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The Evolution of Quepos

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The Evolution of Quepos

Quepos has been a “sleepy” little pueblo for as long as I can remember, but lately it’s waking up! The evolution of Quepos, from sleepy little fishing village to prime tourist destination, can be summed up in a name…

the Marina Pez Vela.

For many years Costa Rica had only one true world-class marina, the Los Sueños marina in Playa Herradura. For years there was talk of one taking shape in Playa Flamingo in the Guanacaste region. But that talk never seemed to evolve into anything concrete. Then all of a sudden the secret was out that a new marina was to be built in Quepos.

Marinas are difficult things to develop in Costa Rica. The government, as well as the local population, tend to view them suspiciously. There is always the concern about the potential for negative environmental impact that marina development poses. The locals also view marinas as a sure way to change the entire complexity of their communities, from those dominated by locals, to those taken over by gringos with the big bucks. And when that happens, the price of life tends to rise for everyone.

Nevertheless, it was inevitable for a world-wide tourist phenomenon like Costa Rica, whose very name means “rich coast”, to attract marina development. If you own a luxury yacht, why wouldn’t you want to sail it into port in Costa Rica?

Unlike the situation in Flamingo, the Marina Pez Vela did actually take shape, albeit slowly. These days, however, the pace of its growth has definitely ratcheted up a notch or two.

My first visit to the marina several years ago didn’t impress me that much. However, a more recent visit certainly did.

The Evolution of Quepos

The marina is now home to a wide variety of shops, restaurants and tourist venues. They’ve built a new large parking deck. There seems to be a whole lot more luxury yachts in port than I remember from before. The whole place has become alive with excitement and activity. And that has the entire community of Quepos buzzing as well.

The Evolution of Quepos

I talked about it all with my old friend Cornelius Mesen, the marketing manager of Hotel Kamuk, the largest and one of the oldest hotels in downtown Quepos. I asked him if he’d seen much of a tourist effect from the marina. Cornelius told me that had not happened as of yet, but he envisions that great and positive change is on the not so distant horizon.

Most tourists bypass Quepos and make a b-line to Manuel Antonio, with its gorgeous white sand beaches, plethora of ritzy boutique hotels, and super cool restaurants, bars and shops. These days, however, Quepos is offering more and better accommodations than in years past. Hotel and Casino Kamuk is definitely an example.

The Marina Pez Vela will surely put Quepos on the tourist map. It has long been that bustling and dirty little fishing village one had to endure before arriving to the main destination of Manuel Antonio.

However, in the future, the evolution of Quepos is surely for this place to become a noteworthy tourist destination of its own right.

the-definitive-guide-ebook-cover-small

Hey, my new book The Definitive Guide to Costa Rica Expat Living is now live on Amazon. If you’re thinking about making an escape from the rat-race, whether for political or mental and physical health reasons, or all of the above, The Definitive Guide to Costa Rica Expat Living was written just for you!

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Setting Up Your Life as a Costa Rica Expat

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Life as a Costa Rica Expat

This is chapter from my new book, The Definitive Guide to Costa Rica Expat Living. The book covers a whole host of issues on starting a life as a Costa Rica expat…

You’ve arrived. You have a new home in Costa Rica, hopefully just as you envisioned. Now it’s time to start living your new life in Costa Rica, hopefully, just as you envisioned.

So, what’s next?

Setting Up Routine Services

Well, you’re going to need internet, telephone and cable TV, of course! There’s a little problem for expats who are not yet residents when it comes to setting up routine services like the aforementioned. It all has to do with this thing called a “cedula.”

A cedula is basically an official government issued identification. For you that would come in the form of a residency card. However, getting one of those is harder than you might think and I cover that in more detail below.

When you go into the phone company, or an internet service provider and try to contract for their service they will first ask to see your cedula. If you don’t have one you’ve got problems. However, there is an end-run around that. You can use the corporation you formed to take title to your property.

There is no restriction for a foreigner to own and manage a Costa Rican corporation. And the corporation, once legally formed, has a cedula juridica, or an identification number. With that you can contract for services in the name of the corporation, just as you could with your own residency cedula.

You will need a document called a personaria juridica, which basically shows that you have authority to act on behalf of the corporation. An attorney can do this for you at a fairly small cost, or you can go into a national registry office and get one even cheaper. However, registry offices aren’t located in many places, so you might end up paying your attorney every time you need one. They generally have to be “fresh”, or issued no more than 3 months prior to the date of use.

In opening a bank account, which by this point you probably have already done, you will encounter the same problem. Nonresidents will have to open the account in the name of a Costa Rican corporation. You will find that opening a bank account, and banking in general, in Costa Rica is both an adventure and an exercise in patience.

Driving Legally

There once was a time when this wasn’t that big of an issue. A nonresident could easily get a drivers licence in Costa Rica. I had one for years as a nonresident. All that has changed. Now the issuance of a license requires a cedula. Your valid license from back home will serve you for the duration of your tourist visa, usually 3 months, but beyond that you can’t legally drive on Costa Rican roads without a valid Costa Rican driver’s license. This has made getting a residency all the more important for expats who want to have cars and drive them in Costa Rica. I guess that was the point of changing the law. Each time you leave the country you renew your tourist visa and your right to rely on your home license for an additional 3 months, but that’s hardly a sufficient consolation for the expat desiring to establish a new and mobile life in Costa Rica.

