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I’ll spare all the details, but was broke 3 years ago, 70K in debt. Now: Debt paid off,business doing well(self employed). I am a enjoy life kind of guy, play first work second, my attitude has changed a bit after 2008. Here’s my dilemma:
I now have the funds to build a house on my lot in Costa Rica, but then would not have the cash and post closing liquidity I would want to buy a house here(NJ). I would like to have a mortgage free house in CR to retire to in 20 years and until then to spend 1-3 months a year at. So whats more prudent? Build in CR or hunker down in NJ? (If I buy here I will wait until at least June as I still feel prices are falling).
It costs me about a $1000+ dollars a month LESS to rent here (NJ) than to own, property taxes would run me approx.$800 per month alone minimum if I own. I would build in CR and pay cash and still be left with a nest egg.
I’m almost 47, good health remarried(6 years) to someone 13 years younger so may have a child in a year (her wishes….not mine:? I have two already, 23/26).
So what would you do? Would love to hear from Scott on this as well, he knows what I do for a living. I should add that if I build in CR my life will continue to be good here as a renter(moved out of NYC 4 months ago, quality of life went way up!)
hey lotus,
i read you rposte here and on other sites.
let me run this information past scott and see if he passed it along.
cheers!
bob
we currently have 400 square meter lots for $39,000 or 9.00 per square foot.
there could be some typos on the site.
we are changing direction with a 850 sq foot 1/1 with carport, a.c.’s security window system, hard wood cabinets, laptop floor safe ad out side shower for $89,000. (we can do a 2/2 for $120,000)
this is on a 400 square meter lot in a gated community.
the community is a green community with solar packages beginning at $6,000 for hot water and costing $27,000 for full solar package.
we have a community garden and a water treatment plant.
so around $100 per square foot for house and land not counting solar add on’s…
sweet deal.
hey, thanks for checking in.
bob owner crltd.The answer to your question surely depends on where you feel the economy and in particular real estate prices are headed in the future? And – more importantly – if your feelings turn out to be correct.
Based on the current demographics, the amount of real estate available in most markets, the shadow inventory (which according to the New York Times (1): “… New Jersey has the largest shadow inventory in the country: 41 months’ worth of homes to sell — and they aren’t even on the market yet.” ), the fact that real estate prices may about to take another step down in the US, I believe that the whole concept of home ownership must be evaluated more carefully than ever before.
If your “quality of life went way up” with your recent move out of the city and it’s cheaper for you to rent, why not wait to decide on both?
It’s more likely that prices will continue to decline in the US in which case when you do eventually buy you’ll get more for your dollar, right?
And if you’re not retiring for 20’ish years, there’s certainly no rush to build anything on your land in Costa Rica.
Lastly, if your new wife does want a family, you guys may be paying for college in 20 years rather than building a home in Costa Rica….
Which leads to another question… Which is if you’re not buying or building what do you do with your money in the meantime? That’s a toughie!
PS. Happy Birthday!
(1) [ http://www.nytimes.com/2010/12/12/realestate/12njzo.html ]
Bob,
I know your developments, I have a lot in Hermosa already. Are you building houses for others on their land? If so at what price per square foot approx.? Looking for something simple as I figure I can add more later….
(we may be breaking Scott’s rules here, if so I will email directly)
You and I share the same opinion on Real Estate here in my neck of the woods. That said I feel prices are getting to levels where buying could be an option if you have at least a 10 year hold time. Trying to balance the emotional as well as financial component of such a decision, certainly in no rush to buy here:)
Yeah holding 85% in cash 15% in a variety of emerging market/mining ETF’s that have been doing well (for now). Would love to hear what you are doing with money these days:wink:
The fact is I’m just not very good at holding cash, as my income goes up and down (along with my work habits) I have a history of burning through that paper stuff. Thought having a house either in CR or here with a “until I die” or at least 20 year hold period would make sense for me. Who knows what will happen to our fiat paper, but at least I can live in a house:wink:
*Lotus, let me throw another dynamic into your considerations. Setting aside issues of money, anticipated property value trends, etc, just what is your emotional investment in either your living accommodations in the U.S. or your house-to-be here in Costa Rica?
Are you comfortable to continue to rent your current housing, paying off the owner’s mortgage each month and having little influence over its maintenance and development, or do you wish to live in a setting in which you have more control and influence, a setting in which you can invest both financially and emotionally? Is your housing a home, or is it just a place to get in out of the weather and change clothes?
