By Rudy Matthews
A quirk of the housing economic crisis is that for the most part rental property in Costa Rica has held its own and has returned a better investment than the normal investment alternatives.
I held my breath when the housing crisis hit because I still have rental property in Florida. Over the last four years I have been 95% occupied. Florida, as you know, got hit very bad in the downturn and has yet to recover. I am sure there are pockets where rentals are better than other places so I feel very fortunate.
Here in Costa Rica during the boom there were more buyers than renters. During the last several years, that trend has reversed itself. There are, however, buyers who are investing in the rental housing market here and they seem to like the return. Also the rent gives them a monthly income and if they leverage the renter is paying the loan. It is difficult in this investment climate to buy something and have someone else pay for it. That is one reason I have always liked rental property.
Here in Costa Rica I believe there are three unique markets for rental properties:
1) The Tico market - you can rent and not have to furnish or supply appliances because that is the norm - rents are usually lower but there is a demand for rentals.
2) The Foreign market- people moving here and they do not want to buy or at least not right away- rents vary depending on individual needs but the rents are higher than the Tico market. The niche is that most people want a furnished rental and appliances furnished. They are here but have no clue where to buy furniture etc. A plus is once you have a place furnished - for a few dollars more you can equip the rental with dishes , small appliances etc. Anything you do will increase the amount of rent per month and you have traded convenience for more of a return on your investment.
3) The Corporate Rental- right now there is a demand for rentals by corporations who are moving people here. Corporations seem to pay the highest amount of rent. Many of the properties that can be rented to the corporate market are located in Escazu and Santa Ana because that is where many of the large international corporations have their offices. But lately the free trade zones in Heredia are attracting lots of large international companies too.
Where I live one corporation rented five houses for employees relocating. Rents are from $2,000 to $3,000 dollars depending on the home. Corporations look for gated communities and condos, fully furnished and usually close proximity to the office. The owner pays the utilities and maintenance fee per month but it is still a nice monthly income.
One owner from Canada rented his house for $2,500- went to San Joaquin de Flores and rented a place for $300 a month. He said the rental was like having an income from a job.
Is rental property for everyone - absolutely not. I have always believed that investments depend on the particular situation of the individual and what fits best for you at a particular time.
I will share with you some tips concerning rentals
1) Rental property is not a hobby- Rental property is a business and you have to treat it as such.
2) The time to evict someone is before they move in. This means choose tenants carefully and eliminate someone you feel will be a future problem. They probably will be.
3) With rentals you are in the wholesale business. If you pay retail for services, repairs, and improvements, your money will dwindle.
4) Your best repairman is a handyman who can do many things like plumbing, electrical etc. You may go through a few before you find the right person but the right person will save you money and headaches.
5) Always take into account your overhead expenses - taxes-maintenance-repair-insurance etc etc and evaluate if the investment still fits- if it does not - walk away.
6) If hiring a management company really look at details - you can be nickel and dimed to death.
7) If you are handy and like to do your own repairs ,management, etc - do it - that is where you will save money
If you have your life savings invested in a retirement fund like an IRA, a 401K (US) or a RRSP (Canada), ask me how to invest your money in Costa Rica real estate and get an ROI of between 6 - 10% minimum.
Ivo has sold several former clients rental property and they are doing very well. Rental property is an alternative in this investment market - just something to consider.
Written by Rudy Matthews, the GoDutch Realty Costa Rica Home Specialist. You can call me on my Cell Phone (506) 8839-6961. I am GoDutch Realty’s only agent who is NOT an area specialist.
I know a little bit of everything and have lots of experience finding newcomers the home or property they want. I know how to use the knowledge of each of the GoDutch realty agents to get you where you belong. For a Central Valley real estate agent, call me, I am the man you’re looking for.
For many years, I have worked side to side with Christopher Howard, who does retirement tours for Costa Rica and wrote the book the new golden door to retirement. Together, we have made many happy customers.
Because of my experience of making newcomers to Costa Rica comfortable in their new environment and because of my exceptional way of treating those who are looking for a property in Costa Rica or a condo where they can retire to, GoDutch Realty was more than happy to make me part of their team and I love it. If you are one of those who is looking for an expert realtor who will put in all time and effort to help you get to your goals you have set, contact me now. I'd also love to see your comments on my article below. Thank you!