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Costa Rican Property Management: Investing as an Absentee Owner

why use property management in Costa Rica

If you’re thinking about purchasing a Costa Rican investment property but don’t live in Costa Rica, then there’s a good chance you’re also considering hiring a property manager.  

That’s a great idea. My advice is to hire a large-scale, full-service property management company because they typically offer end-to-end, in-house services (which are hugely beneficial to absentee owners), as well as marketing exposure and other large-scale benefits. But more on all that, below.

Let’s get into it!

When You’re Purchasing a Second Home or Future Residence

When You’re Purchasing a Second Home or Future Residence

There are many reasons to purchase a second home, personal vacation home, or a future retirement home or future residence – among them, the ability to secure a future home at today’s rates, while possibly achieving ROI (via a vacation rental, if desired) and investing in an alternative to stocks or other investments. 

As noted by Investopedia (and various other resources – feel free to verify!), real estate offers a viable alternative to conventional stock investments because it presents a diminished risk, diversifies your investment portfolio, and typically offers superior ROI. You can even create an income-producing investment, if you utilize local property management services to offer the property as a short- or long-term rental.

It’s no surprise, then, that purchasing a future home is one of the most popular investment opportunities in Costa Rica: Not only does it offer the chance to purchase real estate at today’s prices – and here in Guanacaste, prices seem to be going nowhere but up! – but also represents a tangible asset, which, depending on one’s risk appetite, can be immensely attractive. 

You can even purchase your home with an IRA, 401(k), or retirement fund, offering the significant advantage of reaping tax-free earnings from your property investment until age 59 1/2 or until retirement. Then, you can essentially liquidate (or distribute) your IRA, enabling you to personally use and enjoy your home in Costa Rica.

When You’re Buying an Investment Property (ex. a Short-Term Vacation Rental)

When You’re Buying an Investment Property (ex. a Short-Term Vacation Rental)

Whether you’re looking to make a solid investment (see Costa Rica’s tourism investment climate, below) or to leverage your investment to secure residency (and generate revenue), you can also earn an income, build equity, and plan on a possible future retirement home, purchasing a home for investment purposes can provide a robust return on investment.

Very generally speaking, there are two main strategies for homes as revenue-producing investment assets in Costa Rica: 1) either as a future vacation or retirement residence (which you plan to rent out temporarily, per above); or 2) purely as a vacation rental property. The distinction lies in the purpose of the home: Is it meant for your current or future personal use, or do you see this as purely a source of vacation rental income? 

When choosing this second route, it’s crucial to select a property with high rental potential. This means not only a prime location but also sought-after amenities like a private swimming pool, lightning-fast internet, a state-of-the-art kitchen, and more. Additionally, it’s essential to partner with a local property manager who aligns with your standards and business vision.

Note: Costa Rica’s Tourism Investment Climate

Note_ Costa Rica’s Tourism Investment Climate

Costa Rica is a well-known tourist destination – a reputation that has contributed to 7.4% year-on-year growth since 1990, according to the Mordor Intelligence Report on Tourism Market Trends (2023-2028).

Among other factors, the report cites the country’s market resilience in 2021, when tourism recovered 33% percent and registered more than 1.3 million arrivals. This number further recovered in 2022, as evidenced by the Costa Rican Tourism Institute (ICT) 2022 Annual Report on Tourism (link in Spanish), which predicted a full market recovery in 2023; in fact, Costa Rica set a new tourism record in 2023, at nearly 2.5 million visitors. 

This growth is further accentuated by a rise in tourists’ increased average spending and longer stays: In 2022, the average spend per tourist was $1,590 and the average stay lasted 13.5 nights, thus outpacing Spain, Mexico, the Bahamas, Peru, Panama, and other popular tourist destinations, based on data from the World Tourism Organization. 

Much of this tourism demand funnels into Costa Rica’s North Pacific: In 2022, about one-third of all visitors arrived via the international Guanacaste Airport (LIR), primarily to visit the Guanacaste region, including Tamarindo, Playa Flamingo, Playa Conchal, Papagayo, and other area destinations. To further fuel the local economy and tourism, in 2023, the state-of-the-art Flamingo Marina, located just 15 miles (24 kms) from Tamarindo, celebrated its official inauguration. 

Property Management: The Key to Managing Your Property

And so, with all that stated, it’s easy to see why so many choose to invest in Costa Rica real estate. That said, how can you manage, protect, and take care of your investment, if you’re an “absentee owner” – in other words, if you live either abroad or in a distant part of Costa Rica?  

Enter property management. Though neither I nor my brokerage, Blue Water Properties of Costa Rica, offers this service, as a property investor myself – and a real estate broker who works with many other investors – I’m well aware of how important this service is for absentee owners.  

Here’s why:

Secure Your Home & Investment

Secure Your Home & Investment in Costa Rica

Leaving a property unwatched and unoccupied isn’t a great idea, no matter where you are in the world.  

A property manager helps protect your property from petty theft, burglars, squatters, and any other potential issues that plague unoccupied real estate.  

General Maintenance

General Maintenance property management Costa Rica

From meticulous inspections to timely maintenance, a property manager or property management company is there to ensure your property remains pristine and well-maintained.

