Guys In The Zone: Costa Rica Real Estate

We'll see what the year 2012 brings to Costa Rica's southern pacific zone.

November 28^th, 2011 marks the start of the high season, speaking from the perspective of the Guys In The Zone here. However, in the few inquiries that I have made, it is apparent that there was a definite up-tick in sheer numbers of people in The Zone starting on that day, just a little over a week ago. Here’s what we’re seeing around the Guys office.

Lots of Sellers

We were focused on getting our property data based fleshed out over the last couple months of the rainy season.  Rod & I thought we were doing pretty well, taking advantage of the rains, and the quiet time in Uvita and Dominical to get all of our properties in order.  We have come to discover that there is no room for being smug on this front. We are nowhere near caught up with our sellers. We have quite a number of sellers that come down to Costa Rica every six months or so to visit, play, unwind and take care of property matters. This influx of sellers coming by our office, and working with them in various matters pertaining to selling their property has clearly indicated to us that we are in a Buyer’s Market here in Costa Rica. We have LOTS of excellent properties for sale at great prices.

Lots of buyers

The problem with all of these sellers coming in, is that we also are experiencing lots of buying activity. This is great for the coffers of the Guys In The Zone, but it makes for the need for Rod & I to get ourselves cloned, which we are not inclined to do, so we are simply running as fast as we can to be able to accommodate.

Buyers Profiles

Profile 1The global economic crisis seems to have inured to our benefit.  People are saying “I’ve had it” with wherever they may live (lots of Europeans in the mix, as well as Canadians and US’ians) and making the move to Costa Rica. A rather new buyer’s profile for us are the younger families that are not in the financial condition to move to Costa Rica, at least in the old “retiree” manner. These younger folks are coming here as a direct result of unpleasant conditions “back home”. So, they are looking for income generating properties.  Over the last month or so, Rod & I have dealt with about 3 of the following type requests.  These buyers are looking for:

• An income generating property
• Room to build several cabinas
• Room for a small restaurant
• Room for a main living abode for the buyers
• Budget of $200,000

The Esquinas property sold, removing from the front window what was clearly the most talked about property in our office.  We now have another couple of options for these requests, but this is a VERY tall order. We are expecting what properties there are that can satisfy these criteria to be gone by season’s end. Here is the new HOT relocators, income generating property: Pequena Luna

Water at the End of the World

Profile 2 End of The Worlders Last week I worked with prospects that want 100 hecs, lots of water, land to farm, and big view. Their budget is 1,000,000 Euros ($1,350,000 USD). They are looking to being self-sufficient, to the point of providing their own food, water and electricity.  We may have hit pay dirt with some amazing ocean view property up in the mountains around Uvita.

Profile 2b This next one doesn’t fit in the End of The Worlder’s category, but they are certainly an interesting indication of market conditions. There aren’t enough of them to credit them with their own profile, so they are abbreviated. An investor’s group from Europe, looking towards doing an interesting, very green hotel with some activity attached to the hotel, like a golf course, or some other. The budget on this one is multi-millions.

Old Standard Property Buyer Profile In addition to these rather impressive profiles, the old standard is still there – the retirees looking to move to Costa Rica and enjoy a lifestyle with less of the frenetic pace and media saturation of the “developed world”.  It seems that the economic downturn has had an effect on this seemingly bullet-proof group of prospects.  Whatever plans they made in their lives for retiring: 401K, IRA, market portfolios etc… things have simply changed, and now the thought of generating a bit of income with what they do here in Costa Rica is of interest.

Rod is currently working a deal in progress on an amazing listing that we just got here in Uvita that is just a short ways up the hill behind Uvita. The property measures just under an acre and has a gorgeous and expansive ocean view. $90,000 on this one.  Even if this first round of negotiations doesn’t go through to close, I have little doubt that it will go quickly.

Rod is also working a gorgeous ocean view lot down in La Perla Ballena, which is south of Uvita about 5 – 10 minutes. The asking price on this one is $165,000 (back to business as usual). The buyers offered $115,000, the sellers have countered at $150,000. The buyers are cogitating on this.

We’ll see where it all goes. I include these rather mundane details of our lives here because I think that these points help you, dear reader, to know how it is here now. What the feel is here in U-town and in the southern zone. There is more, and it would seem, serious, talk about the international airport having its funding. This may actually be a reality about to happen. Heaven knows why people need to fly into the southern zone of Costa Rica, but it would seem that this is what “they” want to do. The implications of this to land values is interesting.

