Build a House in Costa Rica

Building a home in Costa Rica has become a popular decision for more people than ever before. Buying abroad has become attractive for all kinds of investors: singles, families or retirees alike. Owning foreign real estate can be a way of diversifying and protecting one’s investment portfolio, generating rental income, facilitating residency for expats or simply providing the freedom to have a vacation home to escape to. 

When planning to invest in foreign real estate Costa Rica comes up at the top of many people’s list. Costa Rica is a beautiful, diverse and affordable destination with a variety of real estate investment options. Low property taxes, a stable economy and excellent healthcare are just a few reasons this country is ranked one of the best places in the world to retire. The country incentivizes foreigners to invest by offering residency for those spending over $150,000 USD. The cost of real estate in Costa Rica varies significantly depending on the location and type of dwelling. A beachfront villa in Playa Flamingo is going to have a significantly higher price tag than a condo in Nosara.

But purchasing real estate outside of your home country is not a decision to be taken lightly nor one that should be made impulsively. Regardless of your motivation to buy real estate abroad, the first step is always to take plenty of time, set emotions aside and do some patient due diligence.

Choosing a location is always top of the list when buying or building a home in Costa Rica. The best place to start is to explore all the possible areas that meet your requirements. Do your research and narrow down your favorite areas, then go and visit them with your feet on the ground. Do you want to be close to city life and culture? Do you prefer to have your own remote retreat in the jungle, away from the hustle? Or do you want the beach life with a hefty dose of surf culture

Of all the country’s provinces, Guanacaste currently sees some the highest amount of foreign investment. Because this province has some of the world’s most beautiful beaches, real estate in Guanacaste Costa Rica is largely focused on proximity to the ocean. This gives investors access to stunning seaside nature and a myriad of water activities like world-class fishing, surfing, snorkeling, scuba diving and more. It also ensures access to a host of amenities and infrastructure that has developed in these areas due to tourism, like paved roads, shops and dining spots. But that doesn’t mean it’s the best spot for everyone. The more popular an area becomes the higher the prices get! Having a vision of both your short and long term plans is extremely helpful when you are creating a hit list for your ideal property and area. This will help you filter through endless listings and give you, and whoever you are working with, strong focus.

Once you have an idea of your preferred area, the next consideration is whether to buy or build. For some the choice is obvious. If a buyer prefers to invest in a smaller property inside a building, like a condo, or they don’t want to wait 6 months for a home to be built, then buying is the right fit. If they don’t plan on living in or renting out their property full time, it is recommended to purchase something that can be secure while the home is vacant. Gated communities with property management are good options. However, it is important to understand the trade-offs when buying an existing home. 

Firstly, it is important to see the home you intend to buy firsthand. Many listings online show beautiful photos, but they often aren’t a true reflection of the property and its condition. Some people call this the “pig wearing lipstick” effect. Another aspect you may not see in the photos is the condition of neighboring properties, which can be an eyesore out of your window.

Secondly, outside of major city centers, many homes in Costa Rica have building issues. For example, homes have been known to be constructed over their property line onto a neighboring lot or they aren’t built to withstand flooding during the rainy season. Unlike North American standards, no disclosure statement is required when selling a home, so there’s no way to ensure its quality. Check the property out multiple times with a few different sets of eyes at your side. Ask for the plans, most recent utility bills and warranties or guarantees. Get details on the electrical, plumbing and drainage. Look for damage from the elements that may be covered up. Unfortunately, you can’t always trust what sellers tell you so verify as much as you can for yourself.

Interior finishing is often subpar due to a lack of these skills and supplies with local building crews. And appliances are not always the best quality due to limited selection in the appliance market. There have also been instances of scams where sellers of a home don’t legally own it. For this reason it is imperative to have a knowledgeable, trustworthy and experienced lawyer and inspector working for you well before you venture down to Costa Rica to see any home you may be considering. More on this in a moment…

If you have the time and willingness to build there can be a great number of advantages. Of course the same due diligence applies when buying land. It’s always good to see the community with your feet on the ground during the day and at night. Ask any willing neighbors for feedback on their experience living there. You want to work with a reputable lawyer and engineer/inspector to make sure the property has permission to access water and electricity. You also want to make sure it is not subject to flooding or driveway issues when the rains come. Lastly, you want to verify that the land you wish to buy is legitimately owned by the seller.

The first advantage of building for yourself is value. To build a home gives you much more for your dollar. For example, in an area like Surfside, a popular expat neighborhood in Potrero, a pre-built home currently sells for 180 to 350 USD per square foot depending on the age and furnishings. To build a new home to your own specifications in the same neighborhood currently costs 150 to 200 USD per square foot plus the cost of the land, with an average lot currently costing around 150,000 USD. The second advantage is that the investor can ensure the home is built with integrity and quality. The home can also be customized to suit the specific needs of the buyer/builder. 

The greatest concern most people have about building their dream home in a country like Costa Rica is managing the building process. This can be challenging when the buyer doesn’t know any suppliers or tradesmen and if speaking fluent Spanish is not an option. Getting “gringo-priced” is a very real phenomenon, so it can be intimidating to take on a project like this in a developing country, especially without any building experience! The good news is that there are a handful of English-speaking developers who specialize in facilitating the building process for foreigners in Costa Rica. These companies work with investors and their lawyers to oversee the project from start to finish.

Another benefit of working with such a company is that they already have leads on available properties and have vetted them suitable for construction. Sometimes the company already owns lots so there is no need to involve a realtor, which saves the investor even more money. Working with realtors in Costa Rica is not necessary and can be avoided if you have your own reliable lawyer (never the same as the seller’s) and an inspector. Many sellers avoid using realtors and list their properties “for sale by owner” due to the exorbitant fees that realtors charge on both ends of a deal. 

Using a realtor in Costa Rica is a contentious subject. True, it is extremely helpful to have someone who has expertise in the area you are considering, especially because the rules and culture in Costa Rica are probably very different to those of your home country. But the quality, reliability and honesty of any professional in Costa Rica, including realtors, lawyers, engineers and developers is not guaranteed. Just because a professional has good exterior presentation, like signage or a website and just because they are English-speaking from North America, doesn’t mean they are trustworthy. There are far too many accounts of buyers getting scammed at every step because they trusted a professional without first doing a heap of background checking.

The best bet is to speak to as many people as possible who have done what you wish to do. There is a huge selection of YouTube channels, forums and social media expat groups dedicated to educating people who want to take the leap and buy in Costa Rica because many who have done it, don’t want others to fall into the same traps. Give yourself lots of time to make connections, ask LOTS of questions repeatedly and get references. 

The real estate market in Costa Rica is very different from markets in the developed world. There are still many areas where investors need to beware, regardless of whether they are buying or building. Having an experienced, trustworthy team of professionals on your side is an absolute must. Be cautious and discerning. Your greatest task will be to find an experienced online community of earnest “moving to Costa Rica cheerleaders” plus your dream team of professionals. With these at your side, you can definitely create your dream home experience in Costa Rica!

Ella Roth
Author: Ella Roth

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