Welcome to the world of 🇨🇷 Costa Rican real estate. In this current market hiccup, 🤭 where sellers are flocking to the market and buyers are not coming down, 📊 you can find some fantastic deals in the Costa Rican real estate market. In 🤔 fact, replacing most of the 👀 homes you see on real estate websites would cost less than building them from 🪵 scratch. With motivated sellers looking to unload properties, you can even 🔎 find similar or comparable homes for far less 📉 than what it would cost to build today, driven by inflation and rising materials costs. 👷 But building your dream home in 🇨🇷 Costa Rica is not for the faint of heart. It is a costly 💸affair, and contractors are feeling the pinch of 📈 rising business costs in the country. Unless you are knowledgeable 🧠 about construction, lived in the country 🇨🇷 for an extended period, and have the time, money, and ability to find a reputable contractor, 🛠 building a property here can be fraught with danger. 😱 Only a subset of people should build homes in 🇨🇷 Costa Rica, either those who can do everything themselves or those with the resources to find a trustworthy contractor. 🤝 So, if you are considering building or buying a home in Costa Rica, it’s essential to 💭 weigh the pros and cons carefully, and with the right knowledge, you can find the ✨perfect✨ place to call home. Therefore, it is also advisable to research 🔎 existing properties that you can afford within your budget, as opposed to first buying a piece of ⛰ land and building your home to a budget that is a hypothetical endeavor, and may not pan out. 🤷♀️ So, it’s essential to assess your resources and plan accordingly to find the perfect property that meets your needs and budget. 💸
We are delighted to be talking again with our friend Matt, a real estate agent in the beautiful Guanacaste area of Tamarindo, to guide us through the topic of buying versus building property in Costa Rica. If you’re in the market for real estate in Costa Rica, and you need someone who has integrity and honesty, we can vouch for Matt’s expertise in this field. We’ll be discussing who should consider buying pre-existing properties and who should be building their dream homes from scratch. While few people should opt to build, Matt will walk us through the advantages and disadvantages of each option, and maybe some of the shortcomings in both, so that you can make the right decision. Although real estate agents may have a bias, it’s worth noting that the cost of building a new property is almost always more expensive than buying an existing one. Costa Rica is known for people buying properties and leaving two to five years later, which creates a vast inventory of motivated sellers with accrued time, particularly after the 2009-2010 crash. So, if you’re considering buying or building property in Costa Rica, let’s explore the options together with Matt.
What Was Said In the Video
00:00 Intro
00:55 Who should buy land and build?
03:26 Problem with Building
03:50 Who Should Build In Costa Rica
05:00 Looking to Build On the BEST Budget Possible
07:30 Evaluating the Real Estate Market
11:45 What Everyone that Builds Says About Their Experience
12:55 Matt’s Experience of Building His Own House In Costa Rica
14:25 Coming Down Here With Enough Money But Going Over Budget
16:49 Home Depot, Lowes, Construction Big Box Stores
Hey guys, I’m michael alan from TravelCostaRicaNow.com and we’re talking real estate. We’re gonna get into this quick. We’re gonna be talking to Matt. He’s a real estate agent up in the Guanacaste area, Tamarindo. We’re gonna run his credentials in a minute, but I can tell you that I wouldn’t be talking to him unless I believed he had some integrity and some honesty. And as I’ve gotten to know him, I believe it even more. So Matt, thank you very much for talking to us. You’re the expert in this…
My pleasure.
And we’re going to be talking about who should be buying in Costa Rica real estate versus who should be building. And I’m going to postulate that no one should build here, and you can correct me down the road. But let’s talk about building versus buying pre-existing, and maybe some of the shortcomings in both, or who should be doing away.
