Like many of you I fell in love with Costa Rica while doing an eco-adventure vacation tour.

I came back thirsty for additional information about Costa Rica and discovered Scott Oliver and this website.

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After selling a staffing business in Atlanta, Georgia I was anxious to explore new challenges, so I began to dabble in real estate. The local real estate markets just didn’t intrigue me and I started to do as much due diligence as I could about the oft talked about exploding real estate market in Costa Rica.

Before anyone accuses me of being a capitalist gringo pig, I have a modest financial portfolio, and am certainly not out to gut the natural resources of Costa Rica.

I tried to make my initial plan to invest as simplistic as possible and did heavy canvassing of the web, read Scott’s book How To Buy Costa Rica Real Estate Without Losing Your Camisa, and reached out to as many people as I could who had first hand experiences with the Costa Rica real estate market.

As an ex-staffing industry veteran I can’t emphasize enough the power of networking, especially while discovering a foreign country. My investment plan in Costa Rica included the following:

  1. Work within a defined budget – investing in a foreign country should not be your primary investment strategy and everyone (usually dependent on age) has different risk tolerances.
  2. One of my favorite quotes is “begin with the end in mind” – you must know what it is you want to accomplish and have a quantifiable exit strategy to any real estate transaction you enter into.
  3. Network like crazy and talk to as many people as possible who can share first hand experiences with you about Costa Rica (e.g. the people, weather, locations, culture, business dealings, etc).
  4. Focus on a specific region or area… Location, location, location – the narrower your search criteria the better… Do NOT spread yourself too thin by trying to cover too much. For instance, if you’re interested in beach front property focus on 2 or 3 beaches in the Northwest Pacific rather than 20 beaches throughout the country.
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  6. Research and do as much due diligence as you can remotely, but keep in mind there is no substitute for walking property and getting an overall pulse of a location than visiting the area yourself and formulating your own opinions. I would NEVER buy property without being able to see and feel it myself. It’s amazing the number of developers that are wanting buyers to put money down first before being able to even visit the property in question. If you are meeting a developer on his “turf” your going to receive very biased opinions and scripted answers to common questions v. talking to locals or neighboring property owners. If possible, venture out on your own!
  7. There are two professional services you should not try to cut corners with – legal and accounting advise. Find a local Costa Rican attorney and tax professional who has a proven record of dealing with issues that you may be confronted with. I believe the best service professionals come from unsolicited referrals and always ask for references of recent clients they have worked with.
  8. Experience matters – Because of the recent boom in Costa Rica real estate there are a lot of first time developers who have come out of the woodworks. I would highly recommend looking for developers who have a proven track record of developing real estate in Costa Rica specifically (not other countries)
  9. Understand the dynamics of supply and demand real estate principles – Remember savvy investors are experts at timing the market (buying low/selling high). Prices are dictated by consumer demand. For those that complain about “Americanized” prices in Costa Rica there is a reason why the price points have gotten to where they are. Merchants must act accordingly when demand slips.

With that said I decided to focus on looking at raw land within several Central Valley cities and also met with two developers that Scott Oliver has featured on this website.

Scott Oliver does occasionally consult with sophisticated real estate investors and we were pleased that he was personally able to be with us and introduce my group of investor friends and I to two developers representing both ends of the spectrum.

The first, Concasa, located about 30 minutes outside of San Jose, builds low cost, high quality, stripped down to the barest amenities condominiums at below market prices and targets a mostly middle class, Tico clientele. They are able to price their housing at extremely competitive rates because of the bulk pricing they save in materials and having a strong team of in house engineers and professionals (no subcontracting out of work).

I would compare the look and feel to an American style retirement living high rise. The price for these roughly 1,000 sq foot condos are in the $50,000 price range! For someone with a conservative investment strategy and sensitive budget these condos would make sense – the majority are owner occupied units, but a rental program is available.

The next developer we looked at was the One Jaco Place project being spearheaded by Joshua ten Brink and his Riverside development team. In short, this project blew me away! This is an extremely ambitious development in the beach town of Jaco (2 hours from San Jose) that reminded me of a Las Vegas style theme resort.

The amenities are absolutely spectacular – some of the more noteworthy include a 4 to 6 person jacuzzi on every balcony with most (5th floor and above) overlooking the ocean, a musical water fountain on the grounds, a 400 person convention center, on-site casino (pending permits), huge poolside sports and cigar bars, spa, gazebos, private, on-site movie theater, sand volleyball, tennis courts, etc.