Residency versus Perpetual Tourism

There are many expats living full-time in Costa Rica without residency. We call them perpetual tourists. I did this for years, while I was trying to get my residency via my investment in a tourism business I founded in Costa Rica. I went through many bad attorneys who promised the world for a hefty fee and delivered nothing. So, I just kept leaving the country every 3 months for a 3 day vacation, usually to Nicaragua. I actually enjoyed these trips. However, it’s anxiety producing to have the stress of knowing you must leave the country every 3 months, or become an “illegal.”

When I got married to a tica (actually a Colombian lady who was a nationalized Costa Rica citizen) all that changed. I was able to easily get a permanent residency, without restrictions. That’s the most coveted form of residency and is reserved for familial ties, like marriage or having a child on Costa Rican soil.

There are several other forms of obtaining residency. These forms of residency will be temporary. They do not allow you to work in Costa Rica. However, you can own a business, manage it, and draw out the profits. I will cover that in more detail in the Making a Living chapter. Nevertheless, to maintain your residency you will have to be a member of and pay into the Costa Rica health care and social security system, known as the CAJA.

The main types of temporary residency most expats take advantage of are rentista, pensionista and inversionista. The first two require a guaranteed source of income like social security, a pension, or annuity. Under a former law, residency via investment, or inversionista, was first appraised by immigration authorities to determine whether it was a “good investment” for the country, based on considerations such as whether it had a direct impact on key industries or created new jobs locally.

However, this changed with the new immigration law, which has already been in force now for several years. Currently, the investment is defined as any new capital contribution made by the foreigner in either shares of equity of local companies, or registered assets.

These would include the purchase of a lot, an apartment, or a home, as real estate assets are “registered assets” in Costa Rica. To qualify you must be able to document that the real estate asset purchase, with your own money, was at least $200,000.

The many nuances of obtaining residency are well beyond the scope of this eBook. Having a residency in Costa Rica is not a prerequisite for owning real estate here, or even living here part-time. You can join the legion of perpetual tourists who leave and return periodically. If you are planning to do that anyway, then perhaps residency is a hassle and expense you really don’t need to cope with.

However, most expats who really want to transition to a “permanent” life in Costa Rica will probably want to obtain a residency. It will make life easier in many ways. You will be issued a “cedula” as was discussed above. You will feel like you’re a part of the country. My advice is get a good attorney who knows what he or she is doing. You can attend the residency conference of the Association of Residents of Costa Rica (ARCR). That is a great source of information and guidance on obtaining your residency in Costa Rica.

Be patient with the process. The immigration office in Costa Rica is the most disorganized and bureaucratic government agency of all! It can take up to a year before you have your cedula in hand.

Good luck!

Language Barriers

I believe expats get a little too anxious when it comes to the “language barrier.” First of all, there are lots of Costa Ricans who speak English. And virtually all Costa Ricans are quite used to hearing English spoken and communicating with gringos who don’t speak much if any Spanish. Costa Ricans are by nature peaceful, easy-going and patient people. That is especially true where their language is concerned. They will appreciate and assist attempts to learn and speak it.

Do you need to learn the language? Yes! If you really want to immerse and feel a part of the culture here, you need to at least have a conversational level of Spanish. So, get on it. There are many opportunities for courses and you will certainly get a ton of practice. The only way to really learn it, once you have the fundamentals, is practice, practice, practice.

Don’t be afraid to embarrass yourself. You will! It’s all part of the adventure and the fun of being a Costa Rica expat.

Setting up your life as a Costa Rica expat requires patience and persistence. Take your time, get and follow good advice, and celebrate each victory. Don’t try to cut corners as many do, thinking their money will help them jump to the front of the many lines one has to endure in Costa Rica. Usually what that mentality does is just make them a little poorer and a lot more frustrated. Do things the right way and you’ll be rewarded.

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The Costa Rica Convenience Concept

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Costa Rica Convenience

The Costa Rica convenience concept is something quite different from what you’ve likely experienced back home, as you will quickly learn after just a few weeks, or months, as a Costa Rica expat. Once the honeymoon period wears off, you’ll soon realize that “you ain’t in Kansas anymore”, especially where convenience is concerned.

Here are just a few inconveniences you will experience on a regular basis in your new home…

1. Frequent power outages – due to storms, rationing or perhaps just because the system had a hiccup.

2. Rain, Rain, and more Rain – Rain will become part of your life in Costa Rica. In fact, if it weren’t for rain, there’d be no Costa Rica, or at least not the lush green one that drew you to consider the Costa Rica expat life.

3. Bad Roads – I watched an old documentary from 1947 the other day. It said Costa Rica has some of the best roads in the world. Really? Not the ones I drive on. Costa Rica’s roads are notoriously bad. Like bad enough to loose teeth filings, or induce labor. But that’s just part of the adventure.

