Buying Our First Property In Costa Rica: Why We Chose Not To Buy In The Philippines

This post is part of a series that covers our experiences in Buying Our First Property In Costa Rica:

• Why We Chose Not To Buy In The Philippines (current post)
• Why We Chose The Gold Coast Over the Southern Zone
• Why We Passed On This $400,000 Vacation Rental
• Why We Chose The Convenient Center Over The Quiet Hills
• How We Financed Our First Costa Rica Property

Before our first trip to Costa Rica in March 2017, we had checked out the Philippines two months earlier. Scott, our oldest daughter and I took a 2-week trip to Manila in January 2017 – their first trip and my fourth, although my previous trip was 25 years ago, so it felt like my first time too.

I was already primed to possibly live there because the favorable exchange rate (currently over 50 Philippine pesos to one US dollar) meant that we could drop everything and retire — no job required — right now. I love what I do but would like to slow down and be even more choosy about projects. You can afford to be choosy when you’re financially free. The antagonistic political climate here in the US also makes an escape abroad much more palatable.

Looking at properties in Manila

Part of our trip was focused on looking at properties.  Mainly we looked in Newport City, a cluster of relatively new developments right outside Manila NAIA, the international airport. There is a new walkway under construction to the popular Terminal 3, which at completion will mean you could walk from the airport to your apartment. Furthermore, with proximity to a Marriott Conference Center and Resorts World Casino, an apartment in Newport City would be a potential vacation rental location for the business or leisure travel when we aren’t there. When we are there, we can take advantage of the Marriott and casino shuttles to reach nearby points of interest.

Also, a property in Manila, and particularly near the airport, would make a great hub for international travel throughout the rest of southeast Asia.

We found brand new units for the low $100k’s and even got a lead on two resales for $76k (studio) and 80k (one-bedroom). $80k wouldn’t even buy a parking spot in NYC! Maintenance, property taxes and insurance amount to less than $100 per month. Utility costs are high in Manila but with the smaller units coming in under 400 square feet, these costs would be minimal. Then we would have our escape hatch, our hub for Asia travel, and our first international real estate investment.

So why didn’t we buy?

source: tradingeconomics.com

• The Philippine peso is not a reliable currency (see image above), and if we bought, we’d essentially lock in $100k in a volatile currency;
• We wouldn’t use the unit for more than three months out of the year. We have lots of places we want to visit, and the dry, cooler season in Manila is just about three months. It would be more cost-effective to rent during our visits;
• There’s a lot of development in the Philippines, so who’s to say something better isn’t going to come along;
• For “escape hatch” purposes, the Philippines isn’t ideal – it’s still a developing country, and its political climate is as antagonistic as the US.

On the other hand, Costa Rica

Costa Rica scored positively on the same items where the Philippines gave us pause:

• Costa Rica has its own currency, the colones, but most places and many real estate transactions, are pegged to the dollar;
• We had a couple of leads into strong property managers in Costa Rica, so how much we personally used any real estate purchase didn’t matter as much as it would in the Philippines, where we weren’t sure we could build a rental team;
• Costa Rica closely guards its beachfront, so over-development of the beach-accessible area we would want would not be an issue;
• Costa Rica’s slogan is “Pura Vida” which means a pure life or simple life. With no military for 70+ years, a high literacy rate, universal access to healthcare, rich biodiversity, and an emphasis on sustainability, Pura Vida is a fitting slogan, and Costa Rica an ideal escape hatch.

Passing On The Philippines…For Now

With over 7,107 islands making up the archipelago that is the Philippines, there are, no doubt, lots of choices that would satisfy our desire to be near water. In fact, we could visit a new island every day for over 19 years! However, in the battle of the beaches — at least for our first international investment — Costa Rica takes the prize.

That said, we are heading back to the Philippines in April, and you better believe I’ll make time to look at properties again!

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Check out our full series on Buying Our First Property In Costa Rica:

• Why We Chose Not To Buy In The Philippines (current post)
• Why We Chose The Gold Coast Over the Southern Zone
• Why We Passed On This $400,000 Vacation Rental
• Why We Chose The Convenient Center Over The Quiet Hills
• How We Financed Our First Costa Rica Property