Here are the most frequently asked questions about Playa Hermosa Real Estate
The most common is simple: Why invest in real estate here in Costa Rica? Based on my personal experience of owning several pieces of Guanacaste real estate over the years, I could talk for hours and give you dozens of reasons for how great living in Costa Rica can be. Before we get into the deeper FAQs, here is a short video about Playa Hermosa that will help you get an overview of the area.
Who Invests in Costa Rica
Me, that’s who and you can too if you are looking for a better lifestyle, want to diversify your assets with greater return, live in the tropics and have a better overall life. Don’t take it from me. There are a lot of North Americans, Europeans and even some folks from South America that have seen the value, beauty and the benefits of investing in property in Costa Rica.
Many people from friends to family and even some clients have asked me “Why did you invest in Costa Rica?” I always reply with the same answer; “tell me where you can you find a better place, as beautiful, with great weather and locals that don’t call you names and treat you like a rodent, and don’t forget the taxes are much lower than where you live now." Let’s not forget the opportunity for return on investment. Over the years I have seen many investors more than double their money just on real estate alone. Of course, it all comes down to buying right!
Here are a few of the reasons I invested in Costa Rica and you should consider:
- The most important Item! Costa Rica welcomes foreign investors with open arms. You have the same property rights as a Costa Rica citizen.
- If you put all your money in a bank the returns are lousy. I can get a 7% return on my money, in a certificate of deposit, if in the local currency of colones. What is your bank paying you 2% if you are lucky?
- The stock market is way too risky! It is a gamble, yes it has been performing better in the last couple of years, but are you ready for another major drop? Take a look at your IRA and 401K’s or your RSP account over the past 5 years. Yes, it has come back, but there is always the chance it will tank again as it has many times in the past and will do so in the future.
- The US real estate market is starting to come back in certain markets but most are still depressed. Sure, you can get a bank foreclosure but how long will it really take before the market is back to pre-boom. In certain Canadian Markets, there are Bidding wars for the same property.
- How much do you pay in property tax? Taxes are going up and up and up and will continue to do so and you hardly ever see them come down. Here your Property tax is only 2.5% of the registered value. So for a $100,000 dollar condo, your yearly property tax is only $250. Now that’s Low!! YOU as the owner are required to assess your own property every five years, it’s the Law. Of course, you can never lower the value but you get to control the increase, not some low-level government employee. But if you don’t re-evaluate, guess what, that guy will be knocking on your door and he won’t be friendly.
- Costa Rica is a very safe place to live PERIOD. When was the last time you heard about a news story from Costa Rica about some nut case walking into a school and killing 20 kids and teachers or another wacko going into a movie theater with guns a-blazing? NEVER!
- Costa Rica has a stable democratic government and the second-longest democracy in all of Central America and the Caribbean.
I can keep writing about all the advantages of investing in Costa Rica, but the reality is you may already be tired reading this to find the answer to your questions, so feel free to send me a note as you may have some very direct questions and I will be more than happy to answer them for you.
I Have Heard Bad Stories About Realtors in Costa Rica
I have to be 100% honest with you, here in Costa Rica, there is no government licensing of Realtors. That means that just about anybody can try to sell real estate. From the cabbie that picks you from the airport to the tour operator that takes you to visit some of the great wonders of Costa Rica.
Herein lies the problem. Some people have listened to unprofessional people and have horror stories to tell. Do you really think the bartender is looking out for your best interest? Or for that matter even a “Realtor” (in name only). Let me ask you a question? In your home town would you listen to the clerk at the local grocery store if he said he can help you get a really good deal on a property that is nearby? I don’t think so. The same thing goes here in Costa Rica.
During the real estate boom in the early 2000’s there were many people that came to Costa Rica to make a fast buck off the boom. These were most likely the ones that caused the horror stories. All they cared about was making a fast buck and did not care what happened to the buyer or the seller. Now after the great recession many, if not all of these so-called realtors, disappeared and moved back to wherever they came from because they were not committed to the profession and when the fruit is not hanging low it takes determination to succeed.