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When I think about the people that I would say, “You should definitely buy land and build instead of buying existing construction,” it’s going to be few people that I say that to. Obviously, as a real estate agent, there’s a big benefit to me buying existing construction, so that comes with a grain of salt. That yes, I have a different result if someone buys a house versus a piece of land. However, what’s happened, you know, we’ve discussed how many people, or you’ve discussed, come to Costa Rica and leave two to five years down the road. Really, the cost of construction today, almost unanimously across the board, unless you are an absolute miracle, is going to be greater than the cost of existing similar construction that you could find. Because that churn that brings people to Costa Rica, buying property, building their dream home, and then leaving in two to five years, that creates inventory and motivated sellers that have accrued with time. Especially, you know, in the fallout of the 2009-2010 crash and currently in a market hiccup like the one we’re going through, you can expect a ton of sellers to enter the market, and right now buyers are not coming down. So, literally, to replace most of the homes that you’ll see on the Caldwell Banker Tamarindo website, or most real estate websites…
Did you just plug your website?
Sorry that I didn’t see that.
I didn’t know you had an agenda.
Anyhow, the existing real estate, in many cases, is going to cost less than what it would cost to build it today. And in lots of cases, with motivated sellers, you could get something similar or comparable for far less than what it would cost to build you today. That’s a dynamic, first of all driven by the motivated sellers, also inflation, and the rising materials costs with time. Costa Rica is getting to be a more expensive place to do business for contractors. Their employees get more benefits every year. And so, if you can find a way to live with an existing house, you’re frequently going to find that you get a better deal buying something existing than buying a lot and trying to go through that construction.
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It seems like it just seems like building is just fraught with so many possibilities of things going south very quick. And it’s like, to me at least, the first thing that they somebody should be kind of understanding the construction of things, knowing a little bit of things, maybe lived here long or something because just to go, “I’d like to build my dream home.”
Yeah, absolutely.
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And really, I think if we were to flip the question and say who should actually buy and build, construction is fraught with peril all over the place, and you can have a horror story.
In the world, basically, right?
And in Costa Rica, it’s even more so. The people that should build here are only the subset of people who can either do everything 100 percent themselves and build a home from scratch doing it themselves or the people that have the money and the time and the wherewithal to find a good contractor because they do exist.
They do. I mean, there are some people, they should build.
And, well, if you’re in that set where you can afford to hire one of the good contractors, there are developments that have engaged builders who are brilliant. Those people can give you the house you want on the timeline they say. And the budget they give you. And if you can have the money to be able to really not have to pinch pennies, hire that person. And yes, they do exist here, cases in Tamarindo, people down where I live, etc.
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If you’re looking to do things on the absolute best budget possible, I would highly suggest that buying land and building, if you’re not part of those people who can do it all yourself, is going to end up costing you more in the long run. If you come down with that “I need to save as much money as possible”, and you start looking around for contractors, they’re all going to give you their bids, and as a budget-oriented client, yes, you’re going to be looking for the contractor who gives you that good number. And they’re frequently in Costa Rica, the contractor who’s not going to do that good job. So even though it’s a harder bullet to swallow, if you’re coming down with X budget for Costa Rica, I think that you’re right in that category of people find something existing that you can afford with your budget because a piece of land is a hypothetical thing that you can afford with your budget. If you’re saying, “I want to get land and a house for three hundred thousand. Got the land for 40. Now I need the contractor to finish at 260.”
And it’s not going to, it’s not going to. I mean that’s around the world, and when is it ever. Yeah, that amount. I think that probably the biggest thing to me with the building would be, we talked about it, I think in another video, you better have some kind of patience. I think you should maybe live down here for a while before buying something. I can kind of get that. I’m still a big renter. Yeah, I mean, too, if you’ve only been down here for a short period of time, I definitely think you should rent first. But when you’ve made that decision because you’ve lived here a couple of years, yeah, okay. To me, you have to live here two years, and now we’re talking should I buy pre-existing or should I build
Exactly.
But if you’re just going, “Hey, let’s buy some land and build the home of our dreams”, I mean, forget all the things that could happen during this if you don’t really understand the building process, especially in another country. But, that’s going to be for sale. Yeah, it’s going to be for sale or it’s going to be half-done, one or the other.
Absolutely. And if you’re that seasoned Costa Rican person who knows, “I want this place now and I want to have my perfect home.”