4. The Language Barrier – If you don’t arrive moderately fluent in Spanish, and most don’t, you’ll soon discover that routine things like going to the bank become exercises in humility, patience and empathy for those poor non-English-speaking Mexicans in the U.S. that Donald Trump wants to deport.

5. Intermittent Internet – if you’re like me and do about 95% of your work online, well, having a secure internet connection becomes a very necessary convenience. That’s hard to find in Costa Rica. In fact, it’s downright impossible to find in most places in Costa Rica, especially those remote jungly and beachy places where expats love to congregate.

6. Bugs – I get a kick out of gringos who complain about insects. What do you expect, moron, you made a decision to live in one of the most tropical and bio-diverse locations on earth and you didn’t think that there might be bugs? By the way bio-diversity doesn’t just signify a plethora of those fuzzy and colorful creatures we like to snap photos of…it also means insects…and Costa Rica has about a gazillion different species of them!

7. The Slow Pace of Life – wait a minute, isn’t that supposed to be a positive thing? Well sure, but for most gringos who’re used to that fast track, rat-race sort of lifestyle, adjusting to the slowness of Costa Rica is quite a challenge. In fact, it can be quite a stressful challenge as all that gringo impatience is slowly squeezed out of your system.

7.5. Waiting in Line – closely related to 7. Ticos have perfected the art of waiting in line, perhaps because they get so much practice doing it. Bank lines are a notorious example. I’ve literally seen people pass out in a Costa Rica bank line. The line waiting skills of gringos are not quite so developed, but for the expat, you’ll learn them, soon enough.

8. Lack of Easy Access to Stuff – as gringos, we’re used to being able to find pretty much anything we want fairly quickly. That ain’t happening in most places in Costa Rica. If you live in an urban area like San Jose, perhaps it becomes an easier task, but still just not the same.

9. Lack of Easy Access to Cheap Stuff – and even if you do live in a big city like San Jose and can easily find most anything, you’ll still find that it costs a hell of a lot more than back in the U.S.

10. The Metric System – for those of us who’ve spent most of our life in the U.S., the metric system is, well, just plain weird. Who cares if the rest of the world uses it, we gringos are different, and we don’t. Of course, Costa Rica is on the metric system and they don’t give a hoot how different you are…adapt or suffer the consequences.

Now, none of the above “inconveniences” are insurmountable and neither should the fact that you will experience all of them dissuade you from moving forward with your expat plans.

But it pays to know what you’re getting yourself into.

One of the ways you can plan for them is to think about which onces are most important for you to avoid and try to choose a living arrangement where those particular ones are less likely to be routinely experienced at excruciating levels of patience testing.

For instance, if having good reliable high speed internet and access to shopping on a level that you’re used to having back in the states is important to you, then you probably don’t want to opt for a life in some remote jungle, as alluring and adventurous as that might sound.

Costa Rica has a lot of options, from the remote life in some bio-diverse location to highly cosmopolitan city living in a place where new state-of-the-art malls seem to pop out of the ground like the ever-present lush vegetation.

So, think about what’s most important to you and choose wisely. That’s my best advice concerning the Costa Rica convenience concept, as ridiculous as that might sound to any veteran Costa Rica expat reading these words.

Manuel Antonio In a Nutshell

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Manuel Antonio in a Nutshell

This post is the lead-in to a series I plan to do on Manuel Antonio. This one offers a Manuel Antonio overview, or a Manuel Antonio in a Nutshell…

Wait, It’s Not on the Map?

Manuel Antonio is a tiny strip of tropical terrain that extends out into the Pacific just outside of the town of Quepos, on Costa Rica’s southern Pacific coast. It is located in the province of Puntarenas and in the canton of Aguirre. Costa Rica’s coastal highway, known as the “Costanera”, stretching from Orotina to where it meets up with the Pan American Highway in Palmar Norte, runs right by the outskirts of Quepos. This is a very well-maintained and paved stretch of highway, perhaps one of Costa Rica’s best. So, getting to Manuel Antonio from San Jose, a trip of only about 100 miles, is quite easy and these days takes roughly 2.5 hours. Playa Jaco, another popular tourist beach, is about an hour away to the north. Playa Dominical, a popular beach with surfers and nature enthusiasts, is about a half-hour south. There is also a domestic airport just outside of Quepos, with multiple daily flights from San Jose that are are quick and affordable.

A Few Things You Might Not Know

If you look on the map for Manuel Antonio, you’ll likely only see the little town called Quepos. That’s because Manuel Antonio is really just the name of the small, but wildly popular, national park that sits at the end of the tiny strip mentioned above. People often get confused on this point, but in a sense, Quepos and Manuel Antonio are the same place. However, in many respects, they are vastly different.

Quepos is a small town of around 20,000 inhabitants. The name originates from the indigenous people that inhabited the region during colonial times. Quepos is primarily a fishing village. However, it has grown over the years and now features a marina, as well as many dining, shopping and nightlife options for tourists.

