Back to Basics- Income Producing Properties

 With the economic crisis on everyone’s mind, it is no wonder that every investment opportunity these days is getting a twice over (just generating a positive return is now considered good)! The trouble is finding them. We have all heard that the real estate bubble has popped…blah blah blah, but if you are a serious investor you understand the age old principle that my Real Estate Professor once said “Buy when there is blood running in the streets.” There are lots of deals out there right now and being in the trenches and close to the action, I can tell you this, PEOPLE ARE MOVING OUT OF THE USA at an alarming rate…many of them are heading to Costa Rica and this can lead to a positive investment return for the right investor! Sound interesting? Consider these points:

 1. The world is now Internet based. What does this mean? No longer do people need to show face in an office building, instead, they can work out of the comfort of their own home. Coincidentally their home can now be located in Jaco or Playa Hermosa (wink-wink). The number one request I get for long term renters is ” Does it have Hi-speed Internet?”, for the most part we have it here in Jaco, and as the infrastructure improves in anticipation of free markets opening things up a bit (CAFTA), you can bet that Costa Rica will be wired from coast to coast very soon.

 2. Time for change. Obama lead a campaign based on this simple concept, yet what I hear most from my clients is that they are changing where and how they do business. Let’s be honest, the US has a less than favorable tax structure, strict rules and regulations, and Wall St has proven it can’t manage itself. Job losses are mounting, unemployment is at an all time high and as we enter a recession, nobody is sure when it will end? Wow, maybe now IS the time to move to Costa Rica and try something different? Why not, you have a myriad of reasons just mentioned (well this is just what my long term renters are telling me anyway).

 3. Tropical tourist destination. As the Internet shrinks the global economy, living in paradise has fast become a reality. With warm ocean temperatures, consistent waves for surf, sand, palm trees and 3% of the world’s biodiversity, it is no wonder that Costa Rica has become the #1 eco-tourism destination in the world…and with that comes opportunity and job growth. As tourism grows, so does the support system of travel operators, hotel staffs and dining facilities and the like, which is exactly what is happening here in the greater Jaco area. Jaco is quickly becoming Costa Rica’s booming resort town. Don’t forget, all of these people have to live somewhere!

 One of the most basic principles to investing in real estate is renting out to cover the mortgage. In times of crisis and uncertainty, going back to the basics is exactly what can yield you the return you are looking for! Please contact me to learn more about investing in income producing properties in the greater Jaco area. Clark@jacorealty.com

Take care,

Clark

Editors Note:

 Clark Kreston is a sales associate for ERA and long term rental specialist at Rent Costa Rica Homes.  He has been living, working, investing and renting in CR for 3 years and is a specialist in the Playa Hermosa - Jaco area.  Clark is also our leading listing agent for multi-unit and income producing properties.

Hello Friends,

Something that we thought was completely unimaginable is finally within a stone’s throw of legislation coming into effect in Costa Rica.  I’m talking about real estate brokerage regulation.  Wahoooo!!!  This is a huge triumph for all of us hard working, tax paying and honest real estate professionals who are tired of having to excuse the whole lot of us for our terrible reputation, lacking professionalism and sometimes completely unethical activity.  

Sure there are some great agents out there.  But there are probably ten scoundrels for every legitimate agent, give or take another ten.  If you were not aware, it is not obligated that real estate “brokers” receive any formal training or certification from any governing bodies to practice real estate in here in Costa Rica.  And I often get offended or put off by the new broker in town bragging on credentials that they have accrued in the US or Canada.  Bottom line: Costa Rica is a soveriegn nation with unique laws and procedure to ownership.  A top perform broker in California has no idea what is going on in Costa Rica unless he or she takes a long time to figure out procedure for property trading here in Jaco.  

Or he or she could attend a course offered by the Costa Rica Global Association of Realtors OR the Camara Costarricense de Corredores de Bienes Raices, which would afford that person the legal right to refer to him or herself as a ‘BROKER’ or a ‘REALTOR’, two catch phrases that are as bastardized as luxury and eco friendly in Costa Rica.

When purchasing property in Costa Rica and your real estate agent refers to him or herself as a Broker or a Realtor, ask up.  Did he or she pursue their license with the CCCBR or the CRGAR?  Because if they are not card carrying members, they are not Brokers, nor are they Realtors in Costa Rica.  

The Costa Rican government and populace has finally had enough of the scruples and is ready to commit to a mandatory licensing procedure that will be granted through either of the regulatory agencies.  Details are still being negotiated in the Congress, but one thing is for sure; the time is coming.  And it will be soon.  So if you have not been licensed, but continue practicing real estate in Costa Rica, then you may want to go ahead and take the course.  Frankly, it is not very long or difficult with either agency.  However, you will at least cover the basics of what not to do and how to keep your transactions safe and legal.

And for buyers, please use a licensed Realtor with credentials from either the CRGAR or the CCCBR.  For more information on licensing courses in your area, send me an email for the latest schedules.

Until next time…

Happy bargain hunting.

Hello again world,

Just one more addition to yesterday’s post on things to look out for when purchasing a condo.  Although the last list was general information for any resort destination, this one pertains particularly to Costa Rica.  It is rocking the nation as a near disaster, and hard hitting in many of our favorite commercial developments.  Don’t get caught without a parking spot!