Now that more and more people want to come to Costa Rica, we are starting to see the un-professional "realtor" popping back up.
My recommendation is, if you are really interested in purchasing a property in Costa Rica you should work with an agent that has been in business for a long time and is associated with a major brand real estate company or has a reputation that can be verified.
As of 2020, all companies of persons claiming to be a Real Estate Agent are required to be duly registered with "SUGEF " the Spanish Acronym for General Superintendent of Financial Institutions. The reason is for protecting buyers and to ensure there is no money laundering happening. It is a very detailed process that I had to go through to ensure I am a legitimate real estate agent looking out for your best interest.
Also, I would check or ask a "realtor" to verify that they are registered with SUGEF and also if they are associated with the only two government recognized realtor associations. The first one being CRGAR, the Costa Rica Global Association of Realtors and the second one being CCCBR, Cámara Costarricense de Corredores de Bienes Raices, or in English the Costa Rican Chamber of Real Estate.
Both of these associations require that their members pass real estate courses and pass exams to gain the proper knowledge to represent buyers and sellers in Costa Rica real estate before they can become a member. Furthermore, agents are required to be a member of NAR, the National Association of Realtors in the US. The agents that pass the courses and become active members are also required to take continuing education courses that are offered by the association.
Here are some key points you will want to know before choosing a realtor in Costa Rica.
- Are they registered with "SUGEF", having completed the process successfully?
- Are they associated with a worldwide real estate brand that is recognized?
- Are they a member of either of the two real estate associations?
- How long have they been working in real estate?
- Are they legally allowed to work in Costa Rica (if they are not a Costa Rican)?
- Does the realtor have Costa Rica residency, or are they in the process of obtaining it?
- Does the realtor own property in Costa Rica?
- Can the realtor supply references from both buyers and sellers?
- One of the most important things is can the realtor refer you to reputable lawyers and subcontractors?
I cannot stress enough how important it is to work with a professional. You will have a good experience and will be happy with the purchase of your own piece of Paradise.
I am also proud that I am a member of BOTH Costa Rica real estate associations as well as a past Board member of the Costa Rica Global Association of Realtors.
Is Your Costa Rica Real Estate Agent Registered?
There are two questions you need to ask any real estate agent in Costa Rica before starting to work with them. The very first question you should ask any real estate agent in Costa Rica is “Are you registered with SUGEF?” The second is to ask if they are a registered active member in good standing with either of the only two government recognized real estate associations, CRGAR (Costa Rica Global Association of Realtors) or CCCBR (Cámara de Corredores de Bienes Raices).
Now you might be asking what is “SUFEG” and why does a real estate agent need to be registered? Well let me start with this than move on to the associations.
“SUGEF” is the Spanish acronym for “Superintendencia General de Entidades Financieras” in English it is the General Superintendent of Financial Institutions. This is the Costa Rica government agency that oversees all the banking and any company in Costa Rica that receives third party funds from abroad. As an example, escrow agencies and property manager. The main reason for adding more occupations is to help prevent money laundering, drug trafficking and terrorist funding.
Starting roughly last year, SUGEF starting adding different these types of companies and occupations to the list of those that need to be registered and authorized. Real estates agents were one of those professions along with lawyers and others. The requirements to register were quite detailed, I had to disclose every real estate transaction I was involved in from April 2019 until March 2020. The items to disclose were:
- Do I do real estate in my own name or the name of Costa Rican Corporation
- Number of transactions that closed from April 1, 2019 to March 31, 2020.
- Was the buyer a foreign entity or a Costa Rica entity.
- Was the buyer using a Costa Rican Corporation or their personal name.
- How many employees does my company have that are receiving benefits of the social security system?
- What bank accounts and IBAN numbers associated with my company?
- How many vendors do I utilize to operate my business?
All these items had to be loaded up on their web platform utilizing a digital signature card which thankfully I already have.
The second question you need to ask is if the agent you are thinking of using is registered with one of the two legal real estate associations. Why you ask? Well would you get real estate advice from the cashier at the local grocery store? Or maybe your favorite bar tender? Or the one I like the most, the tour guide that you just spent the entire day with doing ziplining, mud baths and nature tours while in Costa Rica. Now I am not knocking these folks, they have a service they provide and may do it extremely well, but real estate is not one of them.