The Park

Manuel Antonio in a Nutshell

The big tourism draw in Manuel Antonio is, of course, the national park. The park was created in 1972 and is the smallest, but most popular, of Costa Rica’s national parks. The park encompasses roughly 4,000 acres of land. In comparison, Corcovado National Park contains 104,900 acres. It is home to many of the jungle animals that Costa Rica is famous for. In the park you’re very likely to come across three species of monkeys: the spider, capuchin (white-faced) and howler varieties all live there. You can also see sloths (both two and three-toed), boas, pizotes (in the raccoon family), 100’s of bird species, and many other animals. In the tiny area of the park there are some 109 species of mammals and 184 species of birds. Because of the small area, it’s quite easy to cover many of the hiking trails throughout the park in a day and you’re almost guaranteed to see animals. After all, they don’t have much room to hide! That’s why the park has been such a hit with tourists and has made Manuel Antonio one of the “crown jewels” of Costa Rica tourism.

In addition to nature watching, the park features some gorgeous beaches. The four beaches in the park, Espadilla Sur, Manuel Antonio, Escondito and Playita, are some of the best in the country. At 236 feet in height, Cathedral Point, which lies between Playa Espadilla Sur and Playa Manuel Antonio, provides a panoramic view of the surrounding area and blue ocean waters. In 2011, Manuel Antonio was listed by Forbes as among the world’s 12 most beautiful national parks.

What Else is in Manuel Antonio?

Manuel Antonio in a Nutshell

Okay, so we’ve talked about the major attraction, the beautiful national park, but what else? The draw of the park has created one of Costa Rica strongest tourist attractions. As a result, Manuel Antonio has grown by leaps and bounds in a very small space of time and land area. There are now multiple hotels of all ratings, from hostels to 5-star luxury resorts. There are numerous restaurants, bars and discos providing a vibrant nightlife, as well as many funky boutique shops. Street vendors peddling a wide variety of home-made arts and crafts are also a common site. Manuel Antonio has pretty much everything the tourist could want and expect from a Costa Rica beach resort location. Despite the growth, Manuel Antonio has been able to maintain its natural tropical feel. You are very likely to wake up from your hotel room to the sounds of the monkeys playing in the trees just outside.

There are many area attractions as well. From extreme sports like white water rafting on the Naranjo River, to more gentle river cruises around the Damas Island Mangrove Estuary or on the Rio Savegre. There are several popular canopy tours in the area. Other popular tours include snorkeling, ATV, waterfall hikes, horseback rides, local culture tours, etc. The national park can be experienced with an organized tour, or you can just go on your own. Naturalist guides can be hired for a modest sum at the park entrance. It always pays to trek through the park at least once with a guide, as they can show you things you’d never know were there on your own. Manuel Antonio is a Costa Rica natural playground with a touch of the high class, which is why the tourists keep flocking there year after year in increasing numbers.

The Future Outlook

Manuel Antonio in a Nutshell

Manuel Antonio has changed over the years, but in many ways it retains its earlier remote tropical ambiance. In recent years developers have moved in and have begun to carve up the landscape with private enclaves for the wealthy. The small amount of developable area requires that development be relatively dense, compared to areas like Dominical to the south.

Manuel Antonio has become one of Costa Rica most upscale resort areas, more-so than nearby Jaco or Dominical. It is probably not the preferred destination for tourists wanting to do Costa Rica on the cheap. Where will this growth lead Manuel Antonio in the future?

One thing’s for sure, if your talking about the “tiny strip”, as I’ve referred to it a couple times above, there’s just not much room for a lot more development and growth, unless it goes upwards and becomes even more dense. That type of development will likely be met with fierce local opposition. Proponents of continued growth will have to play a delicate balancing game between development and retaining the natural wonders that attract people to the area in the first place. Much of the growth will likely have to go towards Quepos and the surrounding area, as a result of the fact that there’s more room to grow in that direction.

I’ll conclude this piece on Manuel Antonio in a Nutshell with this thought…

Manuel Antonio is surely to remain one of Costa Rica’s top tourist attractions for years to come. And its aura as an attractive location for expats and foreign investors, will likely only increase as well.

Costa Rica Living Mountains or Beach?

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Costa Rica Expat Living - Mountains or Beach?

If you’re considering a move towards Costa Rica expat living, or just an investment in Costa Rica, you might be wondering, which is better for Costa Rica living – mountains or beach?

Like a lot of people out there, I love both. But are both really possible?

Not really. Not if you’re talking about “real mountain living” versus “real beach living.”

Costa Rica Expat Living - Mountains or Beach?

I live in the town of San Isidro de El General, which is nestled in the valley between the towering Talamancas, Costa Rica’s highest mountain range, and the southern Pacific coast. I like to think that I have both, but in reality I am far removed from beach culture and it does take me anywhere from 45 minutes to an hour to get from my front door to the ocean. So, while I am close, I ain’t quite there.

And if it’s not possible to have both here in San Isidro, it’s not really possible anywhere else. So, one has to make a choice. And this post is about helping you make that choice.

Since I do my Costa Rica expat living in the mountains and perhaps I am a little biased in favor of mountain life, I’ll start with…

Costa Rica Expat Living at the Beach

Pros…

Costa Rica boasts some of the best beaches imaginable. The surfing can be great, with waves for beginners, intermediate level and the true experts looking for the biggest, gnarliest rides out there. The beach culture is also a big plus for some. It’s more laid back and bohemian. Since the beach has long been the most popular area for expats to buy into, you can find a unique blend of gringo and tico culture co-existing down there. There you can find things you won’t find up in the mountains, which will be dominated by more of a traditional Costa Rican culture. Things like health food stores, international cuisine, funky bars and discos, lots of “hippie stuff”, etc., etc. All that can be pretty cool and it draws many down there.