Maintenance is a necessity for any home, but when you’re an absentee owner – and especially if you’re not familiar with the ins and outs of Costa Rica’s weather, home maintenance, and related issues – it can run the gamut from hassle to major emergency: 

Property management side-steps the headache, removes the hassle, and reduces your stress (and workload) through professional, on-time maintenance schedules, effective communication, and repair services – everything from monthly upkeep (gardening, painting, pool maintenance, etc.) to preventative maintenance and same-day emergency repair services

  • Monthly Maintenance: This encompasses the essential upkeep of your property, including weekly/monthly gardening, annual painting, pool maintenance, and similar services. This routine ensures your property remains in optimal condition without the need for you to invest in tools—the company should provide everything necessary.
  • Preventative Maintenance: Preventive upkeep is a cost-effective solution for long-term savings, involving regular maintenance on critical components such as your A/C, pool pump, and gates, in order to extend your property’s lifespan. A good property management company will allocate a portion of your annual budget to preventative maintenance, so as to prevent expensive capital improvements in the future.
  • Emergency Repairs: I highly recommend that absentee owners (or non-Spanish speakers) hire a property manager who has access to a 24-hour standby team, so you can count on fast and reliable emergency repairs, at reasonable rates, whenever you need them.

In other words, it’s almost like you’re there, taking care of your property yourself.

Bill Payment & Related Services

property management - Bill Payment & Related Services

There’s no two ways about it: A home comes with recurring expenses. Simplify bill management and payments through a property manager, who not only understands Costa Rica’s inner workings (and speaks Spanish), but can be relied upon to pay in a timely manner and troubleshoot any potential issues.

What’s more, a great property management company will proactively keep an eye on bills for unusual spikes and will investigate and remedy any issues (ex. skyrocketing water consumption due to a broken pipe). They’ll even keep their eye open for upgrades and deals, to lower your costs or get you more (ex. internet speed) for the money. 

Tax & Asset Management

Tax & Asset Management Costa Rica

While we’re on the topic of bills and financials, a property manager can help optimize your financial management with strategic tax planning and efficient asset management.

Tax rates, deadlines, and reporting requirements undergo frequent changes in Costa Rica. Your property manager should be diligently monitoring these fluctuations throughout the year, ensuring your taxes are promptly paid in compliance with all regulations. 

In addition to paying all your Costa Rican tax obligations – they can range from property tax, the luxury real estate tax, and IVA (VAT) tax to income tax, municipal taxes, and more – they’ll navigate the bureaucracy, stay up-to-date on changes to the law, and ensure timely payments to avoid exorbitant fines.

Maximize Your Rental Income

Maximize Your Costa Rica Rental Income

If you plan to offer your home as a vacation rental and you’re an absentee owner, you would be extremely hard-pressed to manage (pun intended) without a property manager. 

My best advice is to choose a locally based team with serious marketing power, to handle everything from marketing to rent collection, with care and expertise.

Many companies offer end-to-end property management services that include expert marketing (including offering your property online AND reputation management), comprehensive guest management, staff and contractor coordination, bill payments, tax compliance, and a plethora of additional services like pool maintenance, maid services, concierge services, and more. 

A huge part of this service will be guest & hospitality management: Your property manager will handle all communications on your behalf – no stress, worries, or responsibility to answering guest questions, confirming bookings, taking deposits, or any other hands-on property management you’d have to do, were you managing the property yourself: 

  • Monthly income statements for transparent financial oversight.
  • Proficient marketing, advertising, and listings management aimed at optimizing bookings and enhancing revenue.
  • Extensive guest management services, encompassing all aspects from communication with guests, processing reservations, vetting guests, and finalizing rental contracts to resolving conflicts, collecting rent, conducting post-checkout property inspections, and more.
  • Supervision and management of grounds staff and contractors, to ensure your property remains clean, safe, and well-maintained.
  • Bill payments, including property and corporate taxes, utilities (electricity, water), internet, phone services, and more.
  • Sales and income tax returns management and completion to ensure compliance with Costa Rican legal obligations.
  • Property owner’s meeting representation to ensure your interests are effectively advocated for and addressed.

Some companies will even manage financial matters on your behalf, eliminating the need for a Costa Rican bank account. Be sure that they also have expertise in the Costa Rican tax system, so your accounts remain current and fully compliant with the law. 

Download Profit In Paradise: The Investor’s Guide To Costa Rica

Download Profit In Paradise_ The Investor_s Guide To Costa Rica

If you’ve made it this far, then it’s safe to say you’re seriously interested in Costa Rican property investment. 

And that means you’re just the type of person for whom I wrote Profit in Paradise: The Investor’s Guide to Costa Rica, my newest free eBook. This info-packed guide covers all the basics and beyond – from investment incentives and market indicators to the various types of investment, including property investment, businesses, and development opportunities.

Bottom line: There’s no one way to do Costa Rican investment – but there are wrong ways! So, whether you plan to retire here, manage a vacation rental property, invest in development, or dedicate your hard-earned cash to anything in between, your purchase is more than just a lifelong dream to fulfill: It’s a strategic investment decision. This eBook will help you make it wisely.  

 

Download

Considering Your Investment Opportunities in Costa Rica?

Considering Your Investment Opportunities in Costa Rica

If you’re scouting for investment properties along the renowned North-Pacific Coast of Guanacaste, welcome!

Hi, I’m Becky Clower, and the answers to those questions are what I do: I’m a real estate broker, agent, and owner of Blue Water Properties, as well as a real estate investor and developer. I’m also your expert and ally in this red-hot market.

I have the credentials – the HGTV appearances, the personal experience, the business prowess – to put me on the map, but what really sets me and my company apart is my expertise: I don’t learn from others; I learn for myself. 

I’ve built over a dozen homes, including two spec homes, and after selling out my highly successful Mango Walk project in just five months, I began developing two more projects: a 16-unit condominium development and a 12-unit commercial project in highly competitive Playa Flamingo.

Bottom line: I offer real, honest advice and expertise. So, if you’re looking for a broker, an agent, an investor, a developer, or simply a trusted advisor to stand by your side as you navigate your Costa Rican journey, however it manifests, then please get in touch. Let’s get started!

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