No matter where you are in the world, you will likely have questions about buying real estate in Costa Rica. Select one of the frequently asked questions below to learn more about buying, selling, and renting real estate. Also, begin to think about important things to consider when diving into your real estate search.
Do you know where you want to live in Costa Rica? Do you have a realistic budget? One way to answer all of these questions at once, and have a chance to see REAL properties in different areas of Costa Rica, is to take a tour. We recommend BTRG’s Costa Rica House Hunting Tours based out of Vista Valverde in San Ramon de Alajuela, Costa Rica (in the mountains of Costa Rica, just 45 minutes from the Main international airport, SJO). CLICK HERE to be taken to their site on fun and informative house hunting vacations that go ALL over Costa Rica. We like their tours because they are customized to YOU, and offer tons of relocation advice along the way.
Question about selling
Can a home depreciate in Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate. This is why it’s a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly.
In Costa Rica however, market value and value can be very finicky things. Where is the house located? How saturated is the market in that area? Is supply meeting demand? What are people generally looking for? If you are interested in the resale value of the homes you are considering, or want to know the best resale neighborhoods before you start your search, a seasoned Agent or Realtor© for that area can answer those questions. For this reason and many others we suggest you work with an Agent in the area you are considering, or a Brokerage who has a network of Agents in different areas so you can take advantage of one Agent, and all their references. It is a whole team working for you!This is really just a matter of preference, but both newer and older homes offer distinct advantages, depending upon your unique taste and lifestyle.
Older homes can generally cost less than new homes, however, there are many cases where new homes can also cost less then older homes. Most new homes will not have any backyard landscaping and some don”t include any front landscaping either. With an older home, the landscaping is normally already completed and could have 10”s of thousands of dollars in landscaping done, which is included in the purchase price.
Taxes on some older homes may also be lower. Some people are charmed by the elegance of an older home but shy away because they”re concerned about potential maintenance costs. While most homes in Costa Rica are sold “as is”, you can still request a home inspection to see what you are getting into. In many cases, this means putting down a non-refundable deposit regardless of the outcome of that inspection. And remember, most fixes in Costa Rica cost 1000s LESS than the US, Canada, and other over-developed countries.
In a new house, you can pick your own color schemes, flooring, kitchen cabinets, appliances, custom wiring for TV”s, electrical, computers, phones and speakers, etc., as well as have more upgrade options. Even in Costa Rica you can add modern features like media rooms, extra-large closets and bathtubs (not typical here!), hot water, solar, special new age ‘green’ septic and things like that. In a used home, you rely largely on the previous resident’s tastes and technological whims, unless you plan to farm thousands into a remodeling and rewiring.
New-home designers can use new building materials such as glazed Energy Star windows, thicker insulation, and other technology that will lower future energy costs for the owner. Kitchens and laundry areas in new homes are designed to house more efficient energy-saving appliances, and one builder we know if here in Costa Rica builds bio-climactic homes to increase the natural coolness of their homes (Eco Grupo). Older homes, unless they have undergone an energy retrofit, usually cost much more per square foot to air-condition and heat. You would not think of heat in Costa Rica, but there are some areas like Poas and high altitude areas that are gorgeous. Maybe one of you likes it cold, and one of you likes it warmer, you may consider heating one area of the house.
Builders have to follow very strict guidelines in new-homes and additions, especially here in Costa Rica, where earthquake safety standards must be observed. In general, new homes are usually more fire-safe and better accommodating of new security and modern fittings like a garage, roofing, etc.
Older homes can be better judged for their quality and timeless beauty. New homes that now possess a smooth veneer might reveal the use of substandard building materials or shoddy workmanship over time. Though we can suggest a few builders we highly recommend. Many offer warranties.
As you can see there are advantages and dis-advantages to each, but it really comes down to what fits you and what you are looking for in a home.The term Broker really does not mean much in Costa Rica. The unfortunate truth is that a company needs to self-regulate, and many do not. There is no official government agency that overseas Real Estate in Costa Rica, and there is no licensing needed to list a few properties on a pretty website and call yourself an Agency, or Real Estate Broker. That being said, a company that calls themselves a Brokerage, as opposed to an Agency, is usually quite well established and will post Codes of Ethics, Terms and Conditions, and have several networks in place to make your real estate search and transaction well informed and fruitful. You may even recognize some big name companies in Costa Rica from your home country. That does not mean that smaller Brokerages or Agencies are not good – many are excellent and DO go by the Code of Ethics in Costa Rica, and some have taken RE courses here even though they are not mandatory. Some may even be International Realtors, like our home company at Blue Tierra Realty. But for a basic explanation, a Broker is simply an agent who has called themselves a Broker. They may or may not have any experience, or education in Real Estate.What is the difference between being prequalified and preapproved for a loan?” If you’re prequalified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information you provide to the bank is accurate and true. This is not as strong as a preapproval.
