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Investment Opportunities in Costa Rica: 4 Types of Property Investment

investment opportunities in Costa Rica main photo

There are so many ways to achieve a dream and often, they adapt and evolve throughout our lifetimes. Here in Costa Rica, many dreams are different than they were “back home.” By that, I mean that instead of bootstrapping a business from the ground up, it’s common for new arrivals to consider other types of investment opportunities in Costa Rica.

That’s my forte.

In Costa Rica, there are many ways to build your dream from the ground up. That said, you don’t have to actually break ground (real, metaphorical, or otherwise) or reinvent the wheel to achieve success. 

So, I thought I’d share four of the most popular property investment opportunities in Costa Rica. By that, I mean the kind of investment you can purchase off the shelf, not build yourself. (There are actually rules governing that kind of thing; see below, “Costa Rica Investor Residency.”) 

In the broadest terms, we’re going to discuss business investmentsincome propertiessecond homes, and development projects – each, with their own benefits and stipulations, as well as time commitments, capital requirements, and more. So, let’s get into it! 

Investing in Costa Rica: What You Should Know

Investing in Costa Rica_ What You Should Know

Before we discuss investment types, there are a few important things to know regarding legalities, costs, and the broad strokes of investment opportunities in Costa Rica:

  • Foreign Ownership is Permitted: The Costa Rican Code of Commerce allows foreigners to own businesses. But to establish and operate your company, you need to have residency.
  • Investment Towards Residency: While not every investor wishes to settle in Costa Rica, those who do should be aware of a particular residency class tailored for investors, known as “inversionista residency.” (Full details in the next section.)
  • Varying Initial Costs: For those keen on initiating a business from scratch, the startup cost for a legal business or corporation ranges between $300 and $1,000. On top of that (if it’s not included in your purchase), buying a pre-existing business can cost anywhere from $100K up to more than $8M.
  • Stable Investment Atmosphere: Costa Rica’s political stability, high standard of living, investment opportunities, and thriving tourism and business climates have long made it a popular destination for savvy investors. I can share many, many of Costa Rica’s related superlatives and numbers – among them, that the country has seen 7.4% year-on-year tourism growth since 1990, thus fueling many of the most common investment opportunities that we’re going to discuss.

Undoubtedly, the path to investing in Costa Rica requires a wealth of understanding. However, the potential rewards, combined with the right choices, dedication, and effort, can be immense. Now, let’s explore the top four sought-after investment avenues.

Know This: Costa Rica Investor Residency

Know This_ Costa Rica Investor Residency

In Costa Rica, many investors are eligible for inversionista residency, or investor residency. 

In a nutshell, this type of residency in Costa Rica is available to anyone who invests a minimum sum into a local business, a forestry or reforestation process, or a real estate investment. Notably, real estate investment does include the purchase of a primary or secondary home (see Option 3, below), even if you plan to reside there, rather than use it as a business.

The minimum amount for investor residency has long been $200,000. However, in mid-2021, Bill of Law N. 22156 reduced this amount to $150,000.

At a Glance:

  • Temporary residency
  • 2-year residency, renewable for additional 2-year periods
  • Apply for permanent residency after 3 years
  • spouse and dependents can be included in the primary applicant’s residency
  • You may earn income from your Costa Rican investment.
  • As an investor, you cannot work, either remotely or locally in Costa Rica, until you have permanent residency or a work permit. 

And with that, let’s dig into four of the top property investment opportunities in Costa Rica:

Option #1: Invest in an Existing Business

Option #1_ Invest in an Existing Business
Pictured: Pizzeria La Baula (Tamarindo)

Benefits: Acquiring an existing business offers ease of entry and a gateway to inversionista residency, beginning with an investment as low as $150-$200K.

What You Should Know: While you can profit from your business, you’re not allowed to be actively employed in it. Consider this carefully, as this will be your sole in-country income stream. (You can continue to work and/or collect revenue from sources outside of Costa Rica.)

