Is it Safe to Invest in Costa Rican Real Estate?

Costa Rican investment is a hot ticket right now. Websites are popping up all over the place and local real estate companies are opening offices in Costa Rica to service the demand of their customers in the US. While many uninformed people believe that investing in what they cannot see is a scam, many other smart investors have made decisions that have pleasantly lined their pockets.

To answer whether investing in Costa Rica is safe, one should review and understand all facets of the investment. And the investment decision is not only based on the actual investment property but also on exterior forces that greatly impact the investment. To determine whether an investment is safe, here are six brief points to consider.

1. Political Stability – Is the country in which you are investing subject to regular coups by political factions? Costa Rica is a country that has seen political and social stability since the 1940s. In 1949, the country’s army was abolished and the country lives a peaceful existence as a democracy.

2. Demographics – Does the investment respond to a need? When investing in anything, the investment is more likely to be successful if the end product is required. In the case of investing in Costa Rican real estate, the country is booming with development and an influx of visitors. The fact that the country needs the new resorts, hotels, condos, private homes and villas makes the investment that much safer.

3. Due Diligence – Any investment or venture requires proper due diligence.

• Ensure that the organization receiving your money is legitimate.
• Ensure that the land parcel or property exists.
• Have a non-bias third party read the documents for any problems.
• If you cannot read the prospectus or financial statements in order to satisfactorily make a decision; hire an accountant or lawyer to review the documents.
• Ask questions by telephone of organizations in Costa Rica to inquire about specifics of the contract to verify that it is fact in Costa Rica.
• Any portions of the contract or brochures that specifically deal with income tax law in your jurisdiction, you must verify to ensure that they are not sales tactics only. For example, if investment documents indicate that you are permitted tax credits based on foreign investment, check with your accountant to ensure this is correct tax law. You will need to know in advance how capital gains are handled and whether expenses directly relating to the investment are deductible.

4. Visit the Site – If you can afford to invest in property, you can certainly afford to make at least one visit to the area. While on location, inquire as to whether the necessary permits are in place, whether the development is legitimate and obtain any other background information that you can gather to help you make a decision.

5. Review Scams – Research any websites, particularly government sites, and if in the US, call your state Attorney General’s office to inquire about any known scams. This will give you the heads up needed to say no to the deal.

6. Title Ownership – Many foreign countries do not permit non-locals to hold titles on property. Costa Rica, however, affords foreigners the same rights as nationals in terms of property ownership. All titles should be registered with the National Registry of Costa Rica.

Investing in any foreign country can be done safely as long as proper due diligence is taken, common sense is used and you are not hasty to part with your hard earned money.