If you are from North America or Europe, the process is probably pretty similar to how you would buy property in your home country.
There may be a couple of differences from your home country: The deposit is typically 10% of the purchase price , the Sales and Purchase Agreement is done by your attorney instead of your agent, it is more complicated to set up an escrow account because of the concern over money laundering.
Thousands of foreigners have done it, and you can too!
Yes, and you will have the same legal rights to it as if you were a citizen as long as you purchase it by following well-established laws and procedures.
The exception is property in the “Maritime Zone,” which is the first 200 meters along the coasts. 51% of the rights to any property within that zone must be held by a Costa Rican citizen.
The first 200 meters along the coasts of Costa Rica are in the Maritime Zone. With very few exceptions, this land is owned by the government and may not be purchased by anyone, foreign or domestic. However, the government may grant a “concession” (or “use permit”) for the property. The owner of the concession may be granted permission to use it for a business or personal residence depending on the application and approval.
The right to use any specific property in the Maritime Zone must be at least 51% in the hands of a Costa Rican citizen. This makes it important that any purchase be thoroughly reviewed by an attorney who specializes in Maritime Zone laws, and that the Buyer be comfortable with their Costa Rican partner(s).
The majority of residential property purchases in Costa Rica are made with cash. However, financing options are increasing as third party lenders begin to offer loans.
For foreigners, owner financing is more common than any other form of lending. It is logistically simpler to arrange and less expensive and the terms can be part of the negotiations. On the other hand, it is usually short term, has an interest rate of 5-7%, requires 50% down and must be paid off within 2-4 years, although all of the terms are negotiable.
There are an increasing number of independent lenders who make loans, but the lack of competition means that they are usually quite a bit more expensive than North Americans are used to. Down payments would typically be at least 30%, interest rates would be up to and even over 10% and may be variable, and loan origination fees are high. On the other hand, these loans can be made for longer terms, as in up to 20 years.
Since there is no formal governing board for real estate agents yet in Costa Rica,* you need to pay closer attention when selecting an agent to work with.
First, make sure your agent is working out of a “real” agency office. If the agent only wants to meet you in restaurants or hotel lobbies, be wary. It doesn’t have to be an internationally recognized brand name office, but there should be signs of a well-run business that cares about its long-term reputation.
Second, look for concrete answers to questions you have. Nothing is perfect, even in paradise, so you should hear honest, transparent answers to your questions and pluses and minuses about properties you are viewing.
Third, be especially wary if you hear too often that “it will all work out.” When the answer to every issue or potential problem is that “it will all work out,” you might want to consider working with someone else.
Fourth, see what credentials the agent has or has had. Previous experience in another country can be a plus. So can registration and recognition by the Costa Rican real estate board.* Years of experience here are invaluable too. Just ask and feel comfortable with the answer.
Finally, go with your gut. If an agent suggests (or pressures you) that you do something that doesn’t feel right, stop and think. E.g. you should never give money to anyone but an escrow company, no matter how much you trust your agent, the Seller, the attorney etc.
*There is a Costa Rican agency that offers classes and recognizes participation. It is a good first step in registering and recognizing those who have put the time and effort into understanding fundamental aspects of real estate.
Although Costa Rica is a smaller country, it has a whole range of housing options from small shacks to exotic mansions. The different areas of the country have their own range of prices but even within each area there are vast differences. In the Southern Pacific part of the country, we have listings from $89,000 to $11,000,000.
It’s fair to say that in order to get a property with a home on it that appeals to most of the clients who contact us in the Southern Pacific area, you would have to plan on something like $250,000. That would get you a comfortable home in a nice setting with relatively easy access to stores and services.
It’s certainly possible to get homes for less, but your expectations would have to be adjusted. It’s less likely that you would have an ocean view, or the house would be more of a local style (or smaller), or the access might be harder. We often find that the homes people are most interested in are at the $250,000 level or above.
The most important thing is to come and see what your budget will buy. It is impossible to get a feel for properties without putting your eyes and feet on them.
Yes. Costa Rica has long been a country where foreigners feel safe in purchasing property. The government respects private property and has a robust system for recording titles and maintaining records of liens or easements against properties. Title searches can easily be done by anyone with access to the internet.
As with every other place you might invest, there are steps you should take to protect your investment. When purchasing, always work with professionals who have good reputations for knowledge, integrity and transparency. Always do the Due Diligence with an attorney, surveyor, inspector and others. Never give money to anyone but an escrow company, and always have a clear, complete contract specifying when and how that money will be distributed. Following this one simple piece of advice would have prevented the majority of horror stories we hear from disappointed buyers.
Beyond that, property investments are always a matter of analyzing market conditions and understanding trends. Real estate agents can help acquaint you with properties in areas that are selling well, but they are just one resource among several that you should consult before investing.
As with any other place on earth, how much it costs depends on your desired lifestyle. I’ll speak to the Southern Pacific area of CR. For foreigners who are healthy and active, want to travel other places or back to their home country annually, want to eat out periodically, enjoy taking in cultural events, want their own car and plan to eat a reasonable mix of local foods and imported foods, about $2,500 income per month would be comfortable for a couple whose home is paid for (not renting or making payments on a loan).
