Buying Land in Costa Rica - The First 2 Steps

It is assumed that by the time you find this info that you have probably searched the internet for "Costa Rica real estate" or "buying land in Costa Rica" or "Dominical real estate" or some facsimile thereof. You have likely perused countless listings and considered the bountiful information on how to visit Costa Rica (airline tickets, car rentals, hotels, etc.) Just getting here, especially if it is for a family, requires some time-consuming planning. I got to thinking... since typical tourism travel to the tropics generally requires the same stuff, you know-- shorts, light fabric shirts, sandals, sunglasses, a hat and some sunscreen, with these things you can pretty much get around the tropics in whatever part of the globe you're going to. But if you are coming down to look at land, well that can be a twist that can leave one sandal-clad in the jungle with a rash up to your knees. So, here is a step by step for those whose next visit to Costa Rica is for the express purpose of shopping for real estate.

1. Make an appointment:

If you are looking for land anywhere south of Quepos (Matapalo, Hatillo, Dominical, Platanillo, Uvita, Ojochal, etc...) you will find when you get here that getting a realtor's attention can be a bit tricky. There is a real estate boom going on, and its not so much that the real estate agents are getting snooty... well maybe it is, but I know that in the case of my office, there have been times when we are hard-pressed to have the office manned, womaned, or peopled. If you make an appointment, you will get put into the calendar and get the undivided attention of myself or one of my associates. (Please click here to go to our contact form. There you can send some of the preliminary information that helps us to help you get your property.)

2. Bring the right stuff:

Footwear is a big concern. A number of folks have come in wearing the Keen brand sandal-shoe hypbrid. These are cool, and everyone goes on about them. I got myself a pair and they are cool insofar as they are different. I get asked about them quite abit, and there seems to be a brother/sister-hood among those that wear them. But for stomping about in the jungle... not so good. Entirely closed in shoes/boots are better.

Bring some hiking boots. I recently discovered that using rather thick hiking socks, made of some kinda synthetic material work great. I was surprised to discover that they were actually cooler than my here-to-for exclusive use of cotton socks. Obviously if you are coming down to view exisiting houses, or say... Canto Del Mar condos, you will be fine in flip flops, which by the way, are my footwear of choice when I am not in the jungle. For rainy season, I always wear rubber boots in the jungle. During dry season hiking boots are fine with sneakers a distant second.

A good hat. Sun is another big consieration here. I like the broad rimmed variety since I get a red neck with a ball cap. There is a lot of sun here, even in the shade. A hat can make or break a day's outing.

Sun screen if you're not a hat wearer... or even if you are.

A wattle 'a botter. A carrying thingy that goes over your shoulder, or around your waist for a liter of water is super-deluxe. At the very least, remember the bottle as we head out, and be sure and remind me to do the same.

Bug repellant. I don't use it myself and I find that I get very few bug bites. But, there does seem to be about a 3 week period when you first get here when your legs are going to get nibbled on up to about the knee. I'm not sure what happens at 3 weeks, either we become distasteful to the little beggars, or they continue to nibble and the body simply quits taking notice. Since the land buying visits don't normally exceed 3 weeks, it is probably a good idea to bring some kind of defense against these guys. For those that are moving down, I have a theory. It seems to me that among my friends here (yes, I do have some friends here :o) that use bug repellant, they seem to continue to be "bugged". Since I was bugged initially, and now am not, I wonder if maybe letting it all run its course isn't the path of profound wisdom. This is a bit of an ongoing debate here among some of my collegues.

Coming next: Strategize!

The Third Thing

For a long time we here in Costa Rica's southern zone have been talking about how the real estate market is going to be affected by two big events.

1. The road being paved between Quepos/Manuel Antonio and Dominical


2. The coming international airport in Palmar Sur.

These two events are bound to impact our market-place significantly, and are points of fact that all of the prospectors in this area are hanging their hats on. But there is a yet more compelling thing out there

3. The topic of this article - financing.

I'm inclined to view this third thing as potentially more significant than the previous two.

A number of our investors are relatively young. These are people that have perhaps purchased a property in the US a few years ago, and that property has gone on to appreciate enormously in the white-hot markets of California, Florida, Colorado, and other areas of the country that have enjoyed huge appreciation surges in value over the last few years. Now they have $100k in equity and have heard that you can buy a nice ocean view property in Costa Rica for that and so they come down.

I wonder what the effect will be when investors with $100k in their pockets walk into our office, and with that amount of liquidity, are able to purchase something of 10 times that value. I suspect that the effect of financing on land values in the Dominical market could be greater than simply being able to get here easier, which is, of course, the effect of the first two things.

We currently have 10 properties in our inventory that are all ocean view, and afford views of the Whale's Tail. They range in value of between $125k - $195k. If one were to track the history of land values in this particular area, they would see that the prices on such properties have gone up considerably. However, when you factor in that everyone who has ever bought up in this area, had to have the cash available for their purchase, in its entirety, one can start to appreciate how the lack of financing has held down land values as though with a ball and chain. Cut that chain, and provide financing, and watch out… a helium filled balloon? ( a metaphor moment )

Consider another area of the planet where the mountains come down to the sea. More than this, throw into our scenario that the mountains immediately in from the coast are very nice and desirable for living. Where would you say? I'd love to get some input on other areas that are comparable, but I come up with Malibu California, USA. I've gotten online and done a bit of research for values there.

Its a little tough to do a comp, since our properties range in size from a minimum of 1.25 acres to 6. And it is a little difficult to find a chunk of undeveloped land in Malibu California of this size. So, just looking at it all and tumbling it around in my mental mixer, I come up with comparable land being valued in the $7,000,000 - $8,000,000 range. This is a considerable difference. When we consider that the purchaser of such land in Malibu actually needs to have, in pocket some $700,000, and oftentimes less. Now we can begin to appreciate the affect that financing for land acquisitions in Costa Rica real estate will make. Imagine that all that a land buyer would need to purchase a piece of land in Costa Rica... Lets say one of the ones in our current inventory, was $40,000 down, and could then service the loan over the next 5 - 15 years. It is conceivable that that same investor would be able to add another property to his portfolio and consider him/herself to be a bona fide real estate investor kinda person in Costa Rica.

So where the buyer would have bought 1, they are now buying 2. Or where the buyer would have spent $200,000 for their property, they are now spending $800,000. In our current market place, we real estate agents are sweating the inventory concern. We ain't got it. It is low. Now lets double the buying power of each investor that walks through our door, and we have a serious supply/demand situation: one can imagine the effect on the pricing.

Now, add to this 3 point equation, an easier access to the Dominical area. Factor in international flights coming into Palmar Sur, just 45 minutes south of Dominical, and 20 minutes south of some of our hottest selling properties. And this is on the smoothest, best darn highway in the country. Now throw in an extension of this highway to the north up to Quepos, and we've got ourselves some ingredients that sum up to serious land appreciation in the coming years.

For those considering an investment in the Costa Rica's southern zone, this "Third Thing", the inevitable coming of financing, this could be a key ingredient affecting investment decisions that one makes today.

I recommend reading "Discovering Costa Rica's Pacific Southern Zone" for more help in investing here.