I’m getting close to my self-imposed blog-limit of 1,000 words so I’ll leave you with this. I went out to the San Buenas Golf Resort today, and I’m blown away.  More to come on that front.

I was excited to find the Poll functionality on LinkedIn a couple of weeks ago. The question I came up with “What is the top reason to buy land in Costa Rica’s southern Pacific zone?” seemed like a good jumping off point for this regular feature on the blog. Although the sample size was small, the responses were revealing.

Low Property Tax
Costa Rica’s property tax rate is .25% on registered value. That means if you buy a $400,000 house in Uvita, you will pay $1,000 in property tax, plus another $1,000 (or .25%) for the new Luxury Tax passed in 2010. Your total annual property tax bill will be $2,000 which is a third of what you will pay in Houston, Texas.

Investment Value
If we can agree that people want safe, beautiful, and affordable environments to live in, then the southern Pacific zone of Costa Rica has to make that list. Clearly, “affordable” is a relative term. Some clients have $50,000 for a house, some have $1.5 million; however, this market has dipped according to the simple dynamics of Supply and Demand. An ocean view property (only 8 minutes from Uvita) listed for $30,000 was unheard of five years ago, yet now we have it (Sunny Josecito). In fact, we have access to just about every type of investment in every property category.

Growth Potential
I can’t tell you how many times per week people ask me when the International Airport will be completed in Palmar. Given the fact that construction has not started, it is a difficult question to answer. Eventually, it will be constructed (for better or for worse), and the area and property values will grow as a result. I state this with a fair degree of conviction because I’ve seen what paving the Costanera (Coastal Highway) and re-paving the road between San Isidro and Dominical has done for the area. I believe if it weren’t for those two improvements, the downturn would have hit our area much harder.

Walking the dog on your favorite beach.

Weather and Beaches
Today (Sept. 29th, 2011) marks the middle of the rainy season, yet we had sun with its accompanying ocean breeze all day long. The evenings are typically cool, especially if your house is strategically located facing the Pacific Ocean and its beaches. Speaking of beaches, The Zone has something for every sun lover. You want to surf or watch surfing, go to Dominical. You want a good dog-walking beach, go to Playa Hermosa. You want to do some cave exploring, go to Playa Ventanas. I’ve spent more time on the ocean the past 4 years than in my entire life in California, because the water is warm, dare I say perfect, year round.

Relaxing Lifestyle
According to our voters, this is the top reason to buy land in Costa Rica. You don’t realize how stressful life is in the progressive Western world, until you move here. Both Ben and I came from Santa Cruz and Aspen, gorgeous towns in California and Colorado, respectively. We lived the typical cycle of working hard and playing hard, and then right back to working hard again. We were surrounded by friends, family and neighbors who were stressed by this same cycle and material pressures. It all added up to a simple yet consistent desire for change. Without question, Costa Rica presents an opportunity to slooooow down and simplify. Sometimes I surf in the morning, sometimes I walk a big farm. There’s no rushing to Starbucks on the way to pick up the dry cleaning. Here, we sit down and enjoy our coffee. We wear shorts and flip flops. If anything, life in The Zone is indeed relaxing.

So, yes there are many reasons to buy land in Costa Rica. Whether as an investment, as a relocation destination, or simply as a place to visit and unplug for a couple of weeks in the winter… The Zone will not disappoint.

A typical conversation in a-day-in-the-life of a Costa Rica real estate agent.
Visitor – Hey Ben, howzit going?
Ben – Good man. How’r you?
Visitor – Good. How are things in The Zone?
Ben thinking to himself – (Translation: Are properties selling? Are prices going up? What is this season like? What is the coming season going to be like? How much is my property worth? What is the effect of the global economic crisis on Costa Rica? I’m thinking of selling my property, is now a good time to sell? I’m thinking about buying a property, is now a good time to buy? Etc etc…)
Ben talking – Going fine. We’re not in a boom by any means, but by contrast with the last couple years, we feel encouraged.
Visitor – Sounds good. What’s selling?
Ben thinking - (or – Are prices going up? What is this season like? What is the coming season going to be like? How much is my property worth? What is…)

It is like having a super-power. Perhaps a bit overstated, but essentially true. The nature of the business of real estate does give one an ear to the ground on how things are going with the economy, social trends and by extension, the quality of life In The Zone. We all are curious to some degree about “what’s going to happen” and so we are on the watch for data, for information that’ll give us a clue as to what the future will be like.

