Q: I’ve heard that Costa Rica real estate is hot right now. What are some simple ways to invest in it?
A: Yes, you’re right. One of the best countries in Latin America for real estate investors is Costa Rica. Here are some easy ways to get started:
- Buy a rental unit: It may sound like a difficult task to manage a rental unit from another country. However, Costa Rica has a lively property management industry that allows foreign owners to collect a steady rental income without lifting a finger. The prudent approach is to start with one unit before moving on to an apartment complex. When you use a property management company, owning 50 units is no harder than owning a single one. You are only limited by the amount of money you can borrow and leverage. Financing options increased in 2012 due to the passage of the JOBS Act, which sanctioned investment crowdfunding for small startups. Your rental company will be able to raise $1 million a year through crowdfunding, which is basically selling private securities to everyday people through the Internet. Use the $1 million to buy Costa Rican rental units with a minimal down payment. Let the local banks finance the remainder of the mortgage – this is called leverage and it multiplies your buying power.
- Invest in a Costa Rican real estate investment trust (REIT): This is basically a mutual fund for real estate. You can choose residential or commercial REITs – both have their benefits. Research the different REITs available in Costa Rica and choose the one that offers the best returns for the least risk.
- Purchase a Costa Rican timeshare property: This is a low-risk way to tap into the fantastic Costa Rican tourism industry. Every year, more and more tourists discover the charms of this delightful Central American paradise, putting pressure on the hospitality industry to accommodate all the new visitors. A timeshare is an excellent way to capitalize on the record number of tourists flooding the country. It also will allow you to visit the country frequently and enjoy the good life firsthand.
- Flip Costa Rican homes: There are many foreclosed and abandoned properties in Costa Rica that can easily be flipped for just a small investment in renovation. The idea is to buy a rundown property for next to nothing, make superficial improvements that are not costly, and then sell the property at a handsome profit. This is one of the easiest and surest ways to make large returns on Costa Rican real estate.