I know, I know – “But Becky, you said property investment!” And that, I did!

For many, an existing business – one that you purchase with its property and, thus, as a real estate transaction – is the most attractive choice. In many cases, this means venturing into Costa Rica’s booming hospitality industry, whether you’re purchasing a hotel or B&B, a tour operator, a restaurant, or a similar business.

Bear in mind that there’s a unique lifestyle component that accompanies hospitality. Unless, of course, you choose to be a hands-off investor and hire a property or shop manager, as many do. Hands-on or hands-off, know that while you can’t work in your business, you are empowered to channel your enthusiasm, in-depth industry insights, and expertise to benefit your business and bottom line. 

In real-world implications, this means your approach to evaluating potential Costa Rican business investments should be impartial: The focus shifts from envisioning your lifelong career (since you won’t be on the front lines) to identifying which investment opportunities in Costa Rica best align with your financial scope, fulfills your criteria, and promises the highest return on investment. Regardless, be sure to discuss the specifics –  how you can make a meaningful contribution without technically “working” –with your attorney.

>> Search Business Investments <<

Option #2: Buy an Investment Property (ex. a Short-Term Vacation Rental)

Option #2_ Buy an Investment Property (ex. a Short-Term Vacation Rental)
Pictured:

Benefits: Choose your own adventure! As you 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.

What You Should Know: If a robust return on investment (signifying income potential) be a top priority, you may find yourself limited to zones with a heightened demand for vacation rentals.

Very generally speaking, there are two main strategies for homes as investment assets in Costa Rica: 1) either as a future vacation or retirement residence (which you plan to rent out temporarily); 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?

I see the second option as an investment property (for more on the first, see Option #3, below). When choosing this 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.

Further ReadingCosta Rica’s IVA (VAT) Tax for Vacation Rentals

>> Search Home Listings <<

Option #3: Purchase a Second Home or Future Residence

Option #3_ Purchase a Second Home or Future Residence

Benefits: Secure a future home at today’s rates, while achieving ROI (via a vacation rental, if desired) and investing in an alternative to stocks or other investments.

What You Should Know: The tangible nature of real estate also means a heftier initial financial commitment. To achieve inversionista residency, you’ll need to invest a minimum of $150-$200K in a home. 

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 riskdiversifies your investment portfolio, and typically offers superior ROI.

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.

Further ReadingHow to Purchase Costa Rica Real Estate in Your IRA, 401(k), or Retirement Fund

>> Search Home Listings <<

Option #4: Invest in Development Property

Option #4_ Invest in Development Property
Pictured:

Benefits: Development offers huge revenue potential, an outlet for your creative vision, and the opportunity to not only secure Costa Rica residency, but to change lives and landscapes (all, for the better) in the process.

What You Should Know: Development is not an inexpensive or easy prospect in Costa Rica. In addition to the initial buy-in, you’ll be responsible for managing permitting, project oversight, and more.

For entrepreneurs with vision, Costa Rica offers a wealth of development property and serious investment potential. From commercial properties and tourism development (ex. a small retreat or resort) to ocean-view acreageagroforestry projects, and full-scale real estate developments, the market is wide open.

The options in the category are incredibly varied, so I won’t try to sum it up in just a few paragraphs. I should know; I’m knee-deep in my own development projects, after selling out my highly successful Mango Walk project in just five months, and now developing two more projects: a 16-unit condominium development and a 12-unit commercial project in highly competitive Playa Flamingo.

In other words, ask me anything! Or, hang around, because I’ll be writing a lot more about Costa Rican development and other investment opportunities in the coming months. 

>> Search Development Land <<

Considering Your Investment Opportunities in Costa Rica?

Considering Your Investment Opportunities in Costa Rica

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

Hi, I’m Becky Clower, and the answers to those questions are what I do: I’m a real estate brokeragent, 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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