What to Invest In Costa rica?

Some people picture their perfect house as an exotic bungalow surrounded by lush palm trees and facing a beautiful beach. Others see themselves living in a cattle-ranch type hacienda. Still, others would prefer a more urban option in or near a major city. Whether you’re looking for a hut, a condominium or a mansion, you’ll find it in Costa Rica. In trying to determine what best suits you it is important to research locations and concentrate on your needs. Costa Rica has a variety of climates, from Guanacaste’s dry heat to the very humid areas on the Caribbean side. Once you’ve found your ideal climate make sure you are close to what you deem important. Determine if the property has electricity and water. Is there a town nearby for supplies? Are there banks and schools in the area? What about suitable health care facilities?  Finally before purchasing any property take a look at the type of community you’ll be living in.

Places like Playa Coco, Hermosa and Escazu for example have large expatriate communities which offer most modern conveniences of home. Alternatively, you can live in a typical Costa Rican community for total cultural immersion. To understand housing in Costa Rica it is important to know that the country is divided into seven provinces; San Jose, Heredia, Cartago, Alajuela, Guanacaste, Puntarenas and Limon. San Jose offers various types of housing, but some of the favorite neighborhoods are Escazu, Santa Ana and Rohrmoser in the west, and San Ramon de Tres Rios in the east. Alajuela boasts a warmer yet pleasant climate. Cartago, which is cooler than San Jose, offers rural areas that are ideal for farming. Heredia contains quaint towns and mountains that have become favorite spots for homes. The provinces of Guanacaste, Puntarenas and Limon have one great asset in common – the beach. However, they also differ immensely from each other. Guanacaste is located in the Northwest and is characterized by great expanses of cattle ranches, Puntarenas is the longest province and it includes one of the main port cities, Limon seems to be in a different country all together because of its Caribbean African flavor.

Regardless of where you decide to buy real estate in Costa Rica historically it has proven to be a wise business move. Costa Rica is an emerging market place and as such housing prices are still significantly more affordable when comparing to sea side dwellings world wide. Increases of 50% annually are not unheard of and a wise investor can make tremendous returns on well chosen real estate.

Ocean View Or No Ocean

View it is always recommended to invest in something that has a special quality; ocean view, walk to the beach, or best neighborhood within a district. Most aspire to invest in something with an ocean view but one should be aware that comes with a hefty price tag. Currently ocean view properties can range from $100 to $250 per m2, while inland lots drop to $10-$20m2. A new trend has emerged towards Inland properties where prices are more affordable. Developers have responded to this by moving away from the water and developing communities driving distance to the beach.

On the Beach Or Not On The Beach

When buying beachfront properties, one must be aware of the Maritime Zoning Law. By law, the first 50 meters above the mean high tide line are inalienable public property. No one can restrict access or have a totally private beach. The remaining 150m allows the government to grant leases called concessions that range from 5 to 20 years. Before a concession can be granted the property must have an approved Zoning Plan (Plan Regulador) in place. Prior to this the National Geographic Institute must place the high tide markers called MOJONES on the shore line to be zoned. It is important to know that only the actual concession will clearly define the rights and terms of ownership. Although local governments will collect a land use tax as a Canon from occupants of land located in the maritime zone it does not mean that a concession has been granted. A payment of a Canon is simply recognition of the right to possession. On many occasions people purchase a right of possession believing that they automatically have a concession from the government. THIS IS NOT THE CASE!  The only exceptions to the Maritime Zoning Law is shoreline properties titled before 1977. Other exceptions are older port cities, such as Limon and Puntarenas, and marinas, which are subject to separate legislation. In regards to marinas, currently Los Suenos Marina is the only legally sanctioned marina in Costa Rica. Finally it is important to note that the law restricts ownership of land under concession to foreigners unless they have been residents of Costa Rica for 5 years. In addition corporations with bearer shares, corporations domiciled outside of Costa Rica, Costa Rican corporations incorporated by foreigners, corporations with 50% or more ownership by foreigners. There are loopholes to these restrictions and it is recommended that serious beachfront enthusiasts seek advice from a reputable lawyer very familiar with the intricacies of the Maritime Zoning Laws.

