Real Estate Investing In Costa Rica Vs United States

 

Attention all real estate investors in United States! Are you feeling that the base of your real estate investments are collapsing under your feet due to a declining market? Are you in search of a domain where to invest so that you can ensure higher and safe returns?

 

When you first ventured into real estate investments, after having read Kiyosaki, Trump or Allen, you found yourself elated. You had all the essential knowledge and information about the industry, were motivated and geared with excitement of buying property in the real estate market.

 

During the pinnacle of the most topical up cycle of 2000-2005 in the United States, it was extremely easy to get fruitful returns on any sort of real estate investments. Recently, the market has started declining in the United States and you have started feeling its pain, when the strategies that had worked wonders in the past are betraying you.

 

There are quite a number of reasons, for which the U.S. real estate market faltered and is continuing to do so. The supply of resale houses is at its best, only the demand has disappeared, and the foreclosure rates are exhibiting never before trends. Everyone knows how real estate market operates in a cycle, and it is understandable that United Estate has entered a cycle that is heading downwards.

 

The best tangible instance of a declining cycle of business is investors withdrawing their capital from the market. Recently, the sub-prime lenders are breaking up, whereas the prime lenders are tightly controlling their rule in the U.S. Lenders now are starting to demand high credit rates on lesser loan-to-values or LTVs. Evidently, this trend does not favor an average house buyer and finally the general market demand gets affected. After all, demand is directly proportional to the number of buyers.

 

The capital that circulated within the real estate market certainly does not disappear all of a sudden… it means, that the money is used up somewhere else. Therefore, it is not astonishing to see the U.S. stock market climb up despite shaky foundations of the economy.

 

In the first 3 months of 2007, the GDP has shown the slowest growth in U.S. in the past 4 years. When this projected growth is combined with the potentials of globalization, it apparently does not ensure a promising future for the stock market. Bearing in mind the scopes of real estate investments, in terms of its safety and profitability, investments in up-cycle markets, like Costa Rica, is a viable option.

 

Costa Rica offers future for well-informed real estate investors.

 

Costa Rica exhibits the perfect potentials of an up-cycle real estate market. The rate of investment of Costa Rica is dazzling in Costa Rica, the demand is immense, and the supply is low in most parts. The pristine country exhibits perfect climatic conditions, blinding beauty, a good infrastructure, comparatively lower cost of livelihood, and highly affordable immobile properties. Costa Rica is only at a distance of a short flight from several U.S. cities and offshore capital is being transferred as rapidly as the magnitude of retirees from foreign lands.

 

With 77 million retirees, beginning to seek out their own comfort areas, it is often the scenario when they realize they can no longer afford popular places like Arizona or Florida, and they turn towards less expensive places like Central America. And what better option could there be over Costa Rica in terms of political stability, health care of remarkable quality and of course the ideal climate of the place.

 

The overt benefit that an experienced real estate investor will have is that all the techniques regarding finance that worked in the U.S. are equally effective here.

 

Usage options, owner financing, lease-options, land splits, and some more variety regarding exit strategies will prove to be of much advantage to you and can accelerate your profit potentials. Tico sellers of Costa Rica are increasingly promising to understand better and accept inventive terms. In fact, we have bargained on a lease-option in the past few months, which suggests a lease-sublet property and a 70% owner-financed trade.

 

Comparatively traditional modes of financing are also existing options in Costa Rica. However, the market is neither as competitive nor copious as in North America. Personal mortgages, local mortgages, bank mortgages and mortgage bonds of America are available in the country.

 

The promise of future growth of the real estate market in Costa Rica is causing many lenders to expand their products in to the country. Irrespective of the fact that the interest rates are higher in Costa Rica and the LTVs lower, the insurance rates and tax rates are much lower in Costa Rica than in U.S.

 

One of the primary reasons why Costa Rica can offer so high profit potentials is its remarkable low cost of construction. Building costs in Costa Rica can get as low as $35 per square feet, while luxury construction should be around $70 per square feet. The cost of construction may vary according to the locale, but the cost is steadily accelerating everyday.

 

If a proper calculation is done regarding the building cost of a 1,500 square feet house, that also includes a swimming pool and all the necessary accessories, the estimated cost should stay within a $100,000, whereas the cheapest rate of building a house in the United States will be no less that $200 per square feet. Now you can stop dreaming about developing your own house, rehab centre or anything else and material your thoughts in to a real event.

 

There are loads of investment strategies that may get you good profit. Among these, developments and rehabs, with value-addition, are conventionally viewed as being most profit fetching, though you can get wholesale deals on Tico homes, up for gradation, or land for attractive prices. All you need to do is combine this with the low cost of construction and sell it off to foreign retirees, in dire need of it, and thus you can guarantee yourself a handsome bottom-line. It is also very lucrative to construct and retain a nice American-style home or a premium building lot for rental purposes.

 

Many people have doubled on their investment by buying building lots and selling them off after a year or two. However, there is a thing I will not recommend you to do. Do not get involved in a buy and hold rent strategy, because the Costa Rican tenancy act highly favors tenants and that might get you in to trouble.

 

Foreign investment and real-estate ownership is encouraged very much by Costa Rican law, whereby you can purchase a property in you own name or in the name of a corporation. Getting in to a transaction with corporations is highly beneficial and it comes by as a great tool in protecting your liabilities to lower fees for transfer.

 

However, there are certain complications related to buying a property from corporations. For instance, the corporation may be engaged in dealing a transaction with other liabilities attached to the property, which the corporation has to transfer. This is one of the reasons, why you need to have a committed real estate attorney in the country.

 

Although ownership rights in Costa Rica are similar to those of the U.S., legality and bureaucracy specifies certain boundaries that must be carefully dealt with during a particular transaction, and it is equally necessary for you to have complete knowledge of all essentialities before you invest in Costa Rica.

 

What’s more important is to have a team of professionals on whom you can lay your trust, and who will assist you in your venture. To have a good team is essential in America also, though its importance increases in a foreign country, where the laws, language, culture are different and your success is dependant on your team. So have the best of luck and a happy time investing!