Things to Consider Before Buying Real Estate
in the South Pacific of Costa Rica
A Good Attorney: You want to make sure your property is free and clear of all encumbrances, and that the paperwork attached to your property is validated and registered properly. This includes having your own attorney do an independent title search and investigation instead of relying on the seller’s attorney. You should plan on hiring a Costa Rican attorney to complete a land purchase here. An attorney can make your new property purchase a joy or a nightmare, so get references before you hire one. We can make recommendations to several very qualified attorneys.
A Caretaker/Property Management Company: If you are not planning to live on your property full time then it’s advisable to hire a caretaker or property management company. Caretakers’ tasks range among a variety of things, mostly dependant on the Property owners needs. If you are building a home or have a home on your property you will need a caretaker to watch your place when you are not there in addition to maintaining your grounds. This will protect your property from squatters and your home from being broken into. This is a monthly fee that you now have to consider with the purchase of your new property. A good property management company will hire caretakers to watch your property, in addition to maids and gardeners if needed. They will even pay your bills; water, electricity, Direct TV etc when you are not in the country.
Title Insurance: Until recently this service did not exist in Costa Rica. There was a problem with people buying properties only to have professional squatters camp on the land in an effort to claim it as their own. There is also a problem with fraudulent documents where the buyer ends up not owning the land he just purchased. Stewart Title from the United States now offers title insurance. This will protect you from having your new purchase lost to these types of scams. This is a yearly expense that you will want to add to the cost of your new “Dream Property”.
Infrastructure: Don’t take some of these things for granted. The more remote you are the less available infrastructure becomes. How accessible is your new property, (distance from an airport, distance from a main highway or road)? Are there hospitals and stores nearby? How are the roads to get to your property? Can you get electricity and public water to your new property? Does your area have problems with electrical outages or water shortages? Who are your neighbors? The list goes on and on but I think you get the idea. Taking basic infrastructure needs for granted could make your purchase a nightmare instead of a dream come true.
Climate & Location: There are many different micro-climates in Costa Rica. A few minutes up a mountain road and the temperature can change 5 degrees or more from the beach you just left. There are different types of climates up and down Costa Rica itself as well. Cool mountain breezes can offer a reprieve from humid beach temperatures. Make sure you understand the type of climate that exists with the property that you are buying.
Build a House or Buy a House: There are advantages and disadvantages to both. The advantages to buying a house are fairly obvious: the turnkey factor is always attractive; no costs or hassles with architects, contractors, and builders; no unforeseen construction delays or expenses, etc. The disadvantage is you will pay
20 - 30% more than purchasing undeveloped land and building your own home, if you do it right.
The key to doing it right is finding good people to design and build your dream home. When things go wrong here, they can really go wrong and we’ve heard some horror stories. So it’s very, very important that you spend some time checking and double-checking references before you decide on a contractor. In fact, we recommend that you make the time to come to Costa Rica and ask around, network and talk to people in the area and get a general feel for the person’s work ethics. If there’s anything questionable about the person’s reputation, you will find out soon enough just from a little poking around and investigative questioning. Even if we or another realtor highly recommended someone, for your own peace of mind, still take the time to check the person out. That said, we do have people we can recommend to design and build your dream home that we have checked out and invite you to do so as well.
Cost of Building a Home: There are Foreign Contractors, American and European, that build homes in Costa Rica, (mostly with a Tico crew of builders). These homes are usually built with concrete and accents of wood. Building materials are becoming very expensive here as more people are developing the properties they buy. A good concrete home will run between $80.00-$100.00 a square foot (depending on the contractor).
You can get a basic wood home with solid American style construction for around $45.00 a square foot. This type of home should last at least 20 years. We have some good personal references in this area that we can recommend to you.
Closing Costs: There are generally three things involved with closing costs; Mortgage Costs, Government taxes and fees and notary fees. These fees usually total just under 4%.
Property Taxes: Property taxes are only .25% of the recorded value of the property which is often much lower than the sales price.
Financing: Many banks are now offering financing in Costa Rica. Please see the links below to find out more about their programs. The terms are subject to change at any time. We do not make recommendations as to financing in general and leave that up to the individual and their attorney to consider.
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