Use a proven real estate professional, one that legally can work in Costa Rica and can prove it by showing you their residency card that says “Libre Condicion” ( Free of Conditions) or their citizenship card called a “Cedula”. The real estate agent should own property in Costa Rica as well, how can a persona that dose not own or been through the process help you? Again, the same question, is the agent an active member in a real estate association. A true professional, like myself, have taken the time and expense to learn the real estate laws of Costa Rica. We have taken courses, as well as are required to take continuing educational courses, through the associations so we can properly guide you through the entire buying process. When thinking of starting the hunt for your Costa Rica Dream home just remember ask if your agent is registered.
Should I Rent First?
Many websites make the point that you should rent in Costa Rica for a while, to make sure you like it before you buy. It's true that Costa Rica is not for everyone, but of course, you know what opinions are like - everybody has one and these are most often written by people who want to rent you their property or from a property management company. Personally, I look at it like this: why spend money that could be going toward ownership and equity in real estate investment? Renting is not owning, and you have nothing to show for it.
The Pros of Renting in Costa Rica:
- You are not paying the property taxes, which, by the way, are very low here.
- You are not paying the Home Owners Association fees if any.
- You are not paying, in most cases, any repair and maintenance costs.
The Cons of Renting in Costa Rica:
- You Own Nothing! With the exception of your furnishings and personal items.
- You are at the whim of the landlord. If they decide that they won’t fix something like the A/C, then what? If it takes them a couple of weeks to get it fixed you are the one who suffers. What are you going to do? Start looking for another place and who needs that hassle?
- You can’t change the layout to suit your needs, wants, and desires because you don’t own it. You can only move furniture around.
- If you really like Costa Rica and you decide to purchase; you just wasted 6 to 12 months' worth of money that could have been used towards a purchase.
- Most sellers want to use their rental homes during the high season so they can be near the beach. This means you may only get a rental for 6 months during the Low season when it rains. Then what? You have to start looking for another rental property again.
- If you are considering renting to see if Costa Rica is for you and after a year you decide it is where you want to live you may have lost out on properties that were purchased while you were paying rent.
- If you have decided that "yes" Costa Rica is for you and are not ready to make the move full time, you may have just wasted six months or more of potential rental income that would be in your pocket.
- One Last thing, and this is a reality of life anywhere in the world; we all have to pass on sometime. If you rent what did you leave your loved ones?
I could go on and on why renting long term first to see if you like is a waste of money. My recommendation is that if you are not sure if Costa Rica is for you, rent a place for a month, if in one month you cannot figure out whether Costa Rica is right for you, how is six months or a year going to make a difference? All you did was have an extended vacation. This may be good for you, but personally, it would not work for me. I am a believer in real estate as a solid investment no matter where in the world it is. I have rented two times in my life and both were a horror story. After the second time, I decided I wanted to control my surroundings and not some crackpot landlord.
If you do have a desire to rent before making the big deal, here are a few links to property management and rental companies I recommend:
Milagro Management and Rentals Milagro Management & Rentals
Rich Coast Vacations https://www.costaricavacation.properties/
Bahia Culebra Property Management http://www.bahiaculebra.com/
Blue Sea Management http://www.blueseaproperty.com/
Most likely the websites and people that are saying you should rent before you buy are probably saying that because they just can’t afford to purchase. Those that can afford to purchase a property do purchase and don’t rent. Successful people got wealthy by purchasing when the market is down and
Who Really Moves to Costa Rica?
Well, like I have written before, me, that’s who and I never regretted making the move to Costa Rica. And to be 100% honest, this is not a sales ploy. If you want a calmer lifestyle, a politically secure country, beautiful scenery, great beaches and mountains and want to live with like-minded warm and friendly people, than Costa Rica should be on your radar.