Here in the southern zone there is a smaller mountain range that more or less hugs the coast. So, it is possible to live up around 300 or 400 meters above the sea level, where you get spectacular ocean views and sunsets and cool ocean breezes. The flora and fauna along the coast, especially the southern Pacific, is dense tropical rain forest. So, there are a lot of critters lurking in there and it’s not surprising to wake up to the sound of monkeys playing in your backyard.

Sound enticing? Ok, but then there are the…

Cons…

The biggest drawback for most is the heat. It is hot, really hot, at sea level in Costa Rica. It’s true you always have the ocean, or your pool, to cool off in, but get ready for any trip to the market, or anywhere else, to leave you drenched in sweat.

The other aspect that could be a drawback for some, like me, is the unique culture that generally forms where you have a large group of foreigners congregating in a particular area of a foreign country. They tend to try to create a culture of their own. Here on the southern Pacific, Dominical is a great example. Dominical no longer resembles Costa Rica. For one, you’ll see more foreigners down there than locals. The businesses that have opened, while many are super cool for sure, just aren’t tico. And the prices are sky high as a result. At the beach expect to pay a hefty premium for just about everything, especially all that cool stuff!

There can also be a bit of a rift that forms between the ticos and the expats. This is usually lurking beneath the surface and is not readily apparent to the tourist only visiting for a few days. But if you live there, you’ll begin to notice. Sometimes this can result in bad things happening, like home break-ins and even violence. I don’t mean to be overly alarmist with this, but you have to understand that this is understandable when outsiders from other countries move into an area, jack up the price of everything, and thereby make life for the locals more difficult. Resentments can obviously develop as a result. Mutual respect is the key to avoiding this, but sometimes it is not given.

Costa Rica Expat Living in the Mountains

Pros…

If you love mountains like I do, then you’re really going to love Costa Rica’s mountains. Unlike mountains in colder climates, Costa Rica’s are teaming with flora and fauna, of a different variety than what is found along the coast. Heck, just take a trek up to the summit of Chirripo, Costa Rica’s tallest mountain at around 12,500 feet. You will pass through virtually every eco-system that exists within the country, from tropical rain forest, to cloud forest, to the semi-barren desert-like eco-system known as the paramo, which exists well above the tree line in tropical climates. I love the beauty of Costa Rica’s lush green mountains. Even as a lifelong surfer who grew up on the Carolina coast, the mountains of Costa Rica are what drew me here and are what keep me here.

Even though in Costa Rica’s mountains you’re not “at the beach”, you’re still not far from it. I stare up at the Talamancas each morning, but also know that I can hop in my car and be sitting on my surfboard waiting for the next long barrel in less then an hour.

In addition to the natural beauty, I love the traditional tico culture that thrives in the mountains. That hardy, yet warm and gentle, culture is nowhere better represented than my home here in San Isidro de El General, in the canton, or county, of Perez Zeledon. Here the people are for the most part farmers and laborers and must rank as some of the most friendly people on earth. Costa Ricans in general, throughout the country, have that reputation and the ticos of this valley are certainly prime representatives.

With the mountains come rivers, waterfalls, little nooks and crannies where you can rejuvenate in the crystal clear and cold, but not too cold, fresh water.

The weather in Costa Rica’s mountains is about as perfect as you will find on the planet. I am talking low to mid 70’s, with little to no humidity. Down in the valley it can get quite warm, still no where near as hot as the beach, but warm. However, just drive less than 30 minutes up and it’s a whole different story. Many folks come here to live at the beach, but after a year or so, make a b-line to the mountains in order to escape the oppressive beach heat.

Prices of things are lower in the mountains. San Isidro de El General is a great example. This “little town” is actually Costa Rica’s second largest outside of the metropolitan area, or GAM, of the central valley. Here you can find anything you need and at pretty good prices. And that certainly holds true for real estate, both in terms of land, homes, and the cost to build.

OK, OK, I’m beginning to show my bias, so let’s talk about the…

Cons…

I guess the biggest one is that the mountains aren’t the beach. Except in certain rare cases, you won’t get ocean views. You will have to drive a ways to get to the beach, perhaps further than some would like. The culture of the mountains is more traditional tico, not the “fusion culture” discussed above that the beach environment gives rise to.

During the rainy season, which lasts 7 months out of every year, from May through November, the clouds and rain come every afternoon. And it all starts in the mountains. In fact, the mountains act as a bit of a buffer to hold the clouds and rain back for a time before they finally reach the beach later in the day. So, in the mountains you will tend to get more clouds and more rain.

If you get up high enough, the mountains can get downright cold at night. Even cold enough where a nice cozy fireplace can be a very good idea. That might be a drawback for some people…certainly not for me.

So, there you have it. My two cents of opinion on the pros and cons of Costa Rica expat living mountains or beach. I’ll let you make up your own mind about which version of Costa Rica expat living is right for you.