To illustrate: Pre-Super Bowl talk shows. These popular shows are really about nothing more than guessing what is about to happen in the next few minutes. Player’s strengths and weaknesses are analyzed, their past injuries are discussed, and notable personal traumas might even play a bit into the picture. And this is all around what is about to happen with something that really isn’t going to impact the quality of anyone’s life to any appreciable degree! We humans love to speculate on what is going to happen in the future.

So, I’ll give you my read. I’ll tell you what my crystal ball says regarding what the future might look like here in The Zone. To do so however, Read the full story

So, the Guys have moved, once again.  We are now located in the commercial center across from

Guys In The Zone New Real Estate Office in Uvita Costa Rica

La Corona and Banco de Costa Rica.  We’re right next to Sonia’s Uvita Information Center.  If you are checking out at La Corona, and you look to your right across the street, you’ll see this image –>

So, why’d we move?  Well I’ll tell you, and in the process you’ll not only get an idea of what rents are going for in Uvita Costa Rica, you’ll gain some insight into the basic differences between men & women, so read on!

We moved from the second floor spot we had because we found that prospective clients simply didn’t want to go upstairs.

The capper was when I noticed that my gal Natalie would come to the parking area and call me on my cell phone.  I asked her why she did this.  Why didn’t she just come on in and talk vis a vis?  She said because she had a sun dress on and so Read the full story

Have we hit bottom?

In the movie “Back to the Future” we saw an example of how beneficial it would be if we could tell the future. The character Biff Tannen gets his hands on printed results from some race track and other sporting events, before they happened, and went on to achieve phenomenal wealth.

In real world economics, the trick seems to be the ability to identify trends and accurately guess what is going to happen prior to it happening.  Here in Costa Rica, the real estate market is no different.  Discussion and speculation about the future run rampant.  Hints & clues are analyzed in a constant effort to make wise buying (and selling) decisions.

It caught my attention this morning when I received the following in an e-mail from an agent in one of the local real estate agencies. He was writing to update us on a client of ours that we had asked him to help with. Without trying, our associate provides a clue as to what the current state of the market is, and perhaps, where it is going.

*Hello [Guys],

Thank you for giving me the opportunity to assist you with the property interests of the Schmegerworgs (names changed to protect the innocent).

I feel it is of the utmost importance to give your potential buyers the Tico Times of today, Friday, Sept. 10 newspaper that explains in detail the past and current real estate market place that will back up exactly what I mentioned to them about the market picking up right now and that 2009 was a slower year (click here to read the article online). I feel it is important that the wife understands if we show them a property at a price point that makes sense and feels good in their heart, they need to move forward with a purchase as good deals are selling and we cannot always replace a fire sale or “perfect property” that one lets go by.

I truly feel our BOTTOM market has passed us and current activity with all us of can only prove that.

Whether we sell them something together or if you sell direct, that is all fine with me as I feel there is much business for all of us survivors right now.

Please take care and have a great weekend.

(Its noteworthy that this e-mail is from a “competitor”.  One of the really promising aspects of the real estate industry here in Costa Rica’s southern zone is the amount of cooperation between all the agencies.)

The ability to identify “bottom” is the hallmark of a successful investor.  It is extremely difficult to do, which explains why so many of us speak in terms of “would’a, should’a ,could’a” when talking about our investment history.

So how can we identify the bottom in the market now?

Indicators:

One of the more prominent factors are that there are less Fire Sale properties on the market now than there were before.  All the reports that we are getting from the other real estate agencies in the area are that they are busy.  This is not just under $100,000 ocean view lots.  It seems that the $300,000 home is a hot item now that won’t last long on the market.  There are also a number of larger, more removed parcels, selling.   Some of these have topped the $1,000,000 (USD) mark.  There is a growing interest in “off the grid” and “community-style” living.

We had one of our favorite developers approach us some months ago and indicate that the recession was finally affecting him, and that he really needed to sell some property.  Long story short, since that time he has sold a house and two lots, making him well.

All of the above activity was stimulated by the market ebb & flow.  The market was and is down.  The inherent quality of the properties that are available in Costa Rica’s southern pacific zone is compelling.  The low prices on these properties has caused enough action here to cause us to wonder what all this talk is about a recession – (well, not really, but almost :0)  Savvy buyers are here snapping up the deals.

