these kinds of developments are harder to find.Uvita Costa Rica