How to Play The Real Estate Game in Costa Rica

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The Real Estate Game in Costa Rica

The real estate game in Costa Rica has for years operated like poker in the Wild West…with few rules (all of which are made to be broken), lots of close-to-the-vest card holding, and cut-throat competition.

One aspect that makes things that way is that there really is no real regulated system of real estate brokerage. There’s no licensing of agents. There’s no MLS system to speak of, at least not a formal one. Many listings are “open”, which means the owner is not beholding to any one agent, but simply broadcasts his property out to all of them who want to take a crack at selling it.

All of that sort of makes things a bit of a mess when it comes to trying to do business as a real estate agent. Not to mention, trying to actually sell or buy a property.

This post will try to bring a bit of organization into the fray for buyers and sellers seeking the optimum manner of maneuvering the quagmire.

For many years the open listing was the norm. An open listing gives the listing agent a chance to sell and earn a commission only if that agent actually closes the deal. If another agent, also holding an open listing on the same property, beats him or her to the punch…too bad, so sad.

That has changed a bit in recent years, but open listings are still prevalent across the real estate landscape, albeit more-so in some areas than in others. And it is for that reason, among others, that things are really a mess out there.

Why is that?

Well, open listings just do not encourage a high degree of professionalism. If you take a step back and think about that objectively you can easily see why. From the standpoint of the agent, the open listing is really a crap shoot. The agent takes the listing on the hopes that maybe he will get lucky and sell the property before one of the other 10 agents the owner is also listing with sells it. If he or she puts a lot of time and effort into doing so, and it ends up being sold by another agent in a different agency, well then all that effort has completely gone to waste. So, what does the agent do? He puts minimal effort into selling the property. His goal becomes one of a numbers game. He wants lots of opens with the hope of selling some small percentage of them before anyone else does.

From the seller’s perspective, the open makes a lot of sense…at first blush. He gets to have his property represented by multiple brokerages. He is even free to sell it himself, without owing a commission to anyone! Pretty good result, or is it?

Why would a seller want to list exclusively? Well, let’s explore that a bit…

These days more and more quality brokerages are encouraging their agents to list properties exclusively. I know that Coldwell Banker certainly encourages me to do so. As a result more properties are being listed in this manner and the effect is the development of a sort of informal MLS system. That’s because once I have the exclusive, it is to my benefit to share my listing with other agencies. They have nothing to lose and I have everything to gain by exposing my exclusive on their web sites and in their marketing. I will return that favor with regard to their agents’ exclusives. With opens that of course never happens. Why would I share my open listing with any other agency when they can just sell it out from under me?

In addition, with an exclusive listing I am incentivized to bring a higher level of professionalism and effort to my marketing efforts. After all, if the property sells within the contract period, I gain, no matter in what manner it is sold. So, as an agent, I am not at risk in putting significant time and money into marketing the listing. And part of that effort would be sharing it with other agencies.

So, in effect, the seller is getting much of the same perceived “exposure” benefit of listing openly with many agencies, by listing exclusively with just one. In fact, he or she is getting that same perceived benefit plus a whole lot more in the form of a much more committed agent, who’s willing to put more marketing “skin” in the game than just throwing the listing up on a site and then forgetting about it!

Of course, it pays for the seller to know exactly what the agent intends to do in order to earn an exclusive listing. The agent should be able to present a cogent and concise marketing plan. The track record of that agent and his agency should be evaluated. If all that meets expectations…

I believe that it’s in the seller’s best interest to list exclusively with the right agency that meets his needs and with which he feels comfortable. After all, the overall goal is to get the property sold, correct? And if listing exclusively improves the chances of achieving that most desired result, why not go for it.

As more and more agents in Costa Rica realize that in order to compete effectively, they have to be able to maintain an inventory of high quality exclusive listings, it should gradually bring more order into the Wild West poker match that the real estate game in Costa Rica has long resembled.

Purchasing Costa Rica Real Estate with an IRA

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Purchasing Costa Rica Real Estate with an IRA

Let’s say you’ve run the U.S. rat-race for the past few decades and have a nice nest-egg to show for it. You’ve not reached “retirement age” quite yet, but that delightful day isn’t too far off. Your nest-egg is tied up in your 401K account and you don’t dare want to touch it, knowing that if you do, the tax man cometh and cometh hard.

You’ve heard that Costa Rica’s a nice place to invest, but apart from all that dough trapped in your 401K, you really don’t have any other way to access the funds to buy your little piece of Costa Rican paradise.

You’d like to make the investment asap and let it appreciate, while generating some income, over the next few years. Once you reach the ripe old age of 60, you’ll say sayonara to the boss and co-workers and head south to live out the rest of your days on that Costa Rican beach you’ve been reading about.

Well, you could roll over the funds in your 401K to a Self-Directed IRA, making sure to pick a custodian who allows investments in foreign real estate. Then you would direct your IRA custodian to make the investment in income producing Costa Rica real estate, either directly in the name of the IRA, or, even better, into the shares of a Costa Rican company, who will then receive the cash to fund the real estate purchase.