Do you want the responsibility for the property or not? Do you wish to be at your landlord’s mercy about the color of the walls and how the snow is plowed, or do you wish to make those decisions and many others for yourself, and reap the rewards or suffer the penalties for your decisions? Clearly, some folks really don’t care; others do. Which one are you?
And what about a property in Costa Rica? Do you want a second “anchor”, a place you are always welcome, or is that not important? And are you willing to take the associated risks?
It’s said that we all make some 80% of our decisions on emotional, not rational, bases. If that’s true, *Lotus, what are the emotions associated with the choices you’ve laid out?
[quote=”*Lotus”]I’ll spare all the details, but was broke 3 years ago, 70K in debt. Now: Debt paid off,business doing well(self employed). I am a enjoy life kind of guy, play first work second, my attitude has changed a bit after 2008.[/quote]
If your business is doing that well in the current economic environment what are your prospects for the next three to five years?
With a falling housing market in the U.S. and renting cheaper than owning in the U.S. while prices remain stable in CR (ask Scott to confirm this) I would wait on the home in CR while driving for the best deal on a home in NJ.
One caveat: The U.S. is not the economic giant that it was before 2000 and you may be looking at massive changes in the world financial system as well as a devaluation of the dollar vs other currencies.
With the Fed QE1 we have seen an effective devaluation of our purchasing power in CR of nearly 14% already and QE2 to come. Thanks to CR government support of the dollar it is not as bad as in other nations (20%) but I am not sure that this policy can continue in the face of QE2.[quote=”DavidCMurray”]*Lotus, let me throw another dynamic into your considerations. Setting aside issues of money, anticipated property value trends, etc, just what is your emotional investment in either your living accommodations in the U.S. or your house-to-be here in Costa Rica?
Are you comfortable to continue to rent your current housing, paying off the owner’s mortgage each month and having little influence over its maintenance and development, or do you wish to live in a setting in which you have more control and influence, a setting in which you can invest both financially and emotionally? Is your housing a home, or is it just a place to get in out of the weather and change clothes?
Do you want the responsibility for the property or not? Do you wish to be at your landlord’s mercy about the color of the walls and how the snow is plowed, or do you wish to make those decisions and many others for yourself, and reap the rewards or suffer the penalties for your decisions? Clearly, some folks really don’t care; others do. Which one are you?
And what about a property in Costa Rica? Do you want a second “anchor”, a place you are always welcome, or is that not important? And are you willing to take the associated risks?
It’s said that we all make some 80% of our decisions on emotional, not rational, bases. If that’s true, *Lotus, what are the emotions associated with the choices you’ve laid out?[/quote]
I was looking forward to your comments David.
I am in the real estate business and that is one of the most important things I try and help people do, balance the emotional and financial components of the transaction. That said I have little emotional attachment to owning a home. I know I am paying off my landlords mortgage but live in a beautiful home built in 1930, he’s about $100k underwater on his loan. I would love to own here at the right price and the way things are going that may be sooner than later:wink:Over the long haul, all things considered your primary home may return you 4% a year. But for me with my record of holding onto cash, I think buying a home makes sense, regardless of the nominal return I will have an asset to sell at the end of 20 years(if I live that long)Some would call this “forced savings” my savy investment friends cringe when I say this:)
In my line of work one deal could change the entire equation and even after say using cash to buy here, I could find myself in a position to build my little dream home in CR. But for now I have what I have and can’t do both; but I would like to do something. I won’t rush into either but what to do has been on my mind now that I have clawed my way out of the abyss (yet again!) Yeah…..I’m tired of it, looking for more continuity in our lives.
I may go the two family route here or even a end unit townhouse if we make buying here a priority. The idea of building in CR is to secure a “hard asset”, after 8 years spending quite a bit of time in CR, this is where I will retire. What it comes down to is I have just had no luck holding onto cash! Seems owning a home somewhere is the right thing for me to do.
[quote=”waggoner41″][quote=”*Lotus”]I’ll spare all the details, but was broke 3 years ago, 70K in debt. Now: Debt paid off,business doing well(self employed). I am a enjoy life kind of guy, play first work second, my attitude has changed a bit after 2008.[/quote]
If your business is doing that well in the current economic environment what are your prospects for the next three to five years?
With a falling housing market in the U.S. and renting cheaper than owning in the U.S. while prices remain stable in CR (ask Scott to confirm this) I would wait on the home in CR while driving for the best deal on a home in NJ.
