How To Finance a Property in Costa Rica

Richard is the owner/broker of Coldwell Banker Tamarindo, and the founder of the vacation rental company viptamarindo.com. Please get in touch if we can help.
Richard Lacey
[e-mail]
www.coldwellbankertamarindo.com
Summary
One of the most popular questions I get, is in relation to financing in Costa Rica. In general terms, Costa Rica is a cash market. Occasionally sellers offer owner financing. Below I discuss the various options available if you currently are not in a position to pay all cash.
Seller Financing
Approximately 10% of sellers in Costa Rica offer seller financing. Typical terms are 50% down, 3 year term at 7% with a balloon payment at the end of the term. Generally sellers will not require any income statements or do any credit checks. A one time loan processing fee of approx 2% is paid by the borrower. There is also a hidden cost because often the seller will offer a better discount for a cash deal
North American bank financing
Banks in your home country will only approve a mortgage secured against a property in your country. The time and risk of foreclosing on a Costa Rica property does not make sense for them. The best option in my view is to refinance a property at home, and be a cash buyer in Costa Rica.
Hard money loan
There are individuals in Costa Rica who offer hard money loans. Typical terms are 50% LTV, 9-13% interest, 5 year term (or up to 15 years in some cases) . They may also charge an origination fee of around 3%. Also they are very conservative on the valuations, so although they publish an LTV of 50%, often the ‘V’ is lower than you expect. Over the years I have had many clients using this option, so I am happy to provide you with more details. The interest rate offered will depend on the quality of the property, and the overall perceived risk.
Use your Retirement funds (US - 401k or IRA funds. Canada- RRSP)
It is possible for Americans to use their 401k or IRA funds to purchase Costa Rica property, subject to certain conditions. Likewise, Canadians can use their RRSP portfolio. They can be used to purchase income producing properties in Costa Rica such as:
A condo generating income through airbnb
A house rented long term, or for seasonal rentals
A bed & breakfast
Commercial property
You should discuss the options with your advisors as the conditions change frequently. But bare in mind some advisors will not have experience using the funds for overseas purchases, and others will be reluctant to lose control of the funds, so it is best to get a second opinion.
Costa Rica bank mortgage
There are 2 private banks, Banco Nacional and BCR, and many private banks, including Scotia, BAC, Improse, Lafise. Traditionally the private banks have offered better service, more bilingual, but the gap has closed in recent years. Interest rates for a resident or a Costa Rican are Prime rate plus 5= 8%+. Offering up to 90% LTV depending on many factors. That said, for a foreigner, on a 90 day tourist visa or a temporary residency I have never heard of a successful outcome for a mortgage, even though the banks will initially say that it is a possibility. Scotia bank is advertising that they have loans for foreigners, but be prepared for a long drawn out process.

[@dlvox5222]

I was in Tamarindo a couple months ago. Great place. Traveled the globe and was impressed by how clean it is, the safety, and quality of the food.

[@puravida5683]

I bought a beachfront property in Playa Hermosa, Guanacaste 7 years ago. The seller and I made a Buyer-Seller Agreement via my CR attorney. I put 50% down, and paid off the remaining in 2 years, at 3% interest.

[@ChadHardcastle]

Was 3% significantly lower than what you typically saw while shopping?

[@hagarbardavid3486]

Please make a video on the whole import to costa rica , laws, and taxes , thank you from Israel :)

[@Charles-qt4hq]

Always possible to find a bargain. Usually arises when an expat gets in over their head trying to build a house, and runs out of money. They’re quick to sell off. I see it a lot here (Costa Rica). Also, some remotely located homes get severely discounted the longer they’re on the market- I see that a lot too. But Rich is right, you’ll need at least 50% down and the balance in a few years. Cash is king.

[@vladimirskrbic5957]

Thanks, Rich! Very informative, indeed.

[@heyawesomedawson]

Very informative. Ty

[@mattanderson7246]

Hi,
Are you able to refer me to a home builder in Tamarindo?
Thanks,
Matt

[@howardmontaque8147]

I use hard money for my real estate investments. I would like to know what hard money lenders are lending for overseas properties.

[@danielmelendez7838]

What would you recommend for new construction financing,I bought a lot cash, but looking for financing for the construction,thanks in advance for your help.

[@cbtamarindo]

No sensible financing available in Costa Rica

[@karu2995]

For option 2, are you saying I can use say an investment account as an asset to get a loan against in North America? Do you have any banks/lenders you recommend?

[@cbtamarindo]

I have private lenders that i can connect you to.. Please email me [e-mail]

[@francorivera1538]

This only applies if you are foreign, citizens and residents have it easy,am I correct?

[@cbtamarindo]

citizens and residents can get loans from the bank, yes

[@LucindaFougere]

I am moving to costa rica looking for a 2 bedroom with a one bedroom guest house I was hoping to pay $150,000 - $175,000 USD ( $200,000 CAD ) I am finding prices a bit higher than I have available these Hard loan or owner finance is an option I may have to look at might stretch my budget to $250,000-300,000 CAD

[@karapereira5776]

Hiya, do you know of any laws related to buying property with crypto currency in Costa rica?

[@cbtamarindo]

Your can do it but it's complicated

[@Sos-kx5dd]

how do I get a hold of you?

[@chrisholing6239]

How about cost of home insurance

[@cbtamarindo]

Cheap

[@CHASINGPROFITS]

Rich could you connect me with a lawyer please in Costa Rica trust worthy