Friends and family still ask me “Why do you want to live in Costa Rica?” and I answer them the same way, “have you been to Costa Rica and Guanacaste?” If you have, which I know you haven’t, did you like what you saw? If not what are you waiting for, the bucket list? That’s when you’re dying!!! Tell me about someplace else that has what Costa Rica has to offer.
The weather is spectacular 98% of the year. The people are warm, wonderful and very friendly. The cost of living is less than most of the USA and Canada and certainly Europe. Yes, it is true that prices have increased here but they have everywhere in the world. If for some reason you need to go back to where you came from, I am sure Costa Rica is not that far away.
If you’re going to make the move and live in Costa Rica, or are thinking of just having a vacation home and a place to diversify your assets, there is only ONE place in Costa Rica to live: Guanacaste and the Papagayo Bay consisting of the towns of Playa Coco, Playa Hermosa, Playa Panama, Playa Ocotal and as far south as Matapalo, which is only 15 minutes away from all the activities on paved roads.
So here is a list of the kinds of people that have made the move to Costa Rica:
- Retirees: those that were ready to retire in 2007 to 2009 could not afford to retire in the US as they watched most of their net worth go down with the stock market.
- Adventure seekers: let’s face it, moving to any foreign country where the language, culture and customs are different makes it an adventure all its own.
- Future Retirees: these are folks that saw the opportunity early and made the move and are happy they did.
- Middle-aged professionals: those that were tired of the grind and of paying exorbitant taxes and were just struggling to get by.
- Nature Lovers: there is nothing more to say about this as Costa Rica has 5% of all the world's biodiversity in this tiny country.
- Young Families: they want a more peaceful and friendly lifestyle for their children to grow up in and be culturally diverse.
- Investors: those that see the future and the potential of this small Central American country and wanted to be a part of it.
- Lastly: those that really want the “Pure Life”
Personally, I do not want to live in the Caribbean. There are too many hurricanes and I could lose everything in one storm! I know I cannot afford Hawaii as prices there are easily five to eight times higher than Costa Rica. Mexico and the other Central American countries like Honduras and Guatemala are way too dangerous with drug wars and unstable governments. A really big reason for me and many other people is: “who wants to stay in the cold weather of the north”! At least here the weather is always temperate and steady year round and it is not as congested as say Phoenix of south Florida and other retirement locations.
With the taxes as high as they were, and about to get higher and higher, I said forget it and made the move to Playa Hermosa almost 7 years ago and do not regret it one bit. I could no longer afford to retire in the US and no offense to anyone but why would I retire to Canada? It is too cold! Let’s not forget to mention the cost of living, insurance rates, medical costs, and crime. Just recently I was talking with my wire and she asked me so is it really less expensive to live here? I laid out all the monthly costs we incur and it basically came down to a resounding YES. Since we own our home outright and are debt-free it cost us about $2,000 per month to live a very nice lifestyle and enjoy the things we do.
So if you are looking for a change of life and a better way to enjoy life I recommend the Papagayo region of Costa Rica and all the benefits, beauty, and joy it offers.
Come join me, won’t you? I am sure you will not be sorry!!!
If I do decide to Purchase, What will the Closing Costs be?
This is actually a very easy question to answer as the laws of Costa Rica dictate what the closing costs are. When considering purchasing a property, the closing costs will be a percentage of either 1) the agreed-upon sale price or 2) the legal registered value of the property in the Public Registry system, whichever one is the higher number. Of course, the Government wants their cut, so it will be the higher number.
The total closing costs should be no higher than 4.5% and can be as low as 3.85%, and this is the number that you should be looking at when budgeting.
Let's give the detailed breakdown of the fees:
- Notary Fees: This is the fee that you will be charged by the Attorney/Notary that represents you in the transaction. The fee will be 1.25% of the higher value between the agreed-upon sale price and the legal registered value of the property in the Public Registry system. This fee is for the attorney to do all the due diligence on the property to make sure you are purchasing a free and clear title with no liens, encumbrance, or annotations. The Notary will also ensure that once the sale is completed, the new deed will be registered properly under your name or corporation.
- Real Estate Transfer Tax: This tax is paid directly to the Costa Rica Government and is 1.6% of the registered value or the agreed-upon sale price, whichever one is higher.
