Prices | Guys In The Zone: Costa Rica Real Estate

February 23, 2010

Houses In Our Future

Filed under: Construction, How to Sell, Land For Sale — Tags: buy land in costa rica, Construction, Costa Rica, development, prices, real estate, Relocation — Tigre @ 6:09 pm

What does the future hold for The Zone?

The crystal ball… standard equipment for psychics and investors, alike. Ben and I are constantly observing the trends and then peering into the future of our little Costa Rican real estate market.

The First Wave

Around 1995, the first wave of developers arrived to the area. These early mavericks (let’s call them environmental-preneurs) benefited from a combination of vision and cheap land. Development was easier back then. Buy a big farm and segregate it into smaller farms (or lots). As the news of cheap land and low costs for materials and labor trickled out to the world, there was a 10-12 year rush on land that led to spiking prices for ocean view home sites. At the beginning of 2007, there were no quality ocean view lots left under $100K, at least not any in developments with good infrastructure (roads, water and electricity). Well, it’s now 2010 and we suddenly have many ocean view properties that can be purchased for under $100K. This quick “land in The Zone” recap is an attempt to set the table for the next trend I believe we experience, moving forward—Houses in The Zone.

Ben and I estimate over 60% of the people who inquire about property want to buy a house; however, over 60% of those house hunters end up buying raw land. There is a very obvious lack of supply in this economic equation, and the reason is we are simply at an early stage of the development cycle. According to CFIA (Colegio Federado de Ingenieros y de Arquitectos de Costa Rica), compared to 2007, the province of Puntarenas experienced decrease of -67% in total square meters constructed compared to the January–April of 2008.[1] Safe to say, the global economic downturn effected everyone investing in Costa Rica.

Gorgeous villa in San Buenaventura.

Yet toward the end of 2009 to present, we find ourselves busier than ever! We currently have 40 house listings on the coast (which means not including the mountain towns of Platanillo, Tinamastes, and the regional capital of San Isidro) ranging from $66,000 to $3.2 million. And, it’s no surprise that 90% of home buyers want an ocean view.

For those with construction experience and a desire to build houses in a foreign country, this where there may be money to be made. The crystal ball formula is– buy a cheap ocean view lot, no more than 10 minutes from the Costanera (our paved coastal highway), and build an affordable house with a swimming pool. The main question we anticipate from potential builders’ is “What kind of house do I need to build to guarantee a sale?” Unfortunately, we cannot provide a “guarantee” only guidance based on our personal, feet-on-the-ground perspective.

Price

The $weet $pot in our house market is between $200-250K. There are folks looking for houses on the coast in the $100K range, but they quickly realize those days are over. If you their budget is fixed at $100K, then we show houses up the mountain in towns like Platanillo and Tinamastes. We do have a couple of nice coastal properties with old tico houses on them for under $100K, but most of these are “tear downs” and re-building on these footprints is generally un-advisable.

Floorplan

Swimming pools sell property.

In this $250K price range, one effective floor plan is the 2&2 en suite (e.g., double master), central kitchen and small living area, and a large patio outside to enjoy the view. Most of the living experience in Costa Rica is done outside. Without question, one of the key rental amenities is the swimming pool.

IT doesn’t need to be huge, or have an infinity edge. But, it really helps a sale because it really helps rent-ability. Even thought there is a bathtub-warm ocean with miles of empty, gorgeous beaches just sitting there for people to enjoy, vacationing groups, couples, and especially families, love the pool.

I could offer a few more building suggestions, but I’ll leave those details to those with far more experience in spec building. What I do know is… Ben and I need houses, and I see them in our future. Thanks for reading.

[1] Indicadores CFIA de la Construcción. Costa Rica, Enero-Abril 2009

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October 13, 2009

Now What’s My Land Worth?

Filed under: How to Sell, Info & How To's — Tags: cooperation, prices, Selling Information — Ben @ 5:51 am

I’m going to go out on a limb here and define some specific points that we at Guys In The Zone use to evaluate a property. At the moment, this practice tends towards the black arts since the basis for land values in the zone went right off the cliff with the rest of the world’s economy.

Jesse over at Green Leaf Real Estate has come up with a rather interesting formula for property evaluation: take what was paid for the land and add 25% annually, and then reduce that number by 40% to get today’s market price. I find this technique to be ingenious, not so much for it’s accuracy, (that would be a subject of much debate), but due to the fact that Jesse actually came up with a method for evaluating land that sounds like it’ll put you somewhere in the ballpark.

The problem is, we’re not sure where the ballpark is these days.