If you’re preapproved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment – and the lender is willing to give you a loan, basically meaning you’re approved.
You will usually be provided an accurate figure which shows the maximum amount that you are approved for. Most sellers prefer buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.
NOW – how does that apply in Costa Rica?
1 – Basically the same, though the steps can be different and the process can take up to a year. Typically, people here purchase the property and get a loan from the bank that they pay off in a few years. Then they use the equity in the property to get a home building loan. Quite smart if you ask me. But, of course, that means you are waiting a few years to build your home – something most ex-pats do not want to do.
2 – But WAIT! You can’t even get a loan in Costa Rica if you are not a resident or a Citizen/national! So what do you do???
3 – For an expat investor or home buyer, your property will be a cash investment. Where you get the money from in your home country is up to you. Many people sell their residence to move down, some take out the equity in property owned in their home country and buy with cash here (I say cash, but its a bank transfer). You may need to be show where you got the money from. This is your’Source of Income’ – an annoying but easily overcome hurdle in real estate purchasing here, as long as you follow the guidelines. But a good Agent with an up to date bilingual attorney will walk you through this. Can I get Title Insurance in Costa Rica? We do not have title insurance in Costa Rica. Each sale has its own set of variables, as I will outline below in a ‘typical closing’ – though honestly, there is rarely a typical closing as you will see. Can I get insurance on my Property in Costa Rica? Of course! But it is NOT REQUIRED like it is in other countries. You can get it, or not – its up to you. It’s pretty cheap here, so expats are starting to buy it.
There used to be just one insurance company – INS. Instituto Nacional de Seguridad. This was when we were more socialist and the government controlled and monopolized all these kinds of agencies. Now with the Fair Trade Act, other Insurance companies have stepped in to offer all the insurances you are used to in most other countries. When you are ready, simply contact us at MLS in Costa Ric and we will recommend a Brokerage that will farm your request to all the best Insurance Agencies, and get quotes and rates for you to choose from. I’d like to mention here again – the insurance is usually VERY reasonable in price. You may be shocked! How do I pay my taxes? Are they high in Costa Rica? Real Estate taxes in Costa Rica are equal to .025 of your registered value in the Municipalidad (your town office). So on a 200,000 home, that’s about 500USD/year. It could be less if the value registered in the local government is less that amount, which it usually is.
You can pay quarterly, directly at your Municipalidad building (every town has one) or you can sometimes pay yearly depending on where you live. Some areas allow you to pay for the whole year, for a little tax break. Its hardly anything to speak of, this little discount, but its a hell of a lot easier to pay once and be done, if you can.[/vc_toggle][vc_toggle title=”Are there other taxes besides property tax?” el_id=”1457564614680-0f2cb9e8-eaaf”]Only voluntary ones. And by that, I mean if you choose to put your property in a corporation, you will need to pay taxes on the corporation. Costa Rica just went through a whole overhaul on the Corporate tax structure, so ask the attorney who creates your corporation when and how you will pay for yours.
Question about renting
What do I need to rent a house in Costa Rica?” A typical request is proof of income, or a bank statement showing the total amounts of rent. Many will have a standard Costa Rican lease (in Spanish), or a basic lease statement in English. Anything is English is more of a gentleman’s agreement but outlines the rules of the tenancy so everyone understands what is expected of them. The Costa Rican leases in Spanish should be translated so you understand what you are agreeing to. Some of the larger condos and apartment complexes in the cities will have their own specific requirements and the Agent for those will take you through what they need. For most of the laid back areas, small beaches and tico mountain towns, rental references are less common because we realize most expats probably owned their own house before moving here. Can I really rent a house for $500 a month?Yes! But if you expect a home built to American or European standards, with hot water, appliances, and furniture – you will be very disappointed. Anything under $600/month in most areas will be tico built, with no hot water, and those 150/month places you may find on flyers at the grocery store will not have furniture or appliances. Sure, sometimes you can find a bargain, but likely you will be giving up a big thing like location (in town is cheaper, and hotter), appliances, hot water, furniture, things like that. In the mountains and most beach areas where expats tend to live, with great amenities and easy access to things you want to do, you can find nice 2-3 BR rentals in the range of $800/month to 1500USD/month (and UP!), fully furnished, all appliances, built to American standards, with all the utilities included.