Then you sit back and watch your IRA-owned Costa Rica corporation rake in the income from your Costa Rica investment, without any U.S. tax implications. Once you finally reach retirement age you can then proceed to live out your years in your Costa Rica home.

Can you really do this? Is purchasing Costa Rica real estate with an IRA actually allowed? Sure, but with a few caveats.

First, any form of self-dealing is considering a prohibited transaction and will blow up the tax deferral benefit the IRA provides. That means you have to make sure the property the IRA purchases is not owned by a disqualified person, such as one of your relatives, brothers and sisters (and their spouses) excepted. You can’t rent the home to a disqualified person either.

You also can’t dare live or vacation in the home until you reach the ripe old age of 59.5. At that age you can receive a distribution of the home without triggering a penalty. The distribution would be taxable at ordinary income rates if your IRA is a traditional one. But if it’s a Roth IRA, then even the distribution of the home would not be taxable!

What kind of Costa Rica property can you purchase?

Well, the example above presumes a property that will produce a good rental income, such as a condo or home at a beach popular with the tourists. But you certainly aren’t limited to that. It could also be raw land, or a commercial building.

There really are no restrictions regarding the types of Costa Rica real estate your IRA can invest in.

Can your IRA borrow the money to buy the Costa Rica property? Yes, but it must be a “non-recourse” loan. That means a loan where the only thing the lender can go against in the event of default is the property itself. There are specialty lenders for these type loans. Obviously loan to value ratios are likely to be lower than with conventional mortgages.

Purchasing Costa Rica real estate with an IRA can be a great option to consider in the right situation.

As always, the many nuances of Self-Directed IRA purchases of foreign real estate are well beyond the purview of this short blog post. You should seek the advice of a qualified tax professional for your particular situation.

Is There a Costa Rica Capital Gains Tax?

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Costa Rica Capital Gains Tax?

What is a capital gains tax and why is it often viewed as being controversial?

A gain is when an appreciating property you own, like a piece of real estate, a share of stock, or a bond, increases in value above what you paid for it. What you paid for it is called your “basis.” The gain can either be unrealized or realized. It’s unrealized until you sell it and once you do, it becomes realized. For most U.S. taxpayers, realized capital gains on assets that you’ve held for more than a year (so called, long-term capital gains) are taxed at a rate of 15%.

What’s controversial is that the income you would normally use to purchase such assets has already been taxed. So, it doesn’t seem fair for the government to tax your earned income and then tax you again on gains from the prudent activity of saving part of that income, rather than just spending all of it!

Now there are loopholes you can use to avoid paying tax on capital gains, such as 1031, or like-kind, exchanges, the resident home exclusion, selling assets within an IRA or 401K, and so forth.

How about real estate you own in Costa Rica? If you sell it and realize a gain, is it taxable?

Well, yes, if you are a U.S. citizen you would have to report this gain just like any other. Remember, the U.S. taxes you on your worldwide income, no matter where it is generated.

However, there is no Costa Rica capital gains tax. That is, as long as the gains were not derived from the operation of a real estate business, like being a developer and selling lots from your inventory.

So, you would be taxed in the U.S. on the sale of your Costa Rica property, but not in Costa Rica.

Is there a way to avoid the U.S. tax? Why certainly! If you hold the real estate in a Costa Rican corporation, rather than in your own name, then the gain would belong to the corporation and not to you. Since Costa Rica has no capital gains tax, the corporation would not be taxed on this gain!

Now, if you withdraw the gain from the corporation in a taxable form, then you would be subject to tax in Costa Rica and potentially subject to tax in the U.S. as well. However, the Foreign Earned Income Exclusion could come to your rescue, if you qualify, and allow you to escape any U.S. taxation on that income. Note, however, for this exclusion to apply, the income would have to be drawn out as earnings, such as a salary, and not in a passive way, like a dividend.

For instance, you could buy, sell, and reinvest within a Costa Rican corporation, thereby gradually building wealth over time, without ever having it taxed in either the U.S or Costa Rica! That would make your Costa Rican corporation a nice tax-free engine of wealth creation, sort of along the lines of an IRA or 401K, but without the morass of regulations, nor the forced taxable withdrawal requirements applicable once you reach what Uncle Sam considers your “retirement age.”

The absence of a Costa Rica capital gains tax is another reason the country has been very popular among Latin American countries for Foreign Direct Investment.

As always, the complexity of all these taxation rules is well beyond the purview of this short blog post. You should seek the advice of a qualified tax professional for your particular situation.

Can You Hide From Creditors in Costa Rica?

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Can You Hide From Creditors in Costa Rica?

Everyone knows that Costa Rica is the perfect “get-away.” But, is it also the perfect “hide-away.”? That is, a place where you can hide yourself, and/or your assets, from those who’d like to take a nice fat financial swipe at them…for a legal cause, of course.

To pose the question is another manner; can one become judgment proof simply by moving, lock, stock and barrel, to Costa Rica? Can you hide from creditors in Costa Rica, successfully?

The technical answer is no. However, moving everything to Costa Rica will make it a whole lot harder for any creditor to reach you.

The answer is technically no because foreign judgments actually are enforceable in Costa Rica, by means of a rather involved court process called an “exequatur.”