- Documentary Stamps: This “tax” is basically what it is and will be 1% of the registered value or the agreed-upon sale price, whichever one is higher.
- Escrow Fees: There will be Escrow Fees, which is usually split 50%/50% between the buyer and seller. The average cost for both buyer and sellers is about $550.00.
- Wire Fees: Depending on the escrow company used for holding the funds, wire fees will be about $75.00 US to disburse the funds after closing. Your bank will also charge you a fee for sending the funds to the escrow company.
- Inspection Fees: When purchasing a finished property like a condo or a home, it is recommended to have a home inspection. This will run anywhere from $300 to $550 depending on the size of the property. This will also be paid out at closing by the escrow agency, so no need to send funds for this ahead of time.
As an example: You found the condo of your dreams, and the sale price is $95,000.00 but the registered value is $100,000.00, the closing costs would be $3,850.
Now you are saying “but above you wrote it could be as High as 4%, where is the difference”? The difference is based actually on the value of the property. The higher the value of the property, the higher the closing costs will be. But the threshold is very high as most people are looking just for a nice house or a condo, and that will certainly be priced well below a couple of million dollars.
So when you are looking at your budget and what you can spend for your piece of paradise, just use the 3.83%, and you will be safe.
The Ins and Outs of “HOA” fees (Home Owners Associations)
Let me explain why some associations are high and others lower with their monthly fees.
Higher priced associations most of the times have following attributes:
- More amenities to offer like community pools, tennis courts, common areas for nature enjoyment.
- 24/7 security guards, landscapers for common areas, employees or service companies to maintain the common amenities
- A paid administrator to handle the paying of bills, supervising the employees or service companies.
- Paid Legal representation to endure the laws are being properly followed
- A Certified Public Accountant and/or financial bookkeeping representation
As a fact, in Costa Rica, there are 2 types of association, one is basically a home owners association or private club, and the other is called a condominium. This second one does not solely refer to a tall building with lots of units in it; I live in a Condominium Horizontal which consists of 50 individual fully titled home lots in a gated community that measures over 62 acres in size.
If a development was originally set up under the law of condominium, it has to follow the rules of the law of condominium of Costa Rica. Some of those requirements are that every year there needs to be an annual meeting and a legal representative must be present, basically an attorney or notary, and all that is discussed and passed needs to be registered in the public registry system of Costa Rica. So there is a fee involved with this.
In addition, every year a legally registered condominium has to file a tax return with the government, showing the amount of money that came in from dues and all the expenses, as it is a non-profit organization. Hence one of the reasons it is more expensive is because a legally registered Condominium association should have an attorney on staff and a certified public accountant. Another reason is that many of the owners may be part-timers and not living here day to day, so these associations hire an outside company to manage the day-to-day operations of the associations. This actually is a good thing as it takes the liability off of the owners, and most do not want to get involved or deal with the daily aspects of the development. So the administrator will handle all these items, as in managing the security company or the landscapers and so on.
In talking about the security companies, a well-run and smart association will hire a security company and will ensure that the company they hire is legally licensed and that the company is properly paying its employees to the letter of the law, so that it does not fall back on the owners in the development. Again, hence why it can be more expensive as a properly set up security company will be much more monthly than a company that is not following the laws of the land. It all comes down to you get what you pay for.
One very good aspect of the registered condominium association is that the bylaws and rules and regulations are enforceable by CR law. As another example, say one owner is not paying his dues, after a short period of time, the admin can send legal notices that they are behind, if the owner does not pay up then the association can legally, and that’s the key, file a lien on the owner and if not paid up within a certain period, then the association can start foreclosure proceedings against that owner to collect what is due to the association. This also helps protect the integrity of the development as well as the values of your investment.
The list of things are quite long as I could write a book about it here but won’t. But if you do require more information please email me at firstname.lastname@example.org and I will be happy to take the time and explain it to you.
Lower priced associations have following attributes:
- Very little to no amenities to offer maybe just a community pool if that.
