With median prices coming down around high-end homes in Costa Rica, some foreign buyers have chosen to remain as renters in their hometowns and purchase a vacation property in the Land of Pure Life. “More and more we see this,” say Tico investment advisers.
A place to live
The rush to get out of the hectic stressful urban living and get a real life in a tropical paradise, where to have more time by beach, exploring the jungle, finding sea turtles and cute sloths are what more foreigners are seeking when moving to Costa Rica.
Does this alternative make financial sense?
If the ultimate goal is to buy a main home in an expensive city, the numbers for acquiring a vacation home are out, having a second home loan commitment will make it much more difficult to buy what would be used as your main home.
People who live in North American cities where there is rapid growth in home prices tend to overestimate the appreciation of homes in Costa Rica, even if they are vacation areas. And there is also an opportunity cost for what could be done with that money during the time of ownership. But it may be a good idea for some people.
Starting with a second home may be a reasonable option for many urban professionals, the ability to easily rent the property on home share sites makes it a more affordable way to increase equity. Rather than taking on a large mortgage in the city, a smaller vacation home loan may not only be more manageable month-to-month, but it could also have some relative tax advantages. For example, homeowners can deduct their mortgage interest on their income taxes for home loans.
Why wait for a vacation home?
Foreign investors can buy a place in Costa Rica at a manageable price and make up for it with rentals. This way they could have a place for the family to play and relax. From a financial perspective, it makes sense, accumulating value. It is an investment in your emotional well-being and meaningful life experiences, for taking this investment decision.
Daniel Yepez/ TCRN Staff