Yeah, they like their place, building is a perfect fit. They understand the land, they understand the people, the pros, the cons. They have conceptualized it. They know some people, probably by this point. They’ve talked to you, maybe, or here’s a good contractor. Yeah, you know he’s a trustworthy person. I totally get that. Unfortunately, a lot of people do this kind of jumping in before they’ve really…
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For sure and in evaluating real estate, everybody comes down and I think the lack of diverse inventory, you know, this is not as big of a real estate market as Northern California or most urban areas in the U.S. where you’ve got 40 or 50 houses built in a subdivision that you’re basically picking. “Do the stairs come on this side or that?”
“How about the white cabinets, not those ones exactly?”
There’s not that quantity of properties that are attractive or viable for foreigners moving to Costa Rica. So, you’re dealing with small numbers in the first place. People come down and they look at the available options and they say, “Nothing really clicked and took my breath away. And really, I didn’t find my house.” And at that point, a lot of people say, “Well, never mind. I’m going to buy land and build.” You should, I think at that point, pull on the brakes a bit because, first of all, your dream home that you’re going to build yourself won’t be 100% your absolute, “Oh, this was perfection, and we nailed it, and there’s nothing we could possibly improve.” No matter where you live, there are going to be flaws with your home. So, in looking at available homes, you’ve got to figure, “Okay, are the flaws that come with this existing home enough where I, you know, are they so severe that I’m going to take the entire risk of the building process just because, you know, this house, “Well, I didn’t really like the Spanish colonial, you know, the third bedroom was a little small, etcetera, etcetera.”
That’s so, so North American thinking. Yeah, yeah, it’s got to be perfect.
And a lot of people don’t find that perfect house, but remember…
Because it doesn’t exist anywhere, not just Costa Rica.
It doesn’t exist. The perfect house is the house that you can resell and get your investment out when you need to. If you happen to be one of the people who’s going home in two or three years, and that perfect house needs to cost you as little as possible so that when it’s time, if you’re part of the people heading home, you’re going to be able to resell. And in a lot of cases, if you would have bought the existing home, first of all, you’d be in your property six months, twelve months earlier. And second of all, you’d probably be in for a lower price point, unknown questions.
That’s almost for sure, right? I mean, that’s it. It’s going to be a lower price point. I just, you would have to, everything would literally have to go perfect if you’re building your own home. And there’s just so many, yeah, and I mean, just you’re in another country, even if you know the construction business and you know piping and water and electricity and stuff, there’s just so many little things. You know, you speak Spanish with the laborers you have there. There’s a lot of stuff.
I would say it’s almost impossible to do a new construction build that’s going to beat existing construction in terms of the price. And in fact, the seller’s loss is your gain when you’re approaching looking at the real estate market. And there are motivated people who want to get out of their house, and you can get in there for less than it would cost you. Yeah, for sure. Now, we hear from a lot of people that really want to build their own place because they want to do some sort of perfect, idyllic Costa Rica jungle, Airbnb, glamping, you know, retreat in the woods. This isn’t for sale. They don’t find any business owner who is making tons of money with their beautiful little business tucked away in the woods in a perfect location by a waterfall who’s also willing to resell at a super good deal. And so, they’ve got to build their own center, etc. That’s the kind of person where you should be waiting two or three years before you’re, you know, coming to Costa Rica and envisioning, “Oh, I want to buy a piece of land and start my own business and be, you know, tackling all of these huge obstacles in a foreign country.” You should definitely be renting first.
And that’s why you’re leaving within five years.
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First, I say this every chance I get in these videos because it’s just so true. Because I’ve been here long enough to make this statement. Everybody I know that has built here, everybody, everybody, not 99/100, say the same thing. “I love my house. I hated the process to get there.” Totally. Well, they got something happening along the way that they’re telling, they’re pissed. They’re pissed, but they’re in deep now. They’re in deep. They can’t go back. Yeah, they have to keep going. It’s gone over budget, the work, you know, whatever it is. It’s some story or a number of stories. Yeah, they love it at the end, normally. Yeah, but that process, man, they just, like…
Really building your own place is a long-term commitment to Costa Rica. So, don’t take it until you’re really prepared for that long-term commitment here. And there, I do think that you might have there might be someone out there who says, “I love my house, and I love the process.” I think those are probably more often…
Comment on me.