- Security may only be at night time if there is even any at all
- One of the owners in the development acts as the administrator or the developer is still controlling the association
- Common area maintenance is lacking if any.
- Rules and regulation may not be enforceable.
- No Legal Representative held on retainer.
- No CPA or Bookkeeper held on retainer.
In a regular not enforceable association, or called a home owners association or a private club, the fees tend to be much less, there are no teeth to make a person pay their share. Most of them are run by someone that is an owner in the development, that may live here full time and do not have a paid administrator on staff. These developments tend to have fewer amenities and regulations, and rules. As an example, the guy next to you could, if he wants to, keep chickens on his property, even though the rules of the development say no farm animals it cannot be legally held up or enforced unless the rules and regulations were officially registered with the government.
To Be Prepared, You Need To Know What It Is Going To Cost
At the beginning you may not exactly know what type of property you want to purchase in Costa Rica. I have had clients that I communicated with for a couple of years and all they wanted was a Home, would not even consider the idea of a condo, then when they finally came to see for themselves it all changed. So Below I will give you averages of many different types of properties with different levels of service that are offered, of course a lot depends on you and what you require and what you are looking to own but the basics are below. The carrying costs in Costa Rica are substantially less than most other tropical locations as in the Caribbean or Costal Areas in the US and Canada and can be as much as 30% lower.
Land and Home Sites:
If your dream is to build a private home for the future or thinking of an investment for the future, or as some investors are doing by building a spec home for sale, here are basic costs based on a $100,000 dollar purchase of a home lot or parcel of land:
- HOA Fees: Depending on the development and the amenities they have to offer the fees can range from $1,200 to $7,000 per year. The fees usually always include 24/7 security, maintenance and landscaping of common areas, maintenance to pools and common roads and the staff to administer the services.
- Property Taxes: On a $100,000 valued lot or land parcel, the annual tax will be $250 per year. The tax rate is .25%. To calculate multiply the assessed value by .25% ($100,000 by .0025)
- Maintenance: Depending on the size of the lot you can expect to pay $100 – 200 per year to cut and keep the lot clean.
If you, like many buyers that prefer to have a property to utilize right away and rent out when you are not using it, a condo may be the way to go. Here is an example of carrying cost for a $300,000 condo.
- HOA Fees: Again depending on the development and the amenities they have to offer the monthly fees can range from $158 – $750 per month. The fees usually always include 24/7 security, maintenance and landscaping of common areas, maintenance to pools and common roads and the staff to administer the services. Of course Condos in a lower price range and a lower end development the fees could be as low as $100.00 per month
- Property Taxes: On a $300,000 assessed valued condo the annual property tax will be $750 per year, as stated before the tax rate is .25%. To calculate multiply the assessed value by .25% ($300,000 by .0025)
- Electric Costs: Average monthly electric bill will be $150.00, of course if there is more usage the fee will be higher.
- Water: Average monthly cost for water is $30.00
- Cable TV and Internet: Combined together as a package deal will run $70 per month and up depending on any upgrades you chose.
- Maintenance: Basic maintenance for the interior of a condo will be somewhere between $500 and a $1000 per year but in most cases it is actually less. I always feel it is far better to estimate higher and be pleasantly surprised then the other way around and be disappointed.
- Insurance: Most Condos have general insurance for the building built into the HOA fees, so if you want to insure the contents of your unit in case a water pipe breaks this will cost about $500 per year for normal coverage all depending on the value of the contents insured
- Property Management: If you are not living in the property fulltime, you will require a property manager to look after your property and pay your bills. If you have a Costa Rica bank account and can read enough Spanish to get by you can pay your own bills from the local bank's web pages. The average fee for property management companies is between $90 and $150 per month depending on the size and type of property and the amount of work and detail you require. Maid service in Costa Rica is very inexpensive, between $20 and $40 per day depending on the size of the home.
>Larger Luxury House:
This can mean different things to different people but for this example, I am going to use a home valued at $500,000 dollars. For some, this is far from Luxury and to others, it could be considered a Mansion!