An exequatur is a determination by a Costa Rican court declaring that a foreign judgment, or decision of a foreign court, is legally enforceable in Costa Rica. The particular court in Costa Rica that does this is called the Sala Primera of the Corte Suprema de Justicia (Sala I), the first division of the supreme court of Costa Rica. It alone decides what foreign judgments are enforceable here and which are not.

A party holding a judgment against you can petition the Sala I to enforce said judgment against you in Costa Rica. The court in Costa Rica will not re-try the case. It only approves, or denies, the exequatur.

For a foreign judgment to be declared enforceable in Costa Rica your creditor must supply the following information to the court:

1. The judgment from the foreign court, translated and authenticated;

2. Proof that the defendant (you) was properly served with the legal action in accordance with the laws of the country from which the case originates;

3. Proof the defendant was properly served with the final judgment;

4. Evidence the legal matter is not exclusively a Costa Rican one;

5. Proof the judgment is enforceable in the country from which it originates;

6. Proof that the judgment is not contrary to Costa Rica’s laws.

Most private interest exequaturs in Costa Rica have to do with family law matters, like divorce, or approving other martial affairs. The remaining ones usually have to do with adoption, or child support.

Court settlements and arbitration judgments are also enforceable using the process of exequatur.

So, yes, it is possible for your creditors to reach you in Costa Rica, but it isn’t easy. It will take time, probably a lot of time…and money.

Unless the issue is particularly egregious, that is, unless it involves an amount that would motivate someone to spend the considerable time and money to go after you via exequatur, you and your Costa Rica assets are probably safe from foreign judgments.

Now, does that mean you should actually consider the option of trying to hide from creditors in Costa Rica?

Well, there certainly are many expats in Costa Rica who are hiding from something. Hopefully, in your case, it’s simply from the rat race up north and not from creditors, your ex, or the law.

If you’d like to consider making your escape and becoming a Costa Rica expat, please consider a customized expat tour to get started.

Real Estate Appreciation in Costa Rica

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Real Estate Appreciation in Costa Rica

Investments are supposed to make money and not lose it, right? And that’s equally true with regard to investments in Costa Rica real estate.

There’s an old, and for some, not so funny, joke that goes like this: You know the best way to become a millionaire in Costa Rica?

Answer: Bring two with you!

Yes, you can lose money in Costa Rica. And that’s especially true with respect to bad real estate deals. It pays to do your homework. So, let’s do a little of that with this post.

What is the outlook for real estate appreciation in Costa Rica?

Well, of course that depends on you making a good deal to begin with. In that light it pays to have a knowledgeable and ethical real estate professional guiding you. If you have no knowledge of Costa Rica, then you need to spend some time on the ground gaining that knowledge. You might want to consider taking an expat tour from a reliable source for such tours.

But the answer to the question posed, in general, is that the outlook for real estate appreciation in Costa Rica is favorable.

Partly because Costa Rica does indeed have a stable and growing economy. In fact, Costa Rica has one of the strongest economies in Latin America. It has a long-standing democratic tradition, with peaceful presidential elections and transitions of power taking place every 4 years. Costa Rica is a vibrant social democracy. It has no military and thus is freed from that heavy drain on revenue to spend money on its people, especially in areas of infrastructure, healthcare and education. Costa Rica has made great strides in improving its infrastructure, especially its notoriously bad roads, over the past decade. For these reasons, Costa Rica is ranked annually as one of the world’s happiest countries.

But the area that’s perhaps most relevant to real estate appreciation is Costa Rica’s growth in the tourism sector. Costa Rica has become on of the world’s major tourism draws. In 2015, Costa Rica attracted a record-breaking 2.7 million tourists from around the word. That represented 9% growth over the previous year and outpaced national GDP growth of 2.8% threefold! According to figures from the Costa Rican Tourism Board (ICT), the tourism sector was responsible for more than $2.8 billion in revenue during 2015 and employs roughly 600,000 people through direct and indirect employment.

Costa Rica’s strong tourism growth comes for good reason, as the country contains some of the world’s most stunning landscapes and most intense levels of biodiversity in flora and fauna. Almost 25% of the entire land mass of Costa Rica is set aside and protected from development as either national park, or some form of reserve or wildlife refuge.

Many who visit as tourists, stay as expats. The cycle of a potential expat is almost always, first visit as a tourist, then come back as an investor, and perhaps buy and live as a long-term resident. And that has made Costa Rica one of the leaders in Latin America for foreign direct investment.

That investment has been a double-edged sword for the local people, the ticos. While it has become an important component of the economy, it has also driven up prices, both for day-to-day living and for real estate. That can obviously be bad for the locals, but good for the foreign investor, at least in terms of the outlook for real estate appreciation in Costa Rica.

The bottom line: Costa Rica may not be one of the cheaper places to live in Latin America, but it is a place where you can expect sound investments in Costa Rica real estate to appreciate favorably over time.

And with the outlook for tourism growth looking very good, any real estate investment with strong touristic appeal should have favorable expectations for income generation as well.

Tourism is a major driver for the real estate market in Costa Rica and it appears to be driving it in the right direction.

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