Recession and Real Estate

Image of Mark TwainAuthor Mark Twain once said, “Buy land. They’re not making it anymore.” There is a lot of wisdom and truth in that humorous statement by the renowned American writer. The middle of a recession is one of the best times to invest in real estate. Why is that?


Aerial view of a Costa Rica luxury home

Financial advisors tell us that real estate has many advantages over other kinds of investments. It is less volatile than stocks. It offers a better return than bonds and, as a result, provides a more stable income. The worst-case scenario? You have a place to live. Of course, that is not true of every property in every location but, if you study the market and make a sound investment, parts of the real estate sector can offer insulation against economic downturns like a recession.

Recessions cause Fire Sales in Costa Rica

When you study a real estate market that interests you, you may find prices have gone down because some property owners were unprepared for the recession and need to liquidate some assets. It is also possible that prices are steady but sellers are more willing to negotiate. Deep discounts and “fire sales” may give you an opportunity to pick up a property at a rock-bottom price. When there is a true fire sale, that’s the time to invest. If you start over thinking it, someone else will get in before you. Don’t think of it as taking advantage of another’s misfortune.  Think of it as an opportunity to help someone get out from under a financial burden and put cash in their pocket!

Trend line going down, indicating recession

Interest rates in the United States are at historic lows and expected to remain low for some time. So, credit that was not previously available may now be offered through your lending institution. Here in Costa Rica most, if not all, banks do not offer financing to foreigners. Your best option is to bring the financing with you.

Graphic of coronavirus causing recession

If you invest in real estate during a recession, as the economy rebounds your property will increase in value as buyers feel more confident to spend money. How long will the current recession last? The fact this economic downturn results from the COVID-19 pandemic rather than a financial crisis of another sort makes it unique and difficult to predict. This is uncharted territory for the financial industry. Most business leaders and financial experts believe it will take many months—or even years—for the economy to recover, and there may be an extended period of virtually no growth before it rises again. Unfortunately, only hindsight is 20/20, but what we know is that real estate prices are lower at the bottom of a recession.

RE/MAX Balloon

As mentioned, it is important not to assume any property purchase is a slam-dunk “nothing-but-net”. You should consult local real estate experts and study the market thoroughly. As in most places, real estate value is based on three things: location, location, location. This is especially true in Costa Rica. So, it is important to consult local realtors about which areas are likely to appreciate in value.

Prices for real estate in Costa Rica tanked in 2009-10 following the crisis in the United States. But prices are steadily rising again and have a long record of growth. You may come across an opportunity to “flip” a property, or you could hang onto it to realize its long-term potential. Investing in a rental property during a recession could give you a vacation home that pays for itself when you are not there. Win, win! The Playas del Coco and Playa Hermosa communities are home to several property management companies that can ease your worries about renting and caring for your property while you are away. When you reach retirement age, you can live in a home that has paid for itself by the time you retire, and give you a place in paradise to enjoy your “golden years.”

Recession and real estate may seem like strange bedfellows, but they can be “a match made in heaven” in Costa Rica!

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Opening of Costa Rica

Finally, the opening of Costa Rica is taking place, slowly but at least happening. Here is the most updated information I could get my hands on as of August 23, 2020. Opening the Airports is a major first step to getting back to some kind of normalcy in Costa Rica and is a welcome relief for many, not just the people of Costa Rica.
Liberia International Airport
The Costa Rican government has been evaluating each week how to restart the economy, as well as how to best protect the people of Costa Rica.  As tourism is a major economic factor for this country, the Government recognized the need to start allowing more tourists in the Country. It can feel like a moving target at times as their plan changes almost every day. However, with the opening of the Juan Santamaría International Airport (SJO) near San Jose, and by September 5th the Liberia International Airport (LIR), it is a good start. The first flights in to Guanacaste (LIR) will be operated by United Airlines, starting September 5, while Air Canada will follow with flights in October.

In early August the government declared that tourists from Canada, the EU, Great Britain, and a few other countries are allowed to visit but there will be strict protocols to follow and hence there was a lot of confusion. Then in mid-August, the opening of Costa Rica was expanded to 44 more countries. But the United States was not included. Restrictions for temporary residents as well as permanent residents was also changed to allow these people to come back home to Costa Rica.
Map of 6 US states approved for travel with the opening of Costa Rica
On August 19th the announcement was made that residents of 6 US states; New York, New Jersey, New Hampshire, Vermont, Maine and Connecticut will now be allowed to travel to Costa Rica. There are additional requirements for US citizens.  Here is the most recent information:
A) All people entering Costa Rica must complete the digital epidemiological form. This is known as the “Health Pass” or “Pase de Salud.” Here is the link to the form:

B) Everyone arriving to Costa Rica must obtain a negative PCR-RT coronavirus test. The sample for this test must have been taken within 48 hours of your flight to Costa Rica. Best to have the form in hand upon arrival.