In Costa Rica, there are minimum regulations for parking for any development.  However, regulations are typically governed by a regulatory zoning plan, and in many hot and booming coastal areas, such as Jaco and Tamarindo, there is still no regulatory zoning plan in effect.  There are a few other agencies that make suggestions, or enforce minimum parking spaces, but unfortunately, developers find ways to maximize their dollars using valuable square meters for more construction and less parking.

Friends beware, if you are purchasing a condominium property (residential or commercial) in Costa Rica, have your attorney (NOT an attorney suggested by the developer or their sales team) verify the ownership and availability of parking.  Do simple math.  If there are 30 condominiums and 29 parking spaces, there is a problem.  Take it a step further, if there are 30 condominiums and 30 parking spaces, there is still a problem.  Remember, there are managers, guests, grounds keepers, and other service providers who will need parking!  Don’t listen to people who insist that “the parking lot has never been full, so you probably won’t have a problem”.  Unless the development is more than 15 years old, then there is not enough time to tell whether or not you will really need that deeded or designated parking space.

Parking in Costa Rica under condominium law can actually be included in the square meters that are sold to the purchaser.  So see if your parking lot is considered “common area”, or if it is actually deeded to your “finca fillial”, or registered property.  BE SPECIFIC when you ask your attorney to double check the contracts in regards to parking.  Even attorneys can look over this detail, or consider it less than important.

In Jaco and Tamarindo, two hot areas of Costa Rica, condominiums are being built with fewer parking spaces then units.  Bad idea.  Don’t get caught in this mess!

Happy New Year!

Wendy Brown

Well, it’s so cliche by now.  I can remember my parents saying the catch phrase when referring to real estate investments when I was a little girl.  And guess what?  People still think that it is the ultimate in buying know-how when investing in real estate.  Location, location, location.

My friends, it’s over.  That rule does not work any more.  While one cannot accredit one simple rule or criteria to be the most important when selecting a property, one can take into consideration the following points to make smart real estate investments.

Because this is www.jacorealty.com, and we are in a very strong market, I am going to speak in reference to this area, but these principals could be applied to any resort destination that is affected by affluent travelers.

In Jaco we’ve had a “boom”.  We are actually still “booming”, and anyone who has visited here in the past four years can attest to this statement.  That boom means that Jaco now has a skyline comprised of strong and impressive structures housing millions of dollars worth of high-end properties.  When a client is new to the area and wants a condo, it can be truly overwhelming with so much to choose from.  So if you are ever in this boat, take some things into consideration:

1.  Why are you purchasing property (or a second home)? 

If you want to live here part time, make sure that you have all of the ammenities that you and your family will need to be comfortable and safe.  If you want to invest and move here eventually, then you may be better off purchasing a property that will appreciate and make money in the meantime, so that when you are ready to move here, you can upgrade to a property that really suits your needs on more of a full-time basis.

2.  If you are looking to purchase property for a rental income, then beware, because “income” might not be the proper word to use. 

If your goal is to rent a property enough to keep from having to pay anything for it, this in most cases, is entirely attainable.  However, if you are purchasing a property and plan to pay off a mortgage, pay the bills, the property manager, rental sales commissions, and any other mishaps that can occur along the way, then you may be in for disappointment.  I’m not saying that it can’t be done, but I am saying that keeping your expectations to a minimum will help you stay positive and less stressed as a second homeowner.

3.  When considering a good property for a rental income situation, I offer you this advice.  Look for something unique. 

In any resort destination with a real estate “boom”, such as Jaco, there is going to be alot of rental options for them.  Condo-hotels, condos and beach homes are not in short supply in Mexico, Florida, the Carribbean and certainly here in Costa Rica.  In order to keep your edge, try to find a property with something special to offer your guests.  For example, my partner and I built a home that rents very well that offered guests a private pool, three master suites (all king sized beds) and double headed showers with jacuzzi tubs, which is very attractive for those looking for a little romance during their getaway.  A simple upgrade in your bathroom goes a long way when you are renting later on in the game. 

4.  It is also to remember that when you purchase a condominium, read the fine print on how and who may rent it in the future. 

Some developments have limitations on who and how a property may be managed, and some have limitations on who may be authorized to rent your property.  It is important to have flexibility in the property management and rental sales team that allows you to change up the program if your teams are not performing for you.  Frankly, there are always going to be several companies to choose from, and sometimes people just get along well with certain people and some don’t.  Every company’s management and correspondence styles are going to be different.  Make sure that your company knows exactly what you expect and that they are willing to do whatever it takes to care for your property as you wan them to.

5.  Being one of thirty is better than one of three hundred.

And always take into consideration the size of the development.  If you are going to purchase a condo that is in a complex of 300 units, then you may not be renting as often as a condo within a complex of 30 units.  It is just much easier to rent a few condominiums vs. hundreds of condominiums.  You likely won’t be given priority, because you will be one of many clients with like interests, everyone will want to rent their unit as much as possible.  Finding a unique boutique-style condo development may also be an advantage to you as the years go by rewarding you with repeat clientele, as renters typically like to be in quaint and intimate ambiences, versus large over crowded complexes.

However, at the end of the day, everyone is different, and no rules apply to everyone, so you must really trust your own instincts and discuss with your partners when making an investment decision.  And as with any purchase, always double check your sources and your facts.  Remember, sales people often exaggerate and hide truths!  Make sure that you are working with a licensed real estate broker in ANY COUNTRY!  For more information on licensing in Costa Rica, check out the Costa Rica Global Association of Realtors:  www.costaricare.net.

Happy Holidays from PuraVidaVille!