What is the Value in Buying an Existing Home in Costa Rica?

May 11, 2023 in Tips for Buyers, Buying Process

Are you dreaming of building the perfect ocean view home in Costa Rica?  Many of our clients have, and they have come to us to buy their slice of paradisiacal land on which to make these dreams come true.  And as agents, we have recently seen so many stunning homes, hotels and businesses being built in our region of Costa Rica, called the Costa Ballena.  In a country in which building a home is fairly normal, this is a fair dream to have for yourself and your family. 

Building for yourself can definitely mean more personalization, and it can potentially mean saving some money.  But have you considered the effort that goes into building a home?  Sure, everyone has done it, but would they do it again?  Many of our clients in fact do say YES!  They have bought land with us, built their homes, and have loved the process so much that they’ve listed their house in order to buy more land and do it again.  For others, the process put significant strain on their ‘pura vida’ dreams and they would firmly say "no, thank you" to going through that again. 

To help you understand the real value in building a Costa Rica casa, ask yourself which of the following characteristics you aim to maximize most in your new, tropical lifestyle: time, money, location, or ease?  If ease is your preference, it may be easier to take your time and be picky with homes already on the market.  And if time is of the essence, you may not have the patience to build.  But when it comes to location and money, these factors are a bit more nuanced.

The easy answer is: if you have lots of time or you can afford to hire a designer to pick out your finishes, then you should consider building.  There are numerous sensational lots in the Costa Ballena that fit a wide variety of preferences.   But buyer beware underestimating the home building process.  Read on to learn more about where the real value is in building or buying a home in Costa Rica.

Putting in Hard Effort While Living in Paradise

Most people can’t even decide where to get dinner.  So what happens when it comes time to picking out a type of granite?  Even with a big budget, the amount of effort that it takes to visit every location that sells the different types of materials available all over the country can be astounding!  The building process costs a lot of time and energy and there are hundreds of decisions to make.  And you have to try to meet your needs in a country where you potentially don't speak the language.  Not impossible but not necessarily easy for the average expat.

There are a few commercial builders in our region who will design and execute the construction of your home all in-house.  But more often than not, clients of ours who choose to build tend to hire boutique builders who cater the entire construction to their clients’ needs, rather than being limited by what their suppliers have to offer you.  And if you don’t have a full-service team, this means a lot of your time traveling around finding the exact materials and styles that you are looking for and referring those items to your home development team, with the hopes that you will find adequate supply.

When building a new home in Costa Rica, you are able to have a builder customize the home before construction is completed.  This means that it will be built with your personal touch and you don’t have to lift a finger, a paint brush, or hammer to bring a pre-owned home up to your standard.  But it’s a good idea to understand what’s needed in the local building process to ensure that everything is built to code and to adequate quality for the weather.  The elements here are nothing to balk at, and the heat and rain are big factors that go into the home build, utilities, drainage system and more.  If you are unsure, it is best to hire your own building inspector to make sure that the job is done correctly the first time.

A pro for buying an existing home is the opportunity to flip it.  If you buy the right type of home for today’s market and make the much-needed upgrades, you have the potential to flip the home, rolling over profits to a newer and better house.  New properties may not be as exciting for buyers who like to customize and upgrade on their own.  A lot of people today enjoy DIY projects, and the best way to get dug into one of those is to buy a “fixer-upper,” which is a property that could use some updating.  These homes are often valued a little lower and are waiting for the right buyers to come along who are motivated and enthusiastic about a personalization project.  Buying a home for renovation means that you will be able to tailor it to your preferences, which you may be more hesitant to do with a newer home, or if you can just pay your builders to do it for you.  Recent clients of ours bought their existing home in Ojochal on a gorgeous white-water view property, and after spending a fair amount of money, time and effort in renovations, they are able to rent their property for luxury rental prices (think BIG!)

Budgeting Your Money

Buying a home in Costa Rica generally involves putting down a deposit when signing the purchase agreement and then paying the balance at closing.  When building, your contract will include a schedule for paying in installments every month or so while your home is being built.  And as important as it is to make sure that you can afford the build before you begin, it is even more crucial to ensure that all aspects of the build are included in the quote.