Rod & I have been working more with the other real estate agencies in The Zone as we move towards a more cooperative real estate profession. John Wieland of Coldwell Banker invited us out to look at a couple of houses in Ojochal and we got to listen to how he addressed the question “what’s my house worth?”. He answered: “you can follow the market, be right at the market, or lead the market”. To “follow the market” would be to realize that others have dropped their price and so you follow suit. “Be at the market” would be to stay in the trajectory, up or down, that you feel the market is in. Now, to “lead the market” means that you anticipate the market and blaze a trail with new prices that are compelling to the type of buyers that we now are seeing here in the zone. In today’s “down” market, this means doing extraordinarily low pricing to get a timely sale. (more…)

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June 28, 2009

Why Did You Move to Costa Rica?

Filed under: Just for Fun, Relocation — Tags: Personal, prices, Relocation — Ben @ 3:25 pm

“The chance to have a second life in the same body. A life immersed in nature, and immersed in culture. This would be to get involved in what is here as opposed to what I had already lived”.

To share your story, scroll down to the bottom of this post.

After reading my article in a new magazine here in the zone, Raven’s flagship Montañas al Mar, an old friend approached me and took exception to one of my comments. He was able to quote the article – the part where I mention how early land buyers here in Costa Rica’s southern Pacific zone were able to convert $1.00 invested in land into $120.00 by selling that land.

My old friend, who is seated squarely in the middle of the “early investors” group, made the point to me that the so called “early investors”, hardly had “investing” in mind. This wasn’t what they were doing. For some reason, this sparked my question: “Why did you move here”? And hence his answer as noted above, which I find to be profoundly beautiful, and the wisdom of which caused me to pause, and it set off a chain link series of memories as to my own reasons for moving here, none of which had to do with investing.

In my conversation with Old Friend, he talked about the day when you would buy a large piece of land, partly because that was all that was available and because that was the life that you wanted. There certainly weren’t the conveniences here that there are now, but there was the serenity and quiet, and a chance to live “a second life in the same body”. Granted, the thought of parceling off a piece of piece of that land in the future to reduce, or fully compensate one’s initial investment was present, but was not the key motivator.

Working in real estate in Costa Rica, one tends to get the viewpoint of valuing the land we work with in terms of “asset appreciation” and “investment potential”. This is indeed what a certain percentage of our buyers are concerned with. However, just like some of the early investors, a number of our buyers now are life-stylers, those who are looking to live life in a way that differs from the way they’ve lived it up till now, and that have placed “asset appreciation” low on the list of criteria that they are looking for.

“Why did you move here” is a great mental exercise for us expats and migrators. I suppose that there will be some that answer the question with: “I came to invest in land and make a lot of money”, but I think that they’d be in a minority among those that live here.

The beauty of buying land in an area such as this is that you can perhaps optimize your dreams in the buying of that land. The land itself becomes the means by which you can live in this beautiful area of planet earth. There are so many ingenious ways that expats find to support themselves here: vacation rentals, B & B’s, spas and retreats are all in full bloom here for this very reason. One couple I know have cabinas, a highly rated restaurant, a decorative iron works shop and a petting zoo on their property, even though the property is a little off the beaten path. Its hard to know if it’s a money maker, but it clearly allows them to live happily in Costa Rica.

There seems to be an irresistible push to make Costa Rica just like any other desirable destination, with all the services and conveniences of a Florida or a southern California. There are a couple of factors here which may affect this “push” from coming through to full fruition. One is the topography.

Costa Rica is a geologically young country. Pressed up by colliding plates, the country was thrown up by erratic tectonic pressures in an anything but orderly manner. After living here for over 10 years I still have to carry a compass with me to establish “north” in a given location, so abstract is the lay of the land. Even if pure lucre were given free reign to define development in the zone, it would be limited by the radical nature of the topography.

And then there is the matter of consciousness. Costa Rica news headlines are rife with reports of catastrophes and subsequent damage control that rampant development has caused in the earlier developed areas of Costa Rica. We here in the southern zone are benefitting from the mistakes made elsewhere. There is a genuine interest on the part of foreigners and Ticos alike to preserve this gem-like portion of Costa Rica, a consciousness that transcends the turning of a buck.

Well, we’re hoping so.

So much of how we’re doing here as a species, living in the finite space of this planet, is defined by our use of land. Just in the last week I’ve enjoyed the conversation mentioned in this article, and others with developers, house builders and residents alike that are focused on “green” and “sustainability”, in their truest sense.