No one knows what the future holds.  Things are changing on the global scale, some of which is unprecedented, causing insecurity.  We really have no idea what to expect in the future.  There is the unmanageable deficit in the U. S. There is China.  There is talk about the “double dip” recession.  There is global warming and other environmental concerns.

So have we seen the bottom?

Hard to say.  However, if you were a fly on the wall of the Guys In The Zone office (or any other real estate office in the zone), you’d hear conversations that would make it seem so.  We’ve had a number of folks come through during the down time that have found what they were looking for, but then felt that they had time to decide, to “think about it”. Or perhaps they think that prices will even come down a bit more.  Our feeling is that the time to buy has been here now for some time, and may well be passing.

What we do know is that we haven’t seen prices this low and on such a great selection for some years.  So, whether “bottom” is behind us, or lies yet ahead, we’re pretty confident that now is a decent time to buy a piece of property in Costa Rica.

Shameless Plug: Click here for all Guys In The Zone real estate listings

* Keith Schenkel of Costa Rica Real Estate Services

Water is a necessity.

If you ask the World Bank or one of the mega-water corporations (e.g., Coke, Nestle, Vivendi), fresh drinking water is a commodity.  If you ask virtually everyone else in the world (including the United Nations), fresh drinking water is a basic human right.  Whether it is the encroachment of privatization or Nicaragua’s plan to divert the San Juan River[1], water in Costa Rica is an increasingly lively topic.

One of the most popular questions for potential property owners is, “What is the water situation for this property?” Most of these new investors come from North America and Europe, areas that have hundreds of years of infrastructure development.  However, this southern Pacific region of Costa Rica is still early in the cycle of development.  We continue to see rapid growth in communications (cell phones and high speed internet), power (high tension power lines), and roads (the newly paved Costanera between Quepos and Dominical).  That being said, cell phones are a luxury, but water… is a necessity.

Property In A Development

Most quality developments have a water system that has been installed by the developer.  The most common sources for these systems are high flowing springs, and in some cases surface water (e.g., creeks and rivers).  Some developments, like Osa Estates in Uvita, even have back-up systems and extensive water storage capabilities.  The interesting thing is very few developments actually have a concession (permission to extract water from the ground).  The good news is the majority of them are “in process”.  Either way, the developer usually provides the property owner a prevista (water right document) which guarantees use of water into the future (assuming the property owner is in compliance with established CC&Rs and other laws).  Proof of a water document, like a prevista, is also required by the local Municipality before they will approve any construction project on a property. Read the full story

Costa Rica – 1999:

Highly Desirable Lifestyle

The year that I arrived here with my family.  There just weren’t that many Gringos, or foreigners of any flavor really, in Costa Rica’s southern pacific zone.  Many of the foreigners that were here shared a similar idea.  Land was so cheap that you could buy several hectares (one hectare = 2.47 acres) of land, cut off a piece, and sell it for nearly what you put into the whole piece.  I used to call this “The Costa Rican Formula”.

If you think back over any real estate cycle anywhere on planet earth, lets say San Francisco, or Denver, it started out with families owning large tracts of essentially valueless land.  Governments typically gave land away at this stage of the cycle.  Homesteading laws had some rather liberal restrictions that, if followed, enabled a family to take possession of the large tract of land.  These families then used the land to live on and sustain themselves.

Costa Rica real estate was in that part of the “the cycle” a surprisingly short while ago.

I say this to help establish the paradigm here.  We are early in the cycle.  The majority of my career has been selling raw, undeveloped land.  To this day there isn’t a large selection of houses, but there are getting to be more all the time.  We are simply heading into that phase of the cycle.

“The Costa Rican Formula” is the obvious way to develop and make money on land.  Buy a larger piece, cut it into smaller pieces and sell them.  It is so obvious in fact that it enjoys a very brief period of the real estate growth cycle.

For the purpose of this article, I’m not writing about big developers that buy and develop large parcels. I’m referring to your normal joe, back in the day, slopping into an 8-ish acre piece of land.  Then, they find out that they can cut off 3 of those 8 acres and bahdah-bing bahdah-boom, they own their 5 remaining acres for free. Read the full story

Rod & I have decided to write a few words about the year just past. We did so without consulting each other or giving any clues regarding what we’ve written.

First off is Rod

If you subscribe to the idea that life is a series of ups and downs, then last year was a harsh reminder of how challenging the “downs” can be.