C) Everyone must purchase travel insurance that covers accommodation in case of quarantine and medical expenses due to COVID-19 for the duration of the stay. The insurance policy can be international or purchased from Costa Rican insurance companies that offer the required coverage, such as The National Insurance Institute (INS) and Sagicor .  It is important to know that if you choose a foreign insurance policy it must demonstrate proof (in English or Spanish) that their policy is valid during the entire planned trip to Costa Rica. The Insurance must cover medical expenses in cases of COVID-19 while in Costa Rica, for a minimum of fifty thousand dollars ($50,000.00 USD). The policy must also include a minimum coverage of two thousand dollars ($2,000.00 USD) for expenses of extended lodging due to the pandemic.
If you happen to be a property owner in Costa Rica but do not have residency, you are still required to have the insurance coverage.

D) All persons from the United States must prove by showing their driver’s license, that they live and reside in one of the states that are allowed to come.

In the coming weeks the Costa Rica government will continue to evaluate which tourists from areas in the United States and other countries will be allowed in to the country. The opening is slow and cautious, but continuing.

Starting August 22, to the 30th, most establishments with sanitary permits are allowed to operate nationwide. This opening of business is a welcome relief for locals as well as expats living here. Basically, any retail company like auto repair shop, a barber shop or salon can legally now open if they have a up to date health certificate.
Medical worker wearing a face mask in Costa Rica
Please note with the opening of the country to tourists, masks, face coverings or face shields are required to enter any indoor establishment that is open for business.

So, if you have been planning a trip to Costa Rica, keep those plans open and be patient, your time will come. As my mom used to tell me when I was a kid, “it is well worth waiting for something you really want than to just give up your dreams”.

A Boating Paradise, Costa Rica Has it All

Boating In Costa ricaDo you like boating, if you do, you’ll love Costa Rica. The combination of hundreds of miles of ocean coastline, beaches and countless rivers, estuaries, and lakes equal abundant opportunities to enjoy life on the water. Let’s consider some of the great boating opportunities.


Groups of people rafting on the Corobici river in Costa RicaRiver rafting:
It’s boating but a simpler style.  The leisurely end of the rafting spectrum includes peaceful floats down lazy rivers like the Coribici in Guanacaste. Such tranquil trips with occasional class I and II rapids are ideal for families with young children or people just wanting to relax and enjoy the scenery. Along the riverbanks you will likely spot iguanas, monkeys, and a great variety of birds. If you crave the adventure of whitewater, head to the Pacuare or Savegre river to experience class III and IV rapids in virgin rain forests. Some outfitters offer overnight trips so you can satisfy your thirst for excitement.

A boat traveling on an estuary in Costa RicaEstuary tours:
Estuaries–brackish pools that form where rivers meet the sea–are teeming with wildlife. Boating is the best (and sometimes only) way to discover them. If you prefer self-propulsion, you can rent a kayak and explore on your own. If you would rather ride than paddle, hire a panga–a local open hull center console fishing boat that is also used for touring. The coastal town of Tamarindo is popular for guided estuary tours. You’ll be glad you’re in a boat when you see the crocodiles float by.

Joseph offshore fishing in Costa RicaFishing:
If your idea of fun is hooking and fighting a big catch, Costa Rica is the place to be.

The fishing options can be divided into three categories: lakes and rivers, inshore, and offshore. If you’d like to cast your bait in Costa Rica’s largest lake, head for Lake Arenal, home of the Guapote. This bass-like fighter can top 10 pounds, but most are in the 2 -3 pound range. A local guide and boat will help you find the big ones. Inshore fishing–ocean fishing in water that is less than 100 feet deep–doesn’t require a big boat. However, that doesn’t mean that the fish aren’t big.

Costa Rica RoosterfishThe Rooster fish, known for its distinctive dorsal fin and the battle it gives, can grow to 100 pounds. The tasty Snapper can also be found in shallower saltwater. If you’re determined to reel in a trophy fish, you’ll need to hire a boat and crew capable of going 20 or more miles into the open sea. Maybe the Sailfish, Tuna, or Marlin you catch offshore will break one of the 95 fishing world records that have been set in Costa Rican waters.
Catamaran sailboat in Pacific Costa Rican waters
The Papagayo region of Guanacaste is famous for its beautiful bays. The best way to see them is from the water aboard a catamaran. Just imagine sailing across the tranquil water at sunset or dropping anchor in a crystal bay to swim or snorkel. In addition to the gorgeous beaches and shoreline, you may be privileged to sight dolphins, sea turtles, or even a whale. Numerous tour companies can arrange half-day catamaran cruises that include drinks and a meal prepared by the crew.

