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Stan,
I’m the President of Costa Rica mortgage. We spoke last May and my firm has since evolved from pilot concept, to a professionally managed company which enjoys close relationships with several of the 15 or so Costa Rica banks, as well as many US funding sources who do offshore commercial lending.
I’m actively involved in commercial financing and would gladly make time to give you insight on what your options are and issues you may encounter.
Over the last 90 days, the banks here have either paused financing commercial real estate development projects altogether or have become scrutinously selective. Unless you have significant equity in your project, SETENA approval and 30-40% presales with customer deposits of 10-20% sales price (in escrow), my opinion is that you’re wasting your time in securing a commercial loan.
As far as financing your customers, that’s a whole different story. There are several developers who send us their customers and are pleased with our service. If you’re in Escazu, I’d love to buy you a cappucino and show you what a professional mortgage operation looks like. It’s the only one to be toured in Costa Rica.
Best,
Marc Schweitzer mortgage@welovecostarica.com or 2288-1630
By purchasing real estate, you are converting dollars into a hard asset. Although the Costa Rica real estate market is mostly dollar/US buyer based, part of what has helped prices accelerate and stay at their current levels is the demand from Canadians, Europeans and S. Americans who find dollar priced assets to be a bargain these days. If the dollar continues to fall, Costa Rica will continue to become increasingly attractive for non-US foreigners and that effect should continue. By converting your US dollars to a hard asset with international demand(like gold which has flourished lately), you’ve hedged yourself somewhat to the risk of the dollar going weaker.
In terms of your mortgage, if you are paid in US dollars and your mortgage is in US dollars, you are taking the most conservative approach. You’ve mitigated currency risk. You know what your payment will be in dollars every month and can match it to your income stream on a steady basis. If you truly believe that the dollar will continue to fall, you might consider moving some investments or savings into non US stocks/mutual funds or foreign currency (the Euro has performed incredibly)…..another form of hedging.
Neither you or the bank stand to lose perse. You’ve “locked in” and the banks are in the business of hedging currency. As for the seller….history has yet to produce many people who wouldn’t have faired better by not holding on to their Costa Rica real estate for another 5 years.