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To cut to the chase, my group of investor friends and I decided to buy two 8th floor, two bedroom, two bath units. To summarize, here were the most significant points to our buying decision:

  1. What makes one developer different from the next? In a word – experience. There are a number of first time developers looking to capitalize on the perceived Costa Rican real estate gold rush. I felt comfortable about “hitching my wagon” to a developer that is well-funded and has an established portfolio of selling out every other development they have been involved in within Costa Rica. These “proven” developers are so sought out in the US that there are often lotteries and long waiting lines to get in at pre-construction level pricing.
  2. Last year Riverside won the Bentley Award given out annually to the best developer in Costa Rica. We were able to visit the Riverside project in San Jose, which will have a very comparable floor plan to the one in Jaco. We also went to Jaco to walk the actual property and looked at adjacent development activity in the area.
  3. Pricing – The key to making condos work as a viable investment (in my opinion) is getting in at ground floor, tier 1 pricing levels. We were able to secure original pricing on both 8th floor units we bought. And yes, I am happy to report that the prices went up the week after we bought. Sales have been incredibly strong. They have averaged selling a condo a day for six weeks with very limited marketing and advertising, and are closing to selling out their first three buildings.
  4. Location – I am well aware that there are differing opinions on Jaco as a desirable area in Costa Rica, but to me Jaco is one of the most established beach towns in Costa Rica and certainly has the most name recognition of any beach town in Costa Rica.
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  6. Vacationers will have a myriad of tourist activities to choose from and Jaco is in the hub of everything. Those activities include but are not limited to eco-adventures like canopy tours, hiking, rafting, ATV rides in the mountains, it’s only 3/4 mile from the beach, there’s a great golf course only 10 minutes away, lots of nightlife and entertainment, etc. It would be a pretty complete vacation day if you can do zip lines through the mountains in the morning, walk the beach or hangout by the pool during the day, and take in some casino action in at night. In addition, One Jaco has the luxury of an excellent very upscale development at Marriott Hotel and Los Suenos resort only seven minutes away.
  7. I am also cognizant that there has been a huge buzz on the Northwest Pacific Guanacaste coast and there are a number of emerging beach towns. This area is trying to get to where Jaco already is and the year round climate conditions are not as favorable.
  8. Competitive Edges – This is a uniquely designed concept that other condo projects I researched just cannot come close to competing with. The communal amenities and “wow factors” of One Jaco Place are in a word AWESOME. When one sees the building models and “after” pictures you cannot help but being impressed. I felt the perception of value in the One Jaco project v. say the Concasa development more than justified the much higher (but still market rate) asking prices.
  9. Financing and Assignable Units – One of the key factors to consider when buying in Costa Rica is if the developer has in house financing program or has a relationship with a Costa Rican bank. Remember, investing in Costa Rica is much more cash intensive than the in the US and conventional financing for non-residents is extremely burdensome. Josh’s Jaco project will offer competitive financing (by Costa Rican standards) to buyers and deposit payments will be spread out over 14 to 18 months before your money goes hard. If your investment strategy is more short term (like ours) you’ll want to make sure you can assign or sell your unit after the project sells out and before you go to closing. In the case of One Jaco Place you are able to sell your unit after the roofing goes on (about 6 months before completion). This is a huge plus.

Again, this project was compatible with our investment strategy, but it may not be for you. Keep in mind as well that these condos can be, but are not being marketed as owner occupied units – the majority will be on a rental program, which I personally like.

I ran very conservative projections on occupancy rates and think that even if we are not able to sell our condos at a return we are satisfied with that these units will be cash flow positive based on the current comps in the area.

Finally, my intention in this article was not to sound like an infomercial for One Jaco, but to give you an overview of my buying experience in Costa Rica. I know it’s easy to get caught in the fever of an early stages development project as enterprising as this, so be sure to do your own due diligence and make a purchase that you are comfortable with and fits within your own search criteria.

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Written by VIP Member David A. Terry 2nd May 2006 – from Alpharetta, GA. USA

2010 Important Legal Update:

Although this project is nearly finished, due to the current economic crisis, the developer has been forced to take legal action against the banks so please make sure you are fully informed!

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