Adjustments can always be made. People can live on less, and many live on far more. The important thing is that Costa Rica isn’t a “dirt cheap place to live.” It’s a healthy, beautiful area that costs somewhere in between the cost of healthy beautiful areas in North America and less developed/higher risk areas of Central America.
Yes. It has frequently been chosen as one of the top countries to retire in. Why is this?
For North Americans, it is easily and inexpensively accessible with direct flights.
The climate is appealing all year, with highs in the upper 80’s on the coasts and lows in the mid seventies. In the mountains, you can adjust those by about 3-4 degrees per 1,000 feet of altitude.
The government is a stable democracy that has been a model for Central and South America.
The country is aggressively working to protect its environment and natural world. There are laws against drilling for oil, hunting, cutting down trees, etc. Electric vehicles are being promoted. Plastics are being eliminated. Wildlife is plentiful and once-cleared lands are being reforested at an enviable rate.
Property purchases are protected with a robust registration system. The process for buying them is understandable and efficient. For most of the country, crime is low. There are areas especially in and around the capital that are more like big cities everywhere, but for the most part safety is not a primary concern.
Retirees who want to only spend part of the year here can rent their homes to vacationers. Depending on the circumstances this can generate enough income to cover your expenses and even produce a good ROI.
Costa Rica is a small country geographically, but it has a diversity of microclimates and settings.
The Central part of the country is mountainous and populated areas are several thousand feet above sea level. This makes them cooler, with average daytime highs around 80 F and lows around 70. There are beautiful mountain landscapes outside the cities and access to hospitals, cultural events and shopping is easier.
The Pacific Coast is divided into Northern, Central, and Southern. Beautiful tropical beaches line the coast, interspersed with clusters of mangroves and some rocky cliffs. The northern area is warmer and drier than the southern area. It also developed first, so it has more hotels, condos, homes, resorts etc.
The southern area is where the mountains come right down to the beaches, allowing for properties that are up on the mountainsides close to the beaches but with nice ocean views. Properties are often developed so that they are larger and more private, with neighbors nearby but unseen.
The Caribbean side has a more laid back vibe and has been slower to develop, but certainly offers opportunities for investment and enjoyment for those that it appeals to.
Yes. Absolutely. The government has put in place numerous laws with the goal of restoring and maintaining a healthy environment. The Supreme Court has ruled that a healthy environment is a basic human right.
Costa Rica leads the world in reforestation by percentage of land mass. It has outlawed all types of hunting, whether for sport or necessity.
Drilling for oil has been outlawed. Tree cutting may only be done with permission from the ministry of the environment, whether for commercial purposes or just to clear building spaces.
Costa Rica has been producing over 90% of its energy from renewable sources including solar, wind and hydro, and has set goal of 100% in the next few years.
Laws currently favor electric vehicles by eliminating import taxes on them and reducing annual road use fees for them. Annual inspections check for emissions from gas and diesel vehicles.
There is a push to completely eliminate single-use plastics with a few years. Many businesses are already using alternatives for food containers and other common items.
All of these efforts take time and effort to implement and enforce, but the payoffs are already evident. Wildlife is abundant everywhere you look, tropical forests are flourishing, air quality is healthy, water is safe to drink almost everywhere in the country. Roadsides are free of trash and garbage. Vehicles screech to a halt to let wildlife cross the road.
They still have a lot of work to do enforcing some of the laws and eliminating things like ag chemicals in some areas, but the “feel” of the country is that they are sincere in their goals and efforts and there is both public and private interest in being environmentally healthy in a wholistic way.
No. There are many foreigners living in Costa Rica who have never learned more than a few Spanish phrases. Many Costa Ricans in key places have learned English in order to make your stay as easy as possible. You can find English speakers in restaurants, banks, shuttles, grocery stores, tour companies and more. Usually, if there isn’t an English speaker there will be someone who has the patience and courtesy to help you out with sign language.
When you live in a foreign country, there are multiple reasons why you might want to take advantage of the setting in order to learn the local or national language even if you don’t have to. Language teachers and schools are available all over, so we would encourage you to go ahead and learn some of the language. We believe it will be like the frosting on your Costa Rican cake if you do.
Yes. Costa Rica’s mountainous interior was formed by the prehistoric collision of tectonic plates and it is on the so-called “ring of fire.” Every once in a while we feel a gentle “rock and roll” as those plates shrug. However, there are a couple of things that keep this from being a concern:
First, the soils in Costa Rica don’t liquefy when they are shaken. They hold their shape and damage from sliding earth is slight to nothing.
Second, plans and specifications for homes built here are approved by the College of Architects and Engineers. They ensure that the plans include substantial foundations. One U.S. builder recently exclaimed that “they use twice as much reinforcing steel and four times as much concrete as we do.” This is why when we show homes here, it is rare to find cracks in the floors or walls even after many years.
Yes. The Costa Rican government has made a priority of providing clean drinking water to homes, restaurants, hotels and other businesses in towns, popular attractions, and cities. You can drink water from taps in those places. The only places where you need to be cautious are very rural areas where the water may be coming from a creek or river. If in doubt just ask: Costa Ricans are careful of their water and understand why you would ask.
