This entry is part 1 of 1 in the series Understanding Costa Rica Real Estate

Costa Rica History in knife metaphorI’d say that about 1/10th of my time spent with people looking to buy property in Costa Rica’s Southern Pacific zone is spent in the actual buying/selling of property. The other 9/10ths is a mix of conversations regarding what’s involved with living here, as well as discussing the business of real estate in Costa Rica.

At its core, the lack of an actual MLS (Multiple Listing Service) colors all aspects of the business here, and I’ll go into that later on in this series. To really understand the business of real estate here, I have found it helpful to go back in time and see the progression of events up to the present. This helps to not only understand the current market but also, to project what is to come.

Early days:
I got into real estate in Dominical in 2004. It felt like the day I got into real estate was the day that someone threw the on-off switch on the market. Since then I’ve heard some tales indicating that the market was already simmering and poised to boil.

I made a sale on my first day in the business. A $60,000 gorgeous ocean view property sized at around 2 acres.  The property featured Uvita’s Whales Tail front and center. That property has gone on to have a lovely home, guest house and pool built on it. It has been re-sold and enjoys a stellar vacation rental history (link to rental page on HomeAway)

Quick overview of The Zone:
The Zone is made up of a string of 3 towns with Dominical at its northern end. The northern boundary is not a hard line but is decidedly fuzzy, easily extending up to Hatillo and at times, up to Portalon. (link to Hills of Portalon Development).

From Dominical heading south on the coastal highway you get to Uvita and then further south, to Ojochal. The area between Dominical and Uvita has a nicely laid out mountain range that runs very parallel to the ocean. Hence the handle “coastal mountain range” This means that you can travel inland from the beach just a short way and get to elevation where it is breezy and cool and offers expansive views of the ocean and coastline, attributes which make this area extremely desirable to investors, relocators and migrators (part-of-the-year residents).

More History:
Before the incoming press of foreign interest in The Zone, the Ticos (Costa Ricans) owned all the land, and their land holdings were always in the multi-hectares (1 hectare = 2.48 acres. Think 2.5 to make it easy).

There was a time in the not too distant past when land in Costa Rica was nearly value-less. There were land-grant programs whereby a man simply had to be willing to take responsibility for a property and the government would “grant” him the land, with conditions.

At that time it was not known that “nature” had a lucrative aspect to it. Instead nature was largely viewed as “in the way” and needed to be tamed, subdued or eliminated. So, one of the conditions to receiving a land grant was to cut the trees down and raise cattle.

I suspect that this era may have coincided with the “McDonalds” explosion. This is an arguable point, so let’s just say it coincided with an extreme demand in the U. S. (and world) for beef.

After some time of cutting down enormous canopy trees and attempting to raise cattle in former rain-forest environs, there was a shift in our world’s appetites; nature became an important commodity. Granted, beef has continued to be an active commodity, but it was also learned that former rain forest land doesn’t necessarily make for the best pasture land.

Raising cattle in Costa Rica was a daunting struggle. The farmers found themselves up against nature. Having to maintain former rain forest jungle land in “pasture” condition presented its trials, as well as the fact that the beef business (exporting meat, bureaucratic inefficiencies, and 3rd world infrastructure or lack thereof) made a guy scratch his head and wonder if having all this land was such a good idea.

The Tico culture was/is multi-generational. These large, granted tracts of land, would end up being populated by the man who acquired the land, his now grown sons & daughters and their families, and the grand kids (soon to also have families.)

So despite having lots of land, a condition that in first-world countries equates to being wealthy, these farmers were subsistence. They lived off of what their land produced. As a child would grow to adulthood, Abuelo (abuelo = grandfather) would simply build them a house and apportion off some land (or not) and they would continue on contributing to the sustenance of the family. The land itself was not thought of in lucrative terms.

Abuelo just happened to acquire a land grant on, let’s say, 60 hectares of land that reaches from the inland side of the maritime zone on the coast up to the highest point of the coastal mountain ridge. He’s not thinking “oh boy! I’ve got some ocean view land here.” No, he’s thinking: “man I hope this land is fertile.”

Enter foreigner:
One day Bob, a tourist, is exploring the area and decides that he’d like to buy Abuelo’s property. Bob offers Abuelo $60,000 for the land. Abuelo has never even considered the remote possibility of maybe someday having such a sum. In fact, he’s never even seen that much money. He talks it over with his family and they (very understandably) feel that this would be a wonderful thing for them to do. So, they sell their land.

Bos is a visionary. He sees what is likely coming and so he stakes his early claim. Now, keep in mind that there is no electricity to this property, the access is horseback and the water is from a nearby spring that is bubbling out of the ground. Abuelo has run a pipe from the spring to an elevated storage tank near the family homes. Bob’s a visionary in that – what foreigner in their right mind would possibly want such a remote and forbidding piece of land?

To understand this is to understand the element that is credited with making the world go round. We all have different likes and dislikes. I wonder at the likes of Steve Jobs, Bill Gates and Paul Allen’s level of focus on the personal home computing idea at the time that they had that focus. I’m not of this ilk and so my hat is off to such ones. I view the early investors here in The Zone as being made of the same stuff.

In looking back over the history of the first wave of investors here, I marvel at their foresight. My then wife and I looked at some Whales Tail view property in Uvita around 2002 and, despite its being gorgeous and nicely priced, I felt that it was simply too remote. This was in the same area where 2 years later I sold my first property.

Ok, so I said that to understand the real estate market here in Costa Rica, it helps one to know a bit of the history. Granted, we’ve gone back to what I appropriately call the first-wave of intrepid and visionary investors – The Visionaries. We’ll continue on in the next article with Bob’s next steps and incredible gains on his visionary act.