To Buy Or To Build

Building costs are generally between $55/sq foot and $65/sq foot, making building your custom home in Costa Rica an attainable dream. However, in order to build in Costa Rica, you will likely face a bureaucratic maze of governmental regulations. The law requires that any application for a construction permit be presented by a licensed architect or engineer. It is therefore advisable to contact a reputable professional to guide you through the construction process. Own Costa Rica Property and it subsidiary Relocate Costa Rica can help you with these considerations and more. We take great pride in offering you expertise and a strong network of premier architects, engineers and builders across Costa Rica.–so you can be connected with the right professionals to meet your needs. Our goal is to bring you peace of mind in knowing that every possible detail is handled, so you can enjoy complete satisfaction and success with your Costa Rica property.

Before you purchase a lot with the intent of building on it, you should conduct some preliminary studies on the property to ensure that there will not be a problem obtaining a building permit. First, determine if the lot has basic services such as water, electricity, telephone, and drainage. Second, make sure there are no restrictions placed on the lot that could result in the denial of a construction permit. It will not be enough to check the Public Registry. Check the Ministry of Public Works (Ministerio de Obras Públicas y Transporte) for future road construction projects; the Ministry of Health (Ministerio de Salud); the National Institute of Housing and Urban Development (Instituto Nacional de Vivienda y Urbanismo) and the municipality where the property is located (Municipalidad). Finally, be aware of any environmental regulation that may affect your construction project, such as national wildlife refuge and areas deemed protected by the Forestry Law.

Requests for construction permits are filed with the Permit Reception Office (Oficina Receptora de Permisos de Construcción), which is a centralized office that houses government representatives from MOPT (Ministerio de Obras Públicas y Transportes-roads), INVU (Instituto Nacional de Vivienda y Urbanismo-housing), ICE (Instituto Costarricense de Electricidad-telephone), AYA (Instituto Costarricense de Acueductos y Alcantarillados-water), SNE (Servicio Nacional de Electricidad-electricity), CFIA (Colegio Federado de Ingenieros y Arquitectos), and the Ministry of Health (Ministerio de Salud).

Developers interested in subdividing property for future sales of segregated lots must hire a topographer, who issues a Catastrated Plan(s). This plan has to be approved by many of the same institutions named above. Your architect or engineer should help you through this entire process which is called “Visado de Plano”. All architects and engineers must be licensed by the Costa Rican Association of Engineers and Architects (Colegio Federado de Ingenieros y Ingenieros y Arquitectos–CFIA). This governing body establishes the fee schedule that can be charged by its members. Most fees are based upon a percentage of the value of the construction project. According to the regulations of the CFIA, the involvement of a licensed architect/engineer in a construction project is separated into two phases. Phase 1 is construction plans and permits, and Phase 2 is control and execution.

Phase 1. Construction Plans and Permits.

This phase is further subdivided into several distinct professional services that can be provided to the client by the architect/engineer. The percentages cited below are those that the CFIA has established as minimum chargeable fees.

• Preliminary studies (estudios preliminaries): 0.5 percent. These studies may or may not be required, depending on the scope of the project.
• Pre-project design (anteproyecto): 1.0 to 1.5 percent. Generally, during this stage the architect/engineer will meet with the client in order to discuss the client’s construction requirements.
• Construction plans and technical specifications (planos de construcción y especificaciones técnicas): 4.0 percent. Once you and your architect/engineer have agreed on the layout and design, they will begin drafting the plans. In Costa Rica, a complete set of plans should include a site plan, distribution plan, elevation and transversal and longitude perspectives, roof design and drainage, design of footings and support beams, structural plans, electrical design, mechanical and sanitary system design, as well as a plan that details all of the interior finishing’s of the construction.

(iv) Budgeting (presupuesto): 0.5 percent for global budgeting; 1.0 percent for itemized budgeting. Here the architect/engineer prepares a materials list based upon your construction plans and prepares a construction budget for you.

Phase 2. Control and Execution.

This stage involves the actual construction and project supervision. The regulations authorize three kinds of supervisory tasks, each of which requires a larger time investment from the architect/engineer.

• Inspection (Inspección): 3.0 percent of total construction value. Here your architect/engineer will visit the construction site at least once a week and will inspect it to ensure that the plan specifications are being followed. They will also verify the quality of the materials being used and review invoices being presented by the general contractor.
• Supervision (Dirección técnica): 5 percent. This requires more direct involvement by the architect/engineer in the day-to-day operation of the project.
• Administration (Administración): 12 percent. Here, the architect/engineer takes complete responsibility for the execution and completion of the project.

The option you choose will depend upon the type of project involved, the reliability of your builder/general contractor, and the amount of time you are willing to dedicate to the construction project. All told, phases 1 and 2 can range from 9 percent to 18 percent of the estimated value of the construction project, depending on the amount of services required.