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Thanks David.
If someone has any other answer to my other question, it would be greatly appreciated. Where do you have your US mail delivered (such as account statements, mortgage, etc.) ? Surely you don’t have all of them forwarded to Costa Rica?
THanks.
I’ve said it before, there is a big slowdown in real estate, especially here in Costa Rica. I’ve seen these before, very nice subdivision gates with nothing but tall weeds behind them. Anyway, good luck to anyone who bought in, however, sooner or later, it does get developed by the lot owners. Might takes years, but eventually it gets there.
I think scottbenson would be inscensed to learn that there are crooked costa ricans. There’s no such thing, it must be foreigners doing these.
And another thing, these foreigners are stealing these con jobs from the ticos.I am glad somebody pointed that out. I’ve noticed quite a few posts that just bashes everything about the US. I don’t mind this coming from other nationals, I attribute this to misinformation/generalization. However, when I hear it from fellow citizens, it just doesn’t sound right.
Please don’t be too hard on Americans/Europeans/whatever that tends to find some sort of comaraderie in a foreign land. We see this everyday in the US, yet its looked down upon if we criticize it. We have chinatown, japan town, hispanic sections of the city, even on the eastcoast you have pockets of different ethnicity. This is perfectly normal.
Now, if you are to come here and act like a king, that’s another story.
Here’s what I experienced in CR.
a) Finding property is not that easy since not all are listed, but at the same time, finding the actual address can be a challenge.
b) If you don’t speak good spanish, it might be very difficult to deal with the owners/maybe developers too.
c) You can bypass agents if you have a good lawyers or friend. It can save you some money.
d) Learn the art of negotiating with the price. Asking price there is all over the map, I’m not exaggerating.If I rented it, I would generate 80% of my fixed expenses on the house, so I guess I’ll just wait and see what this realtor says on Friday. She’s already told me that it’s priced right for the market today, which is $80,000 lower than we would’ve priced it two years ago. It’s not emotional with me at all. It’s about the bottomline.
Please don’t take offence, we are all just simply giving our opinions (which obviously could be right or wrong). First problem was pricing it way too high then cutting the asking price by $80K. That’s a huge cut and a good realtor should have told you in the first place that your initial asking price was unreasonable, regardless what 2 years ago similar houses were selling.
Second problem, which is now obvious but in a hot market, buyers just overlook or simply ignore. You said that renting the house can only cover 80% of your costs, which would mean that you will have to carry this 20% carrying costs. From an investment standpoint, you basically overpaid for your house. Rents and housing costs (after deducting a typical down payment of 20%) should be close enough. During the hot real estate market we saw, this ratio was simply out of balance with houses costing more than 3X rents.
I own a duplex rental and if fully rented, covers costs. However, everytime one unit is vacant, it bugs me to no end that I have to dig into my own pocket every month till I find a tenant. If the rent can only cover 80% of your costs (which I think would increase even more when you factor in vacancy), it would become a big burden on you sooner or later.
Housing or RE is a very touchy subject to discuss, simply because we always have an emotional attachment to them. Interesting comment from Maravilla, where she couldn’t stomach anymore loss by reducing her price. Just because it sold for more 2 years back doesn’t mean it should sell more the same or more in todays market. That is pure emotion dominating logic. Just because gold sold for $850 in 1980, it should sell for more now. Wrong, for a quarter of a century, it has dropped to as low as $250 and now sells for $650/ounce. Including inflation, investing in gold during the 80’s was one hell of an awful decision.
Now we’re talking about houses (which can be quite scary considering it has carrying costs). Prices have skyrocketed from 2001-2005, over and beyond the point of reason. What’s this point? From an investment standpoint, bottom line is, it should generate you more income than expense, else it becomes a liability. Those 20% increase is just simply not sustainable unless we saw its rental income increase by the same magnitude. The thing is, it did not, thereby creating a scenario where rental income is probably like half or a third of the total cost to own the home. SImply a bad investment. You always have to go with the fundamentals, the herd almost always ignores it and creates these boom and then crash. Cycles of life.
Bottom line. The best investment is what assets can carry the most buying power in the future. Thats it. If you think buying a house and just letting it sit there is fits that thesis, then you are mistaken. Money is not easy to make, easy money is just pure luck.
pura vida
Scott,
I merely wanted to clarify that if you takeout the emtional aspect in financial matters, the logic is plain and simple. With respect to the land question, you missed the part where I said that land is almost worthless UNLESS UTILIZED OR DEVELOPED. Your example shows a gringo buying the land THEN HE DEVELOPS A HOME that he sells to another gringo. The key here is DEVELOP.
I agree that if he runs aways with his money, then there is a drain of money out of the economy.