Yeah, if someone’s out there, I think it’s gonna more often than not, it would be someone who is affluent, and, you know, they came into a community where they’ve got a world-class building team, the building site is all laid out, and perhaps there are a few stories of 100 satisfied customers.
All right, I will say that’s probably true.
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We built our own house, I hated the process. We had a totally funky situation that I would never remember.
You were newer though, too, right? You were telling me earlier, you weren’t this wasn’t last year. No, this was before, you kind of really knew all the stuff you know now.
This was, you know, I’d been in Peace Corps, we had done six months, my wife and I living here together, and we sort of started building with a friend, and you know, just sort of working things out as we went along. And oh my gosh, it was unbelievably stressful.
I’ll bet.
When you’re, especially a newly married couple in a new country, we had tons of assets in that, you know, I had a job, we had the experience sort of to get us through that rocky time, but I can’t imagine somebody moving down to Costa Rica with the stress that that brings, the culture shock, the different process, everything going through that and building a house must be an absolute near-death experience for a lot of people. And instead, you know, owning your own property can help a lot with the culture shock and really sort of having your own bat cave to retreat to, or at least having your place, you know, that you feel is yours. But yeah, in terms of trying to put together this project in addition to tackling your life goal of moving to Costa Rica is a huge project, and often times it’d just be easier to buy a house.
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Yeah, I just, I don’t want to be all nightmares and just be all negative, but I have the other big story with building is we’ve seen this, and this is very sad. They come down here with X amount of money, it’s usually a lot of money, and it’s not like $30,000, they come down here, they got $450,000, I’m building this, this, and this. Well, three quarters in, way over budget, it’s not gonna get done. There, by the time whatever they’re doing, it could be a business, it could be a house, by the time it’s done, they either are gonna owe relatives money, they’re starting, you know, they’ve got to make money if it’s a business. They have to make money right now, yeah, and they’re not going to because it’s business and that just doesn’t work like that. And they’re already in trouble, yeah, already in trouble but they can’t stop. Yeah, you can’t stop when you’re 70 percent and all of a sudden, people are taking money you don’t have. You’ve got to get it finished. So now you’re trying to, you know…
You remind me of a story I’ve gone through. You know, and that happens so often and so it’s really, yeah, the people that should build, I would say, are probably also buying into either gated communities or particular areas where there is a known contractor who does, or has not been there for five years but 25 years…
You kind of have to know what you’re buying.
Who’s built for three dozen people that you can talk to and you can say, “Is this person giving me the real budget?” That sort of company, yes, go for it. You can build your dream home. But if you’re coming down with that 450 and sort of getting to know the area and just deciding, “Yeah, I’ve got a lot of variables,” find a house that’s on the market at 450, offer 350 for it, get your 450 house at a great discount and avoid that horrendous story.
If you want to add a patio in the back, you just go right for it.
Keep known quantities everywhere you can instead of tossing it to fate. You know, I’m gonna hope my contractor meets this budget because that’s one of the biggest tragic stories that you frequently hear. And you see the unfinished houses, you see the people who have no savings anymore. You know, it can be avoided, but it’s often not.
Well, guys, I hope this is food for thought. So, if you’re thinking about buying or purchasing or building in Costa Rica, just some things to keep in mind.
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I’m going to add my two cents on that and just say that there are no Home Depots, no Lowes, no big box construction stores here like there are in other places. So, finding your construction material could be a little…
Absolutely, yeah. If you’re building not in the best place, that’s in terms of it.
There’s a lot of variables and intangibles that people just don’t know until they’re knee-deep in it. Yeah, they go to get something and it’s not here, oh you have to get that from Panama, whatever it is. Alright, man, Matt, thank you very much.
Thank you, michael, it’s been a huge pleasure.
Yes, indeed.
Thank you.
Hey guys, I’m michael alan, Travelcostaricanow.com. Peace, guys, hope it helps. Things are gonna pop up. Do your homework, watch more videos. What are you doing right now? Do, watch some more videos, do your due diligence.
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