When DIY building, because you are paying as you go instead of for a finished product, your budget for a home can get wildly out of hand after the first few purchases.  Although it is possible to build a home for less than it costs to buy an equivalent home, brand new homes can cost more —sometimes up to 20% more than a “similar” existing home.  That’s because all of those fabulous amenities that you are seeing while shopping can really add up.  And many of these amenities are new to this region, so you won’t find them in older existing homes.  Today’s lifestyle demands are different than those of a more technologically-limited past.  Many people want open, eat-in kitchens, walk-in closets, and large master baths.  Older homes in our region don’t generally have these luxuries as features.

Upgrades may be marked up heavily by the construction company and the cost of construction can end up being far more than you intended.  Many of our clients who build, especially when it comes to luxury homes, bring containers of items like fixtures, fans, lights, and furniture to name a few.  They save money on bringing these luxury items which would otherwise be imported at highly taxed rates and resold at a markedly higher price than in the US and elsewhere.  And new technologies can be built into the home, like alarm systems, speaker systems, internet wiring — which can save time, money and holes in the wall if that’s what you need.

If you are on a budget, make a list of features that are important to you and compare the costs.  Find the must haves for your home in Costa Rica and then look in your price range for what types of existing homes are available in that range that meet your criteria.   Do your research or ask a knowledgeable source (like a great realtor!) about how much it would cost to build something equivalent.  If your needs are simple, you may be able to save a bit of money with a smart building plan.

A new home means new appliances, plumbing, air conditioning, and so on.  You should be repair free for at least a few years, meaning that you will be saving money in future costs.  And with new energy-efficient technology like heat repellant windows or salt-water pools, you can also spend a bit more now to save in bills later.

Even when you build a new home, it’s still likely that not everything will be perfect.  Whether you run into issues with permits or other delays, building your own home can come with unexpected costs.  We rarely hear of a home that is built on budget and on time.  During the tender stage, for instance, builders and architects may give lower quotes and time estimates in order to win your bid, only to disclose further down the line that your budget is 30-40% below where it should be.

Purchasing upgrades from the builder will be expensive.  Prospective home builders might forget the cost of window coverings, extensive landscaping, a pool, light fixtures and finishes, fans, gutters, hinges, door handles, preparing land, landscaping, and so forth.  Builders typically allow for the minimal finish, adding change-order fees as you add on to the base product.  This adds up to many thousands of dollars. You need to be completely prepared in advance of writing a quote to make sure that you have exactly everything specified.  On top of that, you have to hope that when it comes time to buy the materials that you have requested that they are still in stock.  Changes to one item can mean changes to many more down the line.

You will likely be required to pay for permits as the construction progresses, so be mindful that you are putting in a lot of money in advance of getting anywhere near a finished product.  This may mean additionally paying for a rental home in the area if you intend to be around to oversee part of all of the construction process.  This is highly recommended, even though it may seem counter-intuitive.  But if you want your home to be perfectly catered to you, you will want to be there to make sure that no major corners are cut, thus limiting your satisfaction with the end product.

Plumbing, electricity, internet - it can be a challenge to arrange for utilities and other site details, especially if Spanish is a foreign language to you.  And Costa Rica today is a different country than the cowboy regulations of yesteryear.  No matter what you heard, regulations are becoming more stringent in a nation that is looking to grow its coffers to cover the planned growth in national infrastructure.  So while we are getting things like better roads, faster internet, and more power from renewable resources every year, we are also having to make sure that we are connected to a legal water source, for one. 

Timing is Everything

Buying a home also means that you have the ability to move in quickly.  We know that for some, they can’t wait to move to Costa Rica and to have a place to hang their sun hats that is their own.  When you buy an existing home, you can expect that a large part of your day is likely to be spent relaxing in the sun on your patio or in your pool.  A large majority of homes on the market in Costa Rica are turnkey, meaning that furniture, fixtures, window covers, appliances, and often times art and decorations tend to be included in the sale of a home.

