All Forum Posts by: Alex Washburn

That looks gorgeous! Congratulations!

@Peter Assaad yes you can own outright in CR.

In most areas you need to be at least 600 yards from the high tide line of the beach as a foreigner but other than that there are no restrictions.

In Mexico the coast buffer is something nutty like 20 miles.

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. 

I just entered escrow on a property in Costa Rica and our inspection occurred today as well. I'm hoping to do a blog post about this at the end of the month when we close. Do you have any questions specifically about what has happened so far? Ill be a better resource once the property is rehabbed and on the market... hoping by end of June.

We are entering escrow on our first Costa Rican property and have the condo inspection scheduled for Tuesday... We should be closing before May 3rd... So it's just a matter of time at this point. I will write a blog about the process once we close!

Part of my reasoning for wanting to buy in Costa Rica is that housing (for long term rental purposes) doesn't have a good cash on cash value in my region. In my city there isn't a single listing for under a million and people overbid and pay in cash on a regular basis. I can't play those game$ nor do I want to. 

I speak fluent spanish and have traveled widely in Latin America. In terms of complications it makes little difference to me wether I buy property in Nebraska (somewhere affordable) or Costa Rica (Also affordable but with greater chance of strong appreciation in a 10 year time frame) as I would need a property manager either way. 

This first property is a test case to see if I want to continue investing in CR (or perhaps mexico and belize later).

Originally posted by @Steve B.:

So is this the kind of deal where the tico sells the land to the dumb gringo, then the deal is void due to legal restrictions on foreign coastal owner and the tico keeps the money?

Not necessarily. It probably is concession land and your agreement is more like a lease rather than a 'buy'. You could develop it with fairly minimal restrictions (considering) but it has to be done with the knowledge that in the future it would be really easy for the government to take it back. I could see some businesses making sense on concession land but for what I want to do in CR it did not seem worth it. 

I think Lending Club or similar is becoming the most practical decision for us at this point... It's just been so difficult to move forward with this in CR. If we can't secure funding through formal channels in 15 days I think we are going to go 2/3rds angel investing. 

James is right. Foreigners can only be majority owners of land more than something like 600 meters from the high tide point with very few exceptions. Only about 12% of Costa Rican ocean front property can be owned by a foreigner outright.

Unfortunately we don't own a home in the US. I've run the numbers on homes in our price range within a 3hr drive radius of our zip and they just don't make sense as rental units.

I'm fluent in Spanish so other than the financing problem maintaining a rental in Costa Rica vs another market in the USA that requires a flight is fairly comparable from my perspective.

Its funny because buying a sub 70k house anywhere in the US would be so easy for us. Its maddening!