There is a construction company taking shape in Dominical that is no less than visionary in its approach to the building materials that will be used to construct human habitat. There is a company in Canada that is about to make solar homes with thatched roofing affordable to land buyers here in the zone. There are efforts on the part of developers to employ ecological easements to definitively restrict the further subdividing of their lots, into perpetuity – all good.

We are about to see a major change here in the zone. More people are going to find their way here with the paving of the bumpy road that links Quepos in the north to Dominical, the gateway to the zone. Development and progress are going to happen. It seems to be an irresistible force in human society. More, bigger, better.

So, why are we here?

Perhaps it’s the differences as compared to where we come from. Perhaps it’s the value of quieting the inner dialogue that ran so rampant in our minds “back home” – freedom from media saturation – a connecting with nature and the spiritual side of things – an opportunity to “get involved in what is here as opposed to what I had already lived”.

How we answer this question may define how things look around here in the coming years.

If you would like to send us your answer to this question, please fill feel free to cut loose with your creative thoughts.

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February 19, 2009

A Brief History of Real Estate in The Zone

Filed under: How to buy, Info & How To's, Projections, State of the Market — Tags: buy land in costa rica, history, prices, State of the Market — Ben @ 6:24 am

“The Zone” is made up of a stretch of coastline starting from Hatillo in the north, and stretching south to Palmar Sur. Included in that zone are the following towns, noted from north to south:

Hatillo
Dominical
Uvita
Ojochal
Palmar Sur

The inland portion of The Zone is a leg that runs from Dominical to San Isidro de el General, also known as Perez Zeledon. In between Dominical and San Isidro is the town of Platanillo.

The Southern Pacific Zone of Costa Rica

A word about pricing:
When dealing with ocean view properties in Costa Rica’s southern zone, the usual criteria of looking for a “per square meter” pricing fails us. This becomes evident quickly as one familiarizes themselves with the market place.
Evaluating an ocean view property in this area is a combination of attributes, or virtues that come together to give the property its value. Based on observing land buyers over the years, I rank these virtues in roughly the following order:

view
access
size
infrastructure
amount of usable land
proximity to the beach or a river
privacy
air motion

As an example of this, I once had a 10 acre property that had a window view of the ocean. Of the 10 acres, perhaps 1 ½ were usable, the rest falling away in jungle covered hillsides. Price: $115,000
Across the way from this property, perhaps within 500 meters, I had another property of 2 acres with a sweeping ocean view, (more…)

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January 5, 2009

How to Sell in a Down Market

Filed under: How to buy, Land For Sale, State of the Market — Tags: prices, Selling Information — Tigre @ 1:02 pm

As all of our sellers (who were once buyers) know, value is one of the most important elements for any investor, never more so than now. In years past, headroom for appreciation was a given. Land was relatively cheap and on the rise compared to the rest of Costa Rica. In fact, many investors purchased multiple properties at that time.

We now find ourselves in a more mature market with more discerning buyers and subsequently some properties sitting unsold for an extended period of time. Due to the recent economic downturn we see an increasing desire to move something now. This is a different approach to the “let’s put it on the market and see what happens” mindset of years past. We have now hit the lull so commonly experienced in a previously booming market. Seller financing has allowed more buyers to secure a property, as well as, partially alleviating the financial pressure on many sellers. (For more information on seller financing, see Ben’s article “Do You Have To Be Rich To Own Land In Costa Rica?” ) In any case, for those sellers who seriously need to sell this high season, list price has fast become the key element in the sales process.

Ben and I always strive to create win-win deals. We love those clients who are not limited by a hard-ceiling budget; however, our impression is these liquid investors will probably not make up the majority, moving forward. Most prospective buyers who approach us (either online, as a referral, or as a walk-in) have a budget of $XYZ. We start by showing them the best value in that general price range. More often than not, we only have one or two days to spend with them. This limited time frame means a seller’s property may not make it in the first circuit, or “A” group. When the “A” group is exhausted, then we move to the “B” group, which include equally stunning properties at a slightly higher list price.

I describe our listings in this way not to get our sellers to lower their list price necessarily, but to understand that if they need to sell their property, list price is key to getting the property shown. Ventanas Oasis (listing #299) is one example of a fantastic ocean view listing priced to sell. Without a prospective client taking the drive to your property, standing on the dirt, and blending their vision with the features and possibilities, you have virtually no chance of getting an offer. So, our suggestion is to leverage the next few months with a list price that will get your property shown and sold.

Ben and I are available to answer any questions for buyers and sellers regarding comparable pricing, as well as, the best properties available in the southern Pacific zone of Costa Rica.

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