Costa Rica Vacation Rental

[Michael Moikeha]

Hello Peeps!

I have an opportunity to lock up a beach property in Costa Rica. I'm trying to pick it up with an owner carry, but regardless, has anyone purchase properties in Costa Rica? 

What is the purchase process? I know in Oregon we have Title and Escrow Companies, in other states purchases are done through attorneys; how are properties bought in Costa Rica?

Does anyone run Vacation Rentals in other countries? I would love some resources or to be able to pick someone's brain who has gone down this route already!

[Alex Washburn]

Hi All, 

I will putting this property up as a vacation rental once it closes - so if any of you are going to be heading to Costa Rica soon you should totally stay at my place ;)

Financing: The property was financed in a few ways though if I do this again I will take a cleaner approach. Approximately 10k is left on the loan that the current owner has on the place so we are assuming that debt by purchasing his 'corporation'. A lawyer we hired in CR is currently doing due diligence to make sure other than that 10k of debt the 'corporation' is free and clear of other issues. of the remaining amount 1/3 rd is cash out of pocket, 1/3 is a personal loan from a family member and 1/3 is a cash advance we got from Wells Fargo. The Wells Fargo Loan however is at 11% so after we are able to rehab the place we are going to attempt to refinance. Theoretically with some VERY conservative numbers we should break even on the property at 50% occupancy at even 'low season' rental rates. 

We expect to break even monthly or be 3-400 out of pocket on the loan payments every month mostly because of the 11% on the Wells Fargo loan BUT the property is such a conservative purchase we will own it free and clear in less than 4 years which is why we are willing to take this initial hit. We are buying a VERY small condo as an experiment in the market to get real numbers on rental rates so if all goes well for a year we might take a bigger leap. 

Ultimately - I was not able to find a hard money lender who will loan on foreign purchases and American Banks will not do American Style mortgages in Costa Rica. Scotia Bank in CR does offer  American Style mortgages (with 50% cash down!) but the approval process can take months and months and months and requires I few in-person visits to their bank to finish the paperwork. We didn't want to risk loosing the property when I found it so we leveraged what we had. If I had more capital I would be investing in the USA - but I don't. :)

WHY costa rica? I am a new investor without much capitol or credibility and I happen to live in one of the most vicious housing markets in the world (The San Francisco, Bay Area). I speak spanish and I've spent a lot of time in Latin America (have traveled to CR specifically several times) so when I started to look at other markets for my baby steps buying in CR or the Southern United States was going to create the same level of headache in terms of accessibility for me. 

I would NOT buy any property in Costa Rica without seeing the property first and becoming well acquainted with the area. I researched properties for months before flying down for a week to look at places in person and the two approaches don't even compare.