One caveat: The U.S. is not the economic giant that it was before 2000 and you may be looking at massive changes in the world financial system as well as a devaluation of the dollar vs other currencies.
With the Fed QE1 we have seen an effective devaluation of our purchasing power in CR of nearly 14% already and QE2 to come. Thanks to CR government support of the dollar it is not as bad as in other nations (20%) but I am not sure that this policy can continue in the face of QE2.[/quote]Waggoner: I have enjoyed your posts and videos! My problem seems to be I do well when my back is against the wall, get a little soft (more trips to CR:wink:) when things are good. That said I need to adjust my attitude, you are right, I have done well under terrible economic circumstances, why wouldn’t I do well as things “improve”? Thanks.
hey lotus, if scott allows i will continue.
i was very irresponsible for 2009 and 2010.
i was accustomed to selling 12 homes a year and finishing 16 homes per year.
i blindly thought it would never stop.
i am now very aware of the pitfalls of an economic slowdown.
therefore i have become more flexible.
the owner of the costa verde hotel in manuel atonio told me that the only developers that will survive the recession are those that are good at what they do.
we are still here and interested in building for others in other areas.
the price per sq. meter is based on the finishes but if u r fine with our finish the cost is $550 per square meter.
if we are timely with building time then it is a win win.
i feel it is a great time to build as the cost of materials has dropped.
there are more quality multi skilled workers in the labor pool.
i cant bleive that we accomplished as much as we did with the saturated labor pool of the past.crltd is right on about average annual increases of 5% for a home. Although our home values have droped 30% since 2006, I bought my home in 1992 so it is still worth double (100%) in 18 years. I am one that has plenty of equity, but a terrible market to sell. With material costs low and plenty of skilled labor available besides myself, it is worth upgrading the home on a 3-year track to sell at. The equity would be split to build new smaller home on a smaller parcel (paid for) closer to the city here and buy a parcel in CR.
$55/SF is what I have gathered construction costs of a mid-grade home on a paid for lot/land in CR. The cost of a new home in the suburbs of (Seattle) are running about $120/SF-$150/SF, so it is still a bargain in CR as far as construction costs, but the same cannot be said for the raw land cost, which is a reflection of the huge disparity in construction labor wages. I have found that building lot costs in the San Jose area are virtually the same as here now.
Bottom line for us is that CR provides for the change in lifestyle we seek, the nature, sea and weather we enjoy, the proximity to family in the US and much closer to family in Argentina, there are not [u]any[/u] cultural differences that we find intolerable and we are fluent in the language.
Given the weather as the equalizer, what better options are there that would not require either living on an island, living in a country with a questionable government or living in a culture far more foreign to most Americans as the latin culture that is 2-3 times the travel distance?I would also not omit as an option the idea of renting in Costa Rica. Seems to be no shortage of rentals at very affordable prices and also gives you the flexibility of not being tied down if for whatever reason you wanted to move. The Costa Rica real estate market is very “inefficient” so probably a lot easier to buy but selling is likely an altogether different thing. Renting allows you to pack up and leave anytime you want.
[quote=”waggoner41″]
With a falling housing market in the U.S. and renting cheaper than owning in the U.S. …..[/quote]Actually the rental market is starting to become on fire in the U.S. due precisely to all the people being kicked out of their homes and jobs. In Southern CA. for example if you buy a $300K home and financce $250K of that at 5.00% for 30 years the monthly payment is around $1,350.00 If you wanted to RENT because you can’t qualify or any other reason then $1,350 barely gets you a dumpy 1 bedroom apartment. Many of my clients are seasoned real estate investors and they have been buying rental properties in large numbers.
I would be building with no leverage, just a small place, all I need after living in apartments in NYC for 28 years. I don’t anticipate a very large income in retirement, so having a house with no mortgage will be key.I purchased my property about 4 years ago for $6 a M2 and its paid in full and the development has been completed.
PS.
RE: Miss the snowHad a great New Years skiing…I am now over the cold, miserable comes to mind:)
lotus,
renting is an option but many times the owners of the house want the leaser to vacate the property when they visit.
this occurred with my long term rentals and i really is a pain.
if you choose the esterillos area i need to warn you about a couple of bad seeds that need to be avoided at all costs.
you know my site. go ahead and shoot me an e-mail when you decide your course.
thanks,
crltd
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