• “Unemployment soars to highest level in 16 years.” – New York Times
• “U.S. Foreclosures to Reach Record 3.9 Million in 2009.” – Bloomberg.com
• “New car sales a ‘disaster,’ says Sergio Marchionne, CEO of Chrysler/Fiat.” – NY Daily News

While people were losing their jobs and houses in record numbers, they still had the time and interest to search for Britney Spears and WWE (World Wrestling Entertainment, which is fake wrestling, right?) making them the top two search terms on Yahoo! for 2009.

Although I have no idea what Britney was up to in 2009, I do know that most of us here in Costa Rica felt the impact of this economic downturn.  After a decent start to sales in January and February, most real estate companies saw offers dry up during the following 8 months.

Like many people around the world, the Guys In The Zone shifted gears to “beans & rice mode” (luckily, we both like beans and rice). We tightened up the expenditures and found new streams of income. [Ben deserves some kudos here for his quick mastery of the hard money lending business.  He, (leveraging his experience, contacts, and bilingual-ness) saved more than a few local families from economic disaster.  This lending experience taught us that putting good food on the table is important, but to literally save someone’s table (and house it sits in) from foreclosure is a genuinely rewarding experience.] While we didn’t sell any property during the middle of the year, we did put a lot of time and energy into new listings, our websites, and the Talk Show feature which we will continue to work on in 2010.  Ben also started writing articles for Montana al Mar, a new weekly magazine focused on health, sustainability, and community.

The old adage “When you love what you do, the money will follow” proved true in 2009.  The end of the year found activity picking up noticeably.  Three excellent deals Read the full story

How would you describe the current “crisis” impact on the local economy and on Costa Rica real-estate in general?

Yesterday I made the trip up to San Isidro de el General to take care of some things. I was to meet Rod and Lindsay for lunch at “Mexico Lindo”, an amazing genuine Mexican food restaurant there, run by a bona fide Mexican Armando and his lovely wife. I have known them for years and used to frequent their little taco hole in one of the off-the-beaten-path streets of San Isidro years ago. Now they are located right on the central square and my, how things have changed since those days of long ago. I don’t think that there was a single empty table there, and at least 50% of what I heard was English – my, how things have changed.

Running the gauntlet of greetings as I made my way back to Rod and Lindsay, I looked up to see a couple who are particularly good friends, but that I have not seen for awhile. I greeted them with something like “how are you guys doing in this new world in which we live?” (reference to the economy), to which they responded, “what is going on?”. Working in real estate provides one with an interesting position in life. I didn’t realize it for a long time, but it is now clearer than ever. This industry is at the very foundation of life. We all need to live, play, and work somewhere. I received the above question in an e-mail from one of my clients just yesterday, so I heard the question a total of 2 times over the course of the day, and that wasn’t an unusual day.

Here’s what I think

We have lost a lot of buyers due to the economic crisis. We are gaining some buyers that we wouldn’t have otherwise had. It may look something like the graphic there to the left. It means a slow down for us here in Costa Rica, but not death. I have a client/friend/partner that is a high output kinda guy. I’ll call him Steve, a lawyer in Florida. He purchased a piece of land from me 3ish years ago. Subsequent visits have given us the opportunity to forge a friendship. Steve had a plan.

• Sell his beach condo that he bought for investment
• Sell his main home
• Let the lease on his Porsche run out
• Finish up obligations at the firm
• Set up some means of income in Costa Rica
• Move to Costa Rica

Steve LOVES Costa Rica. This is home to him. Every visit here confirms it to him. He just needed to get the ducks all lined up in a neat row prior to making the move. This is a common scenario. Life was fine. Plans were being made. Then, it all changed. Read the full story

Wouldn’t it be nice to have a crystal ball that you could rely on to foretell what was going to happen? In the present “down” condition of the world’s economy, everyone is guessing what is going to happen. If one were to guess correctly, there is no doubt some opportunity out there. It is interesting to hear Nobel laureates in the media using the now well worn phrase “we’ll see”, ad nauseum.

I am having daily discussions on the current state of the market with regards to Costa Rica real estate. I suppose that my position in the Costa Rica land marketplace makes my opinion of value to some. But really, nobody knows what it is that is going to happen. There are just so many factors at play now. But, having said that, I’m going to stick my neck out and make some concrete predictions about what we’re going to see here in Costa Rica’s southern zone.  But my prediction disclaimer remains in force… we’ll see.

I think that this coming season, which is starting now, we’re going to see some land banking (see below) sales, some of which will likely be higher end, and I think that we’re going to see some determined re-location buyers here. Here’s why.
Read the full story