- HOA Fees: And again, depending on the development and the amenities they have to offer, the monthly fees can range from $1,200 to over $7,000 per year. The fees usually always include 24/7 security, maintenance and landscaping of common areas, maintenance to pools and common roads and the staff to administer the services
- Property Taxes: As others listed above, the tax rate is the same, so on a $500,000 assessed valued Luxury Home, the annual property tax will be $1,250 per year, again the tax rate is .25%. To calculate multiply the assessed value by .25% ($500,000 by .0025)
- Luxury Tax: Here in Costa Rica, there is a “Luxury Tax” on all residences. The real name of the tax is “Impuesto de Solidaridad”. It was instituted to help clean up the slums of San Jose so people do live in squalor. If the property has a constructed value, based on criteria from the tax administration, of over $230,000 dollars, then the luxury tax is applicable if below that point no tax is required. It all has to do with the products and items used to build the house. So for the average home of $500,000, the luxury tax will be about $1,000 per year average.
- Electric Costs: Average monthly electric bill will be $250.00, of course if there is more usage the fee will be higher.
- Water: Average monthly cost for water is $75.00 as a home of this size will have more bedrooms and more usage as well as having a pool to top off one or twice a month.
- Cable TV and Internet: Combined together as a package deal will run $70 per month. Same as mentioned above.
- Pool Service: Depending on the size of your pool and how often you like it to be cleaned you can expect the monthly fee for pool service to be between $50 and a $120 per month and this usually includes the chemicals as well. Each Pool service company is slightly different.
- Landscaping: Here as well depends on the size of your property and how much attention is needed to maintain a beautiful lawn and gardens. Average prices for landscaping are between $50 and a $120 per month.
- Insurance: Depending on the type of coverage you choose, home owners insurance will be between $200 and $250 per $100,000 of value insured per year for normal coverage. There is also the option to purchase theft insurance for your property, personally I feel it is not worth the cost as you have to notify the insurance carriers every time the property is left vacant, that means even if you decide to go out for dinner while you are here enjoying your home in the tropics, you need to notify them.
- Maintenance: Just like your main home, you will have maintenance costs. This is a reality of any property you own no matter here in Costa Rica or where you are from. Here you can expect to spend between $1,000 to 2,000 per year. Of course, it can be lower if pre-maintenance is done. As an example just before the rainy season starts you should have your gutters cleaned out of any debris that may be in them, otherwise, you could see damage to your property.
- Property Management: As stated above, if you are not living in the property fulltime, you will require a property manager to look after your property and pay your bills. If you have a Costa Rica bank account and can read enough Spanish to get by, you can pay your own bills from the local bank's web pages. The average fee for property management companies is between $125 and $150 per month depending on the size and type of property and the amount of work and detail you require. Maid service in Costa Rica as I mentioned above is very inexpensive, between $20 and $40 per day depending on the size of the home.
When thinking of HOA fees, I will be honest some seem really high. But you have to dig deeper into just the fees and the total cost of owning.
Considering that property taxes are so INCREDIBLY low, as mentioned only .25% of the registered value ($250.00 USD per year for every $100,000.00 USD of registered value) when you add the 2 together it is most likely less than what you are paying for property taxes back home alone.
Now some of the reasons HOA fees are a bit higher is due to the fact that property taxes are so low. Let me explain a bit. Since the property taxes are so low the government of course does not take in a lot of cash, and they direct that money towards schools, health and hospital services, police, taking care of the poor and paving major roadways, etc. Some services like paving of development road are a lower priority so the owners chip in to do it. That is what we did at my development. Other issues like private security guard, are hired because the police force is not as large as say cities in North America. Another one is water systems, since most developments are private gated communities, they have their own internal water systems and guess who is maintaining that? THE OWNERS.
When you look at the total cost of HOA fees and property taxes it is most likely considerably lower than what you pay for property taxes alone. I will use my property as an example:
My Monthly HOA fees are $525.00 Per month, plus $50.00 per month towards the reserve fund for emergency items. That equals $6,900 per year. Now on the other hand my property taxes plus garbage collection are $480.00 per year. My total comes to $7,380 per year. Trust me I don’t live in a dump. I have a beautiful two bedroom two and half bath, 1300 square foot condo with an incredible ocean view from the living room, dining room, kitchen and master bedroom and I am walking distance to the beach.
