Wondering how should one start if I am looking to buy a single family in Costa Rica. I have been there a couple of years back and would look to have a place that we can use when travel and then rest of the time can use as vacation rentals.
– Sushil
We are not financial advisors or real estate agents, so we don’t give advice. However, we have written in detail about what worked for us, and then you can take what applies to you and discard the rest. We have written multiple posts with the details of how we ended up with two properties in Costa Rica, and I’ll link to them below in case you want to go that deep. But here are the seven key steps we took to buy a house in Costa Rica:
1 – Know why you’re buying
Sushil wants to buy for part-time use and some rental income, and this is how we use our Costa Rica properties as well. But in addition to that, we saw buying in Costa Rica specifically as a way to accelerate our FIRE plan. We don’t live in Costa Rica full-time, so it’s a plan B — not something we need to do right now, but the option is there. Costa Rica’s universal health care coverage was of particular interest to us, given the high cost of healthcare in the US. Remember, if you pull the trigger on FIRE and leave your job, you will also leave your benefits.
Will buying a house in Costa Rica meet your needs?
2 – Know your comfort level with real estate – and international real estate specifically
While we have been happy with our foray into Costa Rica, this was not our first real estate investment. Acquiring a single-family rental in Costa Rica means 1) buying real property, 2) becoming a landlord and 3) owning internationally. We are too risk-averse to take multiple leaps at once, so our early real estate moves were within our home country and even within destinations that we could easily drive to. We had been renting US properties for over 10 years before we bought in Costa Rica. During that time, we learned about picking the right property manager, handling evictions (yes, it happens), and troubleshooting unexpected maintenance issues (e.g., mold developed in the basement of one of our previous North Carolina rentals). Even when you outsource the day-to-day to a property manager, you still have to manage the manager and ultimately make the decisions.
Are you comfortable that you can do what you need to do to buy a house in Costa Rica?
3 – Pick your country
There are 194 universally recognized countries, according to World Atlas. We considered seven factors to winnow down to Costa Rica:
- Enjoyment factor (you do need to spend time on the ground with your investment, after all!)
- Rules on foreign ownership of real estate
- Affordability
- Currency risks
- Government stability
- Economic stability
- Climate risks
Costa Rica checked off all the boxes for us. In contrast, we ruled out buying in the Philippines because it didn’t meet several of the above criteria.
Does buying a house IN COSTA RICA specifically meet your criteria?
4 – Pick your neighborhood
Just like we had criteria for narrowing down to one country, we also had criteria for narrowing down the country to a specific town. We wanted proximity to the beach, and there are several areas up and down Costa Rica that meet the general requirement. Ultimately, we picked the more developed (some would say “touristy”) Tamarindo in the Gold Coast over Ojochal in the Southern Zone. Because our purchase would be rented out, we wanted a more developed market. I felt more comfortable traveling to and living in a more populated area with readily available commercial options and services.
Since you’re not just buying a house in Costa Rica, but moving into a neighborhood, what do you need to have around you?
5 – Run the numbers
If you’ll be living there, can you afford what you want? If you’ll be renting it out, can you make your target return on investment (ROI)? Since we were looking to primarily rent it out, ROI was a key consideration, but not the only one (see point 1 about Costa Rica for healthcare). Another reader asked us if it’s possible to get a 10% ROI on a Costa Rican rental, and the short answer is Yes, it is possible, but there are multiple inputs to the ROI calculation, so you still have to buy right and manage the property right. Purchase price is just one cost you will have. Ongoing maintenance, utilities, property taxes, insurance, property management fees, business accounting and travel costs (to check on your property) are additional. Rental income also varies by the price you set and how often the property is rented. It takes time and effort to establish your property as a go-to destination.
Have you considered all the upfront and ongoing costs, plus the time and effort, of buying a house in Costa Rica?
6 – Secure financing if you need it
It is difficult and expensive to get a mortgage from a bank in Costa Rica, so we looked at alternative options for financing real estate. Some of the these options include seller/owner financing, developer financing (from the homebuilder), private lending (like a mortgage but the money is put up by an individual or business, instead of a bank), mortgaging another property to pull out money or using funds from your retirement account to buy the house. We used the last two options when we bought in Costa Rica. Keep in mind that, if you use your retirement account to buy real estate, it must be for investment only, and you can’t personally use that real estate. This is why we didn’t use our retirement account for both properties – we wanted to use one personally.
If you can’t pay cash, do you know how you’ll get the money to buy a house in Costa Rica?
7 – Get a strong team in place
At a minimum, we needed a real estate agent and a lawyer to purchase the properties, and because we were renting them out, we also needed property management. We found our team via networking (aka, referrals, word-of-mouth). We didn’t want to entrust such a large, important purchase, just to people or companies we read about. We used Katie Meyers as our real estate agent, though she only focuses on property management now. We used Jim Reilly as our attorney. For property management, we opted for boutique companies – Katie for our condo in Tamarindo and Lindsey for our house in Langosta, rather than the large vacation rental companies.
Do you have a real estate agent, lawyer, property manager and anyone else you’ll need for buying a house in Costa Rica?
Other resources to review for buying a house in Costa Rica
We have been very happy with our real estate purchases in Costa Rica. A key reason why Costa Rica landed on our radar was International Living, which is a great resource for multiple countries including Costa Rica. I also subscribe to Ivo’s Blog, written by a local Costa Rican real estate agent and covering a wide variety of issues related to living in Costa Rica.
Have you purchased real estate in Costa Rica? Are you looking?
We are Scott and Caroline, 50-somethings who spent the first 20+ years of our adult lives in New York City, working traditional careers and raising 2 kids. We left full-time work in our mid-40’s for location-independent, part-time consulting projects and real estate investing, in order to create a more flexible and travel-centric lifestyle. 
Financial independence and early retirement is not something we originally focused on, but over time realized it was possible. Our free report, 