Jet Skiing in Playas del Coco area of Costa RicaJet ski:
If you’d like to explore the same beautiful bays but at full throttle, rent a Jet ski.  Personally, I don’t call this boating but it is a blast and it on the water.

It’s a fast and fun way for you and a friend to check out fascinating islands just offshore or discover your own private beach. You can rent your personal watercraft by the hour, or you can join a guided tour group. Either way you’ll have a blast.

Huge sailfish caught off Costa RicaCanal tour:
Venice may boast famous canals, but Costa Rica has canals too. These natural waterways stretch for miles along the Caribbean coast. A leisurely boating ride on a powered pontoon will bring you into close contact with the abundant flora and fauna of the Tortuguero region. You may sight sloths, monkeys, toucans, and crocodiles–all from the comfort of a shady boat.

Whale breaching in the Pacific off Costa RicaCosta Rica truly is a boating paradise. Whether you crave adrenaline or serenity, sport or leisure, you’ll find what you’re looking for in the oceans, lakes, and rivers of Costa Rica.


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Selling your Costa Rica Property…some things you need to know

Someone dreaming of selling his home in Costa RicaAs the saying goes “All good thing can come to an end”. The same can be said about your Costa Rica property. Selling your property doesn’t have to be difficult, provided you are well-prepared in advance. Selling will be much easier if the property is properly priced and marketed, but there are some things you need to know beforehand to make the selling process as smooth and stress-free as possible.

Most properties are held either in a person’s name or a Costa Rican corporation. Note that property here in Costa Rica can be held in your name, in a Costa Rican corporation, in a trust or even a a foreign corporation (outside Costa Rica).  No matter how you choose to own your property, it is important to know what is required to complete a sales transaction.

Example of corporation legal books in Costa RicaThe things required to complete the sale of a Costa Rica property depends on how the offer to purchase your property is written, and how in-depth the due diligence will have to be (as requested by the buyer’s attorneys).

No matter how your property is held (in your name or the name of a corporation), I highly recommend you use your local Costa Rican “Notario” (notary) or an attorney to assist you in the selling process, which will include obtaining a number of documents required to complete the transaction.

Here is a list of items that may be required to sell your home:

1) Proof of legal water availability: whether from AYA (Instituto Costarricense de Acueductos y Alcantarillados), local municipality where the property is located, legally registered private well or from an ASADA (Asociación Administrativa del Acueducto) in other words a legally registered private water association.

2) Proof of electrical service along with the company providing service and the current contract number.

3) If the property is a house or a condo, Municipal building permits will be required to ensure it was legally built.

4) Proof of property taxes paid up to the date of closing.  You can obtain this from the local municipality where the property is located.

5) Proof of all utilities being paid up to the date of closing (water, electricity, cable and telephone).

6) If your property is a home or a large condominium, proof of the Solidarity Tax Assessment and, if subject to the tax, proof that payments are up to date from 2009 to the date of closing (Impuesto Solidario para el Fortalecimiento de Programas de Vivienda or roughly translated as the Luxury Home Tax).

7) If the property is in a registered Home Owners Association, or a Legal Condominium Association, you may need to provide the rules and regulations of the development, the minutes from the last meeting, as well as the financial report of the development. All Special assessments as well as monthly maintenance fees will need to be paid up to the date of closing.

8) A “Certificado Catastral” or certified plot plan/survey of the property.

9) A “Literal de Inmuebles” or a certification of the property.

10) A copy of your valid, non-expired passport.

Costa Rica home for saleIf your Costa Rica property, whether a house, condo or raw land / lot is registered under the name of a Costa Rica corporation there are benefits that make selling the property easier.

These benefits may include: A) Not having to be present at the closing. By having a detailed special power of attorney (SPA) and an updated shareholders meeting (which can be done by proxy) logged in the corporation legal books reflecting the special power of attorney, then the person you designate can sign the closing on your behalf here in Costa Rica.

B) Shares of the corporation can legally be transferred to a new buyer and, again, a special power of attorney (SPA) will be needed for this as well.
View of the Pacific from a Costa Rica mountain lot
If your Costa Rica property is under your personal name most likely you will be required to be present at the closing to sign all documents, which is not a bad thing when you get to experience Costa Rica maybe one last time?

However, you can still do a special power of attorney signed in front of a registered Costa Rica “Notario” Notary. The least expensive way to do this is to have you attorney draft the special power of attorney and send it to the closest Costa Rica consulate near you. Once the SPA has been approved then an appointment date and time will be set for you to go to the consulate and sign the document.
So, in order to make selling your Costa Rica property a hassle-free experience, be prepared before an offer to purchase is presented.

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