Owner Financing in Costa Rica – how common?

[wmorgan]

How common is the practice of having the Owner finance a portion of the sales price in the form of Owner Financing? I’m interested in this for vacant land.

* Do Tico’s often offer Carry-Back Financing on vacant land purchases?

* If so, is legal title transferred to the new owner or does the original owner remain on title until he/she is paid off ?

* How secure of a transaction is this for a buyer?

In the US, Owner financing is not too frequently practiced, but certainly known and accepted. Access to Bank financing makes Owner financing less common here, however, the transaction is secure, in that the terms of the contract are usually enforced barring anything unusual and extreme. Legal Title can be withheld as security (as in a “Contract for Deed”), or transferred (as in an “All Inclusive Trust Deed”).

I’m just trying to get a feel for IF and HOW it is done in CR so i can keep this possibility in mind when looking at properties.

Thanks,
Bill

Edited on Nov 09, 2006 13:33

[Andrew]

Ticos like cash deals – They like to be paid in full – There are still many that do not trust banks and very few that would do owner financing and in the extremely unlikely event that they did – especially for a land deal – they would certainly want to retain title until it’s all paid off…

It’s secure for the buyer as long as you pay off the debt.

Ouur VIP Members have bought a lot of real estate over the years and we have NEVER been involved in a single ‘owner financed’ deal. And especially since the market is good here, I can only assume that most of the owner financed deals are with Gringo sellers selling something that nobody is really that interested in buying…

There are of course numerous US/Costa Rica hard-sell boiler room operations selling land with this kind of strategy – Pay a small deposit and finance the rest with the “developer” until you’ve paid it off and… helped him buy the property to begin with since they probably only have an option to buy. The risk with these deals is that the ‘gentlemen’ you’re buying the land from sometimes don’t actually own it yet and all you’re actually buying is a corporation that will ‘hopefully’ own the land at some time in the future.

Has anybody else out there seen owner financed deals in Costa Rica? I’d love to know too…

Scott Oliver – Founder
WeLoveCostaRica.com

[Charlie]

My mother came across a gentleman in Tres Rios who was willing to do owner financing. He was selling a new single family residence in the Omega subdivision. The deal was he wanted a non refundable $5,000 down upon contract being signed , on a property selling for $85,000. Now my mother who is a pensioned teacher from the States was willing to put 20% down and possibly finance the rest with local banks. However , for various reasons including her age , and the fact that a pension can’t be garnished in case of default, she was unsuccesful in finding a source for the loan. However, the Costa Rican gentleman was willing to take 50% down and the other 50% within 6 months, but with no refund if she was unable to pay the balance at the end of 6 months, these terms were not agreeable either. But the point is he was willing to do a short term agreement.

[jenny]

Just make an offer and you would be surprised. Nothing is impossible, if you dress it up and present a proposal. You will be surprised. There is opportunity, you just have to ask and make an interesting offer, and be confident.

Some people that have offered have been successful. There is a guy in our community that purchased a house and the owner a Tico is financing him. He put about 35% down and the loan is 8% over a 5 year period.

Another farmer in our community has 160 acers for sell and he is willing to accept 50% down and payments over a period of years. Not many people are purchasing large amounts of land. So if they get someone to make them a serious offer they will accept it. I guarnatee you

[GringoTico]

It is not uncommon, especially, as you said, because the financial system in CR is so underdeveloped. I would even go as far to say that it may be easier for a Gringo to get the seller to finance a portion of the purchase price than a Tico, because Gringos are perceived as honorable, and financially qualified to pay the loan back. A Gringo can even print out his or her credit report to show the seller a copy.

That said, the seller should take every possible measures to insure payback.

I financed 15% of the purchase price of my property for my buyer (reluctantly, and with a healthy dab of paranoia). A lien was placed on the property, and the buyer paid off in full, albeit a bit late.

[deb]

I ran across a couple who are selling a beautiful, furnished home in San Jose for $145,000. They are willing to take $65,000. down, we would pay 9% (figured on total mortgage for 20 yrs) ea month to them & then get bank financing in 5 yrs.

[Author]

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