Your example of the last 10 years for real estate is very short sighted, I am talking about studies that goes back almost 100 years worth of data. No other asset class has outperformed the stock market, it is what it is. I am not saying real estate investing is bad, just that you have to do your math and determine if it is a good investment.
Yes, very true. The problem with most people are they get emotional when it comes to finances. Land is almost worthless, in some ways worse than the cow dung that lies on top of it, UNLESS it is developed or utilized to bring income to the owner. Even a house that you live in (which doesn’t seem to generate you income – of course you live in it) is worth a multiple of the potential rental income it can generate. When this balance is out of whack, then you might have a situation where you are over paying for the property.
People see a piece of land and pays you a handsome amount simply because he knows that if he develops it (or in some cases, neighboring properties are developed), then he has increased the value of that asset class (which is land) and will then pass it on to be converted into another asset class.
The United States, Germany, & Japan are three of the worlds biggest economies, and extremely wealthy. Both Germany and Japan are very small, but has disproportionate size of economy simply because businesses are how wealth is created. They make these things that other nations want to buy. Plain and simple.
However, with all this said, it is perfectly normal for people to feel threatened (oh no, the gringos are coming.. get real) simply because emotions overruns reality. Some very comical posts here: example – foreigners are coming to take our $5/ hour jobs; gringos are going to place a heavy burden on Costa Rica’s amazing health services. Separate facts from fiction.
Land, same as all types of asset, has one primary goal – what would give you the highest possible return (can be of another asset class/services/whatever) in the future. It sounds almost comical when people think that all their land is being bought and they would become tenants to the land owners. This is only true if the seller DOES NOT use that money wisely.
The basic form of this transaction is this: Tico seller gives land to Gringo buyer for dollars. Asset class land is exchanged to asset class money. Tico feels rich and starts buying cars/clothes/furniture. Therefore asset class money now becomes asset class luxuries. Unfortunately, Tico bought a depreciating asset class, which means in the future, when he wants to again exchange his assets, he gets even more less.
What is the problem here? Transaction #2, when Tico uses his dollar asset class and exchanged it into luxury asset class. However, if he used that to invest in a business or stock market, then he probably will be able to increase his asset value.
This is just basic economics. It funny how people have the perception that land is the most valueable asset, when studies upon studies have shown that in the long term, it barely beats inflation and lags stocks/bonds in appreciation. People are as always very short sighted and can only remember how their land has doubled in price the last 5 years, but they seem to have forgotten that it has not apprecaited much the previous 10 years (just as an example).
However, after missing out on the boom in prices, one has to have a scape goat. Surely it was those land buyers that are to blame.
Deborah, your question has been answered many times, and just to assure you even more from what a residency expert has told me, your son & daughter-in-law would have residency at the time they have a child born in CR (the child qualifies for citizenship). Your son/d-in-law would be allowed to live/work in CR.
Scott, I respect your position of trying to protect CR citizens, although I highly doubt that US or European citizens are taking jobs away from them. I truly don’t believe that expats are coming over to CR and putting a burden in their health care system. Your views are quite interesting, because it somewhat mirrors the views of right-wing conservatives here in the US that all the hispanic immigrants (be those coming from Mexico, or the other central american countries, INCLUDING Costa Rica) are the main cause of health-care deficits as well as all the other problems, like steal jobs from Americans, increase the crime rate, gangs, as well as moral degredation. We all know this is not true, but everyone has to have their scapegoat.
Americans are not coming to CR to take those “high” paying jobs nor come there to work as day laborers in the field. Most come as retirees trying to escape the lifestyle, and some younger residents trying to raise their families maybe supported by starting a business or running a US based business. I personally don’t see why a US citizen would want a job in CR, when it is not worth your time. Lets be realistic, the pay scale in CR is probably 7-10 times less than in the US. Anyone going there with the intention of working for a company needs to take basic finance.
I’m not putting anyone down, just stating the facts. There is a saying for immigrants going to the US, it is not the Americans you should watchout for when you move to the US, but rather your own countrymen. Its seems like this is ringing true for people moving to CR. Funny that Ticos seems to welcome us more than fellow expats that think they have been there long enough.
Hi,
I recently visited last November and was able to look at a few schools around San Jose. The bilingual schools are mostly catering to the upper class, obviously it would cost a lot more. Relatively speaking, $400 is quite inexpensive for the 1st rate education your children would get. Schooling here in CA costs about $1000/month.
I have the contact information for the school you mentioned in Tres Rios (Talarke) given to me by one of the posters here. Susana Cabezas, the number at the school is 506 273 3353.
Good luck.
I hate to answer a question that is addressed to someone else, but I would like to say that if you have a fast internet connection, you can use skype and make calls as little as $0.02 per minute.
I have used these to make calls both to US locations as well as number in Costa Rica. The call quality is extremely good. Calls to CR numbers costs $0.08/min.
Pardon my interruption…