As a comparison, and google it if you will, a similar property like mine in Miami with the same attributes pays $864.00 per month in HOA fees. That is over $10,000 a year, then the property taxes on the same unit are over $6,900.00 per year, for a whopping total of over $16,900 per year.
So, in reality I am paying less than half of a similar property in Miami. The best part is my purchase price was half of the example from Miami.
This bit of information I feel is important as well and pertains to all types of properties here in Costa Rica. If the property you own no matter what type, lot, condo, luxury home and even a car or a boat is held in a Costa Rican corporation, there are two additional fees to all of these properties. The corporate tax is $194.00 per year for a non-active corporation; this is classified as a corporation not doing business and not making income. If you happen to have an Active Corporation, one making money and doing some kind of business activity, then the annual corporate tax is $365.00 per year. In addition there is also a Resident Agent fee that a local attorney will charge you to be the representative to receive any legal notices sent by any government agency concerning your Costa Rica Corporation. This fee is usually around $350.00 per year and varies from legal firm to legal firm.
Of course you can own any fee simple property in your own name as well and would not have the need to pay Corporate Tax.
The Real Estate Market is Back Where I live, How about Costa Rica?
There is a resounding answer to this questions but it is not as easy as say just a plain YES.
Yes the local market has seen a good upswing in the last few years overall. The group I am associated with TRES AMIGOS REALTY has closed more sales this year than the last two combined and has sold more properties that all the other competitors added together. More baby boomers and retirees are looking to get out of the cold of the northern lands and want a safe and affordable option to live and enjoy.
This has been one of the driving forces behind our market improving. We still see a few investors coming to the market picking up buildable lots and erecting spec. homes for sale to make a decent return on investment.
Although we are seeing the upswing with more buyers, prices are still flat. This is just perfect scenario for the buyer. Now having said that, are their “FIRE SALES”? Well not too many as most of them were picked up a few years ago, but there are still many good deals to be had. A lot of people have to remember that even though the many of the US markets are coming back Costa Rica still lags behind by a year or so.
Let me give you a bit of breakdown of those buying and how they have changed their look on purchasing.
- Clients that were originally in the extreme Luxury market back in the hay days of the 2005 and 2006, with budgets of $2 million or more are still the same looking at palatial estates.
- Those clients that had a budget of $800,000 to $1.5 million are now looking at properties in the low $800K range and picking up some good deals.
- The buyers that originally would spend $600K to $800k are now looking for properties below a half million dollars.
- Then you have the clients that would have spent a half million 6 years ago are looking in the $300,000 range.
Do you see the pattern here? Buyers are still buying and many want to diversify their assets and own foreign properties for many reasons, and not just the great weather, fantastic beaches, and warm friendly people either.
If you have been considering owning your own piece of paradise in the tropics of Costa Rica and especially Guanacaste, now is the best time to consider as I wrote many of the good deals are going fast and when the inventory gets low we will start to see prices on the rise again so don’t miss out before it is too late!
Thanks for stopping by Costarican-American-Connection. Please allow me to introduce myself. My name is Joseph A. Emanuelli, I am the Broker Associate with Tres Amigos in Playa Hermosa Costa Rica. I have been traveling to and investing in Costa Rica since ‘99 and living in Playa Hermosa, Costa Rica full time since ’07 and loving every minute of it!
Contact me today for more information on how YOU can start living the dream of owning in this paradise of Costa Rica. Let me help you navigate Costa Rica's real estate market and see why this is the best country in Central America! I look forward to hearing from you!
Respectfully and Best Regards,
Joseph A. Emanuelli
Managing Broker – Tres Amigos Realty Group
Playa Hermosa, Guanacaste Costa Rica, Central America
Toll Free From US & Canada 877-661-6074
Member CRGAR, NAR, CIPS, RSPS, IRES, ACP, SDIRA, TRC, ICREA, CRMLS