Changes to blueprints are not easy, nor are they fast. Every change must be approved by the Council of Architects and by all of the relevant municipal organizations.  Some of the biggest headaches happen when everything is approved and seems to be a go, but once the builders begin their process and some great realization happens that they cannot go ahead as planned.  Maybe the soil is actually too loose in the spot that you had planned and construction comes to a sudden halt. 

There are a number of moving pieces in the building process in Costa Rica.  The first is weather, which is really a factor anywhere.  Couple that with a difficult road system and deliveries can often get pushed back by a few days.  And if you are ordering anything from outside of the country, you’d better believe that you will be waiting patiently for them to arrive.  That all may not seem like a big deal until delays happen a few times in a row and work gets pushed back.  Your builder’s team of workers may also have other jobs on the side, especially while waiting for material to arrive at your site.  Be prepared to wait and wait patiently.  Pressuring people in Costa Rica will not get you as far as you may have become accustomed to elsewhere.  Pura vida reigns here, even on the clock.

Location, Location, Location

If you want to build, you must first buy land.  This means that you are likely to be looking for the perfect spot that has your perfect views and can accommodate your ideal home.  Buying an existing home may come with a variety of necessary renovations that are not always obvious during the purchasing phase.  But building a home comes with a lot of unanswered questions of what everything will actually feel like when it’s placed in its final location.  No matter how deliberate you are with your choices, it’s tough to know in advance of completion how the wind will flow through a structure, or where the sun will warm a room a bit too much.  When you are building a home in Costa Rica for the first time and are swept up in a thousand decisions, you may neglect to consider the bigger picture.  Yes, you want sunset views from your living room, but you won’t learn until later that this will mean sitting in a warmed up room all evening or running a high electricity bill for the a/c.  When looking at existing houses, you can get an instant feel for what it will be like to live there.

Many new developments in our Costa Ballena region can be expected to be a construction zone for years to come.  In a new development, you may be the only house on a remote road in the dense jungle and live a quiet life until your neighbors finally decide to build up and move in one day.  It is difficult to have advance notice of what your neighbors intend to build and when they intend to do so, and if buying from a developer, they are very unlikely to give you any indication in case they put you off buying their property.  A few of our clients have been surprised by their neighbors building unsightly homes directly in their line of view and have come to us to list their homes, angry with their developers for the lack of information provided.  And if you plan to rent your house in a new development, be prepared for unexpected construction interrupting your guest’s tranquil experience.

Conversely, if you’re looking for a lovely, quaint, blossoming older neighborhoods with a well-established community of neighbors, you won’t find that for many years in a new development.  In an older development, you can expect to walk past the same homes every morning, witnessing the changes in blooming flowers. 

Although many things grow very quickly in this fertile jungle soil, on a newly groomed property like the lot on which you want to build, it will be many years before your King Palm reaches its full grandeur or before your trees start to fruit.  Older homes will more often than not be on fully-ripe properties, meaning that you can immediate reap the abundance of mangoes, papayas, star fruit, rambutan, citrus fruits, avocados, soursop, coconuts, and more.  In Costa Rica, food basically grow anywhere and everywhere — once planted and allowed to bloom.

And when it comes to the location of new developments, their lots for sale tend to be smaller than developers used to make them.  This has to do with enforcing long-standing regulations about property designations where lots that are over 1.5 acres are theoretically considered farms, coming with their own rules and regulations for development.  Whereas you can find existing homes on properties that are well above that size designated residential, which will not likely change over time.  It also means that you can subdivide a large property with an existing house and sell a part of the land that you don’t intend to use.

If you are a first time buyer in Costa Rica, you should strongly consider finding great representation by someone who enjoys working with first-time buyers and answering their questions in detailed, helpful ways.  You may even need to ask the same questions more than once as you gain knowledge about the market and the process.  Look for a local expert who knows the neighborhoods and will take the time to listen to you and show you around.  Contact our team with any questions at sales@osatropicalproperties.com

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