Property Buyer’s Checklist Part 2 1

This entry is part 2 of 2 in the series Costa Rica Property Buyer's Checklist

I find “temperature” an interesting consideration. I moved to Costa Rica from the high-country of Colorado USA. I think that I spent the first 2 years here thawing out. I still find myself looking at a steep driveway entrance to a house and wonder at what the people do during winter. Hah! The climate in Costa Rica is exceptional – for the most part.

The Zone’s topography is loosely as follows: mountains coming down to the sea. So there are some elevated options, as well as some sea level options available here for the property searcher.

Costa Rica property buyer's checklist imageElevation, temperature, misty, humidity, view spoiling clouds and mold. These are the next points on the checklist about buying a property at altitude in Costa Rica.

I live just a little north of Uvita in a pueblo called Playa Hermosa. My house is located at the highest point in this community, roughly 600 feet. There are times during dry season (read: summer) when I go to Uvita (just above sea level) to do my errands, and then get back home, where the air is fresh and breezy, thanks to the Pacific ocean.

So, we are here talking about a subjective concern. What kind of climate are you looking for? I have talked with some people who thrive on the “hot” of Uvita during the summer. I have also spoken with those who, like me, flee the heat.

Altitude: The official designation of the cloud ceiling within 10 degrees of the equator (Costa Rica is at 9 degrees) is 2,400 feet above sea level*. This is where you start to see the cloud forests. You know you’re in a cloud forest when you see trees that have moss hanging from the branches (among other indicators, but this one is easy).

Here in The Zone, there is the potential for clouds, mist and humidity at elevation. As a guide to making a buying decision on a piece of property, this is a matter of personal taste. My taste is, the higher the better. But, it (altitude) does present some of it’s unique conditions that are good to know about.

If your clothes, bedding and furniture are getting ruined & smelly by incessant dampness and mold, now you’ve got a problem. I’ve not had this problem in any of the areas I’ve lived in here (San Isidro, Dominical and Uvita), but I have certainly seen it, and it’s a problem to contend with.

Part of the answer lies in the design of your house. The treatment of light and air motion, as well as the intelligent use of fans, A/C and de-humidifiers all factor into the equation. The design of the house is the main thing. Design with the climate in mind. If you are at one of the higher elevations, visit the property at different times of the day. Talk with others who live nearby and see what they have to say. These people are generally all-too-happy to share their experiences with you about what worked, and what didn’t. Ask about soffit overhangs, direction of windows, keeping in mind the evening sun, types of paint, wood and so on.

I’ve been up at elevation when the clouds have come in. The homeowner goes around closing their windows to keep them out. I sat there enjoying the spectacle – no, not of him closing windows, but of the clouds coming up the coastal mountain range and buffeting the house. Man I could live like that! Others have expressed a distaste for the experience. Again: subjective.

I spoke with a friend here that lives at 2,000 feet and asked him if he has a problem with humidity and mold. He said “no” with a caveat. When he had first moved into his house, he had left it for an extended period of time. When he came home there were some dark mold spots in a few areas of the house. He had closed his house up tight. Now when he leaves, he leaves his windows open and fans on low. He now comes home to no mold.

As for the question of humidity, it may be the opposite of what one would think. It seems that there is a higher humidity down at sea level than at altitude. I can attest to this from years of driving down from San Isidro to Dominical. There was a point along the way that my family felt when we would hit what we called “the wall”. There was an uptick in what felt like the temperature and humidity. Hey, its not called the tropics for nothing. It is slightly cooler (3.5 degrees F. per 1,000 ft.)  and drier at elevation.

Topography & Terrain Steepness

If you are a lover of the ocean view, you will end up buying a property at elevation, at least a little bit. The coastal mountain range in The Zone is as diverse as can be.

Costa Rica is a “young” country in geologic terms. North and South America existed for some time as distinct and separate countries that were eventually joined by the land bridge that is Central America. It would seem that there were a number of forces at work, determined to make this bridge.

I had never thought of this, but I had it brought to my attention recently by Jack Ewing of Hacienda Baru fame, that despite being known for its volcanoes, all of Costa Rica’s active volcanos are in the northern part of the country. The southern part, where The Zone is situated, appears to have been formed by tectonic plate activity. Interesting. Volcanic to the north, tectonic to the south. Sounds like a nicely coordinated effort.

I say all that to get to this point. The geology of The Zone is diverse. There are areas where the soil is as stable as can be. We get what are almost routine tremors throughout the year here. The Ticos start getting a little nervous when there haven’t been any for a while. The thought is that if there hasn’t be a pressure release on what is underfoot, there could be a big one storing up.

I’ve been through some rather exciting shakes here, but nothing that knocked a TV off it’s place, nor anything like that. But seismic activity is good to be aware of. Also, intense rains. We are, after all, in the rain forest.

So, as you look at your properties, and wonder how the property you are enamored with will handle the shakes, there is something that you can do that will take the guess work out of it.

A soil analysis is a feature of roughly half of the raw-land sales that I’m involved with. The geologist will take a number of samples from different areas of your building area, and give you a detailed report on what it can bear. If you were thinking of building a 3 story, cement block house, he may just come back to you and say that you’ll need to keep it to 2 stories, or build with lighter materials and so on. The results are quite impressive and can make for a successful land purchase of a mountain property.

Up next: Solar Power, Hot Water, and Distance from Amenities

Info thanks to a friend who lives in Costa Verde

Steepness of terrain for building

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