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Adriana Ferguson

Income Property?

17 posts in this topic

I am coming into some money soon and would like to have an income property in Costa Rica. In other words, I would like to purchase a property and use the rent to pay the mortgage as well as create some extra income. Any information on this? Is this recommended? Has anyone on here done this? Do I have to be a citizen?

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Great question! I am wondering: Why Costa Rica?

 

Really with a bit more background information, we might be able to advise you better.

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The answer is YES, you can buy property in Costa Rica and receive some passive income from the rent. Some points to consider;

1) It will be so difficult to get a mortgage in the country, I would strongly suggest you pay with cash. Maybe that is what you meant buy stating you were coming into money before the majority of replies we not helpful, my opinion

2) While it is pretty straight forward to purchase property, do not try and do it without serious due diligence - an attorney, a trusted real estate person, a general if not good understanding about the area. You should also consult your CPA because you need to file anything greater than USD$10K money movement outside the US. Not sure where you are, but as a US citizen, this is not a big deal, you just do not want to avoid it;

3) This forum provides a ton of great education - look back on some posts and try and be specific on your requested questions. Purchasing in Costa Rica is an excellent option, but it is not the majority of the fine folks on this forum. Take your time and enjoy the experience!

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Though it is about to change one must really become familiar with rental law in Costa Rica. It is different than in the US and in CR the tenant has certain strong rights, partially hamstringing the landlord.

 

While the rental laws are inscribed in CR's Constitution, they seem likely to be going to undergo some revisions soon as was recently reported in the news, although it is not known yet exactly how or how much the rental laws will be revised.

 

Still I believe that it is most important that the OP learn everything s/he can about rental law in CR before taking the plunge of renting out a newly purchased property.

 

Regards,

 

Paul M.

==

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There is some excellent legal information about real estate in Costa Rica here: http://costaricalaw.com/category/costa-rica-legal-topics/real-estate-and-property-law/

 

My reaction is this: You want to buy property in a foreign country and use it for income purposes? A country that you really know nothing about and have never been there? (If this is the case....) Frankly, that sounds kind of nutty or naive. Buying and renting property in Costa Rica is not just like in the US (or wherever you are from). The culture is different; the laws are different; things are just.... different. In addition to being overcharged because you are a foreigner, there are few laws governing realtors, there is somewhat widespread title fraud, there are many incompetent attorneys, squatters have rights, etc.

 

In addition to buying and financing this property, you would also need a good property management company which may not be easy. Plus -- how will you pick a place to buy property if you know nothing about Costa Rica?

 

If you are a stranger to Costa Rica, how are you going to find people you can trust? A good lawyer, a good builder, a good property management company? You don't really need a realtor. Once you settle on an area you want to buy, then just look around and ask around. Going through a realtor will pretty much guarantee that you will pay more. Without a good Costa Rican friend, you will probably pay more anyway because of the "Gringo Price" factor. People routinely raise the price of anything once they figure out they are selling to a "rich gringo."

 

I hope you don't think I am rude because that is not my intention. But with so little information from you as to your situation, I am just throwing out all the "things that could go wrong" and trying to be a frank and realistic as possible which is what I think you need right now.

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This advice will cost you nothing, but be worth ten times as much.

 

I don't know how old you are. Regardless of your age, use any "found money" to pay off your debts. Once your debts are paid off, stay out of debt. Debt free life simplifies everything.

 

Talk to one or two reputable investment advisers. Discuss your idea of income property and get their opinions. Carefully evaluate risks of any investment. Chasing high returns can lead to high loses. Think long term.

 

An easy tool to use is any online mortgage calculator. Enter the amount of money you have to invest, select the interest rate you can get, and select the number of years. The "payment" will be an indication of how much you can take out every month until the investment is gone.

 

T

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I have also been researching the idea of a rental property here. So far the numbers do not add up. I have spoken to many that have had rental properties and most just do not make money. They may break even or even lose. I am still looking because I know it is possible to realize an income but to find the right deal, in the right location, with lower risk is bit difficult to say the least.

 

I would love to hear from others who do have rental properties here and what their experience has been.

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We have a one bedroom guest house adjacent to our home. We have had very consistent rentals over the past nine years, but still I would not recommend a rental property as a sound investment. We are unlikely to ever break even.

 

Were it mine to do, I'd put my money in Certificates of Deposit at Coopenae in San Ramon. Coopenae's financials are very sound and your money remains liquid. The traditional advice is that it's easy to buy in Costa Rica but difficult to sell. If you ever needed your investment back, you might be out of luck. What's more, CDs require no maintenance and they earn interest 24/365. Neither can be said with certainty about a rental house.

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I have many neighbors who rent their homes out. Most do it to break even - rent it enough to cover all operating costs & vacation in it for free. A few seem to be making some money from it. We're at a beach in the Central Pacific that is halfway between Jaco & Quepos. Short-term rentals from VRBO & AirBnB seem to be the preferred method to gaining renters - I do have a few neighbors who will only rent to long-term renters & have no issues finding them. The ones who are savvy about this type of thing will literally have their townhome booked solid for the entire high season & well into the June/July/August months with US vacationers on summer vacation.

 

Jessica

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This assumes that if you are not in the area, you have a REALLY GOOD property manager. Otherwise, things could go South in a hurry.

 

Making money or even breaking even from rental property is tricky and there are a lot of places where it can go wrong. There are many elements to the whole thing and all of them must be positive for it to work.

 

And yes, location is everything. You can own a place somewhere in Costa Rica and AirBnB or VRBO are good options for renting to tourists, but if your home or condo is not in a location where people want to go, then that's a problem.

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eleanor is correct & put the point I tried to make in plain English. Successful rentals in our area have everything to do with the location, the existence of very trustworthy property managers living in our neighborhood (living there means they want good renters), & the fact that it has become an up & coming "hot" area due to lower prices but close proximity to some of the top tourist destinations in the Central Pacific.

 

Jessica

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Where we used to live on the farm, there was 3 additional houses built with the intention of renting them out. However, it has not been a success, due to the location and the rates